What is the share price telling us ?

At times, when I look at the trading terminal, I wonder to myself, what is the share price trying to tell me? Does the market know something that I don\'t. Yesterday, following the sharp plunge in KT&T, I was tempted to go in and take some position. It could have been plain margin calls or there could really be something that we, retail investors are unaware of. Subsequently, I dismissed the idea as I have not been following this stock. There are however several case studies that we can look at, to evaluate whether there\'s really something going on in the Company. Kings\' Safetywear If you have been monitoring the share price movement, you would have notice that the share price was firming towards late May/early June. Even the market meltdown in August did not disturb the share price of this Company. I became curious and started to study this Company more in depth. At that current market px, the Company was trading around 11-12x PE. Way in excess of what its peers traded. Alas, I could only watch as the Company announced that it would be privatised in Sept at a premium to the market px. China Fibretech As the market makes its low, this stock continues its superman\'s defying-gravity flight. It hit a historic high of 36 cents last week, just when the market was dying from the US market meltdown. At current px, it is trading around 9x FY07 EPS. DMG, SBI and Westcomb anlaysts went for a plant visit organized by the Company. I extracted the following from DMG\'s report Valuation. Based on our back-of-the-envelope estimates, China Fibretech is trading about 6.5x FY08 P/E and 5.1x FY09 P/E after accounting for its increased dyeing capacity and barring unforeseen circumstances. This valuation is in our view quite rich versus its locally-listed peers,which are trading at a consensus mean of 2.3x FY08 P/E and 1.9x FY09 P/E. Do note, however,that these downstream fabric players are under-researched and hence their relatively low P/E multiples may not give a clear representation of their forward trading value. Portek This is an open secret that Portek is lining itself up to be sold off. The key question now is, how much? Kim Eng came out with a report last week,which pointed to Portek as a likely M&A target. Valutations -- At current price, stock is priced at 12-13x on historical core earnings. On a forward basis, stock trades around 10x P/E with organic growth coming from port management and engineering services. We have a target of $0.75, valuing the firm market cap at S$113m. This strengthened my belief that the offer could come sooner rather than later.

i guess that this tell us that market is inefficient and can be subjected to manipulation by the big players. luck or timing is important in trading. one may have done good both fundamental and technical analysis. after which, wait for luck to come for individual stock (not indices). take care.

Greenspan Says Markets, Economy to Recover as Investors Return By Scott Lanman and John Brinsley Oct. 2 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said financial markets and the economy will recover as investors regain confidence. ``Trust will eventually reemerge as investors dip hesitantly back into the marketplace,\'\' Greenspan said today in a speech at Georgetown University\'s law school in Washington. ``From that point, history tells us, financial and economic revival sets in. I suspect it will be sooner rather than later.\'\' Greenspan urged lawmakers last week to back ``extensive\'\' measures to tackle the worst financial crisis since the 1930s and head off a recession. The U.S. Senate passed a $700 billion financial-market rescue package yesterday loaded with inducements for the House of Representatives to approve the measure following its rejection of an earlier version Sept. 29. ``We are living through the type of wrenching financial crisis that comes along only once in a century,\'\' Greenspan said today. ``Financial markets freeze up as an excess of fear displaces a protracted period of what some might call irrational exuberance. Eventually the market freeze will thaw as frightened investors take tentative steps towards reengagement with risk.\'\' ``Broken market ties among banks pension and hedge funds and all types of non-financial businesses, will become reestablished, and our complex economy, that has the capacity to produce a fifth of the world\'s goods and services, will reemerge,\'\' he said. In a statement e-mailed to lawmakers Sept. 25, signed by Greenspan, former Treasury Secretary George Shultz and Stanford University economist Robert Hall, the three economists wrote that ``the only way that financial institutions can continue to function is for the government to provide financial support.\'\'

what is the stock price of First Ship Lease Trust telling us? the stock has crashed to 40 cent, and DPU is something like 18 cents. That = 45% yield! is the stock price telling us to expect sharp cuts in DPU? or that shipping lessees will go belly up? cut & paste .... SINGAPORE: Shipping trusts had previously been seen as safe havens for investors in volatile markets. But analysts said such trusts may face rough seas due to the current financial crisis. While yields may presently be as high as 30 per cent, shipping trusts could be exposed to refinancing risks as equity and capital markets are being tightened. There are currently three shipping trusts traded on the Singapore Exchange. These trusts typically lease vessels for between five and 12 years. Even though this suggests a stable stream of earnings during that period, the current weakening of the shipping sector means these earnings may now be at risk. The finances for ship acquisitions that shipping trusts secured earlier may also be affected by the global financial turmoil. Rigan Wong, associate, Citi Investment Research, said: \"However remote the possibility, we can\'t discount it. Un-drawn credit facilities may be withdrawn or agreed interest rates may actually rise unexpectedly. That increases the risk of investing in a shipping trust because now there is a greater degree of unpredictability.\" Shipping trusts pay out between 75 and 90 per cent of their distributable income to unit holders, leaving them with few reserves to fall back on. Selling more units to tap equity markets is not an option as trusts would then have to pay out more from their limited reserves to maintain yields. Philip Clausius, CEO, FSL Trust Management, said: \"Our current trailing yields are so high, making our cost of capital so high that you simply cannot structure accretive transactions. \"So, we think it is most prudent in this environment to do nothing for a while, protect what we have and continue delivering what is a very attractive yield to our equity investors.\" Analysts said the trusts could raise cash by selling vessels, but the recent financial turmoil has seen the value of such assets fall.

Yup, every baby out of the bathwater. ALL shipping and commodity related are dumped worldwide regardless of valuations. There must be scared souls out there and I must admit I\'m one of them. But a stranger once told me few months ago when the sub-prime was still in infancy that expect the worst to come. However he had mentioned to me when my own fear is the greatest, that is the best time to start buying... I\'m not saying that we are anyway near a bottom but a gradual accumulation would ensure that you would not miss the bottom when it comes (if it comes). Do not chase into any bear market rallies which could be equally impressive in terms of gains. There is really nothing positive in the 6-12 months ahead...so don;t be taken in with either end of greed and fear.

Fully agreed with you, Gary. This is the Mother of All Crisis. Please do not underestimate this crisis that we are facing. My own opinion is that we will see a couple of more listed companies going bust. More jobless people in the street, property prices dropping to 97 level.....before we can see some recovery.