Shopping Chat

-- Buying IPOs.

An astonishing number of people don't understand how IPOs work. YOU are not really buying an IPO when you buy the stock on the first day of public trading when it opens at $75. Those who REALLY bought the IPO were those who got their shares for $10, well before the public trading began. For the most part, only institutions or megamillionaire private investors have access to IPOs. There have been a few exceptions, but it's almost universally dumb to buy a hot IPO on its first day of public trading. As for those few times when the average investor IS offered shares in an IPO before public trading begins, my advice is to pass. My rule of thumb on IPOs is: If you want it, you can't get it, and if you can get it, you don't want it.

-- Finding the Holy Grail.

Technicians regularly fall into periods where they tend to favor one or two indicators over all others. No harm in that, so long as the favored indicators are working, and keep on working. But the analyst should always be aware of the fact that as market conditions change, so will the efficacy of their indicators. Indicators that work in one type of market may lead you badly astray in another. You have to be aware of what's working now and what's not, and be ready to shift when conditions shift. There is no Holy Grail indicator that works all the time and in all markets. If you think you've found it, get ready to lose money. Instead, take your trading signals from the "accumulation of evidence" among ALL of your indicators, not just one.

-- Overtrading.

The Picks Port commits this sin on a regular basis, but that's mostly because of the nature of the beast. I have to be more short term oriented than I'd prefer to be because you, my subscribers, tend to be more short term oriented than you probably should be. Daytrading, of course, is the epitome of overtrading. Most people just are not equipped, emotionally, intellectually, or mechanically, to day trade and statistics tell us that most are not successful at it. If you are not making money at daytrading but keep on doing it anyway, you should examine your motives. If it's the action you crave, take up skydiving. It's safer and cheaper.

-- Excessive tape watching.

I get a kick out of people who insist that they're intermediate or long term investors, buy a stock, then anxiously ask whether they should bail the first time the stocks drops a point or two. Likely as not, the panic was induced by watching the tape, or hearing some talking head on CNBC. Watching the ticker can be fun. It can be mesmerizing. But it can also be dangerous. It leads to emotionalism and to hasty decisions. Try not to make trading decisions when the market is in session. Do your analysis and make your plan when the market is closed and the White Noise of the television and the ticker is absent, then calmly execute your plan the following day. You have your stop and your target. So go take a nap, or go to the movies, or mow the lawn. The only time you should be scrutinizing the tape is when you're looking for an immediate entry or exit point for a trade. Otherwise, do your blood pressure a favor and tune out.

-- Being undercapitalized.

If you have less than $50,000 to invest, you'd probably be better off in a mutual fund rather than trading individual stocks. To get proper diversification with a fully invested exposure you need at least 10 stocks. You do the math.

-- Letting the tax tail wag the stock dog.

Don't let tax considerations dictate your decision on whether to sell a stock. Pay capital gains tax willingly, even joyfully. The only way to avoid paying taxes on a stock trade is to not make any money on the trade.

-- Relying on gurus.

I'm spitting in my own rice bowl here, but you should not be letting some self-appointed market "gooroo" dictate or dominate your trading decisions. The most you should expect, or accept, from folks like me are a few trading ideas, a little technical analysis tutoring, and a bit of guidance in maintaining a solid trading discipline. You should not think of a market letter (ANY market letter) as a substitute for a personally managed portfolio. No one knows or cares about your personal circumstances like you do; how much money you have to invest, your tolerance for pain, your goals, your most suitable and comfortable time frame, etc. And you should be doing everything in your power to make Nick's Picks unnecessary and irrelevant to your trading, to learn enough not to need the likes of me anymore. Read some books. Take some courses. Buy some decent charting software and arrange for a data feed.

-- Thinking this market stuff is easy.

Don't confuse genius with a bull market. It's not that hard make money in a roaring bull market. Keeping your gains when the bear comes prowling is the hard part. Don't get cocky, but don't grovel either. You're not as smart as you think you are when everything is going great. But you're not as dumb as you think you are when everything is going to hell either. The market whips all our butts now and then. The whipping usually comes just when we think we've got it all figured out.

-- Thinking rather than looking.

One thing you should be thankful for is that you don't HAVE to come up with a reason for WHY the market is doing what it's doing. The talking heads on CNBC do because that's their job. I do too, because I know you expect it of me. But you don't. Just follow your chart work and let someone else do the pontificating. After all, who REALLY knows why stock ABC goes up 5 points on Monday while stock XYZ, in the same business, goes down 5 points? That's the great thing about technical analysis. You don't have to know. The price action is THE TRUTH. It's all you really need to know. Price doesn't lie. Price doesn't alibi. Price never complains and never explains. It is what it is. When XYZ goes up $5 on heavy volume, let Joe Hairdo on CNBC jabber on about what it all means. We KNOW what it means. It means XYZ went up $5 on heavy volume.

Pant...pant...pant.

These are just some of the mistakes traders make. There are lots more, but this has to end somewhere. These have been mostly generic in nature, applicable to fundamental investors as well as technical traders. One of these days I'll do another diatribe along these same lines, but confine it strictly to TA do's and don'ts. Until then, trade smart.

-- Overbetting.

This gets into the realm of money management. Diversification, the process of spreading your investment capital around in different assets and sectors to feather the vagaries of the market, has gotten a bit of a bum rap lately. Some of the New Paradigm folks think the concept is "old fashioned." These tend to be the same people who have every last dime in a handful of internet stocks. That's not investing, or even trading. It's gambling. Preservation of capital is paramount. If you run out of chips, game over man. You may feel a bit envious the day your neighbor, who has put everything he owns into Zowie.com parks his new Mercedes in the driveway next door, but you'll feel a lot better the day the repo man comes with the tow truck to take it back. Most professionals will allocate no more than 2-5% of their total investment capital to any one position. Ten percent should be your absolute max. One more thing. I've checked the U.S. Constitution and the Bill of Rights, and nowhere in either of them does it say that you have to have ALL of your money in the stock market ALL of the time. Money management also pertains to your total investment posture. Even when your analysis is overwhelmingly bullish, it never hurts to have at least some cash on hand, earning its 5% in the money market. You'll need it when you see that next "can't miss" stock but don't want to sell any of your other "can't miss" stocks to raise the money to buy it. Your exposure should be consistent with your overall market analysis. As the market becomes more overbought, overextended, and overvalued, your cash level should rise accordingly. Then as the market gets more oversold and undervalued, you can raise your market exposure accordingly. Being ALL in the market or ALL out of the market sounds like a good idea, and it may work out wonderfully on paper, but it rarely plays out so smoothly in real life and real investing. But you should still employ a sliding scale of exposure, based on your market analysis.

-- Bottom fishing/Catching falling knives.

Many of the daily e-mails I get are of the following type: "Nick, Zowie.com is down 23 points today. Time to buy?!!!" My answer is almost always the same. "Put your pants on, Spartacus. No!" Don't ANTICIPATE bottoms. It's tempting to try to pinpoint an exact low, especially if you're working with indictors like Fibonacci fan and time lines, cycle studies, regression channels, even plain old lateral support points. But it's almost always better to let the stock find its bottom on it's own, and then start to nibble. Just because a stock is down big doesn't mean it can't go down even bigger. In fact, a major multipoint drop is often just the beginning of a larger decline. It's always satisfying to catch an exact low tick, but when it happens it's usually by accident. Let stocks and markets bottom and top on their own and limit your efforts to recognizing the fact "soon enough." Nobody, and I mean nobody, can consistently nail the bottom tick or top tick. Those who try usually get burned.

-- Averaging down.

Don't do it. For one thing, you shouldn't even have the opportunity, because you should have sold that dog before it got to the level where averaging down is tempting. The pros average UP, not down; they got to be pros because they added to winners, not losers. And speaking of averaging UP, there's a right way to do it. And doubling your position is not it. Rather, you should add 1/2 your original stake. If other words, if you already own 100 shares and want to bolster your position, you buy 50 shares. If you later decide to add more, you add 25 shares, etc. Why you should do it this way is too long to go into here, but that's the way the math works out best for you.

-- Shorting bulls and buying bears.

Yes, there are stocks that will go up in bear markets and stocks that will go down in bull markets, but it's usually not worth the effort to hunt for them. The vast majority of stocks, some 80+%, will go with the market flow. And so should you. It doesn't make sense to counter trade the prevailing market trend. If you're worried about a short term pullback, simply cut back on your trading, take a few profits, and build up your stash of cash. Let that money earn its 5% in the money market until the squall has passed.

-- Confusing the company with its stock.

There are some fine companies with mediocre stocks, and some mediocre companies with fine stocks. Try not to confuse the two. This is, at heart, a fundamental analysis versus technical analysis issue. Some stocks simply have excellent trading characteristics while others don't. Maybe it's a matter of liquidity, or a fanatical message board following, or a daytrading clientele, or whatever. Take Amazon.com for example. Is the company a good one? Who knows? Not me. But the stock is. I wouldn't want to have to hold it for 20 years, but I sure don't mind trading it a few days at a time, the "right" days. That sucker moves. Baby Bells are at the other end of the spectrum. Fine companies for the most part. Wouldn't mind owning one for 20 years. But you have to pick your spots when you go to trade them, because a measly 3 point move in a single session is huge for a Baby Bell. Also remember this: even the stock of a great company can go through a bad patch. IBM is a great company today, with its stock selling at 124, and it was a great company five years ago, when its stock was selling at 13.

-- Falling in love with a "story."

This is related to confusing the company with its stock. There are a lot of intriguing "stories" out there, but they don't always translate into instant riches. Iomega was such a "story" stock. The story was that the company's Zip drive was going to replace the floppy in the world's computers. The stock ran straight up to the sky to wait for the story to come true. And for the most part, IOM's story DID come true (many stories don't, witness the Y2K stocks), but the stock gave back most of its gains anyway. Turns out it wasn't that much of a story after all. In other cases, the story comes true but the stock you've bet on isn't the story teller. Witness the laser vision "story." A number of companies were hyped as the category killer, but only one, VISX, made its stockholders real money. And how about satellite communications? Great story, eh? Tell it to those who loaded up on Iridium's stock.

-- Following the leader.

Just as money tends to flow into last year's top mutual fund (sure to be next year's underachiever), people tend to chase the high flying momentum MO-MO stocks, succumbing to the buzz and getting in AFTER the stock has already jumped 80% and inevitably just before it drops 60% as the early buyers take their profits by selling their shares to the "greater fool," you. Yes, you can make a quick buck chasing momentum, but you can lose it even quicker. You can never be sure there's a greater fool coming in after you, and that could make you the "greatest fool."

Just about everyone knows the grisly statistics about options trading: 90% of all naked option players (no, that doesn't mean they trade in the buff, only that they buy uncovered puts or calls) end up losing money. But hardly anyone knows the equally grisly statistics about equity trading: 80% of all stock investors end up losing money.
But how can that be, you ask? Over time, the stock market is a sure thing, a guaranteed way to make money. It's so easy. All you have to do is buy good stocks and hold them. Everybody says this, pundits, brokers, financial advisors, the media, the historical record itself. No one who simply bought and held the Dow Jones Industrial Average or the S&P 500 has ever lost money over a 20-year time span. Right? Yes, right. Now go find me someone who bought and held for 20-years. You should be able to find a few, about 20% to be precise. The other 80% lose money.

How does this happen? A couple of ways. Primarily, it happens because no matter how resolute people think they are about buying and holding, they usually fall into the same old emotional pattern of buying high and selling low. Investors are human beings. Human beings naturally want to be in the winning camp, and human beings naturally seek to avoid pain. When things are most euphoric in the investment world, at the top of a long bull market, these human beings are in there buying. And when things are most painful, at the end of bear market, these human beings are in there selling. In fact, it's usually the final capitulation of the last remaining "holders" that sets up the end of the bear market and the start of a new bull market. As Sy Harding says in his excellent book "Riding The Bear," while people may promise themselves at the top of bull markets that this time they'll behave differently, "no such creature as a buy and hold investor ever emerged from the other side of the subsequent bear market." Statistics compiled by Ned Davis Research back up Harding's assertion. Every time the market declines more than 10% (and "real" bear markets don't even officially begin until the decline is 20%), mutual funds experience net outflows of investor money. Fear is a stronger emotion than greed. Most bear markets last for months (the norm), or even years (both the 1929 and 1966 bear markets), and one can see how the torture of losing money week after week, month after month, would wear down even the most determined buy and holder. But the average investor's pain threshold is a lot lower than that. The research shows that It doesn't matter if the bear market lasts less than 3 months (like the 1990 bear) or less than 3 days (like the 1987 bear). People will still sell out, usually at the very bottom, and almost always at a loss.

So THAT is how it happens. And the only way to avoid it is to avoid owning stocks during bear markets. If you try to ride them out, odds are you'll fail. And if you believe that we are in a New Era, and that bear markets are a thing of the past, your next of kin will have my sympathies.

But people lose money in other ways, too, even during the strongest of bull markets. Let's look at some of the more common trading mistakes to which people are prone. Many of them are related, part and parcel of the same refusal to pay proper attention to risk management. If you recognize your own actions in some of these, join the club. Over the years, I've committed every sin on the list at least once. Still do on occasion.

-- Letting small losses turn into large losses.

A whole myriad of mistakes accompany this one. Refusing to take a loss at all. Overbetting. Catching falling knives. Averaging down. Etc., etc.. At root, it's probably because the average investor pays little mind to risk management. In a way, it's understandable. The majority of those in the market today have only come into the market during the last 5 to 7 years. They have never really experienced a serious bear market. The only investing world they know is that of an ongoing bull market, where it's ALWAYS okay to buy the dips, where a stock that craters ALWAYS comes back. But SOMEBODY bought UBid at 121. And SOMEBODY bought eBay at 234. I hope it wasn't you. You should only be buying stocks that are in an ongoing uptrend (hopefully not TOO far along however), or those that are bottoming out following a stiff correction. In other words, when you buy a stock it should be with the expectation that it will go up (otherwise, why buy it?). If it goes down instead, you've made a mistake in your analysis. Either you're early, or just plain wrong. It amounts to the same thing. There is no shame in being wrong, only in STAYING wrong. If a stock does not quickly begin to move in the direction you envisioned when you purchased it, you should begin to question your reasons for owning it and you should immediately put it on a short leash. If it doesn't turn in relatively quick fashion, get rid of it. You can always go back in later, when it really turns. This goes to the heart of the familiar adage: let winners run, cut losers short. Nothing will eat into your performance more than carrying a bunch of dogs and their attendant fleas, both in terms of actual losses and in terms of dead, or underperforming, money.

-- Refusing to take a loss at all.

I simply don't understand the way some people think. From whence came the idiotic notion that a loss "on paper" isn't a "real" loss until you actually sell the stock? Or that a profit isn't a profit until the stock is sold and the money is in the bank? Nonsense. Your stock and your portfolio is worth whatever you can sell it for, at the market, right at this moment. No more. No less. People are reluctant to sell a loser for a variety of reasons. For some it's an ego/pride thing, an inability to admit they've made a mistake. That is false pride, and it's faulty thinking. Your refusal to acknowledge a loss doesn't make it any less real. Hoping and waiting for a loser to come back and save your fragile pride is dumb. Your loser may NOT come back. And even if it does, a stock that is down 50% has to put up a 100% gain just to get back to breakeven. Losses are a cost of doing business, a part of the game. If you never have losses, then you are not trading properly. Most pros have three losers for every winner. They make money by keeping the losses small and letting the profits build. You should be almost happy to take a loss. It means that you have jettisoned an underachiever stock and have freed up that dead money to put to better use elsewhere. Take your losses ruthlessly, put them out of mind and don't look back, and turn your attention to your next trade.

The Dow opened Friday at six-year closing low and down 47% from its all-time high. Following the path of international markets, the index declined early Friday, trading as low as 7328 before rebounding a bit; in recent trading, the Dow was down 1% at 7395.
With the November closing and intraday lows now having been breached, the next major resistance level for the Dow is its Oct. 2002 low of 7286; falling below that would put the index at an 11-year low.

Faced with those grim realities, long-term "buy and hold" investors are now understandably asking: Is it too late to sell?

The answer, of course, depends a lot on your time horizon and risk tolerance. The stock market is now at "fair value" based on the S&P 500's long-term cyclically adjusted P/E ratios, but history suggests major averages will far further before this bear market ends.

How much further remains to be seen, but signs of "capitulation" do not preclude further losses; from 1929-1932 the Dow lost 90% of its value and Japan's Nikkei today is more than 80% below its January 1990 peak

Source Aaron Task

MALAYSIA STEEL WORKS (KL) BHD reported that pre-tax profit surged to RM85.717 million for its financial year ended December 31, 2008, from RM46.179million the previous year. Its revenue rose to RM881.223 million from RM547.972 million previously.

Muhibbah is well known for being a leader in Marine Construction; since its incorporation in 1972. Today, Muhibbah also stands firm in the various discipline of Engineering Construction, both locally and internationally.


Discussion in the chat box on Muhibbah (please read from the bottom)

16 Feb 09, 17:32
kum moh: i do not know.

16 Feb 09, 17:32
chor ko: kum moh, do u think muhibbah is one of the govt's subsidiary stock??

16 Feb 09, 17:28
jean: thanks kum moh... that's TA!

16 Feb 09, 17:27
kum moh: Muhibbah Engineering (5703.KU) flat at MYR1.03 in moderate volume, continues to hover in bullish "Ascending Triangle" formation dating back to October 2008, says CIMB. Notes stock holding support at trend line since last week, may continue to rise toward upper boundary of Wedge (MYR1.14) in coming days. Says Stochastic has already made bullish crossover while MACD poised to turn bullish. Adds RSI hooked down recently but still in neutral territory; investors may want to accumulate on weakness; pegs resistance at MYR1.09, next at MYR1.19. "Cut loss if it breaks below MYR1.00 (psychological); next support weaker at 94.5 sen. Muhibbah Engineering provides civil, marine and structural engineering contract works through its subsidiaries. (VGB)

16 Feb 09, 17:27
kum moh: cimb also agree with you.

16 Feb 09, 17:25
jean: sensen, yaa i agreee with you.

16 Feb 09, 17:25
sensen: my sen..dun u think so? jean?

16 Feb 09, 17:24
jean: sensen... so u agree muhibbah is going up??

16 Feb 09, 17:22
sensen: muhibah is tight but not tight for down la, that oso cannot see? what charting?

16 Feb 09, 17:22
jean: hehe why not do some homework... and discuss about muhibbah tonight?

16 Feb 09, 17:21
kum moh: kum moh IS not gila.

16 Feb 09, 17:21
kum moh: gila wrong way, you go gila without money.

16 Feb 09, 17:20
kum moh: but it must gila in your way.

16 Feb 09, 17:20
Adosco: wakakakakakakaka..kum moh

16 Feb 09, 17:20
jean: but looking at the vol... its to up?

16 Feb 09, 17:20
kum moh: means if gila one can make money.

16 Feb 09, 17:20
jean: but as kum moh said... it could go either way...

16 Feb 09, 17:20
Adosco: BB belom expand

16 Feb 09, 17:19
Adosco: wat does it mean???

16 Feb 09, 17:19
jean: adosco... can see or not... muhibbah is still tight

16 Feb 09, 17:19
Adosco: today closing dn

16 Feb 09, 17:19
Adosco: tq jean....friday's vols gila meh

16 Feb 09, 17:18
kum moh: not gila for me.

16 Feb 09, 17:16
jean: why kum moh?

16 Feb 09, 17:16
kum moh: maybe my eyes is gila.

16 Feb 09, 17:15
kum moh: my gila chart telling me muhibbah is tight.


16 Feb 09, 17:11
jean: adosco... if muhibbah is involved in the water deals, isn't it good to invest in muhibbah?

16 Feb 09, 17:08
Adosco: tat one bcos of the water deals

16 Feb 09, 17:06
jean: kum moh yaa can ca see why?...but chart doesn't lie...

16 Feb 09, 17:06
kum moh: some not too gila people think run on construction.

16 Feb 09, 17:05
kum moh: last friday gamuda went gila.

16 Feb 09, 17:05
jean: muhibbah i mean

16 Feb 09, 17:05
jean: adosco...yaa tight!!

16 Feb 09, 17:04
jean: true... but why the exceptional high vol last friday??

16 Feb 09, 17:04
Adosco: jean tight???

16 Feb 09, 17:03
kum moh: it can go gila either way.

16 Feb 09, 17:03
jean: kum moh muhibbah BB has been squeezed tight

16 Feb 09, 17:02
Ah Seng: kum moh, muhibbah no chance to be gila?

16 Feb 09, 17:01
kum moh: i see on dow jones cimb say got chance to gila to 114. now that's gila.

16 Feb 09, 17:00
kum moh: got chance to be gila?

16 Feb 09, 17:00
kum moh: why muhibbah?

16 Feb 09, 16:56
jean: it could also mean those who has insider news has collected!!..

16 Feb 09, 16:55
Adosco: jean then if tat the case better dont touch lor

16 Feb 09, 16:50
jean: adosco...cash product means quota for MBB clients has been taken up..

16 Feb 09, 16:49
recoup: adosco, yes

16 Feb 09, 16:49
Adosco: cash upfront meh recoup

16 Feb 09, 16:49
Ah Seng: big player reading our chat box le

16 Feb 09, 16:48
Ah Seng: see the q at 101...after ah seng post the chart hahaaa

16 Feb 09, 16:48
recoup: muhibbah classified as cash product in mbb, cannot buy unless use cash account

16 Feb 09, 16:47
Adosco: muhibah=range strategy

16 Feb 09, 16:47
ha: but long time i heard

16 Feb 09, 16:46
ha: insider news

16 Feb 09, 16:45
ha: muhibah only can go in around 0.8-0.9

16 Feb 09, 16:44
Adosco: try...RM1 .00 SUPPORT level have been holding quite well for quite sometime...but the problem is since then the stock not making much progress

16 Feb 09, 16:44
TRY: seng, what price you think can go in?

16 Feb 09, 16:43
Ah Seng: zen, not yet

16 Feb 09, 16:42
zen: seng kor, u got bot muhibah?

16 Feb 09, 16:41
Ah Seng: TRY, monthly chart http://img23.imageshack.us/img23/6407/2009febmuhibah640x689sm4.png

16 Feb 09, 16:34
TRY: thanks seng... can be considered...below RM1.

16 Feb 09, 16:33
Ah Seng: TRY, Credit Agricole Asset Management S.A (538,100 Shares Disposed) has been disposing muhibbah since late november08 but epf and tabung haji has been collecting ever since

16 Feb 09, 16:27
Ah Seng: try, well supportted at around 99

16 Feb 09, 16:24
TRY: @seng, what is the support?

16 Feb 09, 16:17
Ah Seng: TRY, http://img18.imageshack.us/img18/9960/2009febmuhibah640x689nw3.png

16 Feb 09, 16:12
TRY: anyone on muhibah, any chart ?

Company Profile


Scomi Group Bhd, a global service provider mainly in the oil and gas industry, is a company listed on the Main Board of Bursa Malaysia. Achieving turnover of RM1.58 billion or USD447 million in 2006; Scomi employs over 4,800 employees at 65 locations in 36 countries.

Scomi was listed on 13 May 2003 on the Second Board of Bursa Malaysia. It was transferred to the Main Board just a year later on 13 May 2004. As at 10 September 2007, Scomi has a total of 1.018 billion shares of RM0.10 each with an authorised share capital of RM300 million and paid up share capital of RM101.8 million.

Other public listed companies within Scomi Group are Scomi Engineering Bhd and Scomi Marine Bhd which are listed on Bursa Malaysia, and PT Rig Tenders which is listed on Jakarta Stock Exchange.

Scomi’s ability to harness the synergies between its varied businesses has seen it transform itself to become an integrated solutions provider in niche markets. Scomi’s subsidiary and associate companies are involved in the following wide range of activities worldwide:

Oilfield Services, which comprises integrated drilling fluids and drilling waste management solutions; OCTG machine shops and distribution of oilfield products and services.

More on Scomi ===> Scomi Group Berhad

Six Lessons for Investors
Be diversified and don't assume past performance will continue
By JOHN C. BOGLEJanuary 8, 2009

There is almost no limit to the ability of investors to ignore the lessons of the past. This cost them dearly last year. Here are six of the most important of these lessons:

1. Beware of market forecasts, even by experts.

As 2008 began, strategists from Wall Street's 12 major firms forecast the end-of-the-year closing level and earnings of the Standard and Poor's 500 Stock Index. On average, the forecast was for a year-end price of 1,640 and earnings of $97. There was remarkably little disparity of opinion among these sages.

Reality: the S&P closed the year at 903, with reported earnings estimated at $50.
Strategists aren't always wrong. But they have been consistent, betting year after year that the market will rise, usually by about 10%. Thus, they got it about right in 2004, 2006 and 2007, but also totally missed the market declines in 2000, 2001 and 2002, and vastly underestimated the resurgence in 2003.

Ignore the forecasts of inevitably bullish strategists. Bearish strategists on Wall Street's payroll don't survive for long.

2. Never underrate the importance of asset allocation.

Investing is not about owning only common stocks. Nor are historical stock returns a sound guide to future returns. Virtually all investors should keep some "dry powder" in their portfolios in the form of high-grade short- and intermediate-term bonds. Investors who failed to learn that lesson fell on especially hard times in 2008.
How much in bonds? A good place to start is a bond percentage that equals your age. Although I don't slavishly adhere to that rule, my bond position accounted for about 65% of my personal portfolio in early 2000. Because returns on my bond funds since then have totaled 50% and returns on my stock funds were negative 25%, bonds are now about 75% of my portfolio, still close to my advancing age.

With all the focus on historical returns that greatly favor stocks, don't ignore bonds. Consider not only the probabilities of future returns on stocks, but the consequences if you are wrong.

3. Mutual funds with superior performance records often falter.

Last year was an extreme example. With the S&P 500 off 37% for the year, Legg Mason Value Trust fell by 55%. Fidelity Magellan Fund, after a good 2007, was off 49%. Funds managed by proven long-term pros felt the pain -- Dodge and Cox Stock down 43%; Third Avenue Value down 46%; CGM Focus down 48%; Clipper down 50%; Longleaf Partners down 51%. (Full disclosure: Four of Vanguard's actively-managed equity funds also lagged the market by wide margins.)

Only time will tell whether the disappointing shortfalls experienced by these and other funds will be recovered in the future, whether the skills of their managers have atrophied, or whether their luck has run out. Whatever the case, chasing past performance is all too often a loser's game. Managers of funds seeking market-beating returns should make it clear to investors that they must be prepared to trail the market -- perhaps substantially -- in at least one year of every three.

4. Owning the market remains the strategy of choice.

Such a strategy guarantees a return that lags the market return by a minuscule amount, and exceeds the return captured by active equity-fund managers as a group by a substantial amount. Why? Because the heavy costs incurred by investors in actively managed equity funds can easily amount to 2% to 3% annually. Typical expense ratios run from 1% to 1.5%; the hidden costs of portfolio turnover often come to 0.5% to 1.0%; a 5% front-end sales load, amortized over a holding period of five to 10 years, adds another 0.5% to 1.0% per year in costs.

As a group, investors are by definition indexers. (That is, they own the entire market.) So indexing wins, not because markets are efficient (sometimes they are, sometimes they are not), but because its all-in annual costs amount to as little as 0.1% to 0.2%.

Indexing won in 2008 by an especially wide margin. Low-cost, low-turnover, no-load S&P 500 index funds outpaced nearly 70% of all equity funds, and (admittedly a fairer comparison) more than 60% of all funds focused on large-cap U.S. stocks. This continues the pattern -- with some variations -- that goes back to the start of the first index fund 33 years ago. The bond index fund did even better. Its return of 5% for 2008 outpaced more than 80% of all taxable bond funds.
In sum, active management strategies as a group lose because they are expensive. Passive indexing strategies win because they are cheap.

5. Look before you leap into alternative asset classes.

During 2006-07, equity mutual funds focused on developed international markets and emerging markets provided strong relative returns to U.S. stocks. During that period, U.S. investors made net purchases of $285 billion in mutual funds investing in non-U.S. stocks, and liquidated on balance some $35 billion from funds focused on U.S. stocks.

This extreme example of "performance chasing" at its worst is hardly defensible. But, disingenuously, it was touted by fund marketers as adding "non-correlated assets," or "reducing volatility risk." In 2008 -- with non-U.S. developed market funds falling by 45% and emerging market funds tumbling by 55%, we learned once again that, just when we need it the most, international diversification lets us down.

Commodities were no different. As the global recession developed, commodity funds sank, the largest such fund tumbled 50%. Always keep in mind: When the investment grass looks greener on the other side of the fence, look twice before you leap.

6. Beware of financial innovation.

Why? Because most of it is designed to enrich the innovators, not investors. Just think of the multiple layers of fees to the salespersons, servicers, banks, underwriters and brokers selling mortgage-backed debt obligations. These new products (credit default swaps are another example) enriched their marketers during 2005-07, only to impoverish the clients who held them in 2008.

Our financial system is driven by a giant marketing machine in which the interests of sellers directly conflict with the interests of buyers. The sellers, having (as ever) the information advantage, nearly always win.

We can't say that we haven't been warned about the perils of ignoring the past. More than 2,000 years ago, the Roman orator Cato noted that, "there must be a vast fund of stupidity in human nature, or else men would not be caught as they are, a thousand times over, by the same snares . . . while they yet remember their past misfortunes, they go on to court and encourage the causes to what they were owing, and which will again produce them."

While the events of 2008 reinforced that message, perhaps these stern and oft-repeated lessons of experience will help investors avoid similar mistakes in 2009 and beyond.

Mr. Bogle is the founder and former chief executive of the Vanguard Group of Mutual Funds. His newest book, "Enough. True Measures of Money, Business, and Life," was published by Wiley in November.

Notice: This site and its methodology work best for those people that can act promptly and without hesitation executing the golden rules and general notes listed below. It is also for those that are preferably on real-time quotes. Many stocks are listed in the nightly newsletter and only those that move quickly, on heavy volume, through the trend lines and buy points, should be considered.

In addition to these 10 rules, please see notes below: And if you are new to trading or investing please see the paragraphs with the * at the bottom.

1. Make sure the stock has a well formed base or pattern such as one described on this web site and can be found on the tab "Understanding Chart Patterns" on the home page, before considering purchase. Dan highlights stocks with these patterns in his newsletter.

2. Buy the stock as it moves over the trend line of that base or pattern and make sure that volume is above recent trend shortly after this "breakout" occurs. Never pay up by more than 5% above the trend line. You should also get to know your stock's thirty day moving average volume, which you can find on most stock quote pages such as eSignal's quote page.

3. Be very quick to sell your stock should it return back under the trend line or breakout point. Usually stops should be set about $1 below the breakout point. The more expensive the stock, the more leeway you can give it, but never have more than a $2 stop loss. Some people employ a 5% stop loss rule. This may mean selling a stock that just tried to breakout and fails in 20 minutes or 3 hours from the time it just broke out above your purchase price.

4. Sell 20 to 30% of your position as the stock moves up 15 to 20% from its breakout point.

5. Hold your strongest stocks the longest and sell stocks that stop moving up or are acting sluggish quickly. Remember stocks are only good when they are moving up.

6. Identify and follow strong groups of stocks and try to keep your selections in the these groups

7. After the market has moved for a substantial period of time, your stocks will become vulnerable to a sell off, which can happen so fast and hard you won't believe it. Learn to set new higher trend lines and learn reversal patterns to help your exit of stocks. Some of you may benefit from reading a book on Candlesticks or reading Encyclopedia of Chart Patterns, by Bulkowski.

8. Remember it takes volume to move stocks, so start getting to know your stock's volume behavior and the how it reacts to spikes in volume. You can see these spikes on any chart. Volume is the key to your stock's movement and success or failure.

9. Many stocks are mentioned in the newsletter with buy points. However just because it's mentioned with a buy point does not mean it's an outright buy when a buy point is touched. One must first see the action in the stock and combine it with its volume for the day at the time that buy point is hit and take keen notice of the overall market environment before considering purchases.

10. Never go on margin until you have mastered the market, charts and your emotions. Margin can wipe you out.

Note: If you are new to trading or investing, I suggest reading these rules many times over until they become ingrained so you can act without emotions.

Stocks that breakout and move up with tremendous volume and close near the highs of the day seem to work out best. However many stocks that move up 15% or more on breakout day often fail. You'll just have to watch your stock's action like a hawk and get to see and understand these things over a long period of time. If trading were easy everyone would be making millions. It's not; it takes years and years of hard work and long hours.

Many traders employ a half hour rule, meaning that for the first half hour of the day many traders do not buy any stock that gaps up in price. If the price holds after the first half hour then often many traders will step in a buy the stock. I find this rule works good after the market has moved up for few strong weeks and is not very effective at the start of a new strong move.

If it's earnings season then it's an absolute must that you know the date that your company reports its earnings. Many traders prefer to be out 100% before a company reports its earnings in case the company misses its earnings or guides lower. Others I know reduce positions substantially before earnings are released to lower risk. The choice is up to you. You can see an earnings calendar on this web site by clicking on the icon Useful Stock Recourses. Please verify this information by calling the company or visiting the company's website which you should be able to find in any search engine.

*The market moves in waves that can last anywhere from weeks to months. Then a correction or setback starts, which can last anywhere from 5 to 8 weeks or even as long at 4 to 6 months. If you are starting a free trial and are a novice you may be lucky to join just as the market gets underway, in which case you will see the full power of charting. If however you start after the move has been going for sometime then things won't look as good as traders are paring down positions. Or even worse the market could be selling down hard and working off the prior up move in which case you will be completely discouraged. The power of charts is through waiting for the correction to end whereby the chart patterns will then be fully developed. After weeks of base or pattern building, stocks will begin to lift off and that's when the big rewards come in. The question is, are you willing to wait and be here for the start of the next big move? The biggest mistake a novice can make is to come back after a move has started.

*Please read a few times my interviews in Stocks and Commodities and Traders' Magazine at the top of the home page of this web site. There are many tips and how - to's that will greatly improve your ability to understand how this works.

More good comments can be found in the FAQ section of this web site in the member login area.

I give setups of stocks that are ready to potentially move. That's my job. Your job is to get to know the stock and its movement along with the general market each day. You are the only one that can do this in realtime during market hours. Then if a stock acts well (i.e. volume is very heavy and the stock is moving easily out of the base) then that is the one to buy. I do not buy most stocks that breakout as most do not meet my heavy volume/price action behavior during the day. Also, I buy only the most expensive stocks as the percent loss is least if the stock pattern fails. High priced stocks are the best quality stocks as a general rule in playing the market. Remember to buy as close to the trendline as possible and the volume should come in at least 10 to 20 minutes after you buy (or even earlier) and if not by then, you know no one wants the stock and might as well check out early.

Thanks, Dan

I spent this past weekend shelling out big bucks for one of those mammoth, motorized people transports you and I call an SUV.

Boy, this sucker is huge!

As I sat in my new (used) car, images of scaling mountains and crossing desert terrains filled my imagination. Hill climbing, rock climbing, mountain climbing, here I come! And then… a tap on the shoulder. The salesman awoke me from my vegetative state of drooling to show me the final all-in purchase price.

Wow! Sticker shock!

The images of grandeur disappeared and now all I could see were all the numbers followed by commas and more numbers and numbers… what a “huge” purchase this turned out to be! No matter what, whether a five dollar roll of toilet paper or a new car, I always feel buyer’s remorse (regret) when making a purchase.

Trading can be very similar. We put our money (real or demo) on the line in the pursuits of financial gain and happiness. Our trades are placed plentiful when the potential for profit is there, and we scurry away with lightning speed when the crowd starts selling off in great numbers. “Hurry, everybody out!”

We don’t want to be stepped on or left behind, right? So with the slightest unforeseen movement, the masses fear the worst is imminent. They get out as fast as they can, and we, of course, follow. This fear (and greed for some) becomes a controlling emotion, dictating their trading decisions and behavior. Just as powerful an emotion as fear and greed is regret.

Regret is similarly controlling in that it can keep us from placing a trade because we don’t want make a mistake. We undoubtedly want to feel good about our decisions and strategies. In our attempt to do feel this way, we find it more painless to steer clear of making a trade all together, avoiding any risk of failure. Taking this mindset of avoidance, however, will definitely not lead us to the potential for profits that we seek.

Regret comes about after we make a decision and we then start picturing the things that could have gone differently. When trading, regret is an easy feeling to have because it can occur both when making a move or when doing absolutely nothing. For instances, you open a trade with the best intentions, only to have it stop out for a loss of your entire account balance. You automatically feel regret for ever taking the position and now being poor.

On the other side of the coin, you don’t take a position because you’re allergic to risk. Your missed opportunity turns out to be the trade of the century, and it would have made you a gazillionaire! Arrrgghh! You seep into a state of utter regret.

For both examples, it’s easy to imagine the could-have-beens. We envision ourselves in those “winning” realities and how everything is so heavenly. But then we come back to Earth where things are definitely not paradise.

We have all experienced the pleasantries of regret (**wink**), but they can actually be good for us. Sometimes regret can give us that extra kick in the ribs to get off the floor and back on our feet. It compels us to get right what we initially did wrong; it can promote action.

Maybe you’ve been driving around in a monster truck SUV like me, consuming Mother Nature’s resources non-stop. Gas prices have hit an all-time high, and all of your closest friends are active members in Greenpeace. You regret ever buying that hunk of junk and not listening to your buddies. So, you trade in your SUV for an energy-efficient hybrid Toyota Prius and send in your membership dues to GP. And just like in trading, when the going gets tough and you lose yet another trade, instead of crying in the corner of your bath tub, the response to your mistake is too reevaluate your strategy and the market. You do more testing and try your skills on another new trade. You want that losing trade back!

In the last example, we used the regret we felt for our errors to motivate and encourage ourselves to try again. Taking this new perspective when things don’t go as plan will have a positive impact on your mental attitude and your trading as a whole. Don’t get hung up on the loss. Forget about it and move on!

That said, some traders have an issue with feeling regret even before a trade is made. No action has been taken, but you worry starts to consume the mind, and all they can think about is making a mistake. In this instance, the possibility of a regrettable outcome is stopping them from acting. To help, we must remind ourselves that it isn’t the end of the world and that there’s still time to fix what’s not working. We can’t change our past trades but we can definitely make new ones to take those profits back.

Again, the key here is action; the point is to make the trade. Don’t let regret hold you back from progressing by means of action. And remember, not all risk is bad; Taking risks that are minimal and calculated are integral to growing into a successful trader.

Most investors tend to agree that the decision to sell a stock is one of the most difficult to make. Sometimes it is more difficult to decide when and what to sell than to buy. Ever wondered why?

* People tend to sell winners too soon and hold on to losers too long

You will find that regardless of whether the market is running hot or is coming down, there are still a lot of people out there who either sell their stocks too early only to realize that the prices continue to soar, or hold on to losers for too long only to see them continue to bleed further.

From a behavioural finance standpoint, this phenomenon is held by Hersh Shefrin and Meir Statman (1985) as the "disposition effect". This was discovered from their research entitled, "The disposition to sell winners too early and ride losers too long: theory and evidence".

Based on research, individual investors are more likely to sell stocks that have gone up in value, rather than those that have gone down. By not selling, they are hoping that the price of the losers will eventually go back to their purchase price or even higher, saving them from experiencing a painful loss.

In the end, most investors will end up selling good quality stocks the minute the prices move up and hold on to those poor fundamental stocks for the long term, while the performances of these stocks continue to deteriorate.

* People tend to forget their original objectives

In stock market investment, there are two types of investment activities, trading versus investing. Trading means "buy and sell" while investing means "buy and hold". The stock selection criteria for these two types of activities are entirely different.

Most of the time those involved in trading will choose stocks based on factors which will affect the price movement in short term, paying less attention to the companies' fundamentals whereas those involved in investment will go for good quality stocks which are more suitable for long-term holding.

However, you will find that many people get their objectives mixed up in the process. They get distracted by external factors so much so that some panic when the market goes in the direction that is not in line with their expectation, and as a result, end up selling the stocks that they find too expensive to buy back later.

On the other hand, some force themselves to change the status of the stocks that were originally meant for short-term trading into long-term investment as they are unable to face the harsh fact that they have to sell the stocks at a loss, even though they know that the stocks are not good fundamental stocks that can appreciate in value.

So, when to sell then?

There are few different schools of thoughts on this. Based on the advice from the investments gurus, like Benjamin Graham, Warren Buffet and Philip Fisher, when you buy a stock, you need to make sure that you understand the companies that you are buying, and these are good fundamental stocks, which will provide good income and appreciate in value in long term.

Therefore, you will be treating your stock purchase as a business you bought, which is meant for long term. You should not be affected by any temporary price movement due to overall market volatility.

You will only consider selling the company if the growth of the company's intrinsic value falls below "satisfactory" level or you find out that a mistake was made in the original analysis as you grow more familiar to the business or industry.

However, if you find that your investment portfolio is highly concentrated on one single company, then you might want to consider diversifying your portfolio and lowering your risk.

Any single investment that is more than 10 per cent to 15 per cent of your portfolio value should be reconsidered no matter how solid the company performance or prospect is, suggested Pat Dorsey of Morningstar.

Last but not least, if you find that by selling the stock, you can invest the money in a better option, then that is a good reason to sell.

In summary, successful investing is highly dependent on your self-discipline, taking away the emotional factors and not going with the crowd. It should always be backed by sound investment principles.

Always remember there is no short cut in investment, only hard work and patience.

Securities Industry Development Corp, the leading capital markets education, training and information resource provider in Asean, is the training and development arm of the Securities Commission. It was established in 1994 and incorporated in 2007.

SOURCE

Wah Seong Corporation Berhad is an international oil & gas service group headquartered in Kuala Lumpur, Malaysia. It is listed on the Main Board of the Malaysian Stock Exchange (Bursa Malaysia) with a market capitalisation of more than RM1.5 billion.

The Group, which was originally founded in 1994, has grown from being a mid-sized Malaysian enterprise to a major Asian oil & gas group with the largest part of its revenue earned overseas.

Through its recent internal corporate restructuring, Wah Seong’s businesses have been organized into two main divisions. Under the new structure, Wasco Energy Limited was formed to represent the oil & gas division, which has four key business units:

• Specialized Pipe Coating and Corrosion Protection Services
• Pipe Manufacturing
• Process Equipment –Engineering and Fabrication
• E&P Products and Services

The non-oil & gas division which has been renamed as the Industrial Services Division has two main business units which are:

• Infrastructure / Building Materials
• Agro-based Engineering

With the continuous expansion of its business, Wah Seong ensures internationally recognized Quality, Health, Safety and Environment (QHSE) standards at each of its operations around the world. This is to guarantee that its community is safe on the job and its environment is protected.

Wah Seong currently has global presence and offers services and products across Asia Pacific, the Middle East, Africa and the Americas with facilities and companies in Malaysia, Singapore, Indonesia, Australia, China, India, U.A.E., Saudi Arabia, Nigeria and the U.S.A.

Wah Seong Corporation Berhad - The Global Commitment to Excellence.



Ticker from Waseong Official Website ==> Here

The Kencana Petroleum Group is an established provider of integrated engineering and fabrication services for the oil & gas industry. We undertake engineering and fabrication of production facilities, modules and process skid system; EPCIC and support services; as well as specialized fabrication.

For Information on Kencana ==> Kencana

by Dr. Pipslow

It's easy to get caught up in daily defeats. Your trading strategy isn't working. You're losing money hand over fist even though you know your system works and you're following all the rules.

If you aren't careful, you could get discouraged and feel like giving up. When you aren't making the profits you desire, you could end up feeling like a failure, thinking you'll never make it as a trader.

When you are discouraged by everyday setbacks, it's crucial to keep your eye on the big picture. You could be losing a battle here and there, but you may end up winning the war.

Many traders make the mistake of letting their feelings of worth be determined by everyday trading results.

You think, "If I make profits today, and every day this week, I'm doing well. But if I end up losing most days, then I'm doing horrible!."

This kind of thinking is based on how people view compensation for a conventional 9-to-5 job. You put in your 40 hours, do a good job, and you get paid handsomely. You feel good for working diligently and productively for the week.

But when you trade, you may not always receive sufficient compensation for your efforts. When you don't reach the profit goals you set, you can feel as if you didn't get paid enough for your efforts.

It's going to be tough, but as a trader, you must avoid thinking in these conventional terms. An extremely productive week may produce ZERO profits. When you are trying to achieve a certain level of income in a given timeframe, you are setting "performance goals" that you may not be able to achieve.

A better kind of goal to set is a "learning goal."

You may not be able to achieve a particular performance goal during a given week; that is, you may not always be able to achieve a particular dollar amount, but you can achieve a particular learning goal.

Every day you trade, you gain valuable experience regarding how you approach the markets. You see various setups and learn how they can or can't lead to a profitable trade. Don't undervalue these learning experiences.

Every day, you are achieving learning goals. Your daily efforts may not directly lead to profits, but indirectly, they do add to your wealth of experiences. You may only win a battle here and there, but when you add up the battles you do win, over the long haul, you end up mastering the markets, and winning the war in the end.

If you merely focus on how much money you make as a trader, and use a conventional payment schedule, you'll work your butt off but fail to get the conventionally defined "paycheck" you expect, and feel ripped off. But if you define your paycheck in unconventional terms as the amount of experience you gained, you'll feel rewarded for making a series of trades, profitable or not, and feel you've accomplished something.

And regardless of how much money you actually make, you will have indeed accomplished something: You will have further honed your trading skills.

In the big scheme of things, winning these minor battles will help you win the war. You'll master the markets and become a winning, profitable seasoned trader.