Monthly Archives: February 2013

Keep Calm and Trade the Flow

*edited some grammar errors, typos etc. as I was rushing when I wrote this lol.

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As I am posting this, PSEi has again reached new heights, closing at 6,527.99. Our market seems to be on the verge of breaking out again, probably to 6600-6700. Chart wise, many blue chips are moving forward with small volume. It’s quite understandable that the volume is low in these periods since most fund managers are still on vacation, probably? Let’s see the big flows next 2 weeks. This’ll determine where we’re headed. But so far so good, trends seem to be intact, and stocks that have consolidated in the short term are again trying to test their recent highs.

An example would be MEG.

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Pardon the simple chart. But I think this would suffice, no need to keep it complicated.

In a bull market that seems to be winding down (for those who think that the market is too high, and that the risk-reward ratio at these levels are not worth it, they have a point), or at its late stages, conventional valuations will show that almost every blue will be on the expensive side. Growth stories, value plays, and other fundamentally good but hated stocks are bound to get flows as there will be many funds looking to get exposure in our stock market yet do not want to splurge much on what is deemed expensive, thus they rotate funds to cheap, and under positioned plays. Early in the year we saw the action on new issues such as DNL, & CPG, next in line you’ll see MEG as one of the top performers among the blues. Now you see PF easily gaining 20%+ YTD after consolidating for a long period in the 240 to 245 range. These are the kinds of plays that I’m looking for. I do not want expose myself in high beta stocks or widely positioned stocks such as SM, PGOLD, BDO, and ALI, they’re too cliche for me, though they definitely can move forward given the market sentiment. This is just my personal strategy for managing risk and attaining performance.

So far so good, my port is at its highs, attaining a YTD performance of 14.56%, thanks to Pure Foods (PF). I’ve been whipsawed a couple of times on TA and NI. and now I’m back in TA again.  I’ll just probably hold on this one. I’m having a hard time rotating between positions since most of the plays I choose really have potential, it’s just a matter of waiting it out. I plan to prepare for any coming correction by applying for a bigger margin soon, hopefully COL would give me 500 to 700k margin, so that I could abuse the movements of blues. What’s good about having limited funds is that you’re forced to trim the losers and go for winners, but, at times, when the market is misleading, and your main purpose is to position, it’s quite hard to find a balance. Sometimes, a loser may look like a loser only for a while. After you get out the position, it’ll then move and you’ll be like “ugghh”, “shit”. I guess it’s all about how you work with the money that you have.

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People have been asking about Margins. Just to clarify my Total Account Equity is 765k. Due to my access to COL’s margins (as seen here https://www.colfinancial.com/ape/Final2/home/pdfs/col_margin_primer.pdf ), I can play around an extra 200k. You can apply for margins as long as your account is 200k and above, and if they approve you can garner access to margins as big as your total equity value. Please be careful! Margins are not for the light-hearted. It requires tight risk management, proper sizing, conviction, skill, good decision making etc, otherwise you’ll end up getting burned. It’s just that we’re on a bull market that it may seem easy to throw everything you can at almost any blue chip, but if sentiments change, things wouldn’t look that easy. So please tread lightly. 🙂

There are two things that scare me right now, I’ve read a report that 60% of US investors or foreign funds are bullish, and that on a certain parameter of Merryl Lynch we’re on one of the most bullish times in the past 5 years. Nothing wrong with having the crowd back the bullish notion, it’s just that I don’t like going with the crowd too much as the MAJORITY tend to be wrong. At the same time, it’s hard to go against government intervention and at these times we are getting WAY TOO MUCH intervention, all around the globe HAHAHAHA.. Things are getting HOT. Hihihi. 🙂

Enjoy it while it lasts =)

Anyway that is all for my weekly write up,

feel free to comment, suggest, rant, etc.

Imbang Klase
http://www.facebook.com/imbang.klase.1?fref=ts

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Till when will this last?

Sup everyone? What a strong start for our markets. Seems scary right? you’re probably hounded by questions like; “till when can this be sustained?”, “is the market bound for correction?”, “will the market crash”?, “what’s in for us in the future”?, blah blah blah blah blah. Honestly, no one knows shitDon’t be too complacent, and don’t be too scared. Haha. It’s pretty much contradicting but yeah, find a balance where you’re comfortable.

Most of us deem new highs as positive right? Everything seems to be in place, good economy for PHL, anticipation of investment grade, solid earnings, election year, good governance, improving reserves and debt to gdp ratio, PPP projects, etc. Plus the fact that we have money flooding all over, it seems that the bullish note is really backed well. Most markets are on their highs, it just shows that optimism is all over, I don’t know whether it’s good to take a contrarian stance while everyone is jumping in joy or to just go with the flow. It’s all about choosing a position where the “higher probability” is in your side, based on what ever form of analysis you use. After all, the market is all about probabilities right? That’s why we all want to ride trends, that’s where the highest probabilities are. Take away the fear, and accept the risk, be prepared with what the market can do, make sure you know your plans in the various scenarios that the market can offer. 


Here are some of the things you can do:

  1. Enjoy it while it lasts, set well defined stops.
  2. If you have the intuition or the skill or the luck in finding tops, then good for you, go by with what you feel. Sell if you think it’s time. Look for divergences, distribution clues, trend breaks (trend lines, moving averages and what not, depends on your definition of a trend)
  3. Sell when satisfied with the gains. If you think it’s too risky, sell now. and forget about the markets, If you’re satisfied with the humongous gains you had and you feel like this circumstance is getting dangerous, then get out, and forget about the markets for a while. It doesn’t matter whether you’re right or wrong in this call, it’s about your contentment and security.
  4. Now, if you have crazy conviction and you know what you’re doing, You can get a loan and put more money in the stock market, abuse it while it’s hot. Sell your house, your garden, your car, your wife, your children’s education, don’t enroll them for a while. Hahahaha. Kidding. Point is, if you believe that there are vast opportunities in this kind of market, given how cheap money is all around the world, then GO GO GO and put your money where your mouth is.
  5. Meditate like Buddha, and find inner peace. (this one is my personal choice) :p

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On to my port.  I’m beginning to focus on my positions now, rather than scattering them. I trimmed all losers and shifted to those who can make me money, like TA. Though you won’t see it in the port since I just day trade it. I plan to do a big buy back in TA because I think it’ll have more potential.

I added:

  1. BLOOM – just for the hype on its opening. Will sell when contented.
  2. ABSP – Will continue to add to create a position worth 100k, buying on dips, I’m just betting that it’ll go beyond 50+, I don’t care about the inconsistent bids, fundies are clearly interested in the stock. Still shows strong accumulation.
  3. LC – Good signals from the charts, bought at 1.12 and good to see that it immediately rose to 1.17 after 2-3 days. I expect this to go 1.20 soon, prior to that I was thinking of just range trading it but it seems that it would be better for me to hold it for a while. Big Boy Macq still buying.
  4. STI – My favorite school. Hehe kidding. Good signals on my side. Watch it.
  5. PF – My favorite Hotdog Maker. First day after a long while where it had tremendous volume. Let’s see what happens, it may seem that there are lot’s of sellers but remember that’s how DNL and EW looked like when they were still babies. Likewise, anything consumer seems to be a hit in our market, and from what I’ve gathered this is the cheapest direct consumer play at current levels. Signals on their way, further positive movement will confirm the play.
  6. OV – Slowly building up my position on this one. hehe. OPMB looks good too. but I prefer OV since I’m a big fan of Macquarie. 🙂

Said goodbye to:

  1. EEI – wrong move, I tried to go anti-breakout on this one selling my half zero cost shares after breaking 12.00 I sold at 12.08 to be exact. Only to see it go as high as 13.20. If you have EEI I suggest you just hold this bagger. I can even see it go at 15.00, this stock, I think will be re-evaluated by analysts soon, for whatever reason they have.
  2. ABA, LIHC, EG – opportunity cost, I’ll be back kids.
  3. Others – Just took some profits and shifted to better plays.

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Someone asked me about my port performance, don’t look at the “TOTAL TRADE VALUE” since I use COL margins. My real equity is seen under the tables; “Your Total Equity Value is 728,469.88”.

Performance of my fund is at:
728k – 666k = 62k / 666k = 9.3% ytd.

Not that impressive still have lot’s of work to do, most index funds are near the 8 to 10% mark. PSEi has performed at about 10%+ depending on the fluctuations. Anyway, I’m still happy with my nearly 10% gain in just about a month and a few days. It’s all about consistency, and we still have 11 months to go. Since it’s my second year in the market, I’m expecting more from myself, my goal is to attain 100% YTD. 

That is all. Farewell,

Imbang Klase

You may contact me through my FB account:
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