Economic Uncertainties breed Denial Syndrome?





Nov 12 2008
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Readers who thought that I was being negative with the so-called RM7 billion stimulus plan announced by de-facto PM Najib recently obviously do not have a clue about the global stock markets mechanism. These readers are still hiding behind the closet and preferred to adopt the “hear no evil, see no evil” attitude. And who can blame me for being pessimistic that our hard-earned money (you don’t think Najib is spending his own money, do you?) will be spent wisely and not ended up inside someone’s pocket considering that cronyism, corruption and nepotism are still very much alive else why even these readers’ hero, Mahathir, had to voice his concern over excessive money politics? And you don’t think the stocks would recover immediately with this RM7 billion, do you?

Denial SyndromeMalaysia’s biggest lender, Malayan Banking Berhad’s (KLSE: MAYBANK, stock-code 1155) reported a 22 percent decline in quarterly profit while the country’s largest fixed-line phone operator, Telekom Malaysia Berhad (KLSE: TM, stock-code 4863), made a net loss of RM165.8 million in the third quarter ended Sept 2008. You can blame it on foreign exchange loss of RM195.7 million but losses are still losses. Merrill Lynch immediately cut TM’s rating from “neutral” to “under-perform” and a lower target stock price of RM2.95 from RM3.20. TM’s current stock price of RM2.79 a share is dirt cheap but it’s still not attractive enough, at least to me. Those readers mentioned above should spend their monies supporting such GLCs stocks, no? As much as these readers hate FinanceTwitter, they still come back to pay a visit (weird). *Beware! This is another FinanceTwitter’s SEO experiment *grin*.

The fact is the knife is still falling and you’re a fool trying to catch it. Former great dictator Mahathir had tried that (supporting local stocks and currency) during 1997-1998 Asia Crisis but failed miserably to the extend that he has to beg the rich to pawn their jewelry overseas and bring back the money to the country in order to replenish the treasury. He also begged average-Joe to donate their jewelry to help the country’s economy but of course nobody gave a hoot about it. Where were you during that time? I’ve mentioned the current quarter’s earnings will be the yardstick for the rest of the year’s stock market direction. And I’ve also mentioned you can short the Ringgit all you want because chances are the currency will goes down the drain against the dollar.

Crude Oil PricesYou still want to know more? Well how about this. This year’s good time was the result of last year’s economy so you should know what to expect next year. Am I spreading all the negative news for the fun of it? The truth is I’m enjoying myself to the fullest with the current fears on the trading floor, not to mention my delight in seeing people trying to catch the falling knife and to chase the stocks whenever the stock index jumped during very short-term technical rebound – with the exception of the swing traders, of course. I hope I was wrong and the recession will not reach our shores because the sight of unemployment, retrenchment, broken marriages, flourishing of Mat Rempits etc is both dreadful and cruel. But we have to prepare ourselves mentally to accept the worst moment possible and not hiding under denial syndrome.

Apple Inc AAPL ProfitDo you still want to have another yardstick of how bad the economy is heading? Monitor the price of crude oil. And if the OPEC is scratching their heads, who are you to deny the current economy situation? Get a life FinanceTwitter! What can you gain from being so negative? Again, it was you who have negative mentality in the first place to think that I’m negative because I’m actually accepting the reality and swim along with it. In doing so, I’m taking my money off the table today on AAPL Nov 105 Put Option (for being negative about the stock market *grin*) because the 300-points plunge in Dow Jones is enough for the day. Nobody knows if the technical rebound is around the corner so I’m not greedy. At this moment (of writing) even the cash-rich Apple Inc. (Nasdaq: AAPL, stock) is having difficulty keeping its nose above $93 with $90 being the immediate support level.

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Comments

U have been right so far. In a way I have to thank ur blog cos I am still sitting on the sidelines refusing to invest my hard earned cash yet. Of course I have a few lots of some shares acquired in the past years e.g. TMI and BURSA, which it’s too late to sell now. So I’m just gonna hold these long term.

hello henrie,

one of these days i may be wrong and i expect more canes to come flying in then … :)

happy trading & investing …

cheers …

Trading conditions in this market are very different and new investment strategies will be required.

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