Investors have every right to hope for, like the share prices to drop and the economy turning to worse, so that they can buy at lower prices., or to enrich oneself.

But if the economy does improve, many thousands of jobs could be saved or created. And share market is a place, wealth can be created rapidly. ( if you do concern about 14.5 million unemployed Americans )

On that matter, I vote for US economy to turn better.

I see as a win win situation.

This post has been edited by SKY 1809: Aug 8 2009, 10:39 AM

Yup.
No one would like to see economy going down to drain.

If economy can prosper, stock price can go even higher from current point.

Investing in share is not look for cheap stock price, but you look for better future which send the stock price even higher from current point which enable you take the opportunity to gain money through better economy.

Just like you don't need to hope to buy Pbbank at 8.00 to buy so that it is cheap. As if economy can grow and Pbbank profit can grow, then it can go to 12.00 or 15.00 which based on its EPS and dividend.
Then there is no point hope to buy at 8.00, you can buy at current 10.00 which you also gain. If hope for 8.00 and never touch, you buy nothing, then economy did turn better, the share price goes to 12.00 which I bought at 10.00 gain liao, and those hope for 8.00 one gain nothing it could be forever never drop back to 8.00.

Don't get me wrong, I don't recommend buying Pbbank at 10.00, just purely stated as example and potential what could happen.

It is same for goreng stock, you don't need to look for cheap price to enter, you enter because its price can go even higher from current point.

ya, we will start mentioning bubble by that time

for now: i think it's better 1/2 leg in & 1/2 leg out so up u oso happy and down u oso happy , unless u plan for >3 years investment, buy now u will laughing all the way to bank after 3 years

Those days , i used to hear about 1/2 leg into the coffin theory, do not realise it is also applicable to Stock Market.

1/2 Leg, i try to associate with Asset Allocation Model according to Valuation and Risks.

AS the share price goes higher, the risk is getting bigger generally, unless the fundamentals of the companies improve.
So it might be time to realise your gain slowly by converting to Cash ( FD/BONDS ).

50% cash/50% share starts when the market reaches a fair valuation , let say PE of 18X ( just an example ).
Buy more shares if fair valuation increases or share price drops, sell more shares if over valued, so your risk level is intact.

I just oversimplify as the subject of Asset Allocation is lengthy and

And most investors are concerned with whether their shares would fly to the moon or not.

You are right in that sense.

P/s : it is just an investment model, does not mean all have to agree.

This post has been edited by SKY 1809: Aug 9 2009, 08:49 AM

Yes, the one you sold off?

LPI. Very good company. Too bad, I was soooo short sighted to think I can buy lower when they are giving RM1 div annually.

Looks like a very solid dividend stock to hold long-term.

Like mini PBB.

In fact, way better than PBBank. But then, was too short sighted, so no point crying over spill milk

dollar rebound last nite against euro...it's find bottom already/sttrenghtening??..

good or bad sign... let see 1st next few weeks...

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Added on August 8, 2009, 1:48 pmIs AIG Really Profitable?

Report August 07, 2009 – Comments (10) | RELATED TICKERS: AIG

The headlines are blaring that AIG has swung to a profit (WSJ link...may require subscription http://online.wsj.com/article/SB124964014232314037.html) and its stock is up almost 20% so far today.

Are the profits real? Well, let's see what happened, per the WSJ:

The summary:

American International Group Inc. stanched the flow of write-downs and investment losses to turn its first profit in six quarters, though its core insurance operations are still struggling to rebuild.

The details:

AIG's Financial Products division, the primary source of losses that led the company to receive a massive government bailout last year, benefitted from a swing in the market value of its derivatives portolio amid improved credit conditions. The division reported $636 million in unrealized market value gains on its credit default swap portfolio, compared with a $5.57 billion market value loss in the year-ago quarter.

OK, so basically, improved market conditions have allowed the Financial Products division to stop sinking the ship. I looked at AIG's press release to see the other divisions...their general insurance, life insurance, and asset management divisions were all profitable.

What's this mean? I don't know. Similar to the big banks, it's next to impossible to figure out what's on AIG's balance sheet.


This post has been edited by tessei: Aug 8 2009, 01:48 PM

No, AIG is a trap. Stay away. The price will eventually go down and collapse under toxic asset
when tons of those ARM rates reset again early next year. The only thing propping up its price is because of those short sellers that got caught.

Just barely two weeks ago, Canadian Bank says "Recession is Over" woo Hoo, popping out champagne!
http://www.cbc.ca/money/story/2009/07/23/b...y-recovery.html

Barely 24 hours ago. Canada govt reported "Huh? What Recovery?"
http://www.google.com/hostednews/canadianp...AaHr6oVrlDPY5zQ
http://www.thenewsroom.com/details/3762343

Does US really have "less bad" unemployment data? The "worse is over" they spin this?
True unemployment figure is already over 16%.
http://www.foxnews.com/opinion/2009/08/07/...t-unemployment/
The fact is, many people already given up looking for jobs and some already past their 13 weeks of unemployment claims and those numbers won't get reported.

As for US housing, the temporary fix by their govt to help those home owners to refinance isn't going to last because majority of them have subpar credit. Within two years, half of those mortgages will be under water again.
http://news.yahoo.com/s/nm/20090805/bs_nm/...ng_deutschebank
IMO, they're just on borrowed time.

Recession is over? Yeah right.
People just refuse to accept reality the worse is NOT over.

I think US market could fall big time later end of this year or early next year. This rally mirrors the Great Depression where people thought the recovery was real after the big drop, then got caught with another 40% drop.

How's that for bear view?

This post has been edited by danmooncake: Aug 8 2009, 10:34 PM

Mmm.... with the recent recovery, i still cannot believe that the bear is over..... good informations, and we will see again... in November as ppl said November usually not a good time for share market.... let's see.....

then November is a good time for accumulation for SMART MONEY.... especially for rally end of YEAR -> New year up to chinese NY.....

danmooncake,

http://www.chrismartenson.com/blog/unemplo...stortions/24080

It is a lot worse than that as per unemployment number.

http://www.chrismartenson.com/blog/fed-buy...y-auction/23880

Things got so bad that Fed has to buy their own treasury auction to fake the demand.

By the way, normally, the big crash is in October. So, expect a big one in this October.

Dreamer

Excellent post.

I agree with all the points here.

There is still so much toxic debt that the banks are hiding under the carpet it's unbelievable, The EURO zone has not even begun to face up to reality yet - THAT will be a huge can of worms that is being concealed at the moment.

In the US, DMC is correct: if people think unemployment is the issue then think again. What will collapse the US economy is negative equity in housing (so called underwater loans).

In the UK the BOE has spent GBP175 billion buying UK gilts that no one else wants at any price. The market won't fund the UK's debt - so the BOE simply invents money to buy government bonds. Crazy - totally crazy. The FED is doing the same.

The UK is finished as a country and as an economy. See what happened to Iceland? It will happen in the UK and US...no question about it.

SKY 1809,

You TOTALLY messed up as to what is ASSET ALLOCATION model.

http://www.investopedia.com/terms/a/assetallocation.asp

In asset allocation model, you stick to the SAME RATIO regardless what the market is doing.

You REBALANCE to the same ratio every year or based on 5/25 rebalancing rule.

So, if you 60/40 (stock / bond), in a bull market, you sell stock to buy bond. In a bear market, you sell bond to buy share.

The RATIO stay the same. It does not change.

In 5/25 rebalancing rule, you sell an asset if

A) 5%

the asset increase more than 5% of its ratio

or

B) 25%

The asset increase 25%

What ever come first.

So, if you do 60/40, you sell stock when it is 65% of your portfolio.


In ANY CASES, asset allocation model do not care about P/E and etc....

Dreamer

Hi Dreamer,

AS I said earlier , I just oversimplify it and it is adopted from Public Mutual which is copyrighted.

And what is a bear or bull market ?

If CI is trading at 1500 pts, do you think it is a bull market ? So should one be fully in Bonds ?

And what is a bear market ? Subjective to me also. Which part of Bear Market is more or less bearish to invest ?

The Public Mutual Asset Allocation ( the one I refer to ) is quite difference from the original model I study in Financial Planning , as a matter of fact.

First PB used CI points as the model but CI as you know may not represent the fair valuation of your investments. Besides, if at 1600 pts let say, then it would be at uncharted area , the model ceased to be effective.

So Public Mutual switched to PE as a modification of Asset Allocation to reflect a better picture, not a perfect model either.

At first, I disagree but it does actually make sense to me, so I adopt it.

Investment tools are " dead" if we do not consider the current situation such as "IF we were to be at 1600pts or so."

The methods we use is just another way to measure Bull or Bear, neither a perfect model, but do considering the risk and return factors.

You can disagree of course. Your model could be America's model, therefore tends to be more original. But it has to be relevant to our Malaysian Market. I doubt your model is also as original as the ones from the textbook.

Use which is comfortable to you.

No point to argue further

This post has been edited by SKY 1809: Aug 9 2009, 08:02 PM

SKY 1809,

1) Then, just mentioned it that what you are saying is "Public Mutual Asset Allocation" model. It is NOT what normal people known as Asset Allocation model.

2) I have full access to Vanguard mutual funds and US ETFs. Hence, I am NOT limited what Public Mutual has to offer.

Dreamer

This post has been edited by dreamer101: Aug 9 2009, 08:05 AM

Hi Dreamer,

I did not say it is 100% perfect or applicable to US Markets.

And this thread is more or less related to the local situations.

If you think your investment method and the ones offered by Vanguard is a perfect one, just endorse at your comfort.

By the way, I am not promoting Public Mutual here.


Happy Investing.

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Added on August 9, 2009, 9:36 am
Asset Allocation
What Does It Mean?
What Does Asset Allocation Mean?
An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.

The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time.
Investopedia Says
Investopedia explains Asset Allocation
There is no simple formula that can find the right asset allocation for every individual. However, the consensus among most financial professionals is that asset allocation is one of the most important decisions that investors make. In other words, your selection of individual securities is secondary to the way you allocate your investment in stocks, bonds, and cash and equivalents, which will be the principal determinants of your investment results.

Asset-allocation mutual funds, also known as life-cycle, or target-date, funds, are an attempt to provide investors with portfolio structures that address an investor's age, risk appetite and investment objectives with an appropriate apportionment of asset classes. However, critics of this approach point out that arriving at a standardized solution for allocating portfolio assets is problematic because individual investors require individual solutions.

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Added on August 9, 2009, 9:46 amDynamic Asset Allocation
Another active asset allocation strategy is dynamic asset allocation, with which you constantly adjust the mix of assets as markets rise and fall and the economy strengthens and weakens. With this strategy you sell assets that are declining and purchase assets that are increasing, making dynamic asset allocation the polar opposite of a constant-weighting strategy. For example, if the stock market is showing weakness, you sell stocks in anticipation of further decreases, and if the market is strong, you purchase stocks in anticipation of continued market gains.

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Added on August 9, 2009, 9:49 amhttp://www.investopedia.com/articles/04/031704.asp

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Added on August 9, 2009, 9:54 amConstant-Weighting Asset Allocation
Strategic asset allocation generally implies a buy-and-hold strategy, even as the shift in the values of assets cause a drift from the initially established policy mix. For this reason, you may choose to adopt a constant-weighting approach to asset allocation. With this approach, you continually rebalance your portfolio. For example, if one asset were declining in value, you would purchase more of that asset, and if that asset value should increase, you would sell it.

There are no hard-and-fast rules for the timing of portfolio rebalancing under strategic or constant-weighting asset allocation. However, a common rule of thumb is that the portfolio should be rebalanced to its original mix when any given asset class moves more than 5% from its original value.

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Added on August 9, 2009, 9:56 amTactical Asset Allocation
Over the long run, a strategic asset allocation strategy may seem relatively rigid. Therefore, you may find it necessary to occasionally engage in short-term, tactical deviations from the mix in order to capitalize on unusual or exceptional investment opportunities. This flexibility adds a component of market timing to the portfolio, allowing you to participate in economic conditions that are more favorable for one asset class than for others.

Tactical asset allocation can be described as a moderately active strategy, since the overall strategic asset mix is returned to when desired short-term profits are achieved. This strategy demands some discipline, as you must first be able to recognize when short-term opportunities have run their course, and then rebalance the portfolio to the long-term asset position.

This post has been edited by SKY 1809: Aug 9 2009, 03:07 PM

Hi Jason,

You mean you hope to buy at a lower price after ex-dividend?