Hello Malcolm, <<Sinotrans>> ... do not mention that name, for it reminds me of how I left anywhere between 30-100% on the table betting on shares in my own front foyer :0)
Also, congrats on your Indian bank trades. Again, I sold early :0(
I have a chance to participate in my neighborhood party still, because my father-in-law got an application form for me to subscribe to the PICC (ex-monopoly People's Insurance Company of China) Property & Casualty Company IPO in HK. This is a game where one fills out a form, signs over an enormous check, and hopefully will get some decent sized tranche of allocation (depending on subscription rate), and sell out at the initial day frenzy, trim back on position, or add to stake.
Near the blow-off stage of a bubble, as we were in Nov 1999 to March 2000, one can play for bigger stakes but over a shorter holding period, and run at the very first sign of trouble, like so the posts I attach at the end of this message, just for old times sake :0)
I was hesitating, but my father-in-law reminds me that HK bubbles are not done until after the old ladies line up for IPOs. We have not seen that since the IPO of Tom.com in 1999 ;0)
As to <<crash>>, a buddy in the US sent me an e-mail today, with a question, "What is your latest take on the markets? This can't possibly be sustainable?"
I clip/paste my reply:
My take is that we are in an echo-bubble, a mania flashback, a low-interest rate and tax-rebate augmented liquidity deluge that is floating the entire world’s equity, bond, real estate and commodities markets, from Argentina to Zimbabwe.
A week ago Japan and Hong Kong equity markets declined a heart-stopping 5% in one day’s trading session, followed by a 3% drop in Europe, all on concern regarding the US economic recovery. For a few hours I thought of October 1987 and March 2000. The atmosphere had that nasty feel to it; you know, one of impending doom.
By the time NYSE opened for trading, the US equity culture stopped the rolling global equity rot dead in its tracks as Joe6Pack happily continued to believe in the magic of Maestro Greensputin and the cult of Professor BurnAndKaput.
The market action was both amazing and alarming.
I am up 19% year-to-date on net asset value (28% on actively managed portion of NAV), in large part due to my allocation in non-USD currencies, energy royalties, gold, gold/platinum and other mining positions. My equity allocation at no time was over 20%.
I am scared. The bubble is back, and bigger than ever, encompassing equities, bonds, and real estate. The 2000 tech-collapse was just an appetizer, and the August bond debacle was only the salad course. The coming implosion will do much more to damage the real economy because the system is weak, and the defenders are nearly out of ammunition.
It was a bad idea of Greensputin to engineer more asset bubbles in his effort to defeat what would have been a normal post-bubble cyclical market cleansing and rejuvenating economic recession. Now, for the sake of a few more quarters of nominal GDP growth, even as corporate profit carnage continues a pace, an equity bubble is pumped up (on margin debt terms) even bigger than the original version, accompanied by bond mania and real estate frenzy.
The problem with real estate frenzy is that, unlike equity and bond games, at the frenzy’s end, the new buyer, the old seller, and the financier all get hurt. The new buyer’s down payment and equity is typically wiped out. The old seller most likely traded up to a bigger house with a larger mortgage, and have his equity head handed to him on a platter, and the financier of the transactions, the Fannies and Freddies of this world, have their extraordinarily large book of business splattered by the ceiling fan, and brown mist permeate the dance floor.
Somewhere around the corner is the feared derivatives explosion, given that all players are betting as the FED has told them, that ‘interest rate will stay low for considerable length of time’. This FED promise is nonsensical in an environment where they have no influence over overseas inflow of capital, and therefore no good.
Greensputin is winging it, the world’s economic welfare hangs in the balance, and Joe6Pack is not aware.
Chugs, Jay
P.S. Old times sake:
Message 12186762
December 4th, 1999
Message 12242189
December 9th, 1999
Message 12355669
December 22nd, 1999
Message 12385690
December 26th, 1999
Message 12386627
December 27th, 1999
Message 12393065
December 27th, 1999
Message 12402354
December 28th, 1999
Message 12402641
December 28th, 1999
Oops, just got more bullets. Just bought bravely into Golden Power (603 in Hong Kong) as they resumed trading after 5 day suspension of trade due to PCCLF and Hikari Tsushin bought 51% of it to be used for holding company purpose (invested companies outside of Japan).
Not getting a lot of work done these days. Where are those Pachinko machines?
Message 12403144
December 28th, 1999
No rationale, logic, valuation. Just speculation in its purest and most daring form. A sand castle built on a deck of cards, supported by a shimmering mirage of riches that can be.
Just like Tricom (a/k/a PCCLF after Li's takeover), the big boys decide to buy a small listed company - in this case Golden Power, sell off it substantive but unnecessary innards (battery making), and then inject assets (in the form of convertible debt) and investments (nay, i-net projects, visions, mirages, and dreams) into the almost empty shell, operate the newly puffed up but already listed company. These 'backdoor' listings dispense with the inconvenience of waiting around for IPO opportunity, in case the liquidity train does not manage to cross the bridge of Credibility and crashes into the South Sea.
Message 12404275
December 29th, 1999
Conservatism, me, one who even dares to contemplate shorting this crazy market. Edwin-san, you are, however, correct in detecting my overall bearish bias and reluctant bullishness on my thermonuclear bombs.
January does not concern me much, March does. We all become technicians first, science fiction writers later, soothsayers next, then, finally, astrologers. February is a month to start shorting until we feel margin poor, and August is for going long until we feel cash poor.
Message 12414549
December 29th, 1999
Golden Power (603) power strokes to 13.5 noon time today, a reasonable 48% rise in 24 hours. Sold half, and buying 1049 (Celestial Securities) at 0.95 as it will be the first publicly traded brokerage w/ i-net trading of HK shares. The Boom.com and others are not public. With the US based experience, this is, so far, indeed like reading tomorrow's Wall Street Journal today. Son is right about his Time Machine, just on a much more glorious scale.
Richard Li of PCCLF is throwing a 20 million party with Whitney Houston and other megastars for the Millennium night. I guess the man has cause to celebrate. This is the 1920s all over again. 1925 or 1929?
Message 12414778
December 29th, 1999
Message 12423716
December 30th, 1999
Message 12424137
December 30th, 1999
… I am on page 69 of "Devil Take the Hindmost" by Edward Chancellor (purchaseable at Amazon, of course), and at the bottom of the page, from the year 1720, by an anonymous pamphleteer, in great clarity ...
"The additional rise of this stock above the true capital will be only imaginary; one added to one, by any rules of vulgar arithmetic, will never make three and half; consequently, all the fictitious value must be a loss to some persons or other, first or last. The only way to prevent it to oneself must be to sell out betimes, and so let the Devil take the hindmost."
The earlier part of the book described speculative events since the Roman empire days, and I observe that if one were to replace the nouns (i-net for gold, biotech for tulips, diving engines for cellular phone, treasure in South Seas for WTO in China, etc) and change the dates (1999 for 1720, etc), the resulting words can be published in Wall Street Journal and Barrons, with no loss of sense or education value.
I do (intellectually, at least) realize that 95% of i-net companies will no longer be around by half time, but I believe it would be criminal (not to mention irresponsible to imaginary offsprings) not to play this game out and gather assets for an eventual retreat to a quiet sunny cove in Maui. Our education, experiences, and sense of historic and social relevance and duty dictate that we must contribute to the progress of i-net globalism, and as in all progressive moves, someone must eventually pay a price, even as we ourselves edge towards the emergency fire exit.
We are living in historically significant time and feeling invincible and vigorous. I felt this way once before, during 1990-1991 in Manila/Borocay, immediate after the 1989 TianAnmen event having diminished my consulting business in China, renovating (nay, flipping, in English, or stir frying in Chinese) buildings. My two Aussie partners and I started with risk capital of US$ 100k, got our NAV to US$ 7 million, and back down to US$ 100k, all in 18 short months. I learnt that bankers do use four letter words, and that "we successfully crossed the rickety suspension bridge over the deep gorge, after making proper judgment of the risks involved; and a hungry mountain lion stepped out from the rocks ...".
We got sunk in Manila by 45% per annum interest rate when Saddam invaded Kuwait, causing oil price to go up, tourism to dry up and 500k Filipinos to return to Manila from the Middle East, all looking for jobs.
Message 12436491
January 1st 2000
Message 12438115
January 2nd, 2000
Edwin and Malcolm, I am curious at times and, gad, look what I found ... message 7289 on Bre-x thread ... the party for that stock fell apart around message 7370. So, let us not get into an argument and concentrate on our basket(s) of eggs. If I am right, I do not have to argue, and if I am wrong, I can not afford to argue.
QUOTE
To: Lalit Jain who wrote (7289)
From: Graham Thorley Sunday, Mar 16, 1997 11:22 AM ET
Respond to Post # 7291 of 28196
Lalit you will not get silenced by me. While I may not agree with everything you have said your post is the the type of non gung ho factual message that is required on this thread just as I believe some of mine have in the past been.
Concerning the valuation you have stated my own belief is that this value (and let me state I agree that if the the 3 year forward clock was moved back to this point in time now your value range could be very close) will not occur for some of the following reasons.
1) the huge resource will never reach its full potential because almost if not all of any future increase in the resource has no hope of being mined in our lifetimes and its value will be primarily based on cash flow earnings plus a discounted value for earnings going forward. To give it the same multiple as other majors is not totally realistic unless at that time there is some diversity of sovereign risk by way of other mines in their holdings as well as growth from other properties in the works (the latter could well occur and then you would see a value accorded for it). Cosider Busang to be a vast tract of land sitting to the North of Toronto or other major city. Forcasts are for the land to be built up and developed as another major urban area in 20 - 40 years. The land when built on will be worth up to $10 Million an acre at its centre decreasing down as you move to the outskirts. This land at present is worth say $50-$100,000 an acre and even provides a financial return because it can be farmed, rented etc. This land will rise in value with inflation or time as use becomes closer. Gold is no different.
2)My own belief and this is shared by others is that the lofty multiples being enjoyed by Gold producers is going to come down possibly to low teens. The world is finding more and more gold and Busang is an example of this. Despite the fact that they have been saying for 10 years or more that we are using more than we are mining the price has trended down. Why because investors and central banks have been seling of to make up the difference. Just think what will happen to the price of gold when producers start pumping out more than their is demand for.
3)Indonesia is a high risk country and democracy is lacking there. Resource companies in this situation tend give up some of their premium because of the risk. I believe investors are going to have a nagging fear that the Indonesians are going to snatch another piece of the pie down the road.
Lalit your posts have offered substance and are a pleasure to read by me and I am sure many others because they stimulate thought and analysis of the situation. Drumbeat and some others were constantly bitching about Barrick and the news media and when you start using 4 or 5 names to accomplish this it gets disruptive. Freedom of speech is fine but only one voice per person please.
Graham
UNQUOTE
Message 12442393
January 2nd, 2000
Message 12443500
January 3rd, 2000
Message 12452804
January 3rd, 2000
Thank you Linda, update, but this time literally final update ... liquidated all positions in Founder (418), Celestial (1049), and all of massive position established yesterday in China Overseas (688), and another 25% of Golden Power (603, now only 25% of original stake left). Taking home a modest Maui home due to 688, but probably left a few more on the table. It's OK, I measure myself in absolute numbers, not relative to the Dow Jones'. Like I said, in mania, a few massive but extremely short term bets.
Main motivation on a swooping sale (instead of staggered sales) is that I will be travelling to four locations within 9 days, starting today, and I can not be at the rudder.
Now I I got left in HK is HSBC, a smattering of Golden Power, and some Tracker Fund (index mutual fund established by HK Government from their anti-Soros intervention hoard).
Message 12452907
January 3rd, 2000
Message 12453006
January 3rd, 2000
Message 12453701
January 3rd, 2000
Message 12455169
January 4th, 2000
Message 12467735
January 5th, 2000
Hi Edwin, ?head spin?? I had always thought equity moves to be like dancing, sometimes we are in tune with the beat and other times not. When we do make a mistake, it is more likely than not that we then proceed to make a series of mistakes. At times, I step to the side and try to pick up the beat again. No need to do the treadmill today, tired from exercising.
The HK market was ugly today, gapping down at open 1000 points out of 17000 points. Stocks gap down, markets rarely do. What happens when we wake up, and no one bids for our shares.
I sold my precious HSBC at HK$ 105, China Telecom (941, as opposed to CHL) at HK$ 47.5, my residual Golden Power at HK$ 16.5, and I (dumped) 1070 at HK$ 5.20. I do not mind, as my total gain from HK market since January 3rd still sums up to a small house.
I sold 10% of my Softbank at Yen 91k, and bought back same at Yen 84k, salvaging some cash from the overheated oven. Interesting exercise.
I must note that the market for 9984 was sticky today, and it took sometime for my market order to get done on the sell side, strange behavior for such a big liquid stock.
Depending on Nasdaq tonight, I may try this again tomorrow. However, if the trading limit is reverted back to Yen 5k, trading may simply shutdown, not enabling transaction as no clearing price between buyer and seller. I actually am not in favor of trading limits at all, as it is like locking a bunch of fire escapes in a dark crowded theater.
24 hour trading, with full complement of options, would seriously chip away at sleep time, and I am not sure it should be done from any place besides Hawaii. I may short CHL tonight at HK closing price should Nasdaq do a big tumble, and buy back equivalent number of HK?s 941 to cover the short the following trading session. |
