How you see the market ?

Thank you, Abb, for the posting. David Carbon may well be correct in one or more of the things he said. We will know in a few months time. I believe the market has discounted a lot of the bad news as the responses of the STI to some of the bad news had been rather subdued of late.
I always like to see the market from the psychological angle because of the following facts:

1. Stock prices are at their lowest level when fear and bad sentiments reach their highest level. Are we there yet? See point number 2.
2. Everyone knows where is the lowest price of a stock/the market bottom, after he/she has missed it.
3. In the financial markets, the “majority is always wrong.” When the investing majority or the crowd is overly bearish, this is the best time to be buying stocks. When the crowd is overly exuberant, this is the time to be selling stocks. The financial markets work in this ironic way because not everyone can win in the market.
4. The bottom of the market starts at a time when the stock market is weak and the general population is pessimistic. At this point most investors sell after having endured a long and torturous bear market (Is the current bear market long & torturous enough? You decide!). The extreme pessimism found at a bottom is always irrational and undeserved (eg. profitable stocks selling at PE below 3x or 2x). The market becomes undervalued and is a bargain. Savvy investors, the “smart money”, buy bargain stocks (usually the better ones) knowing that they will be able to sell them higher in the near future. Smart money buying, called accumulation, causes stocks to rise.

I believe many investors are now waiting for more bad news (especially serious financial crisis from Europe) and for a further drop in share prices before buying. When will stock prices reach their lowest level? Well, the answer is at point 2 above.

Well said observer2. So can we know what stocks you are buying (or have bought recently)?
Also, I remember at one time in the past, you were positive about Fujian Zhenyun. It's NAV is so high (~$1) versus its stock price which now has dropped to 16 cents. What do you currently think of it?

U.S. Stocks Advance to Five-Month High. Where is Singapore? Still double-digit % below 2011 start!

Hi, Abb,
I bought STXOSV ($1.165) and YZJ (93 cts) recently for an anticipated small New Year Rally. My stock picks for accumulation (on any sell down) over the next few months remain as follows –

1. STXOSV  - (Top Pick) (A poor man’s Keppel Corp)
2. YZJ
3. Ezion
4. Hong Leong Asia
5. Sino-Grandness
6. Sunvic
7. China Minzhong
8. World Precision

I consider Fujian Zhenyun (at 16 cts), one of the most (if not The Most) undervalued & mispriced stock. It has an EPS of around 70 cts(RMB) or about 14 cts(S) every year from 2007 to 2010. Its 1H 2011 EPS was 30 cts(RMB) or 6 cts(S) and NAV of RMB 5.38 (about S$1.07). It has borrowings of RMB 15 million (to maintain good relationship with its bankers) and a Cash & Cash Equivalents of RMB 370 million. (Accumulated Profits of RMB 347 million in record book). A Special Audit was done on its FY 2010 accounts putting to rest any fear of falsified account or cash hoard not there. However, this stock is extremely illiquid (only 35 million s-shares & 80 million unlisted shares) and is not a growth stock – certainly not a stock for those with no patience or looking for fast returns.

observer2, your investing mindset is solid and sound!
regarding Fujian Zhenyun, it is indeed a bargain ... however, last night it gave a profit warning. Surprise! Looks like the economic slowdown in China is affecting it and the consistent profit of the pasts couple of years is not going to be repeated this year.

Yes, Fujian ZY is unlikely to do well, abb, for at least the next 6 to 12 months. Its 1H 2011 results had already indicated declining profits ahead and was a sign for weak holders to get out. It is best to avoid this stock even though it is very grossly under priced (good risk management).
Economic slowdown and severe bear markets (adversely affecting companies profitability) are usually excellent opportunities to get into undervalued stocks that are well-managed & that are able to bounce back on growth path once the economy recovers – also mean doing a lot of homework!
May you have a profitable year ahead, abb.