stlplaceShui Pi, the editor-in-chief of ChinaTimes, predicted this China drop (or crash) in his paper. Here is the link to his article. Quoted some here:
水皮杂谈：第二次“5·30”的概率有多大
2007年的最后一期水皮杂谈，题目是“何时才能满仓等待暴跌？”，文章缘起和讯的编辑对水皮的采访，其时上证指数在4700点附近，水皮的结论是对于大多数的股票而言，已经错失满仓等待暴跌的机会了。因为绝大多数的股票在11月中旬上证指数单针探底5000点时已经探明了底部，在此后一个月上证指数的反复下探过程中，大多数的股票不但没有随风飘零，反而走上了自己的上升通道。也就是说，“八二”现象其实已经悄悄地在我们身边生成了，最近的统计数据则更能说明问题，沪深两地的上市公司中有60%的股价已经接近6000点时的价位，而深成指和深综指均已接近前期历史高位，中小板指数早就创出新高。
It looks like it. On Monday Jan 21 we have the biggest drop of global stock markets in recent years (see the quoted news below).
I want to talk a little about the Chinese market in specific. It appears to me two pieces of news helped driving the market down. The huge secondary offering of $22 billion from Ping An Insurance (SHA:601318); the talk of starting stock index future market and a Nasdaq-like Market in China after March 2008, by Mr. Cheng Si Wei, Chairman of Finance Committe of National People Congress. 成思危：创业板和股指期货准备工作基本就绪.
But as individual investors I think we should remain calm even in this crazy market. It may be a good idea to get rid of some bubble-priced stocks because we are not going to see that price for a while. Note bubble is relative the intrinsic value of a company, not compared to the previous high price (e.g, VMW, AAPL, N,…are all risky to me).
Quoted news
AP news: stock markets plunge worldwide.
Read this from trader818. While I don’t agree everything here, I think the principle applies. I also want to add one thing: if average down too many times (and never make money), something (the market or the stock) must be wrong. I learned the hard lesson from Longbottom (LFT).
最近有不少朋友问我大势这么差，是不是该逃跑，或者买点put hedge上。
我的观点是，从长期投资角度讲，现在已经出现很多值得关注的股票，该做的不是逃跑 , 而是参与。
熊市里面很难赚钱，特别要防范风险，选股票时候需要注意几个问题
Last week I received the new credit card from CitiBank, which I immediately put it in use by transfering some of the high interest (7.75%) debt in my HELOC to this account. Note this 0% offer is valid for one year.
I found out this offer from MyMoneyBlog.
I have done credit card balance transfer since year 2000. I think most people care about the rate, and the transaction fee when doing balance transfter. But I think the time length is also very important:
From YouTube, the event was hold on Tuesday (Jan 15 2008)
Shoe retailers
Here are some of the major shoes stores in the US. Snapshot from the Shoe Carnival ICR XChange 2008 conference. X axis stands for the choices of shoes; Y axis stands for income level of customers.
My own experience
In recent years I bought most of my shoes shoes from online stores such as zappos, and shoebuy . And I like their service and price. I understand Amazon’s Endless (shoes and bags) is popular too.
I joked with my wife some day we are going to open a shoe store in Shanghai or somewhere in China, something like the Journey’s.
401k
My new 401k plan did first purchase yesterday. I got 0.47 shares of company stock plus other mutual funds. If this rate holds, I am going to get 12 shares this year 🙂
MasterCard CCF settlement
I registered for $25 settlement fees. Now waiting its arrival to my mail box…I understand it will take a while.
Staples easy rebate
(Update noon Jan 18) Opps, the Bush rally only last couple hours 🙁 Seriously, I do welcome this $1,600 per family tax rebate. Maybe a trip to Europe this Spring? Oh well, that won’t help the US economy directly.
(Original) I mean, to the stock market. Yesterday, after Ben spoke in Congress and painted a bleak picture of US economy, and asked for some sorts of stimulus package. The DOW tanked 300 points, S&P and Nasdaq did no better. Today as Bush is unveiling his economy package: good old things like tax rebate for individuals and business, the US market seems took the cue and is up in the morning. Another amazing thing is the Overseas market (Japan, Korea, Hongkong and Shanghai) also reversed course (last night). So when Bush speaks, the world listens 🙂
Just kidding. Seriously speaking, I think US president has little to do with the US economy cycle, nor can a Fed chairman. The US is heading to a recession, period. But see, the problem is people (include myself) don’t want to hear the harsh words, facing the reality. A few days ago in Michigan John McCain did his straight talk “some of the jobs lost (in auto industry) is not coming back, we need to re-train our people for new skills”, while his rival Mitt Ronmey says he will do everything to get back auto jobs. It’s so obvious that US auto industry is losing ground in the US market, but people still elected Mitt: the guy who tells white lies.
Healthcare cost for US companies
Quoting Reuter News: E-House China (EJ), filed with U.S. regulators on Thursday for an offering of $175 million of its American depositary shares. Note the company recently formed alliance with some major home builders in China (read the news from CNNMoney).
Now they are asking more money from the market, the shareholders (old or new). From my observation the China housing market is at a psychological tipping point, i.e., it is facing a correction to say the least. But in long term, I do believe there are rooms to grow.
I am not planning to buy the EJ. But for reference (Yahoo Finance), it closing price today $21.71 represents PE (ttm) of 44, and Price/sales (ttm) of 16.7.
at this time.
I was excited about shorting EDU or APPL (buying puts) after Tuesday’s MacWorld keynote and New Oriental disappointing earning news. I hoped to cover some of my loss from LFT (and to a less content CROX) by shorting the stocks, now that the market appears controlled by the bears. So I went and told my wife about the drop of New Oriental stock, broken shoes (CROX) vs. broken school (EDU) analogy, my wife said this:
“so now you are going to Du Da Xiao (a form of gamble in China), huh?”
So much for my fundamental analysis. Seriously I decided not to short the EDU due to two things:
1) In order to short a stock, I need to have Margin account. I did send the margin applications on Tuesday. But I decided to pull the application today, as I read more about it, and the story about Berkshire Hathaway stock once dropped more than 50%. Hypothetically, a person who bought BRK.A in its earning days won’t get the huge gains of BRK.A because he/she got margin call. Here is the story in Chinese. Quote here:
巴菲特2007年10月18日在接受福克斯新闻网商业频道的专访时，曾就“如何看待通过融资来购买股票或者说借钱买股票？”说：“我认为这有点疯狂。如果你看看伯克夏公司，我们买入的时候是7美圆/股，现在每股是129，000美圆。但在1974年期间，它的股价下跌了50%，2002年时，股价也从高点大跌50%。如果你的资金中有50%是通过融资获得的，则意味着你已经破产了。但你不应该因拥有一只从7美圆涨至129，000美圆的股票而破产。1987年，伯克夏的股价在两周内下跌了40%。因此，如果你通过融资来买股票，你的命运就掌握在他人的手里，这太疯狂了。”