May 31, 2006

Where Are We Going From Here?

Where do you think this market is headed? What are the views of most analysts, brokers, friends, colleagues on the outlook of the market? Outright bearish! That's right! So, what are you waiting for? Sell your whole portfolio and migrate to Australia? Wait a minute....You once read somewhere that turning points occur when the MAJORITY of the market participants are on one side. This is exactly the scenario here. This is the time to start picking up some quality stocks. Do not buy more than you can afford to lose, obviously. Picking bottoms are difficult jobs but highly rewarding, when successful. Can the market move lower from here? Yes, it is quite possible. But are we heading towards a bear market. No, at least not yet. Are the chances good for a rebound? I would think so. So, load up a bit on your portfolio, and come back after the World Cup, and you might have a nice surprise!

Daily Commentaries 1st June 06

OSK Research

Technical View

May 30, 2006

Sure And Steady Progress

Learning to master the markets can sometimes seem like climbing a tall mountain: You know it can be done, but you don't know how to do it, or whether you could do it if you had to. The task may seem insurmountable, and as you think about it, daunting. Fully mastering the markets takes time; time is needed to gain the vast experience required to trade in a variety of market conditions, and the advanced skill set required takes a great deal of practice. Rather than tackle the experience all at once, however, it is more useful to pick a few key trading strategies, identify the market conditions where they perform optimally and trade under these ideal conditions to build up trading skills and confidence. Rather than strive for instant success, it's better to make sure and steady progress.

There's merit in taking it slow when it comes to learning how to trade. It's essential that a novice trader build up a sense of confidence with a few key strategies. Psychologists refer to this process as building up self-efficacy beliefs. Self-efficacy is different from self-esteem. A person can have low self-esteem yet believe that he or she can perform a specific task under a specific set of circumstances with a feeling of self-efficacy. Similarly, a novice trader may believe that he or she is an average trader but has specific abilities when trading a particular trading strategy under specific market conditions. For example, suppose you know you can trade in a bull market using just a few key signals. It may be useful to trade this strategy at the start of the trading day. There's a good chance that you'll achieve success and feel good about your initial abilities. In other words, you'll feel a sense of self-efficacy. Now, you may also know that should market conditions change, you won't be all that competent. But at least the initial start will put you in the proper mindset. You'll feel an initial sense of confidence and that can go a long way in terms of trying out new trading strategies under novel market conditions, or it can help you cope with the daily stresses and strains of the chaotic market action.

Research on self-efficacy has shown that when people believe they have self-efficacy regarding a specific set of skills, they set challenging goals, show unfailing persistence, experience pleasant moods, and can easily handle stress. These characteristics are conducive to profitable trading. Anything you can do to increase self-efficacy will help you master the markets and achieve long term profitability. The two most obvious ways to increase self-efficacy are to start off trading with methods you have mastered so that you meet with initial success and increase your feelings of efficacy, and to practice and gain experience as a trader. The more success you achieve, the greater your self-efficacy, and the more likely you'll be able to trade in a greater variety of market conditions and persist until you achieve consistent profitability. So don't be overly ambitious. Set realistic goals, achieve initial success, and build up your sense of self-efficacy. The greater your self-efficacy, the more success you'll achieve, and the more profitable you'll be in the long run.

AirAsia : A Disappointment

A Neutral Call on AirAsia. Downside risk is quite limited at current levels.

Daily Commentaries 31st May 06

OSK Research

Technical Analysis

Tanjung Offshore : The Next Big Thing

Tanjung Offshore is valued at RM3.64.

Outlook Of The Malaysian Economy : A Revisit

Read the write-up by OSK Research here.

May 26, 2006

You Don't Need To Be Perfect To Win

If you're driven to succeed, in all likelihood, you are an overachiever. And as an overachiever, you strive for perfection. The need for perfection can go too far, however. I'm all for striving for success, but the need for perfection seems to hinder many traders. Some traders spend most of the day neurotically searching for the ultimate setups or the ideal market conditions. Other traders compulsively look at redundant indicators as if seeing the same signal over and over provides new information and solace. Still other traders feel they need to hit upon a winning streak to feel in tune with the markets, and if they don't, they feel as if they are missing the mark, and that they might as well just give up on the trading profession altogether. Ironically, the traders who seek out perfection may never get anywhere in the long run. Had they just lowered their standards and executed trades that weren't so "perfect," or had only a moderate probability of success, they would have ended up more profitable.

Life would be wonderful if we were on a continual winning streak. Perhaps you traded during the bull market of the late 1990s and rode a steady wave of success, or you've had a hot streak that seemed like it would never end. It felt great, didn't it? When you have a Midas touch as a trader, striving for perfection can seem like a realistic objective. But most of the time, striving for perfection just leads to feelings of disappointment. You don't live up to your standards and you feel frustrated. Trying to live up to such high standards often sets you up for failure. It's better to strive for more modest goals.

You don't have to win all the time. Indeed, from a purely statistical vantage point, an extremely profitable trader can be more wrong than right as long as proper risk management is used. But many traders have difficulty taking losses in stride. From a purely psychological viewpoint, it's hard to accept losses. First, people imbue losses with personal significance. As youngsters, many people were taught that losing money was wrong, and so even in the trading realm, where losses are commonplace, many traders feel guilty when they lose, as if they broke a parental rule. Although natural and understandable, these feelings of guilt get in the way of thinking freely. If you beat yourself up for making a losing trade, it is vital that you forgive yourself. In the trading world, you need to lose money to make money, so don't feel bad about it.

A second issue many traders face is "all or none" thinking. They believe that unless they are on a winning streak, they are failing. It's nice to be on a winning streak, but just because you are not on one does not mean that you are doing poorly. Imperfection should be expected. Every successful person faces setbacks, and in the trading world, a winning trader faces many more setbacks than successes. Setbacks are not a problem, but fear of setbacks is a barrier for most traders. If you are afraid to make trade after trade because you believe that you must experience win after win to be successful, you'll avoid making trades. And if you avoid making trades, the law of averages will never work in your favor. You'll end up in the red. It may be difficult, but you have to take some risks. You have to put on trades to make profits in the markets. Sometimes you'll win, and many times you will lose, but your overall profit is all that matters.

Trading is a tough business. Few make it, and this fact can be daunting. If you give in to pessimism, however, you'll never make profits. Don't imbue losses with personal significance. Don't think that you must be absolutely perfect. Every trade will not be a win. You'll be wrong and you will lose. Losing isn't your fault, but letting it get to you is. If you take losses in stride, and radically accept and appreciate any profits the markets give you, you will end up profitable in the end. And that's the whole point, right?

Ahmad Zaki

AZRB is valued at RM2.53.

KNM Group

KNM is valued at RM7.40.

May 25, 2006

The Doubting Trader

It's almost impossible to have rock solid confidence as a trader. Sure, some traders can't be thrown off track very easily, but it's natural to feel a little afraid occasionally. Let's look at some of the reasons that you might feel shaken. What the markets will do tomorrow or next week is far from certain, and you don't have a crystal ball. Your information is fallible. And without perfect information, you are bound to feel a little uneasy when your money is on the line. In addition, there's always a possibility that something may go wrong. A media analyst may hype a stock you are shorting. And what about trading strategies? You can perfect a trading strategy only to see it fail when market conditions change without warning. If you lose your confidence occasionally, it's understandable.

Even a seasoned hedge fund manager can lose confidence. Consider what Manny told us when we asked him about what underlies his self-doubt. "Fear of losing money and fear about the lack of validity of my research. It's perfectly natural. Just like in sports, the difference between the physical abilities of the top pros is virtually nil. But the mental difference is huge. The guys at the top in tennis, for example, are mentally consistent throughout the whole match. It's the same thing in trading. The psychology of professional traders allows them to stick to their strategies. They don't stress out as much as rookie traders. I still make mistakes once in a while, but not as often as I used to. It's impossible to eliminate all doubt. I still fall victim to doubt and other psychological pitfalls. I still have major doubts, but now I know how to control them better."

How did Manny conquer his feelings of doubt? Gaining a wealth of knowledge is key. "It requires a combination of research and experience. After a while, making or losing a lot just did not seem to bother me. It became second nature. The other thing is learning to handle profits and the losses. With experience, you don't get as excited over them. After a while, you expect to experience the natural ups and downs."

When you experience self-doubt, don't make matters worse by feeling bad about feeling bad. Everybody experiences doubt at times. It's natural when trading something as chaotic as the markets. If you are a novice trader, feel solace in the fact that your self-doubt will subside after you hone your trading skills and gain a wealth of experience. And if you are a seasoned trader, it may be useful to remind yourself that everyone gets in a slump occasionally. Don't worry. You'll regain your momentum if you keep trading. The key to success is to remember that self-doubt usually leads to stagnation. When in doubt, don't panic, calm down, and think rationally. You'll eventually work through your self-doubt and return to profitability.

It's No Big Deal : Just Move On

When trading the markets, it is hard to be right all the time (especially these past few weeks where it is has been difficult to determine whether the long term picture will be bearish or bullish). But your money is on the line, and you want to be right. You can't help but put a little bit of your ego on the line with your money. It's just natural to be worried about losing money and wanting to win. The need to be right and the need to win can lead to frustration and anger, though. These feelings can interfere with your ability to stay calm, relaxed and focused on executing your trading plan. But what can you do? Should you let your anger and frustration out, or pretend that you aren't bothered. A recent study by Bond, Ruaro, and Wingrove (2006) suggests that expressing your anger and frustration may not be productive. It may be better to just admit that you are vulnerable to the whims of the markets, try to think about something else instead of how upset you are, and just move on to the next trade.

Bond and colleagues asked participants to pretend their ego was threatened; they entered this state of mind by reading a script that described situations that would bruise anyone's ego. Participants were instructed to cope with the ego threat in one of three ways: write down their feelings, distract themselves, or admit their vulnerability. People who wrote down their feelings felt more angry, while people who tried to distract themselves, or admitted their vulnerability, felt better. What's the lesson from the experiment? Our commonsense often tells us to express our emotions and "get into our feelings," but this doesn't always work. When you mull things over too much, it just makes you feel worse. That said, there are deeply felt emotional conflicts, on the one hand, and then there are the relatively non-significant feelings that occur as a result of relatively unimportant everyday events on the other hand. Most of the disappointments of the trading day, such as not getting a proper fill or seeing an unexpected price drop due to poor media coverage, should not be imbued with great emotional significance. (It's not as if these events are truly life threatening.) These things happen and they should not be taken personally or too seriously. Mulling over them just makes it all worse. It doesn't matter in the end anyway. So when you come across the minor hassles of the trading day, just admit that you can't control the markets. You have to accept the fact that you must go where the markets take you. Just pick yourself up, and move on to the next trade. Don't get hung up on making a big deal over nothing.


Tenaga is upgraded from a Trading Buy to a Buy with target price at RM10.40, after the tariff revision.

May 24, 2006

Maxis Communications

OSK Research has a Neutral call on Maxis.

May 22, 2006

Global Perspective

On a global perspective, UBS turns cautious on stocks as "equity investments no longer have a clear valuation advantage at current levels."

Success Transformer

Success Transformer is valued at RM1.17.

Technically Ugly

Market Focus by Kenanga Research.

Playing By The Rules

The movie "Apollo 13" shows the ingenuity of humans at their best. Due to a design flaw, three astronauts were stuck in space with no clear way to get home. Rather than panic, though, a team of engineers and scientists on the ground and the team of astronauts in space methodically devised a strategy to return the crew safely to earth. The laws of nature can be rigid and you have to play strictly by the rules. On the other hand, there are clear and specific rules to follow, and when you devise a plan according to the laws of nature, and execute it perfectly, you can be absolutely certain that it will work. Trading doesn't always operate that way, however. Rules are tenuous. Indeed, when it comes to trading the markets, it is better to look at so-called rules as merely practical guidelines.

Sometimes the markets seem to behave as if they work according to human nature, but other times they don't. I remember one trader explaining to me that Elliott Wave Theory works because neurons in the human brain respond instinctively to the ups and downs of buying and selling sprees. It would be nice if the brains of the masses were wired that way, but any neuroscientist will tell you that the human brain, and the mind for that matter, does not always work as precisely as navigational computers on a space shuttle. There is an element of uncertainty every time you make a trade. No one knows for sure what will happen next.

Take the market action last Thursday, for example. The major indexes went down on Wednesday. If the masses followed the rules (or one version of them), they would have seller's regret and re-buy on Thursday. They didn't. Sometimes the rules work, but sometimes they don't. That's the nature of the trading game. History only repeats itself when it does, and the masses only behave as they should when they do. In the end, you have to make your best guess and live with the consequences. (But as long as you use proper risk management, the consequences are never so bad.)

So why pay attention to rules? Well, people do act consistently at times, and it's worth developing conventional rules of thumb to capture these consistencies. You should view them as guidelines, however, rather than rules or natural laws. When developing a new trading idea, it's valuable to consider conventional wisdom. Maybe the past will forecast the future, and if you are fortunate enough to find a strong possibility of the masses following a past pattern of behavior, it's wise to follow it. But also consider the infallible nature of the rules. Sometimes the masses have a different idea. If there are no rules, then why commit to a specific course of action? Some traders make the mistake of thinking that they can waver when they are about to execute a trading plan, or as they monitor a trade. Just because your trading plan is not foolproof does not mean that you should not be strongly committed to your plan. When you are devising your plan, and exploring your options, it is useful to play with ideas and concepts. Maybe the masses will follow the "rules" of conventional wisdom, but perhaps they won't. It's useful to be carefree and playful during the planning stages. But once you are about to execute your plan, it is wise to pretend that your trading plan is your best chance of success. Don't waver. Don't doubt your plan. Stick to it and see it through. You may not be right. You may lose money. But you have to trade your plan once you have devised it, and believe that it is your best shot.

If you abandon your plan, or show indecision, you will not only end up with a losing trade but you will not cultivate a sense of discipline. Disciplined trading requires you to trade your plan with zeal. The markets may not always play by the rules, but a disciplined trader devises a trading plan and follows it.

May 21, 2006

Choo Bee Metal

Choo Bee is valued at RM1.88.

May 18, 2006


Jobstreet - Absolutely Brilliant!


Kossan - New Production Lines On Steam

Relatively Safe Trading

Humans don't like taking chances with their money. If given the choice, they would take a sure thing rather than a gamble, even if it meant making relatively little profit. What do you think most people would do, take $100 right now or take a gamble in which they would either receive nothing or $200? Most people would take the $100 but would you? If you trade the markets as a short-term trader, you would be willing to take a risk, but there is still a voice deep down that yearns for a safe, sure bet. And the best way to make it safe is to anticipate all possible adverse events and create a trading plan to let you to feel a little safer and a little more relaxed.

How can you cultivate feelings of safety? First, trade with money you can afford to lose. Second, trade positions that are so small that you may think, "What's the point of even putting on the trade." If you can minimize the personal significance of a trade, you will feel safer and at ease. With a minimal psychological stake on the line, you have almost nothing to lose, and you'll feel less pressured. If you make sure that you limit your risk as much as possible, you'll know it and you will feel safer. If you lose big on a single trade, it will take many more trades to build your capital back up to the previous level. You know this as a fact and it makes you feel uneasy. If you also know, however, that you've taken precautions, you feel better. It's also essential to learn to cut your losses short. Don't get stuck in a losing trade. Don't hope that it will turn around. Just sell the loser quickly. Controlling risk will not only make you feel safe and secure, it will ensure your longevity as well. It's also important to trade with a detailed trading plan. Before you execute a trade, specify precisely how and when you will enter, the signals that indicate the market may be going against your trade, and how and when you will exit. Many traders feel anxious and uneasy because they don't carefully plan their trades. They impulsively execute a trade and then think they can develop the plan as they go along. What usually happens, though, is that they panic easily because they don't know what to do and when to do it.

It's hard to think on your feet, especially when you are taking risks. A safety net helps you feel better. And a detailed trading plan is one of the best safety nets you can have. The more clearly the plan is laid out, the easier it is to follow. And when the plan is easy to follow, it's likely that you'll stick with it. You'll be disciplined and in control of your emotions and thought processes.

It's impossible to find stocks that are guaranteed to increase in price, so when we trade, we always carry with us a feeling of uneasiness. We don't have to let these feelings of uneasiness overwhelm us. By taking precautions, we can feel a little safer, a little surer, and trade a little calmer. And these feelings can make all the difference between winning and losing.

FKLI And KLCI Updates

Recall that in my last post, I recommended taking partial profits on our longs and putting a breakeven stop on the rest of our positions. Markets are not always predictable, and our stops save us from letting the position turn into a loss, a big no no in the world of trading and investments. Never ever let a profit turn into a loss! The current sentiment is very very bearish and not surprisingly, many analysts have turned bearish on the outlook of the market. Whilst I agree that the current technical picture is less bullish compared to weeks earlier, all is not gloom and doom and the market is FAR FROM going into a bear. In fact, at current levels, it is a good time to be accumulating quality stocks. FKLI futures as well as the general market is due for a rebound soon. There are a myriad of factors affecting the markets at the moment including the big Dow, crude oil, inflation, ringgit factors, interest rates etc. We will turn into a bear when there are enough signs of it. The Dow Jones is a big factor here and the possibility of a big drop cannot be discounted. At the moment, we are not in a bear market YET. Until the next update, happy trading!

May 17, 2006

Bumiputra Commerce

Bumiputra Commerce is valued at RM7.00.


CLSA is bullish on the Plantation sector.

May 16, 2006

Higher Growth Momentum For MISC

KLCity Research upgrades MISC to BUY from HOLD, with a target price of RM10.10.

Controlling Your Mood And Maintaining Discipline

Winning traders are disciplined. Discipline means controlling impulses and fighting the urge to abandon your trading plan prematurely. Maintaining discipline is often easier said than done, especially when the market is moving in your favor. It's hard to avoid closing a trade out early in order to lock in profits. Even winning traders face more losers than winners, and when you hit upon a winner, it's tempting to take profits as soon as possible. But since winning traders are relatively rare, it's vital to fight the impulse to sell prematurely and let the winning trade run for a while. In order to win big, it is necessary to delay gratification and patiently wait for the price to rise to your exit point according to your trading plan. Discipline is key, and it is vital to take whatever steps are necessary to maintain discipline.

Your mood can play a major role in determining your ability to stick with your trading plan. When you are in a bad mood, you may have trouble sticking with your trading plan. A study by Knapp and Clark (1991) illustrates how feelings of emotional distress can influence your ability to maintain discipline. Participants engaged in a laboratory simulation in which waiting patiently resulted in greater profits. Specifically, participants were asked to pretend they were fishing in a lake, and that they would be given a monetary reward for each fish they caught. Taking too many fish out of the lake early in the game produced immediate profits, but when fish are taken out early, fewer fish are left in the lake to reproduce, and thus, few fish can be taken out for a profit in the long run. Thus, waiting patiently to take out fish later is the most profitable strategy. Participants' moods influenced their ability to wait patiently and fight the urge to take profits too early. People in a sad mood had difficulty waiting. They wanted immediate gratification, and believed that immediate profits would make them feel better immediately.

You might see how this experiment has relevance for trading. When you are in an unpleasant mood, you may have a strong need to feel better. How can you feel better? Making money usually makes you feel better. You can either take profits out of a winning trade immediately or you can make an impulsive trade to get a quick thrill. Your mood can make all the difference. It is useful to make sure you are in a good mood while trading. When you are in a bad mood, you may act impulsively in order to make yourself feel better.

Maintaining discipline is vital for trading success but it is difficult at times. The best ways to keep disciplined are to trade with a detailed trading plan, but this may not be enough. You must also make sure you are in a good mood. A good mood can mean the difference between trading impulsively and maintaining discipline.


Target price for VADS is raised to RM5.50.

May 15, 2006

Don't Plan To Fail

If you're like most traders, you've made trades that you have regretted. Perhaps you misjudged the markets or acted on impulse, but all you knew in the end was that you lost money, and you wished you hadn't. It may be hard to believe, but it is possible that you may have planned to fail. You may have covertly made a plan to sabotage your efforts.

Dr. Alan Marlatt, a prominent psychologist at the University of Washington, has studied the reasons people fail to maintain self-control. Whether it is trying to quit smoking or losing weight, it's difficult for people to maintain discipline. Many times, people "relapse." They are successful for a while but soon return to older patterns of behavior. Trying to maintain control requires planning. People make a series of decisions when trying to maintain control. Many of these decisions are "apparently irrelevant," but they end up influencing what happens to us. Consider how Jack, who is trying to save money to build up trading capital, may have set himself up for failure. Jack was paid on Friday at 5 P.M. and made the "apparently irrelevant decision" to deposit his paycheck at the ATM located near his mother's house on Saturday morning, which happens to be located at the shopping mall. Although these decisions may have seemed arbitrary to Jack when he made them, you may see that they may have increased the odds that he will spend more of his paycheck than he had planned. The decision to deposit his paycheck at the mall increases the odds that he will walk into a store and make an impulse buy. In addition, making the deposit in the morning gives him the rest of the day to spend money. It's possible that Jack may have "covertly" planned to spend money. Without thinking, he may have set himself up to fail.

Consider how he might have planned things differently so as to ensure that he didn't spend any of his paycheck. He could have deposited his paycheck after work at an ATM far from convenient shopping where he might impulsively spend money. The next day, he could leave his ATM card at home and ensure that he could control his spending. He may have had to drive a few miles out of his way, but this minor inconvenience would ensure that he did not spend his paycheck. The general idea is to plan your life in such a way that you increase the odds that you will maintain self-control. Why put yourself in situations that may thwart your plans?

This framework can be used to explain how a trader may put on a losing trade. Before you put on a trade, you make a set of apparently irrelevant decisions. You may think they have nothing to do with executing or monitoring a trade, but they do, whether you consciously know it or not. If you decide to party too hard the night before a trade, you may be too tired to concentrate. If you decide to meet up with a friend who goads you into bragging about your trading plans, you may feel uneasy about losing the next day, and the added stress may adversely influence your ability to put on the trade while in an optimal state of mind. You may spend a little too much money on the night before a trade and feel that you have to make extra money the next day to make up for your lavish spending. Each of these decisions may seem irrelevant but they may impact your trading performance. Why do we make such decisions? For some people, such decisions are made without thinking. Others, however, may "unconsciously" set themselves to fail. Regardless of one's motives, these decisions matter. Rather than put yourself in situations that may increase your odds of failure, it's wise to anticipate situations that may encourage you to trade on impulse and avoid those situations. Trading is difficult enough without you trying to sabotage yourself. The more you can set yourself for success, the better.

May 12, 2006

The Disciplined Mindset

You're in the midst of a perfect trade. You entered where you had planned, and you know when to exit. All you have to do now is wait for the price to reach 53 and sell. But it's not moving fast enough. It seems to be hovering around 51 and 50. You're starting to wonder whether or not it will ever move up. Panic sets in and you sell. About an hour later, the price hits 53 and it now seems obvious that you should have waited. Why didn't you wait? Why did you impulsively sell? If you have trouble maintaining discipline, you're not alone. It's a common ailment.

It's quite possible to have a trading plan all worked out, but fail to follow it. When you plan out the trade in a logical state of mind, you have every intention of following it. You know exactly what you will do and when. At a critical moment of trading, however, something in your psyche goes awry. When you should be especially focused on sticking with your plan, you abandon it. Why did you make such an impulsive decision that you may regret later? Some traders feel that everything happens so quickly that there is very little they can do. To some extent they are right. Your mind and body tend to react so instinctively that you can't slow things down and stop yourself from making an impulsive decision. However, you can practice slowing down the processes that precede an impulsive move. You may not realize it, but every action you take is preceded by thoughts. You have an internal dialog with yourself as you trade; it's sort of like having a conversation with yourself. Sometimes it may happen so quickly that you are unaware of it, but it happens nonetheless.

What you say in this dialog dictates how you feel and how you act. For example, if you tell yourself, "The price isn't moving the way I want. It never does, and I'm a fool for believing that it will," you will obviously feel uncertain, frustrated, and ready to close out your position. In contrast, if you think, "The price isn't where I would like it to be, but it's too soon to tell what will happen in the end. I need to relax, trust my trading plan and see if it comes to fruition," you will be more likely to stay disciplined and stick with your plan. It may seem obvious that what you say to yourself will dictate how you feel and act, but many people underestimate the power of the internal dialog. They don't realize that thoughts can pop into their head at the wrong moment and seriously impact what they do. If you are not keenly aware of what you are thinking as you trade, you are prone to fall victim to your unproductive thoughts. It is vital to monitor your thoughts, and when you engage in an unproductive dialog, replace it with a more productive dialog. For example, when you find yourself thinking, "I know I should wait, but I'm not making any money and can't stand feeling uneasy and uncertain," you may want to refute this unproductive dialog by thinking, "It's not time to panic. I can wait if I try. I just need to wait and see what happens." It may seem simple to do in theory, but it's hard to do in practice. It may be necessary to write down a script to read in times of uncertainty and uneasiness. By reading the script you can transform an impulsive state of mind into a disciplined state of mind. It's easy to get thrown off balance by unexpected market events. As much as we need to go where the market takes us, we often want to force the markets to meet our expectations. It can be frustrating at times, but it is vital to take control of your feelings. By monitoring what you are thinking and feeling, and making sure that you stay calm and disciplined, you'll be able to follow your trading plans and increase your odds of financial success.

May 11, 2006

The Significance Of Wesak Day

Wishing all Buddhist friends Happy Wesak Day.

May 10, 2006

Plantation Sector

High crude oil prices is positive for the Plantation Sector.


Hovid is given a target price of RM2.58 by OSK Research.

May 9, 2006

The Mad, Mad Rush For Oil

Oil contracts to local players are expected to be ramped up in the coming years leading to increased profits. OSK Research recommends Tanjung Offshore, Samudra and Perisai.

May 8, 2006

The Stock That Analysts Hate Most

Bursa has to be the stock that analysts hate most. Just about every research house issues a SELL call on the stock, and they suffer agonisingly as it inched up higher and higher. Analysts fail to recognise that besides fundamentals, which are very important, stocks can go up on supply and demand imbalances, depicted through technical analysis. It's more an art than science, but a look at the chart says that it is not about to end anytime soon. Both fundamental and technical analysis are important in the investment world.

May 7, 2006

PPB Oil Palms

PPB Oil Palms has a fair value of RM8.30 according to Nomura Research.

Crest Builder

Crest Builder is trading at forward P/E multiples of 5.1x. Target 1.49.


Pelikan is currently trading at FY06 P/E multiples of 4.9x. Kenanga Research targets RM3.60.

Technical Talk

Technical Ratings by Kenanga Research.

May 5, 2006

Hang Seng Is Resiliently Bullish

Hang Seng dipped from 16900 level from my last post to a low of 16618 before rebounding strongly to close at 16919. Regional markets are showing strength and this is another reason why KLCI should be able to hit at least 1000 by year end. I will keep you guys updated periodically on the developments in other markets.

Take Partial Profits On FKLI

The bull is firmly in charge. However, short term correction is quite likely next week. Suggest take partial profits on your longs. Let the rest of the longs ride because FKLI and KLCI is potentially entering a very exciting BULLISH phase. However, bring your stop up to breakeven to protect your capital. Nothing is for sure in the markets. Until the next update, happy trading!

May 4, 2006

Your Favorite Stocks May Not Be The Best Investments

Decisions about which stocks to purchase should be objective, but many times our emotions and personal “attachments” to stocks play a more significant role than they should. Research studies by behavioral economists have shown that social psychological factors, such as the public image of a company, play a significant role in the way a stock moves. For example, consider the media coverage of oil companies right now. With all the profits we’ve been hearing about, how can you resist not trading these stocks? It may be difficult to stay away.

In choosing a stock to trade, many traders try to identify a “great buy” or “sure winner,” but what factors should traders actually consider when making this decision? Should it merely be based on an "image" or something more tangible? Are you actually considering a factor that has a direct bearing on whether the stock in the company is worth an investment? A common mistake among traders is to base trading decisions on hype and image, rather than on factors that will actually produce trading profits, such as current price patterns, volume, or momentum indicators.

Think of all the companies in recent history that were supposed to be up and coming? Tyco and Enron seemed like sure win companies with huge potential. They were viewed as great companies for long-term investments. What about General Motors? At one time, it was one of the largest companies in the world, but what about today? In recent times, you may have seen the hype about Apple Computer raise its stock price, but the high of a few months ago has yet to be seen again. If you are a short-term trader, minor fluctuations in price can pay off big, but ideally, a stock purchase should be based on more fundamental factors in addition to the more immediate factors that move the price. In other words, if the price is purely based on hype, it is easy to watch it plummet. It’s common to see a thinly traded stock surge in price due to media coverage, for example, but it may fall just as fast if the price is purely based on hype. When the masses sell, they all sell, and there are no “serious” investors left to buy the stock.

Media coverage can have a powerful impact on the behavior of the masses. But as a trader, you have to make more logical decisions than the masses. Don’t be a victim of biased analysts' predictions, media hype and the unrealistic exuberance that seems to creep up at times. In this era of trading, the "true value" of a company is a matter of debate. And despite analysts' predictions, no one can know with certainty the actual future stock price for any company, since the stock price is largely a function of the perception of the masses. Media hype, image, or shareholders' sentimental attachment to their stocks may influence prices, but as traders, it's essential to put these factors in perspective. The masses may be easily swayed by these opinions and beliefs, but you must base your trading decisions on current signals and indicators in the short-term time frame you have chosen to trade, whether intraday or intraweek. What is the basic price pattern, and how has it changed in subtle ways by media news? The price pattern, and factors such as volume and momentum are primary; the media news is secondary. Don't make the mistake of using image, sentimentality, and public opinion as primary information for making trading decisions. By all means, consider these factors, but base you primary trading strategy on more fundamental short-term indicators of momentum and trend.

May 3, 2006

Kenanga Research has a target price of RM14.20 on Transmile.