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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (21624)	8/26/2007 2:55:10 AM
From: TobagoJack	Respond to of 217785

Hong Kong What changes occurred in the fundamentals and outlook of SHKP between August 17 and August 23? None of substance that I am aware of. Yet the market tells us that the company is worth some US$7.5 Billion or 22% more today than a mere 5 days prior. And in the month preceding the low of August 23rd, it had lost that same US$7.5 Billion in value. To me, this reeks of irrational markets that move on flows and rumors rather than the underlying fundamentals. Lee Shau Kee might very well be right that the Hang Seng Index goes to 25,000 in the next few months. But to me, if smells and feels more like a casino than it does an exchange in which to invest in businesses. And I am now convinced that the Hang Seng market is more tied than ever to not only the economics of the Chinese economy, but to the sentiment as well. That is, if the A shares crashed 6 months ago, I think that the Hang Seng would have dropped a bit, but would have remained relatively unscathed. As more mainlanders are allowed to plow into the Hong Kong markets, I would expect the correlation to the A Shares to increase and that within another 6 months if the A shares crash, the Hang Seng Index will crash along with it. So while it is “good news” at the moment, we might just see the Hang Seng actually become more “immature” in its reactions to events creating more volatility that we would have otherwise seen in the past few years. In a perverse way, it might make for much better bargain hunting in the future as well for the long-term patient investor. Short Exxon: I said that I would try and make a stock pick on the short side of Energy, and this week I am suggesting that Exxon be shorted. Here are the reasons why. First, Crude Oil Inventories are at their highest levels in 15 years. Second, Oil Futures are now in backwardization. That is, oil prices are predicted to be lower rather than higher in the months and years to come. Third, over US$40 million of Exxon stock has been sold by insiders in the past year. (watch what insiders do rather than what they say – i.e. Bob Toll aggressive selling his home builder shares in 2005 and Angelo Mozilo aggressively selling his shares of Countrywide Financial in the last 18 months). Fourth, the energy sector has outperformed for four consecutive years and is now over-owned, over-loved, overextended and considered a “safe haven” by large mutual funds. Fifth, according to Thompson’s, Exxon is the single-largest long position held by quant funds. Further pressure by these funds to unwind positions would put downward pressure on the stock. Sixth, high operating leverage implies earnings will drop significantly upon any drops in oil prices. I would thus recommend shorting Exxon at $85.69 and if it closes above $94 (its all time high is $93.62), to close out the short position. If you are more cautious, then selling on a close below the 78 week support of $72 would be advised. But I doubt we make new highs and am willing to risk a 10% loss to make a targeted return of 30%. Thus, I think the odds are favorable.

To: TobagoJack who wrote (21624)	8/27/2007 7:41:56 AM
From: surelockhomes	Read Replies (2) \| Respond to of 217785

Why the market doesn't seem to go down. >>There is a huge amount of cash in Japan that is seeking both interest rate differentials and higher equity returns. Japanese investors have approximately $13 trillion in liquid financial assets and over 50% of this, is in cash deposits. The retail Japanese investor is a huge factor in the U.S. Stock Market. While the BOJ is under huge political pressure to protect their exporters...this creates tremendous outlfows of cash into other markets. ...that's why - "it's off to the races again." This is a structural trend - not a cyclical one. And it will continue untill the NIKKEI outperforms global markets.<< Message 23829324