Trading XAO has got used to the bad news?

Global economies and weak government have overwhelmed the impact of healthy local economies for years.

Why did XAO rush ahead in last August into its imaginary GFCII? Why doesn't XAO crash itself in Greece Election crisis which seemed could result in EU disintegration?

Could we say China has got into the way for its soft landing?

Could we say US has got its rock bottom for its economies?

Could we say EU has found its way to repair its critical and structural fault?

Could we say 95% of losers in trading for years have declared their losses for tax deduction if they could?

***
The shorters in XAO seemed worrying the covering costs more than they could make? It failed to push its number lower than that of the August 2011. Is it a sign that we have been depressed too much?

What should we do as individual traders or investors? No one believes "decoupling theories" anymore, most retail traders or investors have thrown their babies with the dirty water out of the windows, and we have passed the psychological phases from euphoria to anger.

What's the psychological phase? XAO rises back just after Greece Election when no policy makers, especially EU's, have made their resolution. All want to deleverage and it has gone for years. Are the cry of growth in EU are the sign that the pains are too much to go further?

***
Could we get worse after the worst we believe?

We need to pick up the safest targets with affordable capital in case. What are the safest target and then how to use time average and diversity to get more margin of safety so that we can sit on the train to leave away the ruins safely?

It is not easy to pick up the gold ahead which others just could not see. I do feel one thing is sure we are in between depression after burning on fire and disbelief of that we could have sunny days ahead.

***
The phase between depression and disbelief is a very tricky and hard to be sure phase since the crowd has the frozen heads and all of traders and investors are risk players.

1. The key is the cash in hand for the rainy days ahead and identification of the qualities.

2. No enough cash or don't know what is quality, and then you don't qualify to play in this phase.

3. The sub-keys are the time average and diversification. You could not fully trust your own judgment unless you buy the shares as the owners for growth.

4. It is wise to believe in this rainy days it is normal to get more rains if not storm or tsunami.

***
I could not say I am businesslike people in the stock market which needs more time and effort after I fix my English Listening. So I could not buy and hold for growth in long term. I just could be a intelligent speculator at best.

There are different types of risks for speculators and businesslike people in the stock market. There are different types of resource requirements or assets for them too. As speculators you have to know the crowd psychologies and have plans to deal with them and the reflexive relationship of sentimental, economies, and fundamental.

1. Speculation means you have to control the risks from things you don't know.

2. Intelligent speculation is very challenging and few can profit always without some big losses time by time. You have to get the relative margin of safety in the period you would like to hold and once this margin gone you have to sell.

3. Business type action means you have to get the views of the underlying business for growth, which should be calculated carefully with great margin of safety based on the long term means.

Without matters we are speculators or investors, we have to zoom out for the seasons and zoom in to check we don't hold things which over-prices.

***
Traders tend to ignore the wisdom and logic in the dazzling and promising of their systems. All of systems could shut down if the conditions are right. Investors tend to be passive and ignore the wisdom and logic too.

Winners don't worry about the successes but do prepare for the course to run against them. Losers do worry the losses but never know how to get the money into their own pocket.

The crises since the May 2011 in my portfolio has forced me to be more self-aware and environment-aware. I do want to change rather than protect my primary instincts and feel proud for my own primary instinct.

***
It is a expensive business to update our own mind. It is a expensive course to get my English listening as my mother language. All of these need to get the cash income annually in the stock market.

It is a challenge that need me to put half day of everyday to deal with. Once we want to get some money from somewhere we need to put time, efforts, and resources in.

1. Could I get a reasonable cash income which is trustful in the stock market while I put efforts into my English Listening and speculation in the stock market?

2. Not sure but I have to ponder about it. Have to say before the April 2011 I never question about it? It was the seed to beat myself down.

Now I question myself to know where my ignorance is and how to control my arrogance to get my direct goal every year. I believe I could be more balanced and then I would have better chances to run my budget for my mind updating in the way of self-reliance.

 

ARU, Rare Earth, SPP, ECE, and its price

No exceptional to ARU, as a rare earth hopeful, its share price has plunged since the beginning of 2011.

The plunge has its internal and external causes but the sentiment of the market were the main reason. While XAO lost 20% of its value, ARU as most of mining hopefuls lost 88% of its market cap.

It is high risky and when the market could not give the hopes, the crowd dumped it ruthlessly. All wanted the sure money since we all jumped from euphoria to depression in fears.





***
Could it price drop down further? How much would it drop? Are there fundamental changes we could expected with some facts? I am not sure but just attracted by the following facts and bought 250,000 at $0.21.

1. SPP at $0.294 in March
2. Issuing shares to ECE at $0.22 of 45.27million shares (confirmed after I bought in)
3. Ending of this financial year
4. Nolan REO mix price: $67 from $239 in RE craziness(72% dropping)
5. China's control on RE export
6. Stabilized RE price in this very turmoil economic environment
7. ARU used price $57 for its NPV, which were told for billions of dollars
8. The fund for BFS which delayed very much, were available now(after I bought in)
9. Its share price at the level of 2005 before the resource booming
10. Its cash reserve before EEC issues: $26million
11. Its market cap before EEC issues: 396millions x 0.215 = $85.14million
12. XAO refused to make lower than its price of lowest one in August 2011.

***
AKK and ARU would be crashed down if EU disintegration, China tipping off, and US house dropping down another 20%... or they would be extremely unlucky. If so it is not their faults and my faults too. I do use the time average and diversification and the information available to me.

It is my belief that the most toughest retail bargain hunters in XAO have been given up their hopes. I am not sure whether or not XAO would drop back to 3000 but I do believe if it would happen, in Australia all would have some serious trouble. However if not... $5000 could play the part as $50,000 when some black swans hit ARU...

Don't bet on the black swans for sure!

***
News said "China on Wednesday pledged to regulate its rare earth industry more strictly, saying its regulations are aimed at protecting the environment and are in line with WTO rules." It means the supplies would be tight in the coming years if not a decade.

It is a very risky playing but I do feel it would be survival in the next three months or a year. EU crises have last for more than 4 years, the crowd has got frozen heads for long enough time, and the price is very reasonable for margin of safety, even it could fail in future.

The capital into it is that affordable and its price is much lower than its means for a decade. If it would be survival, it should jump up over the means sooner or later.

***
I will buy one or two more before July 2012 if the price, the sentiment, the fundamental, and sustainability are calculated good even the calculation shouldn't be error-free.

Warning: be disciplined, analytical, and self-reliant always please! I failed to be so in 2011/2012. Things could be worse and much worse when all are in the tunnel and far away from the light at the exit.

Where is the light? The internet just makes the news of more clouds in anywhere around the world at the click of the losers, who are very smart for that. The problem is there are too many losers since IT busts!

 

RE should be priced as gold!

You may agree or disagree but the RE production would be in tough control in China who hold more than 90% of the RE reserve. As individuals in the stock market, we just could not set the course of the market but we have to be environment-aware.

News said "CHINA has defended its export control of strategic raw material rare earths on environmental grounds in a newly released white paper yesterday and urged other countries not to ''politicise'' the issue" even all are about national interests, which are things about politics.

It was said "more than 40 per cent of the export quota of rare earths from the past year was not taken up by exporters and this reflected there was adequate supply of the material on the international market." When all worry about future, it was reasonable but how about the time less worries?

***
Rare earth is so precious and it should be sold at the price at least as that of IO, was said.

1. the price of rare earths had risen by only 2.5 times between 2000 and 2010.
2. the prices of gold, copper and iron ore had increased by more than four times over the same period.
3. ''Rare earths is such a precious resource and have value similar to that of gold - and yet we sold them at prices of cabbages and carrots in the past''

After I bought ARU, I fully agree RE should be sold at the price as gold even I know there are interest conflict.

Sometimes I just wonder why Australia would have set the price of the IO at the price as gold? China so far doesn't need RE for its living. Australia needs IO to keep the economies in the good track. I do wonder how WTO settles down the issues around RE.

***
It seems China would try all to rationalize the control of RE and ARU should be benefited in long term if it could finish its BFS first.

If you feel upset about the RE production control, you need to get out of the stock market and demonstrate in TianAnMen rather than in the stock market.

Don't worry and politicians would find the way if RE really causes the sky falls down!

***
Don't forget the followings:

1. China is just a nation. If RE control threats the sky, IO production control would be more powerful than RE.
2. Before the things are worse like that, RE price should be up to the level no one can sustain!
3. Don't trade and invest based on your political views in short term too.
4. Hope the white paper from China could shoot ARU into the sky first even it definitely would drop onto the ground again.
5. I would lock the profit if it happens.

***
Have you remembered the euphoria about "decoupling theories" in 2007/8?

By that time too many people worried about the huge holes everywhere in future Australia. Do you worry the holes now? Now all worries no one want to dig the holes if EU goes down, don't they?

China now seems have chips to control the RE and try all to rationalize its control in the frame of WTO. That is good news. It could not let all down since if so all would be losers. However it seems RE price should be up in some limitation.

***
No one can control the future and China could not control the future price of RE by itself. When you want to control the course, something would happen to control you!

It is not bad news if we could identify the ignorance and arrogance of the policy makers, the crowd, and ourselves. The global economies form a macro-control system, of which parts are open parts are closed. Be wise and intelligent to be in the stock market.

Why? No one is God! That is why you have to try balance first or safely first and then beat a point which is very promising but never put all of yourself in!

***
Who is aware of themselves and environment have the future. What if RE priced as gold in months? I win! Haha! But is it possible let alone about the probability?

Inverting, inverting, and inverting when you feel good enough start to build the position but don't hit all out especially when all of warriors are in the valley of death! The attractive point is if you are right... which is risky and very promising.

It is a time you can be wrong! It is the feature in the phase the warriors have been in depression for some times. All of fundamental issues are not important since the fads could overwhelm all down.

***
GFC finished its crash in a year around.

The patients around the global inflected by the euphoria now are very fragile now. They all worry the death more than anything else. In forums we could not hear curses anymore.

All of news are bad news. Good is bad, bad is death sentence, and very bad doesn't hurt the warriors anymore since they have accepted their death. Actually a lot of people in the stock market have taken the death as normal for their finance. Fortunately the trading volume is just so thin.

Is it the time the blood has been shed out enough?

 

CTO: down with its gold

CTO was a gold hopeful in 2006 which made the traders crazy and pushed its price up to $0.42 from $0.13 around.

Since then a lot of Aussie gold hopefuls have encountered troubles to produce the gold but CTO still gave traders hope until GFC crash. So from the end of 2007, it has went down from its peak to its current price, $0.052. Its lowest price was $0.047 for a year and happened a few days ago in a tiny volume. Its lowest price for all of time was $0.04 happened in 2000 for a few days.

No matter how we thought about CTO if you have hold it more than a year you are losers. Gold boom killed the traders here.



***
I tried to learn buying with good reasons. How could we avoid the unaffordable risks? How could we get good enough buffers or margin of safety for our trading or investment?

Anyway I bought 100,000 CTO at $0.053. It was not the lowest one and the volume was too small for too short time. But after I read all of its announcement and financial report, I felt it is at its best position since its inception.

It definitely is not the lovers of traders. It has not sensational news since it just works to get the gold out of the ground for revenue, put the money back or borrow more into the business to get more gold out. It is a boring business.

***
I do feel all of retail traders are losers for the period from April 2011. The crowd sentiment has been in its own self-destruction.

However I don't believe gold price would drop down to $250 again. It produces the gold. It profited in second half of 2011. It has little debt. If the financial market worse it could pause its exploration and just produce the gold for its survival.

Later I will list my reasons why I bought it wrong or right.

 

....... never do it again !

 

Never do it again?

Never do it again? No if gambling or guessing or cursing or running after the crowd. Yes, if playing with time averaging, diversification, affordable bet with big enough margin of safety on high probable winning chances.

Let sort out what we can see not just twist the words:

1. ARU has just got more money from its own shareholders and its partner, which were much higher than $0.21.
2. Rare earth has been beaten down very much due to the fear not Australia economic fundamental.
3. CTO has high quality gold reserve and in the second half of 2011, it has profited
4. CTO produced the gold at the cost below $600. Its price dropped down while gold price at $1600.
5. The only risk to them is EU disintegration in next three months, which is possible but highly unlikely.
6. I locked some profit in March/April 2012. The capital into these two shares are the profit.
7. Both of the means of the shares are much higher than my buying price.
8. Both of them have low debt ratio or no debt.
9. Gold price is higher than $1500 even all in Australia market worry their own death.
10. XAO and the crowd are in GFCII price range or mood. The Street in Australia are full of blood.
11. I don't believe EU would die, I don't believe we are in the dire as 1934, and its war for EU survival have gone on for 4 years. However it is possible.
12. Traditionally EU was the source of the wars but no future to move into the wars. EU is the first try to solve the conflict among nations. It has the structural faults but could be corrected in my view, and will take time to fix. People would get used to its sickness.
13. The shareholders of ARU or CTO, if want to sell, should have sold for their tax deduction. They are in downward slop for more than 1 year.
14. The losers have given up to complain or curse since they have used up their energy!
15. Both of CTO and ARU have enough money for its survival for a year!
16. Nothing is 100% sure but highly likely they would move up after all who would sell, have sold.
17. I really hope that I would have sold all to lock my profit in April 2011 and started to buy now and continue to buy bit by bit in next two years.
18. Nearly all retail traders have given up the hopes for sometimes. The trading volume is very thin even in the losses realization time.
19. All of traders I have known for a decade have sold all and claimed not trading any more.

***
So my conclusion is the winning chances are bigger and much bigger that the losing odds. All of mistakes are not because I bought with good reasons but I failed to lock the profit. In my view, only one thing could crash down everything again:

Greece, or Italy, or Spain, or Portugal, or Ireland get into default. It is possible but it would risk the sky, which I bet the policy makers would try all to stop it. If it happens, I would lost $5000; but if not I could get 1, 2, or 5, or 10 bags. Why? Now everything drops down much lower than most of traders expected which was far away from the means.

If EU integrated, it would result in worst case in years. Before we are sure, we could not lower our cash reserve too much. If the worst happens, $10,000 can be effective than $100,000 which is used now.

***
We need to remember a basic law: all recur to means and we could be wrong to calculate the means. So that we take the risk which is much lower than the winning odds but be sure affordable of the costs.
1. The operation must base on the horizon in years rather than months.
2. The buying must be time-averaged and diversified.
3. The profit must be locked once the crowd feels better than the environment allowed.
4. The holding must be sold if profit turns out to be enough.
5. All decisions must be made based on the judgment about the EU crises and its effects to China and emerging economies.
6. We have to be balanced between direct and indirect goals and the cash reserve, other asset, and capital in stock market.
7. If the risk turns to be true the losses must be affordable.

***
Never do it again? Do you mean never buy, hold, and sell stocks in the stock market? I could not just cry and ignore the chances ahead.

1. I update my mind to get margin of safety for buying not cry for foul at the side line.
2. I believe the crowd mood is between depression and disbelief of any hopes.
3. I could be wrong but I would be wrong due to my calculation error.

***
The retail crowd in XAO have run away from the market. Today all of stock market were red but ARU and CTO held their feet steadily.

Of course nothing is 100% so that I just bought $5000 for each of them. I would buy more if EU crash everything down and XAO become stable again.

I have count on the impacts of the worst case, both of ARU and CTO would become default. I can afford it. What if I would profit from them? I would lock them.

***
All in all I have to follow my judgment but I could not ignore the gap between my judgment and real world. I believe Greece election, end of this financial year, depressed crowd work together to let all run away if they would like to.

Yes, we all could not predict the future. Worst can be worsened. However it is a sure matter XAO is moving into the phase to finalize its bottoms. Timing is not important but it is everything.

I am still preparing for the EU crash but I just feel I could not do too much. Another GFC? Possible but highly unlikely. All are in the ruins already even Aussie economies are still OK. Preparing for the worst is different matter the belief that GFC II is highly unlikely.

Don't let your head frozen in the shadow of GFC and EU crises. Don't let your head red hot while you get some abnormal profit! Don't let your gut gone while your mates and you have lost too much, which means your death financially in the stock market!

Phoenix must be reborn in the ashes of the fire! It has to keep its spirit, which is the last light in the darkness and destruction!

No one could be reborn just laying on the pension! No one could sit the sideline to call fouls for his rebirth.

***
The catches of buying now are no enough cash reserves, EU crashes, and hopes could be destroyed again and again.

1. You have to get the cash reserve and keep your cash flow positive in worst case

2. You have to find the service warriors who are last tiny parts who want to accept the services at the price close the lowest price.

3. You have to follow the time average and diversification

4. You have to lock the profit once it becomes bigger enough and buy again if the price and the crowd falls down enough.

***
Of course if you have some very big cash reserve you can buy bit by bit and hold for a unavoidable recovery but you need redefine how you see your catches.

We must know where we should let cash out stop; We must know where we should let how much cash out; We must know where we should do nothing; We must be right in most of time and never allow errors to destroy your capital too much.

All what we should behave need continued efforts to read, write, ponder for our mental framework updating.

I have bought enough and then I have to stop to buy until around the end of October, which is another selling season in XAO. I would prepare for it patiently and resolutely.

No one would kill us but ourselves in the stock market.

 

I am speculator so far who...

All of us know we should be self-ware and environment-aware. It is simple and obvious since if you are not you fail in the ever-changed stock market which are full of black swans. We all in the darkness of the certainties and uncertainties and most of us fail to understand what could be certain or not.

"Never do it again!" No, never inject the drugs into your bodies again. Yes, brighten the future with your wisdom, discipline, gut to move against the crowd with margin of safety, preparing for the worse be worsen with the awareness whom you are. Whom are you? I am still a speculator even I want to behave as Warren Buffet, but I could not.

Buffett had taken long way to learn from the greats. He started his money making while he was a kid. He was lucky to know learn the great for his money. I was not so lucky when I was a teenage I just didn't have any chances to know the money for this modern society. This is huge gap to make or lose the money.

***
The question is could I fill the gap in the coming year. It is envied matter to be a teenage. You don't fear too much but just need to be led into a way you could use your potential maximally. 5% of human kind has this lucks or gift. Time passed by are gone forever. We have heavy inertia to drag us back into our old way.

Yes if we really want to stay in the stock market after failure for a decade, we have to say "never do it again" to the old way. The question is do you know what was your old way and why does your old way fail you? I do still not really know whom I am but I do get the lessons from my mistakes in IT bust and the mini crash since the April 2011.

One thing I alert myself is that I could not be Buffett or anyone else. It would have not happened in the past, would not happen now and later too. I have to be myself even it means rebirth from the ashes. I should know whom I was, am, and should be. I am a speculator but more intelligent than in 2001. I put my time and effort to update my mental frame work. I have known a lot of basics I don't know.

***
I will be a intelligent speculator first. Action in uncertainties means speculation instinctively.

Action to count on the crowd sentiment, the full picture of the global financial system, the trend of human kind as a whole, the extremely shift from the means, the worst cases, and effective and efficient money or cash or portfolio means intelligent. If we can do so, we have gone far away from the crowd.

Actually investor if wise, also need the intelligence to know what happen around him. I don't believe Buffett are blind to what happen in macro-scope. Don't forget he called the derivatives as destructive bomb while they were and he used derivatives while it is not.

Never come into the eye of the tsunami is different from don't worry in the eye of the tsunami after it has passed by.

***
However you need to do more after you know whom you are. Whom would you be after a decade? It is a question you have to answer now.

I want to be a intelligent speculator with the capability to pick up the gold ahead which no one else can see! I have to learn from Buffett or anyone who can identify the gold. It is really not matter whom we are but we need to be right, decisive, and error-tolerant way for our future.

So if you are a speculator you need to be intelligent. If you are a intelligent speculator you need to known where the gold is. Put your toes on where you would die is stupid. Refuse to sharpen your mind to get the gold with no risks or little risks with buffer for the risks is stupid too.

***
It is very popular in the stock market, traders believe the investors would be the losers and investors believe the traders would be the losers too.

The fact is both of these groups are losers even they argue about the name of whom they are, not actually whom they are. They are market stupids and they could not win anything enough. Before 2004 I was a market stupid in any sense. Before April 2012 I was partly market stupid.

1. I never read anything Soros would have beaten Buffett as an investor or Buffett would have beaten Soros as a speculator.
2. Livermore was one of great speculators but wise ones do beat him since he was really stupid to bet without enough protection at last.
3. I never hear any wise say "never do it again" but fail to know what is the drugs in life or stock market.

Wake up, market stupid!

 

Aussie banks are the gold!

No question to me that Aussie banks are the gold in the stock market even I really don't know what is the gold really. I have heard a lot of story how gold destroys the owners in 1990s when gold was sold in great discount. Yes, it is tricky to pick up the gold.

I thought I know the tricks. So let me know more about the gold in the stock market. After spending a lot of time to know when the market would discount everything, I need to know more about how to identify the gold.

In this sense I do feel very interested in the gold in Aussie stock market, the Aussie big four banks.

1. Robust yields and strong ratings have contributed to Australian banks
2. Australian banks’ dividend yields are in the area of 6-7 per cent, which can be as high as 10 per cent fully franked.
3. The big four have also maintained their AA-ratings with stable outlooks from the credit ratings agencies
4. Global giants such as JPMorgan and Morgan Stanley were downgraded
5. Despite not being hit by the downgrades, Westpac has made contingency plans in case wholesale funding markets dry up due to global jitters.

***
What are the Aussie banks doing? It is very helpful to see how the conservative Main Street to run their business.

They said:

1. ‘‘We planned for greater downgrades,
2. we planned for continued volatility,
3. we planned for, at various times, markets simply being unavailable’’

That’s why all the good, hard work banks’ve done over the past three or four years is standing them in such good stead now with very high levels of liquidity, which really give them an enormous sense of buffer as well as a very strong retail deposit activity which is well more than covering the lending growth in Australia.

Since the April 2011, I failed to do the similar things so I lost all of my paper profit which happened between October 2010 - April 2011.

***
They are very self-reliant. They are less reliant on overseas fund markets due to soft loan demand and higher levels of local savings.

They can cover the loan demand by themselves. They know it’s simply that demand isn’t there because of the caution that exists at the moment. We stand back and watch the activities in Europe and don’t need to participate in funding activities there until they find the right window of opportunity.

Yes, there are chains of demands and supplies. They are patiently waiting for their opportunities windows. They try all to get good cash incomes so that they could pay the cost to wait.

***
The prices of credit default swaps, financial hedges used to protect against losses, have also eased for Australian banks despite the worries overseas.

They do act to build up the buffer for worst case. Expectations for more stimulus from central banks and the ‘‘relative comfort with Australian risk’’ has seen a reduction in major bank credit default swap spreads down to about 160 basis points from 200 basis points in early June.

Similarly people are reluctant to gear into new business and stock market. However they are tend to passive and forced to do so after damages have been done bad enough.

***
They blame the leverage but fail to know when and where the leverage is bad. One thing is sure for individuals that is the leverage needs to be serviced and the service usually cost the money.

1. Leverage can gear up what you can not move if you choose the proper one for you and only for you.

2. If possible or you could not service the cost, leverage is bad and always bad.

3. Even you could service the cost of the leverage if it could not move the things as you hope or wonder the effect you should not take the leverage.

4. We use leverage for benefit not to dig the graves for ourselves. If you wonder you use it for your grave, you should pay the debt back as soon as you can.

5. Leverage needs some skills and knowledge for its applicable place and time. If you don't have these skills and knowledge you should not touch it.

***
Conservative main street always worry their last defensive line and never let cash incoming become negative in the rainy days. I have the chances to pay off the debt and get the fully self-reliant financially as a full time student, but I didn't do so.

Timing is not important but everything. You have to act properly to tilt the two-edged sword to the end you could be benefited. It is a art and the conservative main street get used to use it but not me at least now.

There are still a lot of barriers psychologically and lack of the understanding to these what I seemingly know but not really!

 

BBG or QAN or BSL, no ways for me to buy!







Yes, these three were qualities before two speed economies have taken its form and high Aussie dollar were there or internet has played its parts to hurt them. I would not buy them without matter how cheap they are.

They are in the downward slope due to the economic structure shifting. Unless I could find sure conclusion that the shifting has made them worth much more to die than be alive.

***
Are they sunset businesses? I do feel it would be unless

1. resource booming was not just finished but another bust with all of emerging economies into the hell,
2. internet was shut down because its speed and convenience to buy have greatly interrupted the traditional shopping behaviors and have made all were the losers in all of businesses.
3. No high Aussie dollars anymore. It has raise the cost and made too many losers, and too many robbers in the street, and the sky has to be saved again.

***
Of course if they could choose dying which is more profitable than being alive and my cash reserve allows, I would change my perception to buy some of them in.

Not now... It is too risky... Could they be sunrise businesses again. They have to get out of the sunset business first, which need years to go.

By the ways they were the graves for the investors who bought and held in the last decade especially! Never buy shares in the sunset business!