The Way ICnFeel The Market:

31 December 2009
Last Email for 2009

Dear Students
2009 is coming to an end. December is turning out to be a Moo Run which will continue into January as a Bull Run. In term of portfolio, I was not better off with my portfolio down about 5% (primarily in the US). The blue chips and good stocks did well. But it will be a matter of time before the second liner and third liner come alive. So far, I sensed the Funds have been selectively chewing on the blue chip stocks this December but not much. What will they do in January?

If I am a Fund Manager, I will JUMP in asap. 2009 was the "washed out" year for Fund Managers. 2010 I better perform or else be booted out. This is their dilemma - Do or dies. If that assumption is right, then stocks should rise in the first half of 2010. Japan has added stimulus measures. China and India are burning hot on economic growth. World Cup 2010 is in June 2010 in South Africa provides sunshine and joy. But the biggest will be USA - President Obama's 2nd Year Plan. The Plan is to CREATE JOBS for the million of Unemployed Americans. He has solved Medicare. He has solved the Financial Mess. He will solve the Jobs.

One of my students told me he registered the best business for 2009 in his 13 years of operation. Businesses are doing well for sure. Whether you are employed or fired does not matter. Stocks rise or fall based more on corporate profits than on how many people were fired. But when hiring goes up, you know the economy is "EXPANDING". When firings go up, you know the companies are keeping the bottom-line; and that is a good sign. That is survival.

I am going into hibernation mode. I will keep my portfolio and go on a retreat to India on the 6th of January till the end of January or perhaps, maybe until June 2010. Let the market work for you.

March 2010 will be Full Year and 4Q Reporting. Do you think businesses' profit will be lower or higher?

By now everyone has forgotten about H1N1. On hindsight, you can say I was over-reacting and on the precautionary side. Thank God, we are safe - the virus took an ignominious exit. It is better to be kiasu than kiasee later. On the investment side, you can imagine how the Funds are feeling - they missed another opportunity to buy. I guessed the Fund Managers were waiting for another crisis to PLUNGE in. It did not happen. As a result, many of them are sitting on pile of CASH. I can only imagine the stampede next year.

What about the common man on the street? Are they loaded to their throat? In the first place, do they have stocks? Nay nay. They were on the sideline after PANICKING (suicide enmass) in the first quarter of 2009. And there was NO OPPORTUNITY (no desire) for them to get in. Other than the PSYCHOLOGICAL MELTDOWN in Jan to Mar 2009, there was no crisis to reward anyone who even has the greatest patience. In fact, the rally in October 2007 was inversedly equal to the fall in March 2009 - it was the familiar Cycle of Boom and Bust which generated maximum Greed and Fear. When we were drowned in the noises of Greed and Fear we forget the greatest trading wisdom - Buy when they are fearful, Sell when they are greedy. This is the wisdom that separatse success from failure; the rule that separates millionaires from paupers; the art that draws joy against misery.

My dear student, investment is easy but requires gut. Just like Connie Talbot, the youngest BGT at six years old, you need gut to stand firmly on the Investment Stage. You may have the voice (money) but when the legs (wisdom) are shaking, the performance will be a failure.

Happy Christmas was over. It is time to say Happy New Year 2010. The decade 2000 to 2009 will be behind us and condemned to history. We look forward to the next decade 2010 to 2019. But life and investment is a continuous learning process - so I suggest you continue to learn and to experience. As long as you follow the RULES, you will not be EXTINGUISHED like the many in 2008 and 2009. I have taught you to the very best of my ability, my hope is that you put them into practise and obey them. For anything that you do not understand or wish to know more call on me. My motto is always the same, "Once a student, always my student." Do not feel insufficient or look for greener pastures. It is practise and discipline that count. Experience is the most expensive commodity, and every successful investor needs to accumulate on experience. Thus, the older you are the vintage you will be.

What I taught you, I put into practise. In another way, I taught all I know and I practise all that was taught. Not surprising, my 2009 Net worth was better than 2007. What you need most is to revise and rehearse the knowledge. Rot learning, Chinese style, is recommended.

Do not hurry. Do not panic unnecessarily. Do not fear. Do not greed. Do not listen. Trust yourself. Trust no one. Trust the rules. Trust the knowledge. Shut your ears. Shut your mouth. Open your eyes. Read and think. Short term, we are more likely to be down as we cannot perfect the art of bottom-picking. Long term, we will be sure winners as Discount will self correct itself and rise to Fair Value. Given more time, the scenario will automatically adjust to Premium. The market has this tendency to over-correct and then self-correct itself. You have to trust this fact or else there is no meaning to investment.

In 2008, the Robber Rat stole from the 2007 Fat Pig. In 2009, we worked like an Ox to rebuild the house. Will the coming 2010 Tiger frightens the wit out of the 2009 Ox or will the bravodo of the Ox exudes cowardice in the mind of the Tiger or will the roar of the Tiger continues to fuel the Ox Run? Bear in mind we are still in Wave B of the 7-Lean Years. The Fundamentals call for good times, the Waves says a little higher while the Cycle says a long way more. The Common Sense says drown the Greed while I down three beers!

Cheers to 2009. I wish all of you Good Health first, Good Wealth second and Good Happiness third. With health comes wealth and with Wealth comes Happiness, in that order. So, invest always in Health. Good health means maximum time (life span) for long-term investment. So have you been Breathing?

My Resolutions for the new Decade 2010-2019:
1. No More Coffee.
2. No More Tea.
3. Some Beer.
4. Some Wine.
5. More Vegan Food.
6. Early Sleep.
7. More Retreats.

..........

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