Commodities Cycles

The followings are some slides that I presented to my graduates beginning of this year on January 25th.

Note that the above analysis are based on probablity not 100% guranteed. It is my way of telling readers that commodities go through cycles, just as any other financial assets. If we pay close attention to the historical charts, we can get insights from them.

Finally, one small note on the palm oil prices, although I believe the palm oil price may bottom out in September 2014, however, March 2015 there might be a test of this year's low. If you are thinking of accummulating more on plantation stocks, perhaps you might want to spread out the investment thtoughout 2015.

A Market Correction or A Bear Market

The stock markets around the world have the biggest selloff since January this year. Many are wondering if this is just a normal correction or the beginning of a bear market. I would like to share with you some of my thoughts.

From the fundamental perspective, in order to initiate a bear market we need to see a “crisis”, it could be a financial crisis, political crisis, epidemic crisis or catastrophic crisis. On top of that, the most important factor is the investors’ sentiments towards the crisis. For example, we have the Ebola, the middle east political unrest and the European debt problems now, whether we view these problems seriously or shrugged off the news depends on our experiences towards these news. If we had similar experience towards certain news, we would probably react bearishly for a shorter period of time than news that are something new for us. Sometimes small news may trigger big reactions from market participants. I had some study on the effect of moon and the psychology of investors, and statistics did show that investors’ sentiments are easily influenced by the faces of moon and the eclipse of moon. If you are aware that we just had a lunar eclipse on October 8^th and the stock market reacted bearishly around this date.  In some cases, if the selloff is severe, it may violate important trendlines and once the damaged is done, it is difficult to recover within short period of time.

From the technical perspective, it is “normal” to see a correction in stock prices once in every three month or so. This is due to profit taking when prices moved higher. In addition, in every few years we shall see some bear markets that last for months. In this article, I would like to share with you some simple statistics on a “market correction” and a “bear market”.

Market Correction

A market correction occurs every 2-4 months, and it usually lasts 2-8 weeks, prices may fall from 5%-15%. For KLCI, we hardly had any price correction that is more than 5% this year except in January, the correction lasted for 6 weeks,  and now our KLCI is quite close to the 5% correction.

Bear Market

While a market correction is considered “short term”, bear markets can be “medium term” or “long term”. Medium term bear market lasts for months, long term bear market last for years. The price fall is more drastic, we may see prices fall from 15%-60%. Although by definition, prices drop more than 20% is considered officially a bear market, but I do see 15% price fall that lasts for 6 months which is considered a medium term bear market. (e.g, the US debt crisis, KLCI 2011 Aug – 2012 Jan bear market).

Possible scenarios

I do not wish to speculate if this is a bear market, let’s hope that it is a market correction.

If we believe that we are now having a market correction, we shall see 2 -  8 weeks of market correction started from September 12, and the prices are stated below:

S&P 500: price fall 5% - 15% which is 1920 – 1720.

STI: price fall 5% - 15% which is 3200 – 2868.

KLCI: price fall 5% - 15% which is 1795 – 1606.

Time target: We have past 4 weeks, next week is the 5^th week, and by Nov 7^th that’s the end of 8^th week. 

The above are relevant for index as the statistics are based on the indices historical charts. The study of index chart is to give investors an overall sentiment of the market.

Correction Mode in the Stock Market

S&P 500: Looking at this chart, there is a bottom forming in August. As I said earlier, cyclical bottoms are months of Feb, May, Aug and Nov. If this low supercedes the previous low, then the whole picture of a bullish trend is in question, at least for the medium term. On the other hand, if this correction can stay above the 1890 level, then we shall see the next top above 2000 in October. In general, cyclical tops are: Jan, Apr, Jul and Oct, with accuracy of + or – one month.

KLCI Chart

STI Chart

STI & KLCI: are in the same boat as the US market which is forming a bottom in this August due to geopolitical unrest in the Middle East and Eastern Europe; the outbreak of Ebola disease in the African countries; and the earthquake and gas blasts in China and Taiwan. Investors are feeling very unease with these developments in the world that claimed thousands of people’s lives.

Locally between Spore and Msia, we are concerned over the massive toll hikes at the causeway that may long term effects on the economies of both countries.   Investors sentiments are dampened, Singaporeans who want to invest in the Iskandar will pull their hand brakes, transport related business suffered the biggest blow as their business cannot survive due to the new measures,  Johor poultry and construction sector will suffer as their costs of doing business have gone up and if they pass on the cost to the end users in Singapore, in the long run, the Singaporean customers will turn to other neighbouring countries for alternate supplies. 

The biggest hit would be the Johor property sector as in the past, the Singaporean investors accounted a big proportion in the sales of the residential and commercial properties in Johor Bahru.  The Singapore government even encouraged their SME sector to relocate from the Jurong industrial estate to the Iskandar region to enjoy the low cost environment. However, the new measures will definitely cause some dampening effect on the relationship between the two countries. 

In short, if we see low volume trading along with low prices, then this correction should be mild, with not more than 10% price correction. 

On the palm oil, currently the price is US$703/metric ton, which is still about 5% from the target price mentioned in my previous article. In terms of time frame, in my previous post I mention the third quarter which is Jul - Sept. Hopefully, it will be bottoming either this month or next month.

Finally, I want to stress that there is no one person in the world can predict the market with 100% of accuracy including myself. What I'm sharing in my blog is for educational purpose. The work that I publish here are my own research. I treat myself as a new student and I'm still learning in this long journey in the financial world.

Palm Oil Price

Plantation sector indeed is quite a complicated sector to analyse fundamentally as there are a lot of complicated factors such as rainfall, stock pile, global demand, palm oil tree age yield and import duty & taxes that affecting the palm oil industry. These factors are extremely important to analyse individual plantation counters. Usually I don't do the analysis myself but to rely on a few reputable research houses for their indepth analysis. However, if you want to know the bigger picture such as the palm oil price trend in general, perhaps I can offer some help here based on my technical analysis knowledge.

Firstly, let's take a look at the 30 year palm oil futures price chart to establish a long term view on the palm oil price historically. From the chart we can see that there seemed to be a repetitive behaviour in the palm oil price. Measuring from bottom to bottom, the cycle years are either 3 or 4. If we were to take the last bottom year 2011 as a starting point, the next bottom should be either in 2014 or 2015 (3 or 4 years). However, with the trendline analysis, it is quite obvious that the bottom should be this year as that's where the trend line is.

Next, we want to know the price target by measuring from the double top formation formed 2010 - 2012. 

The minimum target is US$668 if we were to take the lower height of the twin peaks and the time frame is probably in the 3rd quarter by looking at the tendline above.

I want to stress that technical analysis is about probability not about certainty. We all want to trade with odds in our favour. Many people think that technical analysis is a hindsight theory, you only see it after it had occured. However, if you incorporate cycle analysis into your analysis, you may even forecast the future price trend with certain accuracy.

I hope this article will give you a good picture of the general price trend of the crude palm oil, for individual counters, you may read up the analyst reports from various research houses. Generally, plantation counters with younger aged palm oil trees (below 20 years) will generate higher yield. In addition, land bank is also an important factor to consider as it can be a great potential boost to the balance sheet should plantation companies revalue their lands. Finally, look not only the Malaysian plantation counters, but also the Singapore listed plantation stocks as well.

All Time High For The US Market

The US S&P 500 closed at all time high on Friday at 1923 while the DJIA closed at 16,717! 

For the past one week, the S&P reached my target of 1920 and closed at 1923 on Friday. However, the rise was not fully supported by its volume. If we look at the Dow Jones Industrial Average which tracks 30 largest cap stocks in the US, we see that the volume actually decline while the US market was at its all time high. What this tells us is that probably next week we shall see some pullbacks but the pullbacks should be above the 1890 level. Once the 1890 level is secured, most likely we shall see the S&P testing the next level which is 1950 in the month of June.

The DJIA showed divergence between the price and the volume.

The STI Market
The STI market has also reached my target for the past one week. It closed on Thursday exactly at 3300 and on Friday, it closed at 3295. As long as there is no major bad news, the STI is likely to drift nicely in this bullish channel. Support at 3250, resistance 3375.

The KLCI Market

The KLCI market was performing remarkably well as many market participants did not think that our Bursa Malaysia can reach so far. From the chart we see that the KLCI has climbed above the upper resistance line as depicted in the chart below. If our property market is holding well with no major negative external factors, this resistance line may become the support line for many years ahead. However, for next week we shall see some consolidation in the beginning of the week due to the canddlestick chart pattern - a bearish shooting star was formed on Friday with large volume. Support at 1860, resistance at 1890.

Weekly Chart Update 23/5/2014

This week we look at the GDP figures across the Asian countries. For the first quarter 2014, while Singapore and Malaysia tops analyst forecast with GDP growth of 4.9% and 6.2% respectively, Indonesia +5.2% slowest growth in 4 years, and Thailand -2.1% qoq.

Analysts at first were worried about the Thai Baht and its stock market earlier this week due to the political unrest in Thailand, but turned out to be quite stable as the military coup was no stranger to its people and the rest of the world. Since 1932, this is the 19th times that the army took over the Thai government! 

Despite so, analysts are still concern about the stability in the Thai Baht and its equity market as they want to see whether the military can eventually hand over power back to its people. Otherwise, the country cannot function well and by next quarter, if the economy continues to contract, then it would be in recession and the neighbouring countries in the South East Asia would be affected in terms of investors sentiments.

US Market

On Friday, S&P 500 closed above the 1890 resistant attempting to breakout from this rectangular chart pattern. Next week we shall see if the US market would test the 1920 resistance level.

STI Market

The STI is likely to move higher next week to test the 3300 resistance level. Technically speaking, the STI is still within the medium term bullish channel. We need to see some consolidation as depicted in the chart before it can move higher. Support at 3225, resistance at 3300 level.

KLCI Market

This week I would like to present a different interpretation of the KLCI chart. There are many ways of interpreting a chart, different people will have different interpretation of the same chart, there is no right or wrong answer to it. To me, chart reading is a form of art, I can be creative in drawing those trend lines.

In the following chart, I drew a step-up trend line pattern on our KLCI. The reason for this is because I notice the KLCI for the past 5 years, there was a repetitive pattern of a series of consolidation phase, then followed by a step up in price. According to my chart, if KLCI successfully steps above 1860, the next level to reach would be 1960 provided if we do not have major bad news such as political unrest, or US stock market crash or war in the Asian region.

For next week, the last week of May, we shall see the KLCI consolidation within the 1860 - 1890 level.

Relative Strength Index RSI

RSI is a very popular technical indicator used by many traders. In my latest youtube video, we look at the application as well as the principles behind this popular indicator. The principles mentioned here are from Martin Pring's "Introduction To Technical Analysis" which is an excellent book for any beginner in this field.

Weekly Chart Update 9/5/2014

The US market

This week we continue to see divergence in the US market whereby the Dow Jones Industrial Average was closing on Friday at near historical high of 16,583 while the Nasdaq was down 8% from its recent peak since March. The worst hit were the China technology stocks with big names like Sina, Qihu, Bidu and SouFun that lost 20%-50% in 2 months time from Mar till May. Besides the Chinese Tech stocks, the Bio-tech stocks also performed poorly with the Bio-tech index - SPDR S&P Biotech (XBI) fell 30% since March. Social media stocks did badly as well with Twitter even fell below its IPO price at $32 now, its peak was $73 in December 2013.

People began to question whether the historical high of the S&P and the Dow indices are sustainable due to this divergence. Generally speaking, in a healthy bull market, most sectors should be bullish all across especially important sectors like the Technology. But the interesting part is that although the individual counters did badly, the Nasdaq index was still holding at above the 4000 level. If calculated from the peak of 4,371, this correction is not even 10%! Some analysts explained that the technology and internet stocks were ahead too far with PE ratios in hundreds times, and there are bound to due for corrections. Other analysts are concern if this is the beginning of a down trend like the dot com bubble in 2000. It started in the tech sector then spread  on to other sectors like a domino effect. At this moment we can't tell yet because from technical analysis perspective, the S&P and the Dow are still in bullish trends.


STI

As I mentioned last week that the Singapore market is likely to undergo a consolidation phase for this May and June, I think it would be a great opportunity for long term investors to accummulate some good quality dividend stocks during this period.

From the chart below, we can see that the STI is currently bouncing off from the long term trendline at around 3100, and it is still 20% below its historical high of 3900 while our KLCI has already passed that 2007 high as early as 2011!

KLCI

KLCI is operated in an unique environment whereby we have strong local institutional support for the blue chips stocks, while the local retail players tend to favour the smaller cap stocks. As long as we see these 2 groups of people are still interested, there won't be a crash in the market. In addition, if we see that the foreign institutional players are also interested, then that will be a bonus.

Weekly Chart Update 2/5/2014

Information for this week has been overwhelmed that wallstreet participants need time to digest. On Wednesday, the FOMC announced a fourth $10 billion reduction to its quantitative easing (QE) program, reducing its monthly bond purchases to $45 billion and keeping pace with earlier guidance. Everyone was reading every single word that Yellen said, line by line, including myself. The feeling is that she is not so concern about rapid growth for the US GDP, she will continue to observe and measure the effect of tapering on the economy and make changes should the need arise.

In addition, the US GDP 1st quarter 2014 was a mere 0.1% growth, which showed that the amount of money put into the system doesn't work much at all.

Most importantly, the Ukraine crisis has escalated on Friday with clashes between the pro-Russian protesters and the Ukrainian government supporters in the eastern part of Ukrain, Sloviansk. Earlier some pro-Russian gunmen took over some government buildings in this eastern part of Ukraine, now the Ukraine government launched an offensive attack against these pro-Russian protesters to take control of the besieged eastern city of Ukraine. Death tolls are amounting at the point of writing.

The complication of this Ukraine crisis is that despite Russia's denying their participation in this war, the US president, Obama has gathered supports from the EU countries to impose sanctions on Russia. Hence, if this escalates, it will not be a simple Ukraine crisis, it would have a bigger implication to world peace.

US Market

I have re-drawn the S&P 500 chart due to its range bound price actions for the past 2 months. Chances are it will continue on this horizontal trend until further news. The market is lack of direction now, or we call it "Neutral".

STI Market

For the Singapore market, I have drawn a bullish channel beginning from the beginning of February. After 3 months of bullish trend, I think there is a great possibility that it may go through a horizontal trend for the next 2 months based on my analysis on the past trends for this index. Nothing is guranteed, but I forecast based on probabilities that the STI seems to work well with a 3 waves chart pattern. Resistance 3300, support at 3200.

KLCI Market

From the chart we can see that the KLCI is little stretched here. We need new leads to push the market higher. Support maintain at 1840.

Weekly Chart Update 25/4/2014

The US Market
This week we see that the US market S&P 500 did not cross above the 1st resistance of 1890, and it closed the week at 1863 which is just slightly above the 20 day and 50 day moving average. Next week we shall see the market testing these moving averages as support levels, if break below 1860, the next support shall be 1800. Buckle up your seat belt, it is going to be volatile next week!

The STI
The STI market has been performing well since it broke out from the bearish chart pattern end of March. It would be in a stronger position if it can consistently hold above the 3225 level. My favourite sectors are Plantation, Oil and Gas, Technology, Telco, Banking and some property stocks. Buy in stages at cycle low months like February, May, August and November. We never know when is the bottom, but if we buy in stages it can help to eliminate some of the emotional mistakes of investing. My approach for the STI is long term hold with a duration of minimum 2 years. Since its a long term hold, I'm not in a hurry to invest, I would take my time to look for value buy.

The KLCI
As for our local market, our market did not go through a down cycle like the STI since last year May. Hence, we may need to take extra care when investing here. In general, in a new bull, large cap stocks are moving fast, when the bull starts to mature, large caps are slowing down but the small caps are moving. However, when you see that both large caps and small caps are lacking momentum, you should know what to do. Support at 1840 for next week.

Multiple Moving Averages (GMMA)

Personally I find this technical indicator useful in giving me information about the trends and behaviours of the market participants. In fact, I get to know this indicator from one of my students, Mr. Chia who is also passionate about learning various trading skills. I hope you would find this tool useful as well.

Weekly Chart Update 18/4/2014

The US Market

Since the beginning of March, the US market has been on a rough ride. It passed through the 20 day moving average line as many as 8 times! This shows how unstable the market is. On Thursday, although the S&P 500 closed above the 20 day MA again, but I'm still skeptical about this chart pattern development as the rising prices were accompanied by falling volume. I will step aside and wait for more confirmation on this. Resistance at 1890, support at 1800.

KLCI Market

I did a comparison on the regional markets PE ratios I discovered that KLCI is on a pricey side with 17 times PE ratio. Hang Seng and Shanghai are among the lowest with 10 - 11 times. STI is 14 times while Thailand is 16 times. This probably explains why KLCI is lacking momentum to move higher. Support at 1820, resistance at 1870.

STI Market

Since end of March, STI broke out from the bearish trendline and currently it looks overbought. If you are looking for opportunity to buy into the STI stocks, perhaps you could wait for a pullback to add more positions in it. For long term investors, I always advice invest in stages, or invest during the cycle low months such as February, May, August and November. Support at 3150, resistance at 3300.

Moving Averages and It's Applications

In this video lesson, we learn about the application of the moving averages. It is one of my favourite indicators too.

Technical Analysis and Its Applications

Many people think that only traders apply technical analysis in trading and long term investors apply more on fundamental analysis. In this article I will go into the details of the application of technical analysis and show you how it can benefit not only the traders but also long term investors.

Firstly, I would like to clarify that technical analysis can be used for short term, medium term and long term analysis and not short term only. For example, with the help of moving averages we can tell whether the security is gaining a support in the short term, medium term or long term.

For short term analysis, we may use 5 days, 10 days or 20 days moving averages on the chart. If price is above these short term averages, we can say that the security is short term bullish. On the other hand, we may also use 200 day moving average for a longer term analysis. If the security's price is above the 200 day moving average, it is considered long term bullish; If below the 200 day moving average, it would be long term bearish, and we may advice the long term investors to sell their holdings in their portfolio.

Top Down Approach

We may also use technical analysis the way we use fundamental analysis in a top down manner. First we analyse the chart of the market index (such as KLCI) to get the overall view of the market. Then we analyse the sector index such as plantation sector index, finance sector index, and conduct comparative analysis between the company and the sector index or the KLCI index. After we get the overall view of the market and the sector, we can then analyse individual stock, their support and resistance, momentum and the trendline analysis.

Leading Indicator

According to John Murphy, Technical analysis serve as a leading indicator for the economic and business condition in the market. Charles Dow also shared the same view whereby the original intention of his Dow theory was to forecast the business activity at his time.

Technical analysis is built on the assumption that "history repeats itself", by knowing the pattern of the historical data, we can forecast into the future price trend. For people who are familiar with cycle analysis and planetary cycles, you will know that these knowledge will help you forecast years ahead which is extremely useful to any long term investors.

Assist in Price Entry and Exit

Technical analysis is a very useful tool for timing the entry and exit of the market. For example, in a trending market, we may use a simple moving average to help us or to give us signal to buy and sell securities. In a horizontal or sideways market, we may use a stochastic or RSI for the timing of entry and exit. How to execute these trades I will discuss later in my Youtube videos. 

Support and Resistance

Using trendlines and moving averages we can determine the support and resistance zones for a particular security. The support and resistance levels are important in setting your stop loss. Not only traders need stop loss, long term investors are advice to use stop loss too such as the 200 day moving average is generally used for the stop loss for a long term investor.

Momentum

There are many momentum indicators that we can apply from any charting software to give you an idea whether a particular security is still trending, and if it does, how bullish is it? Is it overbullish that it is about to reverse soon? All these information can be answered by studying the momentum indicators like the stochastic and the RSI, or some even more sophisticated momentum indicator like the Average Directional Index (ADX). However, momentum indicators are more for short term application rather than long term.

Finally, I would like to share with you one little story about the Great Depression. In 1929, Irving Fisher, the greatest economist at that time proclaimed that the stock market was in a "permanently plateu". Days later the Dow Jones Industrial Average (DJIA) plunged drastically. Over a period of three years, DJIA fell from 381 points to a low of 41 points in 1932.

This is because during the peak of the economic activity, we see all the rosy pictures and data, based on the rosy data, analysts kept raising target prices for stocks. However, in technical analysis perspective, the market was due for a correction as it was way overbought prior to the crash. In other words, we can say that the stock market reflects the economic condition months ahead, if we can use technical analysis to forecast the stock market, we can really predict the economic condition in the market.

Chart Patterns Part 2

In this video, I continue on a few more chart patterns, they are: Double top and double bottom, rectangle and triangles chart patterns.

Chart Pattern Part 1

I learn a lot of investing ideas and knowledge from youtube, so now its my turn to produce some learning videos to benefit others. In this youtube video, I go through the 4 principles of chart pattern so that you can understand better and utilise it in your investing.

March 2014 Market Report

A monthly report on the US, Singapore and the Malaysia stock markets, as well as the outlook of gold and the palm oil markets.

Gold

Since January, gold price has gained 10.6% from US$1220 to the current US$1350 due to the rising tension in Ukraine as gold always favours uncertainties. For people who are still keen on holding gold as long term investment, perhaps you might want to know what is the long term prospect for gold.

Below is the 100 year old chart for gold and silver. As you can see the precious metal seems to follow this repetitive price pattern - 10 years of bull run followed by 20 years of bear run.  Historically, gold spikes in the year 1934, 1979 and 2011. After these spikes gold price would seem to follow some prolonged period of bear trend. The bear trend would start with price slump for more than 50% followed by a few rebounds and then the price would move in a horizontal trend for many years.

If history were to repeat itself, we shall take 2011 gold price peaked at US$1900 as the starting point, divided by 2 gives us US$950. This is quite a scary scenario for gold investors who are hoping that their gold will go back to the historical high of US$1900. Hence, I believe the peak should be over and we are currently in the secular bear market of the precious metal.

Below is another chart to show  the short term outlook for the gold price. In the short term, gold is bullish as it has broken above its 200 day moving average and there was a double bottom formation in the chart. This chart pattern may bring the gold price to the US$1500 level which I think the maximum that it can go as my view is that US$1200 - US$1500 is a reasonable long term price range for gold.

At the moment US$1200 is a crucial support level for gold, should it break below this level, chances are it may move towards below US$1000 level. 

The above are just my personal view on gold price based on technical analysis. I'm sharing this because I think gold is an excellent investment for long term, however we must recognise that it is a commodity which has its own inherent risk. I would advice people to hold not more than 10% of their portfolio in gold, unless the gold price did go below US$1000, then I don't mind to hold a bit more.

Forex Trading

More and more people are asking me about forex trading, whether it is a sound investment and how they can be successful in forex trading.

Personally I think investors are good to expose themselves to various forms of investment as ways to diversify their portfolio provided they understand very well the risk involved in each type of investment. Forex trading involves higher risk than the usual equity investment that requires certain trading skills and discipline. Of course all these can be trained as you go along in the journey of trading, be it forex, futures or equity trading.

So if you were to ask me if it is a sound investment, my answer is "Yes" if you trade with a plan, this plan must state clearly your entry price, target price, and your stop loss.

Next, I would like to share with you my personal views on how to be a winner in world of forex trading.

1. Big Picture

Too many traders get too detail in the day to day, minute to minute trading which often make one get confused and frustrated. Identify the bigger trend first. For example, if you want to know which currencies are superior you need to know where the money is flowing to. In 2013 money has been flowing into the US market which caused the USD appreciated against other currencies. In 2014, analysts are expecting money should be flowing into the Euro zone markets especially the UK, hence we should expect USD, British Pound and Euro dollar are the superior currencies for 2014.

Next, which currencies are weak? The emerging market currencies are weak, the Asian currencies are weak, Yen is weak due to massive money printing, as well as commodity rich countries like Aussie dollar and Canadian dollars are weak too.

With these big picture, we shall come to the next step: selecting the pairs.

2. Currency Pairs
When choosing the pairs, always pair a superior currency with a weak currency to get a clear trend in your chart. If you pair 2 weak currencies or 2 strong currencies together, chances are you would see a very irregular chart pattern that often lead you to no where.

3. Trading Plan
Finally always trade with a plan that spells out exactly what is your entry price and at what price you need to cut loss. Calculate your reward to risk ratio for every trade and stick to your plan strictly.

Other factors such as interest rates, current account deficits and other economic issues will affect the currency of a country too, but the above 3 items are basic ingredient for forex trading that I hope will help those who just started in currency trading to have a better picture.

Below is the USD index chart for 40 years. I see that the USD seems to follow a 7 year bull run chart pattern. 1978 - 1985, 1994 - 2001. If history repeats itself, the next bull run is 2011 - 2018. This is just my personal view that at least this is what the chart is telling me, you may view it with an open mind.

Good Luck in your trading!

How To Avoid Losing Money In Scams

Recently a close relative of mine was scammed away more than RM100k and I think I need to write this article to warn people about scams.

This can happen to anyone, whether or not you are educated and you have seen many times these things happened in the media, you may well be a victim of a scam. You've saved all your life and you've been investing wisely to accummulate your wealth, but one unlucky day you encounter a professional syndicated group of people who got hold of your emotional weakness and you may lose your life savings.

Internet Scams

The most common is through internet. It is reported that many scams are initiated through the Internet; victims range in age from 18 to 81 and come from all socio-economic backgrounds.

All types of advance-fee scams have one point in common – the targeted person is led to believe that he or she has a chance to attain something of very great personal value (financial reward, a romantic relationship, etc) in return for a small up-front monetary outlay.  As a general rule, if it sounds too good to be true, it probably is.

If you feel you have been a victim of an Internet scam, please consult the publications below for help and send all reports of Internet fraud directly to the Internet Crime Complaint Center.  If the scam originated through a particular website, notify also the administrators of that website.  When it becomes apparent you are the victim of a scam, it is best to end all communications with the scam artist, rather than attempt resolution.  It is extremely rare for victims to recover lost money.  If you feel threatened in any way, you should report your situation to the local police. 

Investment Scam

It is reported that every month, RM100million is lost to commercial crime in Malaysia. The most common investment scams are gold investmet ad forex. Mohamad, an airline clerk had lost RM52,000 in a forex scam; Another victim, Yusof (not the real name) had lost US$100,000 after investing in an online get-rich-quick scheme that promised  a “guaranteed” return of US$1million.

Any person or company who commits an offence under Section 25(1) of BAFIA 1989 shall, on conviction, be liable to a fine not exceeding RM10 million or to imprisonment for a term not exceeding 10 years or to both. Any person or company who commits an offence under Section 4(1) of AMLATFA 2001 shall on conviction, be liable to a fine not exceeding RM5 million or to imprisonment for a term not exceeding 5 years or to both.

Members of the public are advised to be cautious of investment schemes promoted on the internet, through phone calls or through seminars conducted by individuals or companies that are not licensed or authorized by Bank Negara Malaysia to accept deposits or to conduct foreign currency dealings. A list of all licensed institutions that accept deposits is available on Bank Negara Malaysia's website at www.bnm.gov.my.

While it is important to invest wisely to accummulate your wealth, it is even more important to prevent your money lost through scams.

A Review of 2013

In review of 2013, I made a few predictions based on my research on the historical price data that:

1. 2013 was generally a bullish trend
2. Support and Resistance was 1600 - 1840
3. Aug - Nov was volatile
4. Buy in the month of Feb, May, Aug and Nov
5. Last quarter of 2013: Oct mixed, Nov down and Dec up month

Most of them were right on except: October was a clear up month not mixed, and that the year end closing was above my 1840 resistance price target which closed at 1866.

In recall the year before 2013, that was at the end of 2012, people were generally bearish about the Bursa Malaysia due to the uncertainty in the coming election, but it turned out fine and many people make big money in the stock market. So this year 2014, although people are worried about the cooling measures of the property market and rising prices, but I think our market is quite resilient with strong support at 1680.

Last year I kept mentioning about investing in the right sectors because we had clear theme such as "Iskandar", "MRT", and projects on Oil and Gas. But this year I've been searching for investment themes and come up with few possibilities: Tourism, KL-Spore High Speed Train, MRT, health care, and plantation.

Wishing everyone Happy New Year! May this year be full of opportunity in the stock market and the property market!