Today attended a talk by Warren Mak, a former trainer at Bursa Malaysia and currently a private trader. Warren also writes for Nanyang Siang Pow, a chinese daily. The talk was held at ShareInvestor Malaysia education center at 3rd mile Old Klang Road. There was a nominal fee of RM5 for the talk.
His talk was about trading in general and features in ShareInvestor software. The indicators he is using are volume, candlesticks, Heikin Ashi, Bollinger Bands.
The wisdom nuggets which I picked up from Warren was :
Market Price Earnings P/E Ratios.
Use market PE ratios of 20 (Expensive), 15 (normal), 12 (undervalued) as a guide. When markets are in PE 20 it is considered overvalued/overheated market. A normal market should be around 15 PE while if the PE is 12 is probably undervalued.
Interestingly, he showed that the Shanghai index was around 12-13 PE right now. I sense he was hinting that this index is currently undervalued with risks of overflowing trade war between US and China. He mentioned that the Dow Jones is now hit a dangerous triple top, a bearish signal that has high probability of collapse, however he did mention that collapse will only happen with a fake breakout of the triple tops, which so far this has yet to occur.
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| Dow Jones hitting a triple top |
FBMKLCI vs FBM70
FBM70 outperforms FBMKLCI due to smaller company caps and out of fund managers radar. Your best bet for trading is go for companies in the FBM70 rather than in FBMKLCI.
Industries/Sectors
Warren pointed out that industries/sectors that will outperform in the future is are Technology, REITS and Healthcare (he forgot to put in slides) while putting some weight into finance and construction.
Buy/Trade stocks that have profit
Whether investing or trading, the company behind the stocks needs to be making profit and giving out dividends. This dividends can act as a hedge against temporary capital losses while compounding itself over the years. He likened it to like buying properties that can be rented out, not just having capital appreciation potential.
Dollar Cost Averaging
Dollar cost averaging can be used as a strategy but should not be used on a stock that is a falling knife. It is best used during up phase (best) or stock consolidation phase, when the stock is moving sideways.
Use Heikin Ashi Chart
Heikin Ashi chart yields better signals than candlesticks. Whipsaws signals are less and trendlines are clearer. I'm currently using Chartnexus and I've never seen this chart signal before. Warren's software was ShareInvestor station and it has the Heikin Ashi signal.
Include volume in trend analysis
Volume plays a huge huge role in his analysis. Candlesticks are significant only if there is abnormal volumes, else it could be stock market operators/syndicates making head fakes in the market.
Be brave to buy on uptrend, avoid buying on lows
Human psychology is to buy when stocks are in discounted form. This does not work in the stock market.
Oddly enough, the talk didn't mention about the topic "Sell in May or Stay Away" but it was an informative session. Warren knows his subjects quite well.
Be brave to buy on uptrend, avoid buying on lows
Human psychology is to buy when stocks are in discounted form. This does not work in the stock market.
Oddly enough, the talk didn't mention about the topic "Sell in May or Stay Away" but it was an informative session. Warren knows his subjects quite well.
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| What to invest in bull and bear markets |
I asked Warren to review UCrest since it's a very heavily operator/speculator stock that is dealing in technology. This stock was previously mentioned to be high potential by a previous ShareInvestor Malaysia speaker Dr Money (Alfred Chan) a few weeks back.
Warren's comments were :
- To be cautious of stocks that change name (eg UCrest was previously called Palette)
- The stock has since take a beating and a lot of people are waiting to sell on rebounds, so it would take lots of lots of money to push it up. Operators seem to have existed this stock for some time already.
