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This analysis is specially created for the community of investment knowledge
members at
http://groups.yahoo.com/group/qinvest/
Why focus only on the last three years of the market behavior i.e.
beginning 2000 and ending 2002 ?
About three years ago, this column started with invitation to some
friends to subscribe to this virtual community of investment knowledge -
sharing of knowledge and analysis of the market. Membership grows
rapidly with more and more members sign up with this QuaSyLaTic investment
unit trust consultant as they are convinced of a more disciplined and
structured approach to having investment targeting at optimal gain from
the market behavior.
As the investment strategy is using portfolio investment using unit
trust, not individual stocks, this column has been advising members to
patiently wait for a more opportune time to invest. Till todate
(31st Dec. 2002) we still exercise the strict discipline of waiting for
further market decline.
Now we will review the last three years performance (on the hindsight),
whether we could make significant gain or loss.
| Market Premises Re-visited:
- Unit trust with equity investment follows KLCI behavior.
Hence we focus on KLCI movement and later check with corresponding
fund behavior.
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Note: After the Asian Economic
crisis, with sharp downfall of the market, the market rebounded sharply
till the end of year 1999. (Some of the unit trust fund rebounded 240%
gain!). Since beginning 2000, the market has been on major decline as
per the above graph.
Periods of Investment Gain in the
last 3 years:
Of the three years, 36 months, there
are two significant investment profits periods :
- From April 2001 till Sept.
2001 (Sept 11 Terrorist attack) - less than 6 months
The market gained from
553.34 to 696.65, or 26% gain
- From Nov. 2001 till April
2002 - less than 6 months
The market gained
from 592.26 to 808.07, or 36% gain
Three-year cumulative gain of 61%.
IF our timing had been perfect, we had less than 1/3 of the time
to make gain from the market movement in the last three years, with less
than about one month to enter the market, and less than one month to exist
from the market.
(Referring to the previous analysis of about 9-12 months of possible
entry period, and another 6-9 months of exist period in 1998 to 2000 for
an appreciable gain of 240%. What it implies is that : if we could catch
the MAJOR Downswing and MAJOR Upswing, we have more time to
enter the market and more time to exist the market for a very significant
gain.)
Periods of Investment Loss in the
last 3 years:
Of the three years, 36 months, there
are three significant investment loss periods :
- From Feb 2000 till April.
2001 - more than 14 months
The market lost from
1009.53 to 553.34, or 45% loss
- From Sept. 2001 till Nov
2001 - less than 3 months
The market lost
from 696.65 to 592.26, or 15% loss
- From April 2002 till end Dec. 2002 - about 8 months (no evidence of
reaching good support, i.e. market may still decline) : the market lost
from 808.07 till 646.32 or 20% loss
Three-year cumulative loss of 80%
How have we been doing in the last three years?
As our strategy is really to buy at MAJOR low zone, with sufficient time
to buy and collect at low prices, and sell at MAJOR high zone, with
sufficient time to sell and slowly discharge to the market, for a
significant gain, we can conclude that we have been doing all right in
the last three years, as the constant advice to the members is just to
get the unit trust application paperwork ready (never submit till todate),
and in the meantime, we continue to enjoy the 6% POSITIVE gain from the
EPF fund, and about 3% POSITIVE gain of the bank interest with our cash
intact at banking institutions.
We avoided the potential of 80% loss
and "gladly" passed the potential 61%
gain, which does not give us much time and flexibility to navigate.
Your Action:
- Those of you who have not had their EPF application paperwork
ready, email me at andrew@360q.com
to get the paperwork done.
- Those of you who wish to use cash to invest, email me andrew@360q.com
so that I could advise you the timing later, certainly not now.
- Those of you who become curious and serious about the theories and
application to market behavior, email me andrew@360q.com
for the coaching service arrangement.
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