KLCI Movement & Portfolio Choice (13 Feb 15) KLCI movement
Tracked by FBMKLCI ETF, and closely by ishares MSCI Malaysia Index Fund (EWM)
Trend tracker : Non-parametric spline with varying noise persistency.
Momentumtmi: strong >0.4, max: 1, min : -1
(NB: KLCI index point subject to free float/capping factors variation on component stocks)* Market mover = market perception/sentiment(stochastic, major investor activities) + hedge-fund/contra activities(active volatility, futures movements) + news/announcement(uncertainties, market usually heading). Market watch: KLCI stocks, research promoted stocks, rumoured stocks, hot stocks. (Stocks may generally be screened using equity screener, and watch/screen using charting tools. As information adds sense to stock watching, low profile low volatility stocks(hidden gems) may be dug by TA+FA screens)
- The momentum indicator shows that short term volatility is higher in frequency and riding on long term volatility. (Short term trader bet on making profit irrespective of long term trend, while investor bet on making profit in long term irrespective of short term volatility)
- Market fair price(SMA) may be used in place of the spline tracker. Examples are 5 and 20 intervals SMA for short term tracking, and 100 and 200 intervals SMA for medium/long term tracking(usually buy-call when price up-crossing SMAs and sell-call when price down-crossing SMAs). 100/200-day SMAs normally provide clues to the performance of past and present economic/business performance of a market/company, and, together with present economic/business condition/outlook, often used for future(business profit,market fair price) projection. In the view that confidence/opinion shall progressively be checked and balanced by reality, 'bubble/reservoir' and mark-up/down noise may also be seen against the SMAs. It is unusual that market diverges consistently from business performance.
- Market fair price projection: market price variation may be fitted with level model, as prices are seen varying nonstationary in step at any time interval, which provides instance level price projection 'for the fitted time interval'. However, SMAs may be fitted with linear level model as they are seen varying with slope at any time interval, which enables > zero order projection giving both price & time target projections.
- Trading range my be defined as 2 sigma volatility risk (~95% confidence interval) of a SMA. It is also known as the Bollinger band. Similar to volatility index(VIX) as barometer of investor fear, the trending(up/down) of Bollinger boundaries and the width between them may be seen as measures of investor fear. Statistically, if price persisted at or outside the Bollinger band then probably a structural change in the price mean level has occurred.
- PSAR gives price (parabolic/f '(price)=a x price + b)decay/rise estimate from recent high/low price reference, which provides trailing gauge for support/resistance & price reversal in time. (steep PSAR may be used to pace/provide buy/sell signal in short term trading)
- Price tracker may be used to construct bubble/reservoir for its price retention level, building up and drainage features(e.g. 10/20SMAs be the bubble surface/reservoir bottom profile for 100/200SMAs retention/drainage). Notwithstanding the price levels, it is all about price/profile timing..(notably reservoir/bubble profile probably would not last long outside 100SMA Bollinger band, retracement from SMAs/100/200SMAs, etc). Snapshot of a stock price in probability context may be seen below: following the stock price persistency nature(modelled by present tracker and suggested in PSAR), stock prices will traverse within the nonstationary probability frameworks in stochastic sequence(the associated returns may be described using Markov process in moving time window) close to(less of) a random walk process, as zero-crossing event in nonstationary random walk is very infrequent. (NB: long term probability of returns in securities often seen skewed due to information bias & among stock clusters in stock indices, and that returns of investment time frames would feature the characteristic of prevailing yield curves)
- The momentum oscillator may be read together with RSI/MFI oscillator(better for side way market), B%, distribution of buyer/seller lot size(participant strength:Bvol%,Btrans% and accumulation), price gap(probable rebounce/push through), etc for indication of market buying/selling sentiment. Generally the hot/cold of a stock or market is reflected by traded volume/value and market breadth(the balance of institution(like market maker/banker: usually not selling down), retail and foreign participations. ref: thesun-epaper.com/SUNBIZ).
- Price retracement in up/down trend often seen following over-bought/sold or when KLCI retraces(indication by Bollinger band/RSI for example, a retracement 'day' denotes day-candle begin to change its colour following a series of up/down days:3,4..). Succesive retracements without over-bought/sold/KLCI influece, and consolidation of SMAs often indicate sideway/turning of trend development.
- A price up trend usually first be confirmed and sustained by volume/transactions(ref: Dow theory) as dominant investors surge in and accumulate in up trend. A sideway/down trend following up trend may first be confirmed and sustained by reduction in volume/transactions as dominant investors leave the market and gradually replaced by smaller investors (dominant investors may appear as smaller investors while leaving market/reflection of generally diverse investment time frames/switching-over, opinions & decisions made among genuine smaller/retail investors). Market often remains sideway/down trend when volume/transactions increase but failed to push price up(though mild & gradual) as volume/transactions are from smaller investors, otherwise showing confidence(in "potential stocks") from smaller investors. At anytime, short term price rebound may be seen when sum of up volumes >> sum of down volumes(oversold rebound, on the other hand, usually from apparently genuine smaller investors). Trend analysis apparent norms: big blows & small digs..(as smaller investors seemingly wish to buy/queue at better then market price, force selling.. . Investor dominance in market may be seen from participant strength & institutional investors info & dominant investors' surge is also reflected by surge in upper Bollinger boundary/volatility. As a result, change in price-volatility-volume are often used together as filter/initial detection and tracking of investors' strength. In contrast, a down trend/correction with increase and sustain volume would be active sell/mark-down by dominant investors, notably the foreign investors in KLCI. Otherwise, smaller investors' (gap down)risk may also due to high sensitivity among themselves toward negative events/news)
- Price expectation, support and resistance of a stock may be glimpsed from the bid-ask volumes/disparity pattern(and time distribution of traded volumes, bid-ask prices of tracking ETFs). Smaller investors expectation may probably be seen from the bid market, e.g. thin & shallow bid market may show sign of not enthusiastically expecting price dropping to/"bottoming" at the bid prices(looking "expensive" for asker), and vice-versa. A quite bid market(esp when change from hot & thick) relative to the ask market, however, may be sign of dominant investors in cold & begin distributing/fishing down rallying for "supporting up". At the same time, the relatively thick hot ask market may manifest the dominant investors' "spot fair prices". (Dominant investors, if not collecting/distributing, as appeared normally rallying up while jamming the supporting bids, & in time(..probably following cycles & aids in consolidating) may attract relatively hot thick & deep bid market. Generally, market pushing/shorting may be seen by series of opening gaps up/down combined with bid/ask market jamming:))
(NB: Bid/ask market is made translucence by masking pre-bid/ask orders. Direct transactions are not seen in bid, ask and market traded volume)
- Quantitative/technical analysis enabling decisions to be made(development to be gauged) systematically in time and works better when stocks are traded with highly spread participation(and good breadth signal, e.g foreign investor volume & movement, noticeable institution net selling volume/strong bull..!).
- Quantitative/technical analysis works when it appears with fair confidence that, within its frame-work, achievable target prices and time frames(more insightful) can be tracked. It rests on the premise that market movement has rational explanation(collective subjectivity) that is encoded in the data, as markets work in spite of not being totally rational.
- 10-year moving window downtime reference for market matching stocks: Longest breakeven time frame(largest T candle) in KLCI over the past 10 years is ~36 months with candle tail ~47% bottom at 11-month (~20% bottom at 16-month, 25% bottom at 46-week and 30% bottom at 198-day for monthly, weekly and daily(hypothetically excluding trading cost) buy-sell cycles, respectively). However the downturn in year 2008(remained profitable from monthly tails), KLCI is supported by 100month SMA with no. of up-month/down-month ratio >1.5 in the past 10 years(frequent up-month:Oct,Dec; frequent down-month: Aug,Nov). Reasonably, a KLCI monthly investment may be that entering at any reference begining of month(possible return from candle head) followed by best gauged low of the month(possible return from candle tail). For continuous fixed value investment(FVI), figure below shows return variation of a max. RM2000 daily FVI trading across the downturn (unrealized(worth)/relizable break even with 658k after 337day, end profit 24% with 1425k)
Liken to betting on banker continuously in a baccarat game in which the expected return is -~zero if each bet amount is constant and a sure win if the bet amount is doubling up continuously(if no betting/participants limit), the expected return of FVI in liquid stock market is positive for a price recovery across downturn. (FVI investors, particularly with fixed interval investment, believing in equal up and down chance at any tick/daily/.. price/price-interval. With capital/time constraints, however, they will hold or cut loss(probably make share gain at lower price) in down trend and FVI again in up trend. FVI is preferable in cyclical liquid stocks/markets, e.g. commodities)
- "Early bird"/contrarian/FVI investor and short term trader normally catch the bottom/top(vicinity) of a stock's trend/reservoir/bubble before quarterly business announcement(notably before/in months: 2-5-8-11 or 3-6-9-12, and KLCI stocks particularly perhaps on FKLI foreign positions movement/accumulation info:)). Like visionary investor, they may also catch the fundamental bottom of a stock. (NB: Dominant investors are also as visionary investors. A market maintaining sideway without sign of dominant investors/from high transaction volumes drop to zero volume at times, may show sign of "bottoming out with potential"/short term trading opportunity for "holding-up" recovery)
- Investors genuinely believe in IPO price may also have confidence in all-time high price, otherwise always see opportunities at candle tails relatively. (NB: IPO price is from expert opinions, consolidated long term SMAs may be seen as market traded public offer price, MPO)
- Master(Sifu) investor & trader: normally invest/trade only the familiar(e.g. dominant investors'/news cycles, rally price levels, etc) & well informed counters and may not use any charts as the prices are "explained" and traced in memory, as well as able to project price movement with reasonable insight/up coming events.
Portfolio choice
KLCI component stocks allocation based on Markowitz's mean-variance (MV) analysis. Application to the de-trend returns from linear regression is given here as potential-variance (PV) analysis, where the mean is defined by the normalized trend slope. The initial reference level taken here is 12-day average, given within the parenthesis together with the last price.
Mean variance analysis(MV): The expected return of a stock computed from the mean-variance analysis is the average sum of upside and downside variations with respect to the given initial price level. The risk of the stock is measured by the price volatility. The volatility presented here is the 2 standard deviation (2σ) variation of the expected return.
The 'potential analysis'(PV) making used the MV approach with reference to the linear trend of the stocks, and thus provides a comparative measure of the stock expected returns and detrend volatilities in accordance with trending strength.
Allocation constraint: - Maximum (allowable) allocation of a stock in the portfolio can be set between 0% and 100% (default)
Allocation constraint: - Total sum of maximum allocation of component stocks in the portfolio must be >=100%
The M(P)V analysis presented below for the KLCI portfolio are computed with each component stock maximum allocation set to 25%
(NB: Data feeded to analysis subject to misrepresentation/corruption, any comments appreciated)
* Stock investment diversifications: Portfolio diversification, temporal diversification, trading diversification (portfolio balancing, statistical arbitration).
- Portfolio(funds) diversification in global & regional markets often seen by correlated movements in the diversified markets. (ref:MSCI international funds correlations)
- KLCI is closely correlated to DJI which often regarded as "future" to KLCI, as a result DJI/DJI futures is popular indicator for KLCI movement/projection. (e.g. a bet on tomorrow KLCI gap up/down may be seen before market close following DJI futures' tip)
- The computed M(p)V expected returns not discounting trading fees.
- Probable return = expected return +- volatility risk.
- Stock portfolio reference expected returns with zero volatility risk: Fixed deposit, AAA bond.(minimum yearly candle head + dividend expectation, notwithstanding candle width growth)
- Example of a portfolio buy-sell cycle:
- Expected returns from M(p)V provide references for trend analysis about the state of net returns acrossed growth/bubbles. ("Fundamental SMAs" may be checked/confirmed by holding fundamentals(states of business, financial, management/politics). Quantitative/technical analysis aids to the confidence in trading, and managing portfolio risk/opportunity)
- A consistently KLCI-alpha portfolio in Bursa Malaysia(Bursa treasure) is less likely to have more component stocks than the KLCI, though component stocks (likely)posses beta>1. (KLCI has sufficient components for a stock a day monthly invester:). B% shown that KLCI stocks are defensive bias, in correction/downtime however, stocks posses negative beta in general become the defensive stocks)
- Wishful KLCI investment/trading business.. : annual return 10-15% (considering trading cost(online) offset by dividend/bonus), monthly target 0.84-1.25%. (cf: Berkshire Hathaway 22% annual return(ave) from 1964-2005, Soros Fund Management 30% annual return(ave) between 1970-2000. NB: When investors tend to hold shares, share supply tends to getting less in the market. When investors dominate the market rally, though in short term, market moves in their interest)
Top EPF investments in Bursa Malaysia
Details of top 30 EPF holdings can be obtained from the EPF website(total holdings ~1/5 of Bursa market cap). Below are average profit/loss traces(normalized) of the top EPF holdings comparing with G16, KLCI and its major component stocks(oil & gas and finance sectors).
(NB: 1-order approximation may be applied for small step variations)
* Sector performances in Bursa Malaysia are tracked by sector indices. EPF30 performance is closely correlated with KLCI as ~50% of the top 30 equities are KLCI stocks. Properties & construction sectors also shown positive beta with KLCI oscillation. Technology sector seen least correlated to KLCI partly because there's no technology stock in KLCI. Generally, stock sectors are correlated to/led by the stock market index(ref:S&P & sectors correlations).
- Sector/portfolio indices normally portray less noisy profiles as price traces of component stocks are superimposed/constructed together, as more in liquidity and less in market monopoly generally also less in noise.
- An investment index may be efficiently composed(and tracked), without adjustment of prices for right issue, dividend, bonus, warrant, split/consolidation, etc and combinations of aforementioned (of which may pose short selling(RSS)/pair trading opportunities if not regulated), by using weighted average of %gain/loss(read from online trading platform) of component stocks in the portfolio.
- Stock investment returns: Price appreciation, dividend, bonus(capital increase/par>0) and sweetie(free warrant,etc).
- Average of top 5 KLCI stocks dividend yields ~> 4%. (Dividend scraping: buy in near ex-date and sell out before ex-date, otherwise keep dividend and, with best wishes, wait for closing of dividend price gap)
- Among the major investors in the KLCI stocks are the institutions(e.g. EPF). When retail and foreign investors in the cool and off market, KLCI index is often sideway supported or up bias. (NB: Hang Seng China AH Premium Index, the G20(now 16) total shareholder return has been matching/out performing the KLCI since 2004 for examples. Nontheless, reality/timely return for all = share price(~fundamental SMA)+dividend/bonus/sweetie net appreciation)
Money supply/major economic indicators
Money supply, exchange rate and other economic indicators(GDP, inflation, employment, etc) affecting/following the stock market(KLCI) can be obtained from www.tradingeconomics.com, USD-MYR exchange rate
* Capital market growth hedges inflation. In a sustainable economy, capital market down times shall not sustain without deflation. (Notably in properties price: cf. real estate price index/stock sector index oscillation vs KLCI/ KLCI generally leads the properties sector and not other way round)
- Capital market like "cashier" of a business in sustainable economy, though devalued in down times, irrespective of accrued debt/deficit (notably KLCI vs national deficit). The daily expenses/income of the market is the daily net business of the market maker/banker(institution/wholesaler collectively). They(market) generate income(besides dividend, etc) and unrealized gain as the market/economy grows and spend(real net), make unrealized loss/loss when market/economy shrinks/collapses. (a feature of this net spending/profiting in down/up market is that market movement generally ahead of economy(money-driven ecomomy), and that market maker/banker is, in collective sense, optimistic about the market in the long run. Seeing in this context, if stock market is possible to contain/controllable, then small money shall be possible/able to make money from big money while big money generating wealth through stock market exchange:))
- Capital market(like a thermometer) in the heart of economy and a catalyst for whealth disparity (Malaysia is among high-up in income distribution disparity). Investment in capital market aids hedging its growth. Economist believe that economy can be better sustained through market mechanism as it is more efficient, innovative, fair(if appropriately regulated) and draw on knowledge and skills present in the society as a whole. Coupled with monetary easing schemes, market mechanisms help sustaining/balancing liquidity of a economy(generally through money controller buying treasury bonds/mortgage-backed securities from own authorities/banks, giving impact to bond yields and morgage rates; and money/cash flow thus generated may not for depreciation/appreciation as appropriate). The monetary flow rate through the capital market is usually controlled by interest rate and that monetary easing is balanced by inflation(world inflation for reference money). Studies found that equity markets perform well during periods of weak economic/GDP growth if accompanied by an easing in monetary policy, otherwise significantly correlated to expected GDP growth(other than inflation). (GDP is mnemoniced "ripsaw"=R(rents)+I(interests)+P(profits)+SA(statistical adjustments for income taxes, dividends, undistributed profits)+W(wages). In the past ~>22 years, American median household income has been decreasing while GDP increasing 1.33% annually. Capitalisms by means of stock selection:)
- Capital market-commodities market correlation: Oil remains a significant economic driver by its low price elasticity. Past records show that equity(KLCI particularly) is positively correlated with oil(which in turn likely negatively correlated with USD as it is priced, in normal times) and negatively correlated with gold. Correlation between capital and debt markets(equities & bonds yields) is shown below:
Market illusion
There is always willing buyer/seller (watcher/holder) in the market irrespective of buy/sell-call. (impression that there are always people reading one's chart backward in time.. and that the market is noisy & highly nonlinear..)
* An investor decision/extrapolation is only one among myriad of conditions/decisions in the market(e.g. different perceived market inefficiency/volatility, different senses of market depth(whole sale vs retail), differences in risk averseness/differences in gut feeling/hesitation to change decision from watch/hold to buy/sell, opposite views when in and out of market, contary market(KLCI) sentiment/mode, decisions contrary to feelings(as market seemingly contrary to judgements in past experiences), differences in financial/capital & political considerations/evaluations, no free lunch & trust at own risk, etc..).
- Investor view may be affected by the movement/opinion of futures market in coming months, seasonal festive mode(e.g.cashing out before new years), fund manager window dressing(e.g buying in before performance evaluation), major news/announcements(e.g. before/after Fed's announcement on monetary policies, budget, etc) or taking/realising(making) arbitration opportunities. (Transparency paradox: information transparency reduces uncertainty and boosts liquidity, however, a fair and orderly market may not be maintained with "absolute transparency" as market fore-running(e.g. insider trading, signal intercepting/esp from mobile devices, etc) and manipulation(e.g. NCBO, cornering, etc) become indiscernible/"visionary":))
- Investors may be affected by market liquidity or puzzled by volatile or perculiar trading activities, e.g. stocks too il-liquid to buy/sell, volatile up and down trades, series of unit trades(among buzzing reasons may be for trade confirmation, collateral/margin holding, minimum wage, phantom signal, ..), etc.
- Investors using difference chart(time frame)/strategy references: e.g. contra/margin-call force-shelling(inherently accelerating drop in down market), 5min(daily), 30min/1hr(1/2weekly), day(quarterly), week(yearly), month(~>3yearly); and believing in 'can do better' than buy/sell-call reference from time to time.
- Investors' psychological attachment such as greed(risk premium), fear and hope may influence thinking(decision-making process: Profit or loss at end of trading range.., there's always another(bigger) SMA volatility trading range. Seemingly taking risk from profit-taking/loss-cutting and also opportunity for investment/collection.). Market uncertainty/perceived uncertainty & preferences(subjective probabilities), however small, generally generates differences in opinion; and become more opaque when the market bid-ask spread+cost of trading are small(a feature of added liquidity).
- Investor/crowd psychology, can do better feeling(market maker/wholesaler/major investor/share-collector/price-marker/chart-drawer aside, apparently always have people waiting to buy/shell at lower/higher prices), contrary news/announcement and common sense are the common reasons why quantitative/technical trading systems always work in back-testing and paper-trading but may not in real time condition; as market noise often seems too real to investor/trader until become clear in extended time horizon (however, if 'market noise'(often due to retailer/hot money or probably force-selling/hedge funds activities..) developed into real trend, then either the investor/trader would have done better or the trading system might not work in that instance as no all-future-time foolproof for any trading systems. Nevertheless, back-testing is static data fitting and paper-trading is objective and has no influence to market liquidity. In real time trading, new data is feeded to as well as influenced by the trained or dynamically-train expert trading system which desision could possibly be failed by unforseen/untrained conditions/subjectivity, notably fooled by noise in short term tradings/market friction/profit taking from trading system promoter-participant..:)). In the event of algorithm/auto-pilot trading(lack flexibility and "insight" to the trading system and market as compared to semi-auto an manual tradings:a trading paradox..), market liquidity(bid/ask volume: system harmony-friction paradox..), ordering speed cum diminishing/amplifying perceived price inefficiency are uncertainties and potential instability to the trading system.
- Investor shall have investment/risk(opportunity,responsibility) management plan over time (capital, expected return, time frame and strategy), though expect no charity/mercy from a profit-making market(normally opening/closing at buyer's price) and not taking refuge in optimism, while believing in the free market 'invisible hand' at work and being safeguarded by reductio ad absurdum of Russell's teapot). However, if "fair prices for a given time frame" made any sense at all, then the market is inherently stable cllectively as there's always risk-opportunity rally(in search of "dynamic equilibrium") at all times. (Investors are often battling against the market/market quote in big cap markets, and the market is often battling against dominant investors/investors' quote in small cap markets).
Value of stock
Stock is next to cash in liquidity, and is liken to money note with floating denomination. A stock has holding collateral worth(and book backup value), and its instant value is the market price plus its right(price/cost of which appears as the bid-ask spread(getting compensated by lower trading cost)). The conversion cost between stock and cash is the trading commission plus bid-ask spread (instant out of market/cut-loss cost). In view of its potential returns(income, multiplicative & appreciation) and price marking purposes(major share holder/investor activities), idle/not making good return monies are converted to stocks and vice-versa from time to time(in normal time, Bursa is sustained by ~RM1-2b business daily(>genuine) for a market cap of ~RM1.6t). As a result, the stock market is always busy (market down time may be seen as force-saving time for good potential stocks).
* Stocks are traded in regulated stock exchange, a trade is a matched of buy/long and sell/short calls.
- Short selling facility aids to discover the "true market price" of a stock, maximises the stock liquidity(increases volatility esp no seller-tick constraint) and gives market control of its manipulation.(as short-sell opportunities balance the long-buy counter part. NB:besides RSS, short selling/intraday short selling is prohibited in Bursa besides "shorting/mark down-roll over" on T+4 :))
- Money(Forex) is traded globally and its trades are relative zero-sum trades (a zero-sum market, as in money depreciation/appreciation against deficit/reserve), as those long-short matches in the stock market. Cash-settle stock derivatives such as call warrant and FKLI futures(counter balance of underlying) are also zero-sum markets(as expiry, if any collateral worth)|winning/losing trades at all times :). The basis monetary value(exchange rate) of stock & money are USD following the law of one price(LOP)/zero price arbitrage.
- The difference between a stock IPO price and its par value is the underlying business ownership value. The current pricing and backup state of a stock may be seen from the PE & PBV and BV(NTAB) & BV/par, respectively.
- Warrant(share option/deferred rights issue) of stock usually does not have collateral worth and has no dividend, without rights issue but entitled for bonus(force deferred rights issue) and offers leveraged exposure in magnifying percentage profit/loss. Capital protected portfolio usually made up of high leverage warrants/options and good high yield bonds.
Hot stocks
Example of hot stocks on the trading floor are those attracted attention by nature of their active trading and gains.(every stock has its day:))
* Many of these stocks are penny stocks and they are favourites of the contra/day-traders, although stocks with holding fundamental may also emerge as hot stocks on their upward runs. (Speculators trading these stocks usually with confined losses by means of cut loss price/cut loss time, or whichever come first)
- Hot stocks in general reflect the market sentiment and do better in up market. Their emerging and on going development|without "David Copperfield"/tunelling vision & predator's tech.:) are often subjects of traders interest(tracking the development/progress of first day up candle in hot market, probable wave following last wave up volume > down volume, for examples).
- Some of these 'market selected' stocks may appear as manipulated or monopolized, and be cautioned as socks with unusual market activities(UMA). (short term/day-trader normally adopt consistent trading system/strategy, and at offbeat times believing in "Of the Thirty-Six Stratagems(..untowardly protecting irregularity/irrationality), fleeing is the best":). NB: market circulation: short selling(share recycling)<->long buying(money recycling), e.g. pair of marubozu candlesticks or patterns to that effect)
- Hot stocks mostly high in energy(liquid+swing) and usually volatile, and retracements are often seen when force selling activities prevail(e.g on the T+4s). If market has only one day memory, hot stocks at market close may be featured as "daily IPOs" for coming day.
- Stock trading vs dice rolling: assume a stock as dice and take the entry price as 3.5, numbers above 3.5 as up and below 3.5 as down. Roll the dice, chance that the stock will go up or get down is equal and volatile. Trade two stocks as roll two dices and take the sum. Perform this simulation(click here) and see how the investment may vary..(best wishes in rolling-over.. and may the good news match the stocks of your choice!)
- Additional to DJI/DJI futures for KLCI, daily forecast for stocks may be seen through today & yesterday candles. i.e. today candle seen comparatively rallying up within/through yesterday candle may show sign of better tomorrow, and vice-versa(collectively gap push-through consistent). In real time trading, RSI-MFI combined is popular among oscillators(for divergence, over-sold/bought indications and as companion to pacing indicators such as PSAR(4,20), 5-interval SMA/patterns/promotional patterns projection:). NB: a price gap may be referred as money/share gap, when crossed in usually pushing through as there's no support/resistance with reference to the gap)
- Pascal's wager and probability: Consider two mutually exclusive possibilities. If there is no god, then believing in him will be of little matter. However, if there is a god, then believing in him will bring you the infinite happiness of an eternity in heaven, and not believing in him will bring you the infinite unhappiness of an eternity in hell. So even if your subjective probability of god existing is arbitrarily small but greater than zero, your expected gain from believing that god exist will be infinite. We now understand that Pascal's reasoning is flawed since it depends on his particular listing of the possible states of the world. For example, another possibility is that if god exists, believers are sent to hell sine no human has enough information to conclude this is true, while doubters, who have the correct view given the information available, go to heaven. - excerpt from: A History of the Theory of Investment. M. Rubinstein (2006)
- Outline of an Intellectual Monster: the market cannot do without a state or state institutions .. - page 13, The Metaphysics of capitalism. Andrea Micocci (2009)
Investor interest
Investors expectation of a company is preserving their interest.
* Share holders' common interest/right are dividend, bonus/sweetie and share price appreciation.
- Company/GLICs may uphold/defend its/market share capitalisation commensurate with business/economic performance as appropriate, as it remains primary avenue to raise & distribute asset worth/money/cash flow efficiently to aid overall economic growth(net of.. inflation/cost of living apparently ever increasing, etc).
- Foreign holdings in Malaysian equities averagely ~25% with low 18% and high 27%. In year 2008 KLCI corrected more than 40% with foreign holdings reduction ~30%(~40% sold down in portfolio market value) and the rest of market correction from the retailer. It appears that KLCI is sensitive to foreign holdings, and that retailer net selling was proportionately small amidst the downtime. Generally retailer(with diversity & net trade ~an order smaller) has less influence on KLCI as on exchange rate and futures/commodities-hedged stocks(stocks attracted foreign holdings), notably 1997 foreign holdings sold down following asia currency crisis.
- In spite of the relative up & down times, KLCI 'zero correction SMA' growth rate is ~10% yearly for the past 10 years and maintains positive catching-up of government debt growth in net term(~11% debt growth rate, ~4-5%GDP budget deficit). Until presently, KLCI PE10 is hovering around ave of ~>16x, inferring proportionate growth in KLCI EPS10 (NB: studies on S&P shown that, in the long run, market prices grow & gradually diverge from EPSs).
- Malaysia business remains competitive(ref: current a/c balance, GDP growth/among top 30 economies by GDP(ppp), ave BCI above 100 for past 10 years) although with relatively weak RM and top in government debt among the top 10 emerging markets (NB: G7 government debts ave ~>100% GDP, ref: insolvency, monetizing debt). Long term buy call..(debt up, budget deficit, reserves healthy & market up)/cf. AirAsia Bhd(debt up, cash flow up, cash up & profit up)
