Economist's prediction

Good morning,

There's this article in the newspaper money and business section today that caught my attention. The headline reads “Year’s well that ends well – Economists predicted financial Armageddon, but quick recovery points to better 2010”. What interest me is the comment that economists and experts failed to see the financial crisis coming and when it came, these cried out loud that financial Armageddon was at hand. Well, we all now know that it did not happen. In fact the economies and markets recovered amazingly, and now most of these experts are predicting 2010 to be a better year. It’s easy to make predictions, isn’t it? I remembered we have one of the top economists in my previous employment that is very much respected in the region that briefed us every Monday morning with his views and forecast, and many of those in the briefing would whisper among themselves to buy whenever he is pessimistic and sell when he is bullish, and most of the time they were right. It is not my intention to criticize these experts, but I would like to be reminded that no one knows for sure what the future will be and every predictions and forecasts are statistical probabilities. It applies to my KUTE system too. The system is not designed to predict with 100% accuracy for the stock price movement. KUTE only helps me to screen find good fundamentally sound companies with good business growth potential and understand current market behaviors for buying and selling decisions. There are times when decisions were wrong and good stocks’ price advances are missed, and times when the prices moved too little to have significant profits. Like all forecasts, the only sure thing is these stocks will surely appreciate in long term, whatever the future date is, since they are all good companies. Having said so, I believed you are as impressed with the last 3 years’ back-testing results as I do, (ref: yesterday’s blog) and I should be contented with the returns I had for most of the stocks selected.

It’s only one more night to Christmas Eve and I am staying out of the markets this week. I am going to enjoy myself and catch up with old friends. This is the season to be merry and enjoy wines and liqueurs, and reasons for me to drink a little more than usual. As mentioned, my trading plan this week is to exit all positions if possible and not make any trades once the early trades bought are squared. I will be placing limits to my positions and hopefully the stocks are making money while I am enjoying myself.

NOV was up at $44.39 during the morning session but closed down 0.2% at $43.83. I have one position sold after it hit the limit in the morning. DOX gained 0.87% to close at $27.97. I am still holding to the position. PTI was down 0.48% to close at $19.80 and I am still in the red for this counter. NE was down 2.12% to close at $40.67. I did not buy this counter because there was no signal to place a buy order at 0.3% above last week’s close. MGLN gained another impressive 3.95% to close at $41.30. It’s the stock I missed and how I wish the KUTE system can give me 100% accuracy. Again I need to remember: “Godly contentment is gain”, especially so when we are celebrating His birth and love for all mankind.

Have a great day.

Francies Cheng
BBus MAppliedFinance