What are you waiting for?

Dear Fellow Investor,

 

In the last 18 trading days the KLSE has been stuck in a narrow trading range from 1699 to 1725. 


Most other world markets have chopped around in a similar manner but made little progress.
 

The last months trading ranges in the KLSE setting up a one eyed Joe

These narrow trading ranges show uncertainty, lack of commitment, and a wait and see attitude by many participants.  This is the famous One-Eyed Joe pattern from the Richard Wycoff days. Wycoff was a rich and successful trader/ investor from the 1930’s who popularized price and volume trading and related the story of One Eyed Joe.

 

Joe was a veteran floor trader in Chicago who traded corn, wheat and agricultural commodities.  He specialized in price and volume trading and kept accurate price charts.  He only had one eye.  But this eye was a powerful eye.

 

It could see things on his charts that other traders missed. His was also a patient eye that only traded when the odds were overwhelmingly in his favour.  When he caught a big trend that lasted perhaps 60 to 90 days he took his big reward, lived a comfortable life and traders did not see him for the next few months.  He returned refreshed and waited for the next big trend triggered by his one- eyed Joe pattern

 

 

One eyed cat which I am sure is an expert rat catcher.

  

Joe waited for a situation where almost all the analysts were bearish, sentiment among the crowd was negative and volumes were low but prices held in a narrow triangle pattern.  Fundamentals and values were bullish but unrecognized.

 

Joe would take a position in relatively quiet conditions when no one else was interested and wait for an explosive move.  If the break was down he would exit with a small loss.  If his bullish analysis was correct, he would sit on his position for potentially large profits.

 

Joe did not believe in waiting for a breakout and follow the momentum because that is a crowd following method and the risk increased.

 

There are many fine quality KLSE shares now that are trading at attractive valuations and pay dividends.  The KLSE is trading at a price to book of only 0.8 which is at 2008/ 2009 levels.  This is 20 % undervalued.

 

What are you waiting for?

 

Invest well and grow your wealth,

 

Bill

 

 

Clients ask me who I support for the November US election. As an investor, I support the candidate who will benefit our bottom line and benefit Malaysia/ Hong Kong and Singapore where we invest.  I might not personally like a particular candidate but my focus is on profits/ protecting and growing our capital and I am for the candidate who answers our financial needs.