Woke up in the morning and wanted to go gym workout that disappointment of not getting CRCT, I notice that there negative divergences in the DOW and SP500. It might be wise to be cautious if you are trading for a short term.
1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position… not ever, not never! Adding to losing positions is trading’s carcinogen; it is trading’s driving while intoxicated. It will lead to ruin. Count on it!
2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.
3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.
4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.
5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.
6. “Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent.” These are Keynes’ words, and illogic does often reign, despite what the academics would have us believe.
7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.
8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.
9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In “good times,” even errors turn to profits; in “bad times,” the most well-researched trade will go awry. This is the nature of trading; accept it and move on.
10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we’ve known have the simplest methods of trading. There is a correlation here!
11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, “When they are cryin’, you should be buyin’! And when they are yellin’, you should be sellin’!”
12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.
13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow… usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.
14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year… and our profits grow accordingly.
15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a “secret” to trading (and of life), this is it.
16. All Rules Are Meant To Be Broken…. but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
By Vitaliy Katsenelson, CFA
“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.” — Jeremy Grantham
Many investors (including the author) were caught off guard by the economy’s surprising earnings growth over the last several years. Earnings of S&P 500 companies have grown more than 20% during the last two years, and they are expected to climb another 8% in 2006. This astonishing growth has exceeded the Gross Domestic Product (GDP), which topped out at 4.6% in 2004 and has grown at a slower rate since. Contrary to common perceptions, corporate earnings growth historically stays in line with GDP growth.
The source of this earnings growth was profit margin expansion (here we define profit margins as corporate profits / GDP), from 7.0% at the end of the third quarter 2001 to a whopping 10.3% in the latest quarter. As profit margins rise, corporations get to keep more of their sales, leading to improved profitability. To put things in perspective, the average profit margin for corporate America over last 25 years was approximately 8.3%, 200 basis points less than today.
The question comes to mind: Are the billions of dollars dedicated to productivity enhancements over last decade finally paying off? Did the new era of technology-induced corporate efficiency descend upon us? Are we in a “new”-economy, higher-profit margin paradigm? (OK, three questions). The answer is no, no, and definitely no.
Fallacy of composition
Corporate America’s enormous investment in technology did not go to waste. It made companies more efficient, helping them to produce more with less — the definition of productivity. That’s the good news. The bad news is that technology improvements were available to everyone. Oracle(Nasdaq: ORCL) will sell its software to any company that can spell “Oracle” on a multi-million dollar check. This is where the economic concept fallacy of composition (what is true for part may not be true for the whole) kicks into high gear. Though technological investment may help the first adapter to cut costs and get a leg up on the competition, competitors won’t watch their economic pie being eaten by a more efficient company. Those who do sit still will be driven out of business. The others will adapt by writing a big fat check to Oracle, SAP(NYSE: SAP), or Microsoft(Nasdaq: MSFT), eventually catching up and competing the higher margins away. Thus, what was true for one company is not true for the industry.
As much as we would love to believe that productivity improvements brought to us by technological innovations will transform into corporate profitability, historically that has not been the case. Wal-Mart(NYSE: WMT) has changed the retail landscape by installing the most (at the time) revolutionary inventory management and distribution systems, passing the cost savings to the consumer, and driving less efficient competitors out of business.
However, Wal-Mart-like technology is available off the shelf to any retailer aspiring to coexist in today’s competitive landscape. Even companies like Dollar General(NYSE: DG), with stores the size of several Wal-Mart bathrooms put together, wrote sizable checks to Manhattan Associates(Nasdaq: MANH) and installed perpetual inventory and automatic reordering systems. This investment will keep Dollar General in the game by helping it survive in the new competitive environment, but is unlikely to send its margins much higher from today’s level. [Read more…]
I took a trip to Hougang Mall located in Hougang central. I have not been there since years ago when i left disappointed by what NTUC does to that shopping mall. Back then, Seng Kang wasn’t that well developed so the ammenities were limited. Hougang Mall was the only shopping center close by.
The shop selection was all the bare essentials. I was disappointed with it all together such that when we had compass point later on, i never set foot into that mall again.
However, since CapitalMall took over, they have give the whole mall a very refreshing change. Now it has become a mroe enjoyable place to be compare to what it used to be. The number of eateries has increase tremendously. New spaces were opened up to accomodate more tenants. What i notice is the crowd was bigger then years ago. This may or may not be directly related to the enhancement. Nevertheless, the faces on people i see is that they enjoy shopping there compare to the last visit.
CapitallMall will commence Asset enhancement of bugis junction in 4Q 2006. I’m sure alot of ‘gin na’ will be looking forward to a further enhancement to an already adequate shopping experience.