Signs of Recovery?

Malaysia Central Bank has left the key interest rates unchanged at 2.0% and emphasized that the present monetary policy measures were sufficient to provide support to the domestic demand, despite exports are widely expected to contract drastically in both first and second quarter of this year.

With the status quo unchecked, it could well suggest that Malaysia's economy and business prospects may well recover in the second half of 2009.

That likely explains why the local stock market has had a rally of 19% within the past one and a half months. Investors are clearly anticipating the worst is over and a major recovery will take place.

The Age of Buy and Hold Is Over?

Based on various feedback, this is a mixed view. Some say the age of "buy and hold" stocks and/or equity related investments is simply over, simply due to the fact that economy and business are cyclical in nature. For instance, many stocks (even the bluest of blue chips) effectively wiped out the entire gains made during the last 10 years in just one year of global economic crisis last year!

On the other hand, others say that adopting the "buy and hold" strategy is the best strategy to investing as it is not possible to time the market in terms of peaks and troughs.

Personally for me, the "buy and hold" strategy will not work at turbulent times like this as every single company 's market share will be severely affected by sentiment. Instead of "buy and hold", the likely apprroach during such time in fact is "dump first, think later"! The objective of course, is capital preservation.

However, the strategy of "buy and hold" may make sense during market bull rally. For instance, US market went through a 5 year up trend from 1995 to 1999, followed by from Year 2003 to 2007. Notice that market went through a 3 year correction from year 2000 to year 2002. Assuming the stock price performance is correlated to the index, it would be wise to take some profit during initial market downtrend instead of waiting out for the unknown.

Year 2007 to date performance is a classic example where things really turn nasty! For those who hold on to their investments, chances are the entire gain built up over the last 10 years or so may be wiped off completely! Is it worth while to continue with the gung ho approach then?

So the question is how do you tell the market is undergoing bullish trend or bearish trend then?

Answer lies with Technical Analysis. As technical chartists often say, the charts do not lie! Mind you, technical charts are no crystal ball! They serve the purpose of serving a strategic or tactical guide, based on market "psychology" which will be reflected in the chart. As one say, the Trend is your Friend! Do not fight against the trend when it comes to trading or Investing! Tonnes of hard earned gains accumulated over the years could well be wiped off in an instant!

At the end of day, trade or invest with the trend rather than fighting it. One may not be able to time the market perfectly but at the minimum invest with proper risk management in place is the key to long term success.

Similarly, one needs to know when to cash out when the trend changes. No point be the hero. After all, IT'S YOUR MONEY!

Read This Only If You Are Serious In Changing Your Financial Life Forever!

I wasn't convinced but I am now! Before I attended this program, i was just as sceptical as you do...reading the same headline. I thought i knew everything there is to be financially successful but I soon realize that what i lack is a solid financial blueprint of wealthy and successful people. Mind you, a solid financial blueprint, is not just all about money but also about having the right positive and balanced state of mind!

Have you ever wondered why some people seem to get rich easily, while others are destined for a life of financial struggle?

Over the years since we were a child, our minds have been conditioned to think a certain way about money and success. If you have not realized it, this is one of the most important factor affecting our finances today!

You need to unwind these conditioning, and learn how to identify and change your personal money and success blueprint, FOREVER!

Introducing Millionaire Mind Intensive, a program that has touched and helped more than half a million people worldwide and is now coming to Asia!

If you are serious in changing your financial life forever, this is certainly an event not to be missed! Besides, it does not cost you an arm and a leg to attend this program as they are giving a very special promotion price that will simply blow your mind off! (Trust me, it will!)

Click this link now to find out more. To register, all you need to do is go to the bottom of the page, pick the appropriate date and venue, and then fill in the information as required.

This is certainly a weekend worth sacrificing for.....To me, it's one of the best I have ever attended and it has certainly changed my financial life for the better, FOREVER! I sincerely hope you are the next to benefit too.

Click here: A Weekend That Will Change Your Financial Life, Forever!

P.S.: This is a definite sell-out program. You need to register fast before the seats are gone! FYI, the special promotion price is only valid until 30th April 2009. So Act now!

P.P.S: Be honest with yourself! This program is not suitable for people who continue to live their lives in self-denial! One way is to look at your own results!

Should You Invest In Foreign Currency Account?

What is a Foreign Currency Account? Foreign currency account is essentially an account maintained in a financial institution in another currency other than the local currency. As most banks in Malaysia are offering this facility, you can easily open up one account, with normally the condition that you have an existing deposit account with the bank.

There are several purposes why one would require a Foreign Currency account, namely:

1. An account to hedge against foreign currency transactions whether in the form of business or personal use;
2. Higher yielding interest rates (e.g., Australian and New Zealand Dollar) compared to local interest rates;
3. Children education funding;
4. Individuals with sources of income from overseas;
5. Investment return
   

One should bear in mind the most important factor to consider is the direction of the foreign currency versus local currency, no matter what the purpose are. In other words, one should invest into foreign currency account only if there is a perception or expectation that the foreign currency will appreciate against local currency. Otherwise, the benefits of having a foreign currency account may well have been offset by a depreciating foreign currency even though one may gain from the supposedly higher yielding interest rates for instance.

In general, many have this perception that local currency will tend to depreciate over time but certainly this could be a false perception at times. Economic fundamentals and market sentiment definitely have a large role to play in the direction of currency strength. For instance, the value of Australian Dollar had in fact depreciated by more than 20% against Ringgit Malaysia early part of this year!

Therefore, it's important to study these factors before plunging into any foreign currency or open a foreign currency account.

There are generally two types of account, being call deposit and term deposit account. Call deposit is equivalent to a savings account and in most currency offered, there will be nominal interest rates computed daily credited month-end. Currently, US Dollar does not offer any interests. Term Deposit on the other hand is a fixed term deposit account whereby higher interest rates are given upon maturity.The term can range from 1 week to 12 months.

Locally in Malaysia, there is generally no fees charged for opening a foreign currency account. However, the catch is this.....the bank would have earned from you already the moment you open one due to the exchange rate spread between buy and sell rates. As such, don't be overly excited when the bank officer tells you that they do not charge any fees!

Options Trading Course By David Yuen Reviewed

David Yuen is a relative unknown in the options trading coaching world. A search of him in the internet has found hardly any information about himself or his credentials. Yet, David Yuen runs a low profile options trading coaching course (TeraOne) in Malaysia for about 3 years now (based on information given by David). David is also the founder of Teraoptions, an investment education center. Unlike the sort of publicity often generated by other options trading coaches such as Clemen Chiang from Singapore and Mirriam Mac Williams from the U.S. who both conduct respective coaching courses in this region.

Why I choose David over the others? Well, i believe the decision boils down to his presentation style.....Concise, straight to the point and most importantly, NO HYPE! Elsewhere, one could often hear about the possibility of becoming a millionaire by trading options or achieving sizzling returns in one day, etc but not from David. You will hear none of that! David in fact was frank enough to admit that this course does not guarantee success but is meant for those who work diligently and follow the rules and principles. On this point, unfortunately, David could not illustrate a better proof of success by inviting some of his ex-student to share their experiences and/or success, or illustrate to me his (successful) students' long term track record. David would certainly have reinforced his creditials better by introducing the above. So it remains to be seen whether how many of his students do make it a success!

After attending his course, my conclusion is that David is very sincere in teaching his students in his 20 hour course a practical guide and strategy to trading options, using a detailed step-by-step approach. His course includes the following:

- basic fundamental analysis using automated tools;
- basic technical analysis using support and resistance, and Japanese candlestick;
- Long Call and Put option strategy with emphasis particularly on risk reward ratio;
- Price charting;
- How to analyse Options such as fair value, volatility and greeks;
- Real interactive live training with the U.S market on the final day.

In conclusion, I would regard David's coaching as decent, practical, straight to the point and covers the essential elements of trading. However, the strategies presented are limited. In options trading, there are many other (around 66 of them!) powerful strategies such as spread, naked options, covered options, straddle, butterfly, etc., which cater for different trading scenarios and tactics. It is a regret that David does not cover these strategies.

David's rationale is that the best way for beginners to study options trading is to keep it simple. His reasoning being such that although the other strategies can be useful, they are also very complex in nature and deployment.

Ironically, David does not offer a more advanced course to his fellow students.

In a nutshell, I would rate David Yuen's Options Trading course as a diploma grade relative to a full-blown premium degree. Nevertheless, what David teaches is workable and does offer the practical knowledge and skills to trade successfully based on a certain limited strategy.

How To Predict Stock Market Movement Using Currency

Most traders use technical analysis to make a prediction the likely movement of stock market. For most layman, learning up technical analysis takes time and a fair amount of patience and technical interest. For most, they simply give up.

There is one other way of making advance predictions of stock market movement, and based on my observation, the correlation between the two is a pretty good one.

Take currency versus US Dollar comparison. When US Dollar gains strength against other currency, stock market will likely go down. On the contrary, the exact opposite movement (market rises) happens when US Dollar depreciates against other currency.

Take the following two examples (USD vs Ringgit and USD vs Singapore Dollar) to study the correlation:



Do you see the opposite trend being formed? It may not be the most perfect correlation but generally, it holds true.

To explain this, generally speaking it is a case of US Dollar demand is stronger during rising risk aversion (i.e., funds are risk averse to investing overseas and therefore more funds are repatriated to U.S.). On the other hand, US Dollar demand will be weakened when funds are more eager to invest overseas, thus outflow of funds from U.S.)

So if you would like to predict the day's market movement, study the currency strength versus US Dollar.

Options Trading For Beginners

Due to the current financial and economic crisis in U.S., I have started evaluating some stocks in the U.S. Before 2008, trading in U.S. stocks would certainly require deep pockets, particularly for myself due to my country's unfavourable exchange rates ($1 to RM3.5 on average). Never in my life could I imagine stocks in U.S. could one day be trading at such low prices! eg., financial giant like Citigroup trading below $1? GE trading below $6? There are many other examples, such as General Motors and AIG. Then of course, these stocks were trading at such low levels due to their own respective unprecedented crisis!

So I started putting some money into U.S. stocks and thankfully, i made some decent gains in a short period of time. Having a solid trading plan knowing when to enter and exit was the critical success factor. By the way, adopting buy and hold strategy no longer works these days in my opinion, due to the volatile nature of markets and frankly, no one knows for sure whether the markets have bottomed. So why take on the risk of hitting the unknown?

Precisely. But here's a problem. Investing in U.S. stocks means that I will still need to pump in a sizeable amount of money to trade (bearing in mind my unfavourable exchange rate)! There comes to my mind options trading which I had heard so many times before but have very little knowledge of. Options trading utilises the power of leveraging on stocks and is a very powerful form of derivative instrument. So powerful that even Mr. Warren Buffett is fearful of (as he recently criticised as one of the major cause of stock market crash).

As I recalled, I had contemplated to learn options trading in June last year but I dropped the notion because I was not ready then (Please refer to my archived post entitled "Do I Need Options"). Now I believe I am ready to explore this new frontier (new, at least for me...) and to uncover it's perceived power of leveraging and to unlock the myth of successful options trading.

Haven't attended numerous previews of Options Trading learning courses in the past and feedback from numerous ex-students and friends who ventured into options trading, I was certainly skeptical on which Options Trading trainer or course would actually deliver the goods. My attempted research through the internet was of little benefit too as no website content would reveal satisfactory practical knowledge on options trading. Finally, I had little choice but to take a calculated gamble by learning from a fee-based course.

Next I shall reveal which course I have selected and my ground up review.