From the initial result of the “Poll” conducted by FinanceTwitter it appears majority of the readers are ready with tons of money to pounce on cheap stocks. I’m both surprise and happy that the readers are so financial-savvy – Bravo! This is once in a 10-year chance and might be once in your lifetime opportunity to make your money grows exponentially. Of course many of you were screaming like a hungry wolves that have not seen a moving creature for months – when is the best time to move in for the kill? Well, if I know the exact date Warren Buffett, Charlie Munger, Peter Lynch, Jim Cramer, George Soros, Carl Icahn, Jesse Livermore, John Templeton, Prince Alwaleed or even President Bush will need to bid with the highest bidder get to have an hour lunch appointment with me *grin*.

The fact is nobody knows when the perfect time to buy low (or rather lowest) but fortunately neither the technical analysts nor the fundamentalists can tell. It won’t be fun if you know that Michael Schumacher will emerge again as the F1 champion for the X-time, would it? So that’s the excitement of the current stock market. Everyone was looking at each other and wondering if it’s the right time to scoop the stocks. In fact the big boys with deep pocket are currently buying in stages. Only time will tell if they’re actually averaging down or averaging up – either way they’ll have the portfolios if the bull comes. Small investors would not have such luxury and most of them will have to wait for the right wave and ride on it. Unless of course your strategy is as simple as buy the stocks and keep it until the bull comes regardless of the “when”. I’m not suggesting that the bottom is here and you should buy now because I still think the worst is yet to come – I might be wrong, mind you *grin*. At the stock trading hall when the KLCI was at 1,300 back in 1997, who would have thought that the index would plunge to 262 in another 18-months?

At this stage the bear is taking a rest with the bull is standing still while shaking its butt as if it has taken ecstasy. Heck, even the delicious Maine lobster industry is being slammed by the current economic tsunami with some seafood shops selling lobsters for as cheap as $3.89 a pound. Obviously the lousy sentiment on the stock market means lousy demand for the lobsters or any other luxurious seafood. Not even great earnings result from both Google Inc. (Nasdaq: GOOG, stock) and Apple Inc. (Nasdaq: AAPL, stock) could save the Nasdaq. The poor earnings and guidance from Boeing, AT&T and Amazon knocked off more than 500 points from Dow. For now the 9,000 will be the immediate resistance for Dow Jones. The global economy is getting so sick and chaos that the Argentine’s President Cristina Kirchner has to seize the country’s private pension funds in an apparent attempt to access its $29.3 billion before the $20 billion debt obligations deadline in 2009.

Now, this story about Argentina somehow reflects exactly what the Malaysian government was trying to do – access to EPF’s (Employee Provident Fund) RM5 billion in the name of boasting and helping undervalued stocks. Blind patriotism aside, I still couldn’t figure out why the ruling government has such an easy access to the vault. What you need to do is announce it (access to RM5 billion) without providing a detail plan and you get it? One of the comments I received from the reader suggested that there could be insider trading and the repeat of the 1997-1998 bailout of politicians’ stock at sky-high price actually hold water, mind you. The cronyism, corruption and nepotism are still very much alive and you can bet your last dollar that many politicians’ wealth had evaporated over the weeks. Strangely if Valuecap could make great profit by investing undervalued stocks then why should EPF loan the $5 billion? Won’t it better for EPF to invest the money itself and reap all the profits (and hopefully redistribute the profit in terms of dividends to us)? Declare how much profit can EPF enjoys from such silly arrangement and FinanceTwitter increases it by 1 percent. Just give me the RM5 billion and let me invest the so-called undervalued stocks *grin*.

The ruling government never fails to amuse me with their half-past-six reasons in their policies implementation. Not long ago they cried loudly that the government cannot afford any more fuel subsidy thus the RM0.78 (41%) a liter petrol price hike when the global oil prices was at $127 a barrel. And now the black gold is under $70 a barrel yet they only reduce the price by RM0.40 a liter. They even have the cheek to divert the attention to petrol station dealers who complained about potential losses if the fuel is reduced further. And the pathetic Tenaga Nasional Berhad (KLSE: TENAGA, stock-code 5347) which despite its monopoly status cried like a baby for electricity tariff’s hike, blaming the high global oil prices. The baby was pacified with the hike but now TENAGA said it could lower the tariff only if the excessive 42% reserve margin for power is reduced (Huh?). In other words there won’t be any electricity tariff reduction so make yourself useful and go play balls.

Using such silly excuses only go to prove that it was true that the country actually has huge excess of electricity after all. Therefore why the plan to proceed with this stupid and wasteful mega project called Bakun Dam, not to mention the newly proposed RM3 billion dam in Murun, Sarawak? Maybe the brilliant boys from Khazanah Nasional Berhad could shed some lights with its forecast that the nation will face energy shortage in 2012. Or maybe the newly appointed deputy Chairman was smarter than Abdullah Badawi in such tariff usage forecast calculation. Still, I want to know why give away RM5 billion to Valuecap knowing that we couldn’t trace its whereabouts. The chances are high that a huge portion of it will ended up in unknown’s pocket so might as well divide it equally to the 27 million population – each will get roughly RM185, enough for a month groceries to some of the poors.

Other Articles That May Interest You …

• The RM5 billion, shouldn’t the Government seek ap
  proval?
• Hooray! Another Fuel Reduction but it’s a Little Too Late
• Cash is King but do you have the bullets?
• Nuclear Plant – Tenaga’s new Toy worth RM10 billion?
• Windfall Tax – Punishment or Desperation for Money?
• SIME aborts cable, no more cheese or the Rats move it?

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October 23rd, 2008 by financetwitter

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