My Precious...

Here's my Precious Fund:

P - Precious Metals (Gold 15%, Silver 5%, Platinum 5%}
R - Resources (Hard metals, Copper 5%, Zinc 5%, Nickel 5%)
E - EURO (5%)
C - Cash (10%)
I - I.T. (specifically Google, 5%)
O - Oil (10%)
U - Uranium (20%)
S - Soft Commodities (like Sugar, Corn, Rice) @ 10%

Economic Pi-Cycles

The Economic Confidence Cycle (8.6 years) and its subsets have been very reliable in the gold market. We established trading rules in the 1980's that identified important highs around the date and lows in the weeks following the cycle date.

In a rising market the cycle date offers an opportunity to lighten-up on long gold related positions and re-establish them on a hard break.

http://www.contrahour.com/contrahour/2007/03/free_martin_arm.html

http://princetoneconomics.blogspot.com/2006/06/economic-confidence-model.html

HIGH mid-date is 2007/2/27
LOW -3/8 date is 2008/3/27
HIGH -1/4 date is 2009/4/23
The -1/8 date is 2010/5/21
LOW cycle date is 2011/6/18

Peak in gold and commodities between 2007 and 2012 (2010)

The 1/8 date is 2012/7/15
HIGH 1/4 date is 2013/8/12
LOW 3/8 date is 2014/9/9
HIGH mid-date is 2015/10/6
LOW -3/8 date is 2016/11/3
HIGH -1/4 date is 2017/12/1
The -1/8 date is 2018/12/28
LOW cycle date is 2020/1/25

The 1/8 date is 2021/2/22
HIGH 1/4 date is 2022/3/22
LOW 3/8 date is 2023/4/19
HIGH mid-date is 2024/5/16
LOW -3/8 date is 2025/6/13
HIGH -1/4 date is 2026/7/10
The -1/8 date is 2027/8/7
LOW cycle date is 2028/9/4

The 1/8 date is 2029/10/1
HIGH 1/4 date is 2030/10/29
LOW 3/8 date is 2031/11/26
HIGH mid-date is 2032/12/23
LOW -3/8 date is 2034/1/20
HIGH -1/4 date is 2035/2/17
The -1/8 date is 2036/3/16
LOW cycle date is 2037/4/13

The 1/8 date is 2038/5/11
HIGH 1/4 date is 2039/6/8
LOW 3/8 date is 2040/7/6
HIGH mid-date is 2041/8/2
LOW -3/8 date is 2042/8/30
HIGH -1/4 date is 2043/9/26
The -1/8 date is 2044/10/24
LOW cycle date is 2045/11/21

The Pi model is global, not just US. And it means that for every significant date, the peak/bottom can be anywhere in the world in any type of market. Obviously, it won’t be a tiny stock market in an isolated island country. For example, it can be Asia as a whole.

Not every peak/bottom in the Pi model will generate a peak/bottom in some markets. Only with more likelihood, especially for mid-cycle and cycle dates.

Gold & Oil Bull-Seasons

If you want to add gold or related positions to your portfolios, the best time seasonally is when gold is languishing near its seasonal support. This tends to happen in late March / early April, late July, and early November. Off of each of these three major seasonal buying points marked above, gold’s trio of seasonal rallies tend to launch.

If you want to buy gold, the weakest months are very close to the annual weakest spots. Mid-March, late July, and mid-October tend to be the worst spots for gold seasonally when indexed monthly.

On average gold rallies from early Nov to early Feb, a big 3-month span. This rally is exceptionally strong too. It is the only rally of the year that breaks out well above gold’s seasonal resistance.

Crude Oil has a seasonal tendency to:
- Bottom in late June to early July
- Rally in mid-Sep to early Oct
- Decline into Nov to Dec

In May, XOI tends to correct to its seasonal support for the first time since early Feb rally. Mid-May is a high-probability-for-success time to add new long-positions in oil stocks.

Oil stocks tend to have their sharpest and biggest seasonal surge of the year at the end of August. XOI summer rally climaxes at the end of Sep. Late Sep is likely to be the best time seasonally to realise your profits.

Long-Life Oil-Reserves

Barron’s : Did Somebody Say Energy Crisis?
- Interview with Charley Maxwell

Q: Where are oil prices headed?

We are now getting a reaction to the higher oil prices. It is translating into slower economic growth and, of course, it is allied with a rise in interest rates. Don’t think that it is just that rising oil prices equal lower economic growth. It is a question of rising oil prices and less liquidity and higher rates that’s a triple threat. The bottom could be in the high 40s, though that wouldn’t be sustainable. On a yearly average, we will stay in the 60s, but we’ll spend a lot of time in the 50s. Then they’ll start up again in 2008-2009 and go up for some time. When we get to 130 or 150 there will be another pullback.

Q: How are you advising people when it comes to the oil stocks?

You want to buy companies that have long-life reserves and are developing them, it’s as simple as that. The average oil company, because they are all in the non-OPEC world, will by definition peak around 2010 or thereabouts. I estimate Exxon will peak in 2011. BP will peak in 2012. Total (TOT) in 2012. ConocoPhillips (COP) in 2013. Marathon Oil (MRO) in 2009. Royal Dutch (RDS-B) in 2009 and Hess (HES) in 2010. But a company like Suncor Energy (SU), which operates in the Canadian tar sands, will peak around 2045. It is a completely different world. EnCana (ECA), the big Canadian gas and tar sands producer, will peak around 2020. Canadian Natural Resources (CNQ) is another. I also like Nexen (NXY), another Canadian tar sands producer, and Lukoil (LUKOY) of Russia. The only one I’m recommending at the moment is EnCana because it has a large component of natural gas. The gas market is at a bottom now, whereas I see the oil market bottoming in the spring or summer of 2007 (Apr-June or July-Sep), or even early 2008 if we have a recession.

In the recession of 2001, oil prices dropped from roughly $40 (inflation adjusted) to around $23, or -42%. In 1990, they dropped from roughly $56 to around $33, or -41%.

So, let's see... $78 - (78 * .41) = $46

Margin Of Safety

Benjamin Graham: "When the general market is high, there are always a number of individual issues that appear definitely undervalued by objective standards, and consequently even more attractive in contrast to the inflated level of other stocks. But that is a time that calls for especial caution. Not only may the 'neglected security' continue neglected for the remainder of the bull market, but when the downturn comes it is likely to decline in price along with the general market. In a word, beware of 'bargains' when most stocks seem very high.

The chief losses to investors come from the purchase of low quality securities at times of favorable business conditions. These securities do not offer an adequate margin of safety in any admissible sense of the term. Most of the fair weather investments, acquired at fair weather prices, are destined to suffer disturbing price declines when the horizon clouds over."

P/E Fair Valuations

Stocks are great long-term bargains when P/E ratios are low.

14x earnings is the long-term base fair-market valuation. It provides a stable central reference point off of which we can define cheap and expensive. Half of fair-value, or 7x earnings, is cheap and a great bargain.

Conversely 21x earnings is moving into the realm of expensive valuations. And double fair value, or 28x earnings, is bubble territory. Try to keep dwelling on the fact that $1 of earnings is $1 of earnings, totally fungible. So paying only $7 for that dollar of earnings is vastly superior than paying $28 for that same dollar. For long-term investors, the valuations at which they choose to buy is the single most important factor guiding the long-term success of their investments.

If I had to pick one metric for longer holding periods, it would be a low Price to Book. Beat the broader market by buying a diversified portfolio of low PB stocks (below the market median and average) and rotating them as need be after holding +/- a year.


What Is Fair Value Price?

1) First check if that company is worth valuating. A company worth valuating should have consistent shareholders' equity growth, EPS growth, sales growth, cash growth and better still, if you can find its ROC growth. All these figures should have more than 10% every year.

2) Once you found such company, get the average growth rate in shareholders' equity of the past 5 years or more.

3) Once you got the figure in step (2), use that figure to project it's EPS for the next 5 years (or whatever years you use in step 2).

4) Once you get the EPS in step (3), multiply that by the average PE of the last 5 years. Now, you get the estimated fair price of the stock in 5 years time.

5) Now let's say you want 15% returns/year for this stock from now to the next 5 years. Use the price obtained from step (4) and work backwards using 15%/year. Now you get the true price of the stock today.

6) Throw in a discount of 50% (margin of error) to the price you obtained in step (5). What is this price compare to the price of the stock that is trading now? If they are close, then you know that this stock is undervalued by 50%. Good bargain! Buy it!


Great Secular Bears

Great Bears start at high P/E ratios and low dividend yields. Then these key valuation metrics gradually declined throughout the bears. The problem with Great Bears is that they do not just drive stocks from overvalued to fair-valued, but they ultimately drive stocks all the way down to deeply undervalued levels. In valuation terms, the late 1974 cyclical-bear bottom happened near 8.3x earnings.

Great Bears last for 17 years and do a masterful job of stringing the bulls along. They are not an endless grind lower, but instead a series of periodic multi-year downlegs (cyclical bears) punctuated by spectacular multi-year cyclical bulls. This pattern gradually turns the screws to the bulls, continually providing them with just enough hope so they stay fully invested until the very end.

Secular bears are really long periods of time when the markets trade sideways on balance, huge cyclical bulls followed by devastating cyclical bears. This cycle continued over and over again. It is this sideways trading that slaughters even the bravest buy-and-hold investors in the end.

Know-Nothing Portfolio

Sgfunds 2007 Funds Portfolio

Here's the $100,000 portfolio:

$40k Infinity US 500 Stock Index (ER 0.99%)
$24k Infinity European Stock Index (ER 1.06%)
$16k UOB United Regional Growth Fund (ER 1.26%)
$15k Legg Mason Global Bond Trust (ER 0.91%)
$5k DBS Enhanced Income SGD (ER 0.47%)

80% equity (50% US, 30% Europe, 20% Asia incl Japan)

20% fixed income (75% global investment grade medium-term bond, 25% local short-term bond)

This portfolio is for people in their 20s who do not want to spend too much time investing and not interested in knowing investment details. The investor of this portfolio admits that he knows nothing about market direction and predicting stock market is not practical. Hence, it covers major stock markets and does not overweigh any sector or country.

The 20% fixed income allocation derives from the simple rule of thumb that uses age as fixed income %. The choice of bond fund invests only in investment grade bonds (rated BBB to AAA), no emerging market bond or junk bonds. It also captures the medium-term bond, while DBS Enhanced Income SGD captures the short-term bond.

It can be implemented in FSM and enjoy the free switch between the two equity funds (Infinity funds) and the global bond fund (Legg Mason glbal bond) because they belong to the same tier in sales charge (1.0-1.5%). This is something you don't get between normal equity funds and bond funds.

Guru's Portfolio

ghchua's Investment Strategy

I always stress that one should adopt a portfolio view when constructing a diversified portfolio. If your portfolio is overvalued, you should seek to add more undervalued stocks to bring it back to fully valued or under-valued levels.

How do I manage to keep track of so many stocks? My answer is that there is no need to keep track at all. Since I hold a diversified portfolio, any one stock that tanks will have little impact on my portfolio. So, no worries if there is a profit warning on one of my holdings. I just collect dividends every month and seek to re-invest those dividends or use them to pay for my monthly expenses.

Do I go in and out of the market? No, I strive to be 100% invested at all times - be it bull, bear or range market. The opportunity cost of not being invested is higher than trying to get into the market at the right time. Some people might think that they do not want to be in the market when it is going down. But remember that not all stocks go down in a bear market. If your portfolio is well-constructed, it should not go down as much as the STI. Also, you collect dividends and add more holdings in your portfolio when stocks are down.

For yield, look for sustainable earnings and low price. For capital gains, look for explosive growth, a good story, or if the stock is irrationally undervalued. There are quite a number of gems in the market that are both dividend and growth stocks.

If you look at yield alone, these large-cap stocks offer good yields - SPC (6%), Cerebos (7.5%). There are smaller-caps that offer better yield - MIIF (7.6%), Kim Eng (5.8%), UOB KH (7.8%) and GK Goh (7.7%).

Dividend Portfolio

Creating Wealth With Dividend Growth

Blue-Clip Stocks That Raise Dividend

Dividend portfolio investment philosophy to hold "forever".

So, if a recession comes, the portfolio will be undervalued due to the fall in prices, and the right thing to do, is to hold, collect the dividends, and pick-up the undervalued shares to move it back to fairly valued or fully-valued levels. Conversely, during surging markets, and the portfolio is over-valued due to the rise in prices, the right thing to do is buy more dividend and/or undervalued stocks using the dividends you have been collecting, and bring back the portfolio to fairly/fully-valued levels.

Dividend-paying stocks act as "bear-market protectors" and "return accelerators" during down markets. When stock prices fall, yields rise as long as companies don't cut their dividends at a greater rate than the price drop. When those dividends are reinvested, they purchase more shares at lower prices and these extra shares act as a bear-market protector. When share prices reverse, the extra shares act as a return accelerator and rocket total returns higher.

The traditional retirement strategy for stocks is to live off dividends alone. This is an excellent approach. Typically, dividend payments continue far into the future and keep up with inflation. By living off dividends alone, a retiree avoids the most serious danger to portfolio survival: being forced to sell stocks at low prices.

What happens if you live only on dividends during the first decade of your retirement? Answer: you extend your portfolio's lifetime by ten years. Withdrawing all of the dividends for a decade did not impair portfolio survival. If you have concerns about long-term portfolio survival, consider living off dividends alone.

Maid For Sex

I was half-asleep when Lita slipped into the quilt. I felt her lying on my chest and I opened my eyes. Lita kissed my lips and shifted her naked body over mine. I felt my dick rubbing her pussy when she crossed her legs over my groin.

Our bodies were in a warm embrace, our lips interlocked passionately, and our desire to copulate was building up. There was no conversation, just kissing and hugging. My dick swelled as though it was my first time.

The feeling of my swollen head grinding with Lita’s shaven pussy has made my dick ooze with pre-cum. I could feel Lita’s juices flowing out of her cunt and my dick head was soon wet. Lita and I just knew what to do and when to do. The urge to enjoy every second of our love making made us control the urge to fuck.

The grinding continued as we began to lick one another. Lita pressed her body up for me to lick her nipples. It must have been a long time since she felt so loved. She was moaning as I suckled on one nipple and rubbing the other. She was enjoying the attention.

The intensity was gearing up and both of us were about to lose all control. With perfect synchronization, Lita lowered her body for my dick to enter as I lifted my ass to punch hard into her. Her hands gripped tightly onto the bed sheet as my prick filled up her love hole. Our flesh now rubbing and grinding wildly, our senses lost in the depths of our desire.

Lita was wriggling her ass as I lifted mine to increase my rhythm. I could feel Lita panting getting heavier and heavier, I knew she would be worn out soon. I sat up and now she was in a squatting position, sitting on my prick. We kissed and continued wriggling; it was such a heavenly feeling when my prick is fully engulfed in a wet and juicy pussy. I could just die in this position.

I turned Lita on her back and I began to fuck her. Lita was gripping so tightly that I thought my dick head would be ripped off if I tried to pull too hard. I carried on ridding Lita like a stud while she shook her head wildly. I could feel my balls tightening and my dick swell even thicker. Lita gripped on my shoulders as we cummed together.

I kissed her to prevent ourselves from moaning too loudly. The fucking hadn't stopped. Our bodies begin to rock again; Lita stretched her hand to hold on the bed head to receive my thrusts. I spread her legs and increased the thrusts; Lita was moaning and shaking her head. Then suddenly, she stopped moaning, her body cramped and her cunt tightened again before she released everything. My Lita just had another orgasm.

Lita and I had just gone through one of our most intense session of love-making ever.

I Do Not Love You

I do not love you as if you were salt-rose, or topaz,
or the arrow of carnations the fire shoots off.
I love you as certain dark things are to be loved,
in secret, between the shadow and the soul.

I love you as the plant that never blooms
but carries in itself the light of hidden flowers;
thanks to your love a certain solid fragrance,
risen from the earth, lives darkly in my body.

I love you without knowing how,
or when, or from where.
I love you straightforwardly,
without complexities or pride;

so I love you because I know no other way
where I does not exist, nor you,

so close that your hand on my chest
is my hand,
so close that when you close your eyes
I fall asleep.

Goddess Venus