Saturday, 13 April 2013

Quote for the day

"Stock market corrections, although painful at the time, are actually a very healthy part of the whole mechanism, because there are always speculative excesses that develop, particularly during the long bull market." - Ron Chernow

LSL Weekly Market Focus 12th Apr 2013

By Lanka Securities Research

On Monday, Union Bank gathered further steam led retail investors. The bullish trend on Union Bank seemed to have rubbed off on other mid-capped counters such as Colombo Land and Vallibel One. Meanwhile Kegalle Plantations saw a private deal taking place on the normal board. Normally, a sluggish period is seen with minimal activity in the past during the upcoming festivities. But there seems to be a clear reversal this year. 

ASI gained 11.44 points (0.2%) to close at 5,777.38 and the S&P SL20 index gained 9.28 points (0.28%) to close at 3,321.81. Turnover was Rs. 398.0Mn.Top contributors to turnover were Union Bank with Rs. 63.6Mn, Kegalle Plantations with Rs. 44.2Mn and Carson Cumberbatch with Rs. 35.6Mn. Most active counters for the day were Union Bank, Vallibel One and Colombo Land & Development.Foreign participation was 8.5% of total market turnover with net foreign inflow of Rs. 34.87Mn.

Profit taking was quite evident on Tuesday as retail investors cashed in before the weekend. Activity on blue-chips remained relatively low which was reflected by a lower turnover. Weligama Properties, a subsidiary of East West Properties announced a private placement with the latter rising by almost 10%. 

ASI dipped 9.78 points (-0.17%) to close at 5,767.60 and the S&P SL20 index dipped 5.06 points (0.15%) to close at 3,316.75. the turnover was Rs. 399.2Mn.Top contributors to turnover were John Keells Holdings 79.3Mn, Hatton National Bank with Rs. 32.7Mn and Carson Cumberbatch with Rs. 32.2Mn. Most active counters for the day were Union Bank, Vallibel One and Colombo Land & Development. Foreign participation was 26% of total market turnover whilst net foreign buying was Rs. 112.2Mn.

On Wednesday, gains on Sri Lanka Telecom and Nestle helped boost indices whilst retail sentiment also picked up. Turnover levels low with institutional activity on the sidelines. With treasuries holding steady, it will bring a sense of relief to equity investors. 

ASI gained 26.70 points (0.46%) to close at 5,794.30 and the S&P SL20 index gained 5.74 points (0.17%) to close at 3,322.49. turnover was Rs. 309.4Mn.Top contributors to turnover were Commercial Bank with Rs. 27.4Mn, National Development Bank with Rs. 25.5Mn and Central Finance with Rs. 23.7Mn. Most active counters for the day were East West Properties, Union Bank and Nation Lanka Finance.Foreign participation was 10.41% of total market turnover with net foreign buying of Rs. 11.4Mn. 

Retail investor driven activity picked on Thursday whilst institutional activity was seen on mainly banking and financials. Sound investor participation ahead of the festive season is a promising indication of improving sentiment in the CSE. Foreign interest was seen on Hatton National Bank. Foreign interest on blue-chips during the past few months could be held as the main reason for the current revival in the condition of the market. However, retail participation continues at discrete levels. 

ASI gained 19.07 points (0.33%) to close at 5,813.37 and the S&P SL20 index gained 6.93 points (0.21%) to close at 3,329.42. Turnover was Rs. 940.5Mn.Top contributors to turnover were Hatton National Bank with Rs. 462.9Mn, Commercial Bank with Rs. 103.7Mn and Cargills with Rs. 56.1Mn. Most active counters for the day were Union Bank, Free Lanka Capital Holdings and Nation Lanka Finance. Foreign participation was 39% of total market turnover whilst net foreign buying was Rs. 480Mn.

Leadership and Trading

By: Nazy Massoud

I was participating in a meeting the other day and the speaker was talking about leadership. 

When I was thinking of leadership, it occurred to me that as traders, we own our business and we set its direction. We are leaders and how we run our business is very essential to our success. 

As you might know, 90% of traders lose money. The challenge is how can we lead and run our business so we do not become part of these statistics? 

One way is to understand the leadership principles and see how you are applying them to your own trading business. 

What are these principles? 

1. Knowing why you are in the trading business 
You can start by asking yourself:
  • Why are you in the trading business?
  • What was your initial attraction to trading?
  • Are you thinking about it as a business or a hobby?
  • Are you passionate about your trading?
  • Does trading feel like a lot of work?
  • What are your trading goals?
  • Are you enjoying the journey or just focusing on the end result?
  • What do you want to get out of trading? 
    • Money
    • Excitement
    • Challenge
    • Power
    • Other things
  • Imagine you got all of the things you wanted to get out of your trading business:
    • What do they mean to you?
    • How do you feel about them?
    • How do you feel about yourself?

When we know why we want something, it helps us to overcome challenges that we go through. 

When you think of Tiger Woods, what comes to mind? For me, he is one of the most successful golfers. I believe he wants to be the best that he can be. This is so strong for him that he has a merciless routine. Rain and shine, he practices and tries to learn something new.  

Because the reason he has is so strong for him, he is disciplined, he produces consistent results and has fun doing it. 

Is the reason you are in the trading business strong enough for you to give your business your full commitment? 

2. Managing your energy 
When we get up in the morning, we have a certain amount of energy. It is up to us to decide how we will use our energy and where we will focus it. So how do you manage your energy during the day? 

What activities energize you and what drains your energy?
  • How do you sequence your activities?
  • Do you try to do everything yourself, or do you focus on your strengths and delegate the rest?
  • How do you deal with stress?
  • How do you motivate yourself?
  • Who do you surround yourself with?
  • How do you manage your energy?
  • How do you deal with the bad news or naysayers?
  • How do you deal with emails, phone calls, IMs and other things that can distract you?
  • Are you being productive or running out of time each day?

If you try to be everything to everyone, you get burned out. 

You might have heard of the 80/20 rule – 20% of our efforts get 80% of our results. You can focus your energy on the efforts that get you the results, or let yourself get distracted. 

When you get distracted, you are very busy, however you do not produce the result that you want in the time frame that you want. The choice is yours.

3. Your perception
As we all know, we face challenges and speed bumps throughout our trading business. The important question is how do you deal with them? What meaning do you give them? 
  • When you lose:
    • How do you view it?
    • What meaning do you give it?
    • How do you feel about yourself?
    • Are you looking at the lessons?
  • Do you let the bumps on the road stop you?
  • Do you move forward despite challenges?

The way we look at things determines how we feel about it and how we can handle it. 

For instance, if you look at your losses as being the end of the world or feel that everything is going against you or that you are stupid, then guess what? It will be harder for you to be successful at your business. 

However, if you consider your losses as being the cost of doing business and an overhead for your business, then it is easier to accept and you can move on. 

It is important to realize that it is about your perception and how you view it. You might have heard, “There is no reality only your perception”… 

It is OK to have fear as long as it does not completely stop us. Take small steps. 

4. People you surround yourself with
You might have heard, “You’re the Average of the 5 People You Hang Out with Most.” Friends have a way of influencing us. 

I remember meeting a very nice couple during one of our vacations. We started talking and the husband was interested in trading. However, after over a year of studying, he had not pulled the trigger yet. He wanted to create some extra income, however he was afraid of losing. On top of that, his wife was saying, “We cannot afford to lose even one penny.” As a result, he had not pulled the trigger.

Who do you surround yourself with? Are they: 
  • Encouraging you in your trading business?
  • Believing in you?
  • Opening doors for you?
  • Successful?
  • Someone you would do the same for?

It is important to choose who surrounds us and whose advice we take. Often, we surround ourselves with the people we like, rather than the people whose point of view we respect. 

Do not allow others’ fear to become the boundaries of your dreams… 

5. Taking ownership of your trading business
Ask yourself, do you:
  • Trust yourself?
  • Have a point of view when you are trading?
  • Take calculated risk?
  • Take responsibility for your trading results?
  • Take the opportunities that present themselves?
  • Adapt to the changes in the market?
  • Build flexibility in your trading business?

Many of us put a lot more value in others’ opinions than our own. We tend to want to be safe than sorry. If we follow others, we do not have to take responsibility for our results. 

We can blame the advice, the markets or anything else. 

One of the signs of great leaders is not that they do not make mistakes. It is that they handle the consequences and move on. 

Plato says, “To risk nothing, is to risk everything.” 

To summarize, the 5 principles of leadership are: 
Knowing why you are in the trading business
Managing your energy
Your perception
People you surround yourself with
Taking ownership of your trading business

Remember, the most important thing is not only to make decisions, but also to live with the consequences and be gentle with yourself. That is how we grow, learn and build trust in ourselves.

The trading business is a marathon and not a sprint.