Showing posts from July, 2009

Have We Reached a Top?

By James Kostohryz

It's never been my position that the flow of fundamental news would turn from positive to negative overnight and in a total fashion. The world simply doesn't work that way.

When I terminated my core long position a couple of weeks ago for reasons explained in�Ten Reasons the Countertrend Rally May Be Over,�I outlined a series of factors I believe may manifest in the later half of 2009 and the first half of 2010. Indeed, most of these factors will be more back-end loaded, as negative factors tend to build on one another and gain momentum in time through the medium of psychology and social mood.

It's my view that the flow of economically relevant events�-- and perceptions of these events --are in the early stages of a transition. In this case, a transition means the flow of relatively good news will tend to wane somewhat while there's an uptick in relatively bad news. This is what one would expect at a top.

However, it's to be expected that during the…

The secrets behind china real estate boom

While the real estate market appears to be is in the midst of a boom, defaults among developers are also beginning to rise. Small and medium developers are resorting to faking sales to get bank loans to relieve their funding pressure.

Statistics show that from May 1 to July 24, which seemed to be good days for Shanghai's real estate market, many housing projects were seeing over 30% cancellations, and the cancellation rate of some projects was as high as 125%. Behind the "boom" of the housing market are irregular behaviors such as getting bank loans by cheating and making fake housing purchasing contracts.

Among the top ten housing projects with the highest cancellation rates, 60% are developments by small and medium real estate companies. "In fact, it is still difficult for small and medium developer to get credit support from banks," said a sales manager of a medium real estate company.

Now it is common for developers to sell an apartment to an employee as a …

Singapore govt says ready to stop any property bubble

SINGAPORE, July 29 (Reuters) - The Singapore government stands ready to step in to prevent a property bubble after signs of speculation in the real estate market, state media quoted a cabinet minister as saying on Wednesday. National Development Minister Mah Bow Tan told reporters it was not clear if the buying momentum of new private homes in the past few months could be sustained and the government was keeping a negative growth projection for such demand this year. "I wouldn't say there's excessive speculation at the moment, but there is some element of speculation involved. I think some of the practices that you saw in the last property boom are starting to come back. So I think we'll have to be careful," Mah was quoted as saying by state radio 938LIVE's website. Property and stock prices in Singapore and elsewhere in Asia have jumped in recent months after central banks and governments pumped cash into the ailing global economy, but Asia's monetary au…

Good post by CNA Forummer Colby

Its true we have not seen the bottom. Nobody has come out with concrete evidence of bottom, only vague blind firing called green shoot is called bottom.

If the water is purposely muddy, how do you know if it is shallow or deep. Likewise, the economy is muddied with bailouts and stimulus so nobody could know the depth of abyss recession, what more to point the level of bottom.

Its almost like a replay of late economic crash of 1920s, early 1930s. The economy was crashing, but like a vortex, it attracts more victims seeking profits and greeds from the crash. This was why the Great Depression lasted a long time.... cos there was steady supply of victims for the economic failure.

Notice the eerie similarities, asset property bubbles, people addicted to high-life and overspend even with business prospects collapsing around.

The China central bank knew the cheap bank loans to help their economy recovery is funneled into the bubble stock markets. This is why the govt notify their local banks…

Mum and dad’s tips for home buyers

Parents may not be property experts but their advice is sound in a commonsensical way, so here are their tips for first-time buyers

The current property boom reminds me of the time I bought my apartment about seven years ago. The year was 2002 and the Government had relaxed one key regulation concerning property purchases.

Instead of having to put down a 20 per cent cash down payment on a home, buyers now needed to come up with only 10 per cent cash, and could take the rest of the down payment from their CPF savings.

It was a major change for young working adults like me who had worked for a few years and accumulated some savings, but not enough to comfortably stump up say, $100,000 on a $500,000 home.

Suddenly, smaller and reasonably priced apartments appeared on my horizon. My job prospects seemed certain, so I went house-hunting with my parents in tow. A few weeks later, I had signed on the dotted line and was preparing to move into my new studio apartment.

When the rule changed in 2002…

Commercial real estate

The government's last-ditch efforts to prevent a $1 trillion collapse in commercial real estate are doomed to fail.

But a 372-year-old investing technique could not only work to protect your wealth... but could also make you a fortune during this crisis!

Dear Reader,

It's been around for the last 20 years.

And even though the U.S. Government won't officially acknowledge its existence, it's about to make you an absolute fortune.

It's called the Plunge Protection Team -- and the secretive committee's primary responsibility is to manipulate the U.S. financial markets and prevent devastating collapses.

But here's the critical part:

The Plunge Protection Team - at this very moment - is pushing the U.S. market artificially higher... but not for much longer.

You see - they've exhausted nearly every trick they know just to push the Dow back toward 9000... in search of a solution for an imminent market collapse that could have a devastating effect on the U.S. economy.


The Commercial Real Estate Collapse !!!

Dear Fellow Investor,

Before the bulls break out the champagne here, I would warn them not to get too far ahead of themselves.

After all, euphoria in these or any other markets is a dangerous emotion that can lead to big losses.

And as for Dennis Kneale's breathless prediction that the "recession is now over", the picture on that score is about as clear as mud... murky to say the least.

What is crystal clear, however, is that our problems are actually getting worse... not better. Fundamentally, things are as bad as they've ever been - especially in commercial real estate.

It's one of the brewing disasters the bulls just don't want to talk about as they break out the party hats, insisting somehow that the markets really can grow to the sky.

Of course, we know otherwise. If only it were so...

What they don't tell you or refuse to recognize is that commercial real estate is following the same exact path as the housing bubble - the exact same path!

And we all know ho…

Traders Profit With Computers Set at High Speed

Seth Wenig / AP
Traders work on the floor of the New York Stock Exchange Wednesday, July 19, 2006, in New York. Stocks rallied Wednesday on remarks from Federal Reserve Chairman Ben Bernanke that economic moderation "now seems to be under way" and that inflation remains contained. (AP Photo/Seth Wenig)

It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.

These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk.

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money…
Hello everyone!

I have displayed some books on the blog's side bar which I am reading or considering buying to read. They are really good books offering timeless advice in view of the current financial crisis.


The Stark Reality In U.S

Years of state and federal neglect have hobbled the nation’s unemployment system just as a brutal recession has doubled the number of jobless Americans seeking aid.

In a program that values timeliness above all else, decisions involving more than a million applicants have been slowed, and hundreds of thousands of needy people have waited months for checks.

And with benefit funds at dangerous lows even before the recession began, states are taking on billions in debt, increasing the pressure to raise taxes or cut aid, just as either would inflict maximum pain.

Sixteen states, with exhausted funds, are now paying benefits with borrowed cash, and their number could double by the year’s end.

Call centers and Web sites have been overwhelmed, leaving frustrated workers sometimes fighting for days to file an application.

While the strained program still makes more than 80 percent of initial payments within three weeks — slightly below the standard set under federal law — cases that require indivi…

The Economy Has Hit Bottom

by Alan S. Blinder

How's the economy, you ask? I have the proverbial good news and bad news, but in this case, they're exactly the same: The U.S. economy appears to be hitting bottom.

First, the good news. Right now, it looks like second-quarter GDP growth will come in only slightly negative, and third-quarter growth will finally turn positive. Compared to the catastrophic decline we recently experienced -- with GDP dropping at roughly a 6% annual rate in the fourth quarter of last year and the first quarter of this year -- that would be a gigantic improvement.

Furthermore, there is a reasonable chance -- not a certainty, mind you, but a reasonable chance -- that the second half of 2009 will surprise us on the upside. (Can anyone remember what an upside surprise feels like?) Three-percent growth is eminently doable. Four percent is even possible. Surprised? How, with all our economic travails, could we possibly mount such a boom? The answer is that this seemingly high growth scen…

Buffett to CNBC: Invest in Stocks Even At Dow 9000

Warren Buffett tells CNBC that the economy still isn't showing any signs of life but that doesn't mean investors should stay away from stocks for the long-term.

In a live interview on Squawk Box this morning, Buffett says "business is still flat." But he stresses that doesn't mean he's negative on stocks, predicting the market will revive before the economy does.

"The market is very, very likely to turn up before business. But I don't try and time stocks. I try to price stocks."

He repeats his advice from his "Buy American" op-ed in The New York Times last fall: don't wait to buy stocks until the economy improves. By then, he says, you will have missed the biggest stock gains.

Even with the Dow hitting highs for the year around 9000, Buffett repeats his belief that stocks will outperform cash investments, such as Treasury notes, over the long-term. "I would much rather own equities at 9000 on the Dow than have a long investment in…

Return of pay bonanza

NEW YORK - The Wall Street gravy train is gathering speed again as banks only just emerging from financial crisis lavish billions of dollars on their employees.

Announcements over the last week by Goldman Sachs and Morgan Stanley of a return to mega compensation pools are seen by some as a sign of health. For others, they mark a worrying throwback.

When Wall Street tipped into the abyss last year, dragging the country's economy with it, popular and much political anger was directed at so-called fat cat executives - individuals paid fortunes with little regard to their performance.

But Wall Street appears to be on the mend now, with the Dow Jones shares index topping 9,000 and a handful of banks, which survived thanks to government bailouts, emerging as powerful giants.

Goldman Sachs last week reported record US$3.4 billion (S$4.9 billion) earnings for the second quarter - and disclosed that it had set aside a record US$6.6 billion for compensation expenses in that quarter, or 11.4 for…

Recession hits dead in US

LOS ANGELES - BODIES left unclaimed, cadavers stacked high in morgues and burial rates tumbling as loved ones cut funeral costs: the crippling recession is even haunting the dead across the United States.

In Los Angeles, the local coroner's office has witnessed an unprecedented spike in the number of corpses unclaimed by families who cannot afford the costs of a burial or cremation.

'The reason we are hearing from the families is the economic downturn,' Los Angeles County Coroner's chief investigator Craig Harvey told AFP. 'They tell us they don't have the means to afford funerals.' In the past 12 months, the coroner's office, which is responsible for handling bodies from homicides and suspicious deaths, carried out 36 per cent more cremations than the previous year, jumping to 712 from 525. At the Los Angeles County morgue meanwhile, the cremation figure rose by 25 per cent.

Cremations are usually carried out around one month after death if no-one from th…

Lower returns on stocks will lead to higher dividends

By Joe Light, Money magazine senior writer

You know that you're supposed to invest with your head and not your heart. But the truth is, a thriving stock market requires a lot of faith - in the economy, in corporate America, and in the promise that your investments will make you money in the long run.

Recently, faith in the economy has rebounded a bit, which explains why risk taking has re-emerged. But short spurts of enthusiasm won't erase the distrust of equities that's developed after two crushing bear markets caused by the misallocation of hundreds of billions of dollars, first into Internet stocks and then into housing.

"Corporate America has proven twice that it can't handle capital well," says Gordon Fowler, chief investment officer at Glenmede Trust, a wealth-management firm. "Because of that, investors will become more conservative." In fact, since the start of last year, about a quarter of a trillion dollars has left stock funds.

This penchant…

Asia to rebound in 2010

BANGKOK - ASIAN economies will likely bounce back from the global economic slump in 2010 but fears remain over the sustainability of growth if there is no wider recovery, the Asian Development Bank said on Thursday.

The bank's chief economist Lee Jong Wha said the outlook for East Asia this year remained 'pessimistic' but foresaw a V-shaped recovery led by China if countries continue to focus on stimulating domestic demand.

'We are optimistic for developing Asia for a V-shape recovery... But the big question is whether it will be sustainable growth - in that part we are rather pessimistic without a full global recovery,' Mr Lee told AFP ahead of the launch of ADB's biannual Asia Economic Monitor in Bangkok. 'It will be very difficult to return to the pre-crisis trend of growth,' he added.

Despite an increasing proportion of export demand coming from within Asia, notably China, countries in the region continue to rely on markets in the US, European Union an…

What went wrong with economics

From The Economist print edition
And how the discipline should change to avoid the mistakes of the past

OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself. A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling. Wall Street ransacked the best universities for game theorists and options modellers. And on the public stage, economists were seen as far more trustworthy than politicians. John McCain joked that Alan Greenspan, then chairman of the Federal Reserve, was so indispensable that if he died, the president should “prop him up and put a pair of dark glasses on him.”

In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate—think of Ben Bernanke or Larry Summers …

A Deal with the Devil

There has been a lot of talk lately in the media about Goldman Sachs and how they have corrupted and taken over our government. I would like to throw out a theory of my own and its implications as it relates to trading.

First off, let's examine the charges pundits have been leveling on Goldman Sachs and the main evidences they cite to support their claims. Pundits charge that back in the fall of 2008, former Treasury Secretary Hank Paulson, who also happened to be the the former CEO of Goldman Sachs, let Bear Stearns and Lehman Brothers fail in order to eliminate major competitors to Goldman Sachs. The circumstances behind Bear Stearns' run on liquidity to this day remains suspicious with fingers all pointing to rumor mongering originating from Goldman Sachs. The Feds allowing Lehman Brothers to fail was especially suspicious because 1) the Fed denied Lehman Brothers application to become a bank holding company, hence denying them access to much needed liquidity that could have…

Investment banker to exotic dancer

Episode 1

'The financial markets are full of hard luck stories these days, so I thought it only right to share my experiences.

I joined Lehman Brothers straight out of college in 2004. Although I didn't really know what I was getting into, a friend of mine worked for the firm, and there was a vacancy in fixed income support, so I tried out for it and lucked out. When it came down to it, however, the job was really nothing more than a glorified PA, as I ran around photocopying things, and undertaking menial tasks like going out to get lunch for busy traders.

After a while, however, I started to get into what I was doing, and learning the lingo. Gradually, I learned what terms like 'ABS', 'MBS' and 'CDO' stood for (although I never really got what they actually were). In time (after 18 months or so), I even found myself on the telephone speaking to clients, who were eager to buy 'top-rated commer…