More Bad News On Subprime

Today, news about subprime is getting grimmer.

For example I saw these headlines, "Signs of US subprime crisis spreading" reported by Financial Times, "HSBC hit by sharp rise in bad debts in US" from Guardian, "Corporate Bond Risk Surges by Record as Subprime Losses Spread" reported by Bloomberg.

As far as I know and have experienced problem related to debt don't go away quickly, it will stay there for a few years and you have to really, really hope it can be contained and not spread out, which I don't see happenning, it has spread to UK, Australia, Japan and recently I saw a story about a Germany's based bank taking the hit.

Why? Because the subprime loan gets packaged and sold of to, who knows whom from anywhere in the world.

Next Week KLSE and Global Market Sell-Off

My prediction is this, we are going to see another deep drop next week.

As of yesterday, KLSE reduced by 26.12points. The day before, Dow Jones dropped by 311.50 points and this morning I saw closed lower by another 207.53.

Both combined, the total drop is more than this year 416points February sell-off.

So expect another global sell-off next Monday.

It seems that US stocks sell-off came after a mix of bad news from Commerce Department's report that new home sales fell 6.6 percent last month and a weak result from two of the largest US homebuilders including the delay of a leveraged buyout of Chrysler from DaimlerChrysler AG's for US$7.4bil by Cerberus Capital Management due to difficulty in getting financing.

So the next big negative trigger can also be anything that comes with the word "failure to issue" + "bond" or "loan" or "debts".

Well for KLSE in Malaysia, I would say select the companies to be bought carefully and you will come out as a winner.

What is your strategy? Is it long-term, and what investment technique you have learned and used, I hope it is based on fundamental studies and not something related to Technical Analysis.

So, lets wait at the sideline next week or for the next few weeks and see any bargain, buy if you see one and stash the stock for a few years.

I'm sure you won't regret it.

But a letter of caution, check first how much those company are exporting their goods to US, and be wary when buying electronics based companies shares, they usually have substantial export to the US which will eventually effect their revenue.

But there could still be bargain in those export oriented companies if you know how to find it.

Oil Shale May Affect Oil & Gas Investment

Oil shale, what is that thing?

Here is the definition of Oil Shale.

I think it will have a big impact on the price of oil in the next few years.

I read articles yesterday claiming that US has the biggest reserve of oil shale and is in the process of commerciallising it. It size is five more times than the stated oil reserve in Saudi Arabia.

Previously it was not viable to extract and process oil from oil shale but maybe now.

The figure I got is that crude oil price must be between $30 to $100 to make it viable depending who is saying. And as of yesterday crude oil price is hovering around $75.

Shell has been studying the method for extracting oil from oil shale for about 23years. Recently it has been able to produce 1400barrels of oil from a testing site in Colorada.

So the question in my mind now, when is the time to exit from oil & gas companies investment.

I'm not sure. I have to think more about that.

You may find it interesting to read this report.

How to Make Money From The Next Market Crash

It is really easy. I have done it various time. You can also do it.

1. Learn the technique of value & growth investing
2. Be comfortable when reading companies financial report
3. Read articles on the companies that interest you
4. Wait for the price to dive down
5. Check if the fundamental is still intact and start buying
6. Wait for the price to move up again

Happy investing and money making.

But if you only focus on buying during market crash you may miss the next boom.