Wednesday, October 27, 2010

Inflationary Properties Vs Property Driven Inflation

So now which camp are you in ? It is chicken or egg first question.
It is a common believe that property could acts as an inflation hedge. But how true does that hold ? Honestly I have no idea. In an expected  ( anticipated ) inflation environment, I believe house price would be driven up by the buyer who are anticipating the rise of the house price in near future. This would certainly drive the demand even higher. As long as the supply doesn't outstrip the demand the house price will keep on rising. When inflation gets to the point that the general public can no longer afford to buy a house or anything else they need to survive, then the housing prices start to come down.
As high inflation force the house price to go down, even investor are hesitate to buy. That is when the buyer are expecting the price to go down even more as they expect ( anticipate ) the inflation would go down when the Central Banks try to increase the rate to suck up the liquidity.
Hence, the best time to buy a property is when you can see the inflation happening and sell the house when the inflation is heading the boiling point. So with all the talk about the QE and money printing, what would you expect ? This is inflationary. This should drive the house price up. But the house price in the sate is still dropping even though it is at the slower pace. Guess the the QE is working or big enough to create the demand. I am still buying the QE story for deflaction is just too ugly to handle. I would prefer the less ugly " inflation".

P/S :  Close position on Top Glove and Long even more Haralega. Wish me luck :) 

WAYNE: To some the fastest distance between point A and point B. To others a beautiful stretch to the American landscape. But to Mickey and Mallory Know, it was a candy land of murder and mayhem."  
                                                                   ~ Wayne  ( Natural Born Killer ( 1994 ) )

Monday, October 18, 2010

For the Gold Bug Out There ...

I have been reading the about the fractional reserve banking system and a whole bunch of stuff about econ. Well the author talked lengthly about inflation, deflation, gold, capacity utilization blah blah blah.... Something catched my attention. I have been betting a small amount of my capital on gold 2 years back when the Federal Reserve start the money printing machine. Well it pays off so far. So now everyone is betting of the QE2 ( Quantity Easing 2 ). The dollar drops and the gold sky rocket again to so far 1369.90 USD/oz  now. ( I just check the bloomberg ).
If we look back to 1980's with all the headwinds about inflation, the gold price at that moment ( inflation adjusted was USD 2400 / oz ). So now, 2 years after the so call money printing the inflation is still low ( at least that was what have been officially released, don't ask me to go to the street and check around the good price because that leads us no where ).
The anticipation of the inflation have driven up the gold price so far. Would inflation it go higher ? Probably if the capacity utilization is running at up to 80% and more ( Currently at 74.1 %. I just check Federal Reserved website ). It would take some time probably a few years. To achieve 80% capacity utilization, unemployment has to go down. People need to have job to spend, to consume more in order to drive up the price. ( Inflation ).
What if when the inflation hit, there is another Paul Volcker appears and acts super fast to suck up all the liquidity to drive the price down ? People would say " Hei look, Gold at 1369.90 now. But back in 1980's the gold is 2400 ( inflation adjusted ). Hence there is still more room for gold price to go up " . But the flip side of the coin is " If you were buying gold in the 1980's you would be still loosing out if you hold it till now ".
So is gold a good choice of investment ? What like to know your opinion.

" Give it up, Frank! Death ain't no way to make a living!" ( Judge ( The Frighteners ( 1996 ) )

Wednesday, October 6, 2010

Top Glove - Not so shining !!

Top glove just released its 4th Q result which to me is a surprise negatively. I am not expecting the result should be flying colour with the headwind of the appreciating US dollar and the higher latex cost. But net profit of 45 mil is totally out. Margin is squeezing from Q to Q. Sale is dropping from Q to Q... Looks like I am betting the wrong bet. Yes.. Top Glove will has a lag time to pass the increasing cost to its customer. I am not totally bearish about it future. But I can't see the result will improve in the coming 2 quarters or so. I am closing  my Top Glove position. Will load up Hartalega if the price is encouraging. After all Hartalega will not have to face the increasing latex price for its production consists of 75 % nitrite glove and 25 % nitrite glove. Damn ... a wrong bet again.... Happy Trading....

" Traitors are defined not by themselves, 
but by the people they betray. " 
~ Adolf Hitler ( Hitler : Rise of Evil (2003))

Sunday, October 3, 2010

What Can I say .... Always too early or too late

Just came back from a trip to Japan. What can I say about Japan ? Fantastic country. By the way there isn't much to say about the market. Have been doing nothing about my portfolio. Said it before and I am going to stress it again .... Long Top Glove and Hartalega big time. Happy Trading. There is not much to say actually except properties have gone ballastic. Miss the boat. It is long gone. Still looking for a reason to be in the same boat as others. It is simply too crowded in the boat marked " property ". I just can't squeeze in. Happy Trading....

P/S : Watch this movie on the plane. Quite nice...

" First, I seal your mouth, then left eyes, then right eye .... ( Monk said to the captured while holding a super glue ) "

                      ~ Monk ( Mongga (2010) )