Thursday, 7 March 2013

Quote for the day

"A market is the combined behavior of thousands of people responding to information, misinformation and whim." -  Kenneth Chang

LSL Market Review 7th Mar 2013

The transfer of a minority stake in Asian Alliance Insurance to Dutch and German investors from Softlogic Holdings was the highlight of the day’s trading. Buying activity was also evident in Cargills and John Keells Holdings. Market trended in the opposite direction according to the implications of yesterday’s rise in treasury yields.

ASI gained 16.66 points to close at 5,680.02 and the S&P SL20 index gained 5.55 points to close at 3,220.41. Turnover was Rs. 2.5Bn.

Top contributors to turnover were Asian Alliance Insurance with Rs.1.8Bn, Cargills with Rs.238.0Mn and John Keells Holdings with Rs. 89.0Mn. Most active counters for the day were Nation Lanka Finance, Nation Lanka Finance warrant 21 and PC House.

Notable gainers for the day were Nation Lanka Finance warrant 21 up by 25.0% to close at Rs. 1.50, Nation Lanka Finance up by 8.7% to close at Rs. 10.00 and Durdans up by 7.3% to close at Rs. 103.00. Notable losers for the day were Environmental Resource Investments down by 5.6% to close at Rs. 1.70, Pan Asian Power down by 3.7% to close at Rs. 2.60 and Ceylon Guardian Investments down by 3.5% to close at Rs. 161.10.

Cash map for today was 71.45%. Foreign participation was 48% of total market turnover whilst net foreign buying was Rs. 2.2Bn.

2013 Global Stock Market Performance

Below is a table highlighting the year-to-date performance of the major stock markets for 77 countries around the world.

The average YTD performance of the 77 countries listed below currently stands at 4.01%. Sixty of the 77 countries are in the green so far this year, while the other 17 are lower. Of the G7 countries, Japan and the UK are up the most, but remember that much of these gains are due to local currency depreciation. The US ranks third with a YTD gain of 6.5%, which really puts it on top given the currency impact on Japan and the UK. Italy has been the worst performer in the G7 with a YTD decline of 2.74%.

The BRICs (Brazil, Russia, India, China) have not had a great start to the year. China is up the most of the BRICs, but it's only up 1.94%. Russia ranks second with a gain of 0.64%, while India is down 1.41% and Brazil is down 6.09%. Brazil has been the third worst performing country on the list so far this year.

James P. Arthur Huprich's Market Truisms And Axioms

1. Commandment #1: "Thou Shall Not Trade Against the Trend."
2. Portfolios heavy with underperforming stocks rarely outperform the stock market!
3. There is nothing new on Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again, mostly due to human nature.
4. Sell when you can, not when you have to.
5. Bulls make money, bears make money, and "pigs" get slaughtered.
6. We can't control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.
7. Understanding mass psychology is just as important as understanding fundamentals and economics.
8. Learn to take losses quickly, don't expect to be right all the time, and learn from your mistakes.
9. Don't think you can consistently buy at the bottom or sell at the top. This can rarely be consistently done.
10. When trading, remain objective. Don't have a preconceived idea or prejudice. Said another way, "the great names in Trading all have the same trait: An ability to shift on a dime when the shifting time comes."
11. Any dead fish can go with the flow. Yet, it takes a strong fish to swim against the flow. In other words, what seems "hard" at the time is usually, over time, right.
12. Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain vigilant in managing risk and expectations. Use volume as a confirming guidepost.
13. When trading, if a stock doesn't perform as expected within a short time period, either close it out or tighten your stop-loss point.
14. As long as a stock is acting right and the market is "in-gear," don't be in a hurry to take a profit on the whole positions. Scale out instead.
15. Never let a profitable trade turn into a loss, and never let an initial trading position turn into a long-term one because it is at a loss.
16. Don't buy a stock simply because it has had a big decline from its high and is now a "better value;" wait for the market to recognize "value" first.
17. Don't average trading losses, meaning don't put "good" money after "bad." Adding to a losing position will lead to ruin. Ask the Nobel Laureates of Long-Term Capital Management.
18. Human emotion is a big enemy of the average investor and trader. Be patient and unemotional. There are periods where traders don't need to trade.
19. Wishful thinking can be detrimental to your financial wealth.
20. Don't make investment or trading decisions based on tips. Tips are something you leave for good service.
21. Where there is smoke, there is fire, or there is never just one cockroach: In other words, bad news is usually not a one-time event, more usually follows.
22. Realize that a loss in the stock market is part of the investment process. The key is not letting it turn into a big one as this could devastate a portfolio.
23. Said another way, "It's not the ones that you sell that keep going up that matter. It's the one that you don't sell that keeps going down that does."
24. Your odds of success improve when you buy stocks when the technical pattern confirms the fundamental opinion.
25. As many participants have come to realize from 1999 to 2010, during which the S&P 500 has made no upside progress, you can lose money even in the "best companies" if your timing is wrong. Yet, if the technical pattern dictates, you can make money on a short-term basis even in stocks that have a "mixed" fundamental opinion.
26. To the best of your ability, try to keep your priorities in line. Don't let the "greed factor" that Wall Street can generate outweigh other just as important areas of your life. Balance the physical, mental, spiritual, relational, and financial needs of life.
27. Technical analysis is a windsock, not a crystal ball. It is a skill that improves with experience and study. Always be a student, there is always someone smarter than you!