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SoundGlobal: Breaking out of resistance.

Friday, December 7, 2012


I last added to my long position at 49.5c on 5 November 2012. For the reasons why I added to my long position then, please see my last blog post on the company.

Today, Sound Global's share price broke resistance and formed a long white candle on relatively high volume. A long upper wick was formed towards the end of the session. This tempers the bullish picture somewhat.



On the daily chart, the positive divergence which was spotted earlier is playing out. So, we had an early indication of a possible uplift in share price. Therefore, it should not surprise us that resistance was finally taken out although it was anyone's guess when it was to happen.



On the weekly chart, the MACD, a pure price momentum oscillator, looks to be on the verge of a bullish crossover with the signal line in negative territory. A rebound in price could meet with resistance presented by the flat 50w MA at 56c and the declining 100w MA which is currently at 60c.

Now, whether the counter's share price is able to finally form a higher high is anyone's guess although the higher lows formed in the MACDs of both the daily and weekly charts are very encouraging.

Fundamentally, SoundGlobal's valuation is undemanding. Technically, it does seem as if its share price has bottomed although we cannot say that for sure until a higher high in price is seen.

Related post:
SoundGlobal: Smart money is buying.

China Minzhong: Gap down black candle day.

Thursday, December 6, 2012

China Minzhong's share price gapped down today and formed a long black candle on the back of very high volume.

Apparently, "one party sold 57.23 million shares at S$0.80 each.

"A trader said one of China Minzhong's shareholders had sold its entire stake in the company through a private placement.

"According to Thomson Reuters data, Olympus Capital Holdings Asia, is the company's third largest shareholder, with 57.23 million shares or a 10.3 per cent stake.

Franklin Templeton Investments Corp is the second largest shareholder with a 12.2 per cent stake, or 68.13 million shares." (Source: REUTERS, 6 Dec 12.)

I do not know why the investor decided to sell especially when the fundamentals of the company have been improving. However, if there is no material deterioration in fundamentals, this correction is an opportunity to accumulate shares of the company cheaper.

Technically, the negative divergence between the share price and MACD is playing out. So, it is not as if we didn't get some kind of warning. However, the intensity of the decline has been stunning.


I decided to draw a Fibo Fan and it is interesting to see how nicely the 38.2% Fibo line approximates the rising 100d MA. 38.2% is a golden ratio but with such a high volume sell down today, we could see persistent weakness tomorrow. If immediate support should be compromised, then, we could see a test of the next two golden ratios of 50% and 61.8% for support.

Related post:
China Minzhong: Accumulate on weakness.

Inflation is not going away.

Between inflation and deflation, governments would rather have the former. However, if inflation remains elevated over a prolonged period, then, we will have problems aplenty.

I am not an economist and this is not going to be an economic essay. This blog post is inspired by a report by Bloomberg which says how elevated inflation in Singapore is persistent and unlikely to go away. The repercussions are real and grim.



As the negative effects of inflation would affect middle to lower income earners more than the rich, it is even more urgent that we do something to at least protect our wealth.

Sections from Bloomberg's report:

Singapore is grappling with the elevated inflation that comes with years of economic growth and population expansion on an island smaller than New York City, with rising demand fueling record property and car prices.

Singapore has the highest inflation rate among 27 economies with GDP of at least $100 billion and classified by the International Monetary Fund as advanced. The island’s inflation has exceeded 4% every month but one since November 2010, more than double the 1.9% average in the past two decades.

Singapore, which uses the exchange rate to manage inflation, unexpectedly refrained from slowing the pace of its currency’s appreciation in its October policy review even after the economy contracted last quarter. The Singapore dollar’s 6.4% gain this year has done little to damp inflation stemming from domestic price pressures.
Higher car and property prices and the measures to tighten rules on hiring overseas workers are driving up the “overall cost structure” of the economy, spurring inflationary pressures that are a result of “self-imposed” policies, according to DBS Group Holdings.

I have shared my thoughts on wealth creation here on a regular basis. We want to grow our wealth but for many, taking the step to at least protect their wealth from being eroded by inflation would be significant and, in certain cases, it would be quite an achievement. All of us have different circumstances, after all.

It is more important now than ever before that we make sacrifices and put in place plans to secure our financial future in a world that is increasingly uncertain. People who still think Singapore will continue to do well simply because we are in Asia, the future global growth engine, should hedge their positions. Things could get worse.

Read Bloomberg's report: here.

Related posts:
Go to the right side bar and look for the box with the label "Wealth Creation: Beating inflation" for my earlier blog posts on the topic.

Don't build traps for ourselves. (FKA "The worst type of readers.")

Wednesday, December 5, 2012

We might have all heard of the saying that "no publicity is bad publicity". 

Well, it is generally for people in the entertainment industry since anyone who wants more people to recognise them and be aware of them would "benefit" from all forms of publicity.

After photos of his sexual escapades were made public, Edison Chen was able to land a deal with Carl's Jr. to be their spokesperson for the launch of their "Thick Burger" in Asia! 

What a boon from his indiscretion!





Well, in the last two days, off the top of my head, traffic to my blog increased by some 25 to 30% because of an edited version of an old blog post of mine appearing in Yahoo! Finance Singapore.

I am still trying to fathom if this is good news or bad.

Follow the link to Yahoo! Finance Singapore and you will see tens of comments and almost all are negative. 

Many are downright rude while most are dismissive. 

So, this is bad, isn't it?

I cannot draw the conclusion that it is bad because none of these negative comments appeared in my blog. 

So, the writers of the negative comments probably did not visit my blog at all. 




They made assumptions and passed judgement based on one edited version of an old blog post of mine.


Then, what about all the traffic that Yahoo! Finance Singapore sent me? 

These are probably people who are more open minded and who bothered to find out more about me and my ideas. 

So, this should be good, right? 

The willingness to find out more could be the first step to a new journey.

After blogging for almost three years, I have encountered many types of people. 

There are many who are appreciative of what I have done although I am not sure that I am all deserving. 

There are also rude ones who called me names and even questioned my motives. 

I am very sure I don't deserve such treatment. 





However, these are not the worst. 

Not the worst?

I believe the worst are those who pretty much dismiss what I have shared to be fairy tales.

The worst are those who think that I am a prolific fiction writer and that my claims that people can escape wage slavery are spurious.

Actually, for those sceptical readers of the edited version of that particular blog post of mine in Yahoo! Finance Singapore, if they would only make the effort to visit my blog and read the unedited version including the comments left by some readers, they would be able to appreciate how it is all possible.





A life with greater financial security for any regular wage earner who is not disadvantaged in any way is possible.

Often, the traps we find ourselves in are built by ourselves.










 

Related posts:
1. Article published in Yahoo! Finance Singapore.
2. Do you want to be richer?
3. Wage slaves should be fearful.
4. ASSI is an affiliate of BetterWorldBooks.

Buy gold and silver as insurance.

Tuesday, December 4, 2012

Anyone who is regularly reading news on personal finance would have come across articles on why gold and silver prices are set to rise even higher. Marc Faber and Jim Rogers, both people I respect, are just two prominent figures who have put forth compelling reasons to own some gold and silver.


Personally, when I started this blog, I also wrote about the real value of gold and why silver would be a better buy than gold after I researched the gold:silver ratio. I started a separate blog on the precious metals later on because I want to concentrate on blogging about investing for income here at ASSI.

We just have to do a quick check online to see how much the prices of gold and silver have appreciated since I started blogging three years ago to see how well anyone who invested in these metals have done in that time.

My current attitude towards buying physical gold and silver is like my attitude towards paying for insurance. To own physical gold and silver is an insurance against the inherent flaws of fiat currencies. Just like how we put aside a certain sum of money annually to pay for our insurance policies, I believe that setting aside 5% of my annual income for the purchase of gold and silver as insurance is not too much.

So, am I saying that I do not buy gold and silver now with the hope of making more money in S$ terms? Well, if we think of gold and silver as a form of money, then, buying gold and silver in the hope of making more money in our home currency is like forex trading. It would make more sense to trade in paper gold and silver then.

Buying physicals would be more suitable for anyone with a crisis mentality.

I am posting this article here in ASSI instead of my blog on the precious metals because the latter's readers are probably conversant with the reasons why we should be in precious metals. I want to reach out to readers here in ASSI who might not have any position in the precious metals yet.

Let me guess. Some of you are probably wondering if it is a good time to buy now. Well, if we believe in the thesis that the precious metals are set to rise much more in price over the next few years and if we are holding them as insurance instead of trading them for short term gain, the question becomes less important.

Technically, there is some near term weakness and if we want to wait to buy lower, a 5% correction in price could see buyers returning. Remember, however, that technical analysis is all about probability, never certainty. It never hurts to hedge.

Related posts:
1. Silver bullion coins.
2. Gold and silver: Important assets to own.
3. Gold or silver?
4. Silver: Some views.
5. Silver: Weekly chart.

Olam: Renounceable Underwritten Bond-Cum-Warrant Rights Issue.

Monday, December 3, 2012

Olam, in response to Muddy Water's claims, said that they "have more than enough capacity to meet ... repayment obligations of S$1.5 billion in the next 12 months, as well as ... likely capex of S$1-1.25 billion in the same period" and that "without raising any further debt (they) can easily meet ... debt repayment obligations and pursue ... planned Capex, in addition to meeting the on-going working capital needs." Then, why are they issung bonds-cum-rights now?

This reminds me of CitySpring Infrastructure Trust's claim a few years ago that they did not have to issue rights and that people who said they had to didn't understand their business. It could also be a coincidence that Sunny Verghese was also the chairman of CitySpring Infrastructure Trust then.

Each 1,000 shares owned will get to subscribe for 313 bonds with a face value of US$1.00 each. The bonds have a 5 year tenor and a coupon rate of 6.75%. This unsecured bond will raise some US$750m for Olam.

Each 1,000 shares owned will also be given 162 free warrants. Strike price of warrants is US$1.291. The warrants expire in 5 years and cannot be exercised in the first 3 years. This will raise US$500m for Olam if all the warrants are eventually exercised.

Full details here:
Olam International announces proposed US$750 M Renounceable Underwritten Bond-Cum-Warrant Rights Issue

Rights issues to strengthen the balance sheet is bad news for shareholders as it dilutes EPS (eventually, in this case). It also admits that the balance sheet was weak in the first instance. What are shareholders to do? It is Hobson's choice.

"Temasek is committed to take 100% of rights not subscribed by existing shareholders." Just like the case with CitySpring Infrastructure Trust, Temasek Holdings could end up enlarging its share of Olam.

 
"The Transaction is available to all its equity shareholders and provides a unique and rewarding opportunity to participate in the long term growth of the Company." This requires a leap of faith and I certainly hope for all shareholders that things improve from here.

Share price could take a hit tomorrow. $1.35 perhaps?

Related post:
Olam: A time bomb?

Article published in Yahoo! Finance Singapore.



Some time ago, I was approached by MoneyMatters.SG for permission to re-publish a few of my older articles. I consented as I feel that if more people could access my writings and benefit from my ideas, it would make me very happy.

Today, I found out that an article was re-published in Yahoo! Finance Singapore on 28 November 2012 under the Special Features section. Although edited, the message is intact and the spirit has been retained.

Link here: http://sg.finance.yahoo.com/news/want-richer-065248352--sector.html

If you feel that this article could be useful to your friends or family, please feel free to share it. If we can help people to better themselves and improve their financial health, we should.

Help people to help themselves. I like this. :)

The original post (unedited):
Do you want to be richer?


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