Nottibird's Long Term Predictions

If you are reading this, dont eyes big big and mouth big big hor.

Dream with me instead.

SingTel...

For IG traders, margin is 10% for up to 400 lots.
In my vocabulary, 1 lot means 1000 shares. Old school thinking.

LAST HIGH was 4.36 (20 Jul 2016).

LAST LOW was 3.39 (21 Jan 2016).

That was an upmove of 97 cts over 6 months.

She will trade XD on 2 Aug. Dividends is 10.7 cts.
She closed at 4.30 on Friday. 6 more trading days to go before she goes XD.

I hope she goes higher towards 4.40 to 4.60.
So that by XD, even with the gap down to adjust for dividends, she will still be at 4.28 to 4.48.
For the purpose of my dreaming, I will use a lower price of 4.10 to project what kinds of profits
I can expect if I embark on a SHORTING EXPEDITION after XD to ride her down.

If I SHORT at 4.10 and ride her down to say, 3.70, that's a ride 40 cts.

100 lots = 40K
200 lots = 80K
300 lots = 120k

If ride her till see 3.50, then its 60 cts.

100 lots = 60K
200 lots = 120K
300 lots = 180K

How much capital does one need to play this big?

100 lots at 4.10 = 41K
200 lots = 82K
300 lots = 123K

And when you play this big, ideally, you should have enough capital to serve as a buffer to go LONG
by the same number of lots if need be. Yes, when you get it wrong, buffering is the only way to keep
your loss small. And you need to do it as near to your original position as possible. The nearer your
buffer is, the smaller your loss. Let me illustrate.

Say you go SHORT at 4.10 x 100 lots.
Suddenly, tons of buyers appear in the queue at 4.10, 4.09, 4.08...right down to 4.05.
You decided to buffer by going LONG at 4.11 x100 lots.
Once you do that, your loss is fixed at 1 ct x 100 lots + com and finance charges.
Your loss will never be more than 1 ct + com + finance charges whether the stock goes up or down.
Becoz at any time at worst if you have to and you close both positions at the same time, your net loss
will be 1 ct plus com + finance charges.
So what it means is that if you trade 100 lots, you need not just 41K but 82K.
Unless you dont intend to buffer and you are willing to bet on the stock moving in your direction the
moment you enter or soon after you enter. And if the stock dont, there may come a time when you
run out of capital to buffer the paper loss and you will have to cut and take the loss.

If you have 41K to go SHORT but you dont have another 41K to buffer LONG if need be, then dont
trade 100 lots. Do 50 lots instead. And you will have enough capital to buffer trade if need be.
Buffering is a good strategy to keep your loss small and yet enable you to stay in the game without
cutting your original position first. Let me illustrate.

Say I go SHORT at 4.10 x 100 lots.

Then a big buy-up occurs and sellers at 4.10 and 4.11 are swallowed up.
To contain my loss at a constant 2 cts, I can go LONG at 4.12 x 100 lots and follow the price up.
Let's say there is a change in landscape and the monkey wants to squeeze and kill karteks and he pushes
the price relentlessly to 4.50, imagine how you will feel if you are LONG 100 lots at 4.10 ? You will have to
deal with the anguish of being down 40K plus com and finance charges. You will sleep uneasy and suffer
loss of appetite. Your wife or girlfriend will also notice a change in your temperament and an obvious loss
in your desire for sex. Becoz you will be worried sick about what happens if the price keeps rising and you
have to cut and take that 40K loss? But if you have buffered that SHORT position with a LONG position at
say 4.12, when the price is pushed up by the monkey to 4.50, your SHORT position is down by 40K but your
LONG position is up by 38K. Your net loss is only 2K. And that, is surely a much better position to be in. You
will sleep well, eat well...and still want lots of sex as your raging hormones are happy too.

What happens next will depend on what the monkey does. Surely, the monkey cannot keep going higher and
higher. One day, one fine day, he will Siew Kang. And the price will then go into a correction to revisit her low
tide. That is when you close your LONGs to take profits. Monkey Siew Kang means the price wont be going
any higher. With no more upside to expect, the logical thing to do is to close the LONG position to book profits
before the price retreats further. Okay, at this stage, your LONG profits are in the pocket. Your SHORT position
is still deep in the red.

But as the price retreats, the paper loss of your SHORT position will become lower and lower. You can simply
LOON that paper loss meantime and watch it shrink smaller and smaller and decide when to cover to close
that SHORT position. Even if the price do not drop to 4.10 or below, you will still find that the loss for that
SHORT position is smaller than the profit from your LONG position. Your net is still a profitable trade.

For more aggressive traders, once the monkey Siew Kang, they not only close their LONG positions to book
profits. They also open more positions to add SHORTs to ride the downmove and profit from it with those
fresh SHORTs done higher.

Since I am dreaming, might as well go further and go all the way to dream a good dream and see what the
end result of a good dream can be like.

Say I SHORT at 4.10 x 300 lots after XD and the monkey himself also started a new game from the SHORT side
and she falls all the way back to say 3.40... that's 70 cts x 300 lots = 210K for a trade lasting 3 months, ie. from
August to October.

 

I posted the above prediction on 14 Aug 2015. It was a 12-Mth CALL starting from 14 Aug 2015. Today is 24 Jul 2016.
We can now examine her chart to see what she did over the last 11 months.

 

Those of you with spare money looking for somewhere worthwhile to park will find this interesting.

If your money is still with the CPF Board meaning you can withdraw but decided to leave it there
to earn interest, you get 2.5%.

If you put your money with a bank in a 12-Mth fixed deposit, you get 1% to 1.5%.

But if you park that money in a good index stock which has a reasonably good chance of appreciating
in the next 12 mths, you can get much more.

I wish to draw attention to SIA.

She is now at 10.11 : 10.12.
Give her 12 months and she will show you $11.00.

That's an upside of 88 cts which translates into a yield of 8.69% for your $10,120 investment in her for 12 months.
For Fund Managers, anything more than 5% is considered a good yield.

SIA pays dividends twice a year in Aug and Nov.
In 2014, total dividend payout was 41 cts inclusive of a Special Dividend of 25 cts.
Otherwise, ordinary dividends would had been just 16 cts.
The Nov dividend was 5 cts.

This year, she already paid out 17 cts this month.
Her next dividend payout is in Nov 2015.
Assuming it will be 5 cts, capital yield of 88 cts plus 5 cts dividends will give a total yield of 9.189% over 12 mths.

Let's see what happens to her over the next 12 months from 14 Aug 2015 to 13 Aug 2016.