Futures Gathering by Mr Nico Omer Jonckheere

Nico Omer Jonckheere is Vice President of Research & Analysis
at Valbury Asia Futures and Valbury Asia Securities

11 Date: 27th October 20

18.00-Finished
Venue: Grand Aston, Cypress Room
Jln. Balai Kota No.1 Medan 20112

Recently I was attending a futures gathering party that present Mr Nico Omer Jonckheere as the speaker, it was quite a nice presentation as the speaker gives us his point of view about what is happening in the financial world nowadays, and gives us the knowledge that we very much needed in this kind of volatile yet confusing market.
The speaker had done a very great job on presenting his ideas.

These are the summary of the presentation:

Time to Buy or ... ?

Volatility will still be high for these one or two years, but high volatility will offer much opportunity, the thing that we can do is to adapt with this situation

The world has 3 Economic Powerhouse, which is: America, Europe, and China. While America and Europe are having trouble from their financial system, China are having trouble from economic overheat,and it's property market. And it is very dangerous to the world economy at large.
Every now and then, things might be seems good, government and central banks from these country might release encouraging statements, but investor now have to be critical and skeptical, don't follow the euphoria,as things might collide down once again

These are the trouble that surrounding these 3 country:

Europe

Thing will blow up !
Greece will default.. Eventually, the bailout funds -no matter how large they grow- will merely slow the march toward inevitability. The destination is certain; the timetable is variable
Now the question is not "Will Greece face bankruptcy ?" The real question is "When"
Domino effect

There will be a time when France and German will finally say "enough is enough" and when the time comes, the domino effect of the European financial crisis is inevitable  

Candidate for bankruptcy:

1. Greece
2. Portugal
3. Ireland
4. Spain
5. Italy
6. Belgium
7. France
8. Germany
9. Netherlands
10. Sweden
11. United States

United States

@2011, US Consumer Sentiment Index is declining, this index is usually a catalyst to US GDP, which means the GDP will soon follow to decline. Meanwhile, US National Debt is now at all time high, almost 15 Trillion USD, and doesn't show any sign of slowing down.
That means declining GDP and inclining Debt. This situation is very bad for US economy and create some very bad impacts, such as:
US are unable to pay off their debts
A default will crash the currency (USD)
Gold will going to be king again

Note:
Given the role the US Dollar plays as the world's reserve currency, the dismal shape of the US monetary system spells trouble for the global monetary system.
Some countries are swapping their reserve from USD to gold, China is the biggest buyer of gold this year, means that they have forecasted the impact of US and European Crisis


China

China is about to face stagflation, the situation of high inflation, and no growth.
The property market has been down around 50% MoM on several big cities in China. With the property stocks are still going up, yet the real property market has going down, the situation does not look very good.
China GDP has been averaging 10.27% per annum over the past decade, now Jim Chanos estimates Chinese GDP growth would take a 7.5% - 10% hit.


Stock Market

Things will get worse before it starting to get better

With problems surrounding these 3 economic powerhouse, a crash is inevitable. But the good thing is, a crash will accompanied by abundance of opportunities to buy cheap stocks, with one word that investors are looking forward to: QE3

QE3 will lift up stock market again, because with QE3, the will be a lot of liquidity pouring in the market
But government can not exercise the QE3 now because of the high inflation,  they are waiting for something happen that lower the inflation-a crash (a crash will lower the inflation because all the assets price will collapse during the crash) to exercise the QE3, which is why the crash is a great opportunity for investor to buy cheap stocks


Emerging Market

Emerging Market will be the destination for funds and foreign investors for the next decade, with Indonesia and India as the favorite destination. It is because emerging market show a very steady growth, and the huge population in the countries that creates a huge domestic demand

So, things will likely to get worse before it starting to get better, as the fund redemption will have huge impact on emerging market. The good thing is, on real sector, emerging market only had a little impact on the crisis abroad. Emerging market is the place with great potential and very interesting growth and valuation that is very likely to be the investment destination again when things are settled down


That's the summary of the presentation, which I think is a great one, because it does enlighten me to see a market direction in this confusing market.
I hope this article can help you too, to see the market objectively. Oh yeah, the last word: Be Prepared ! :D

Winston Sual View on Market and Europe Crisis

European crisis is not likely to be settled anytime soon, the estimation time for  it to settle down is another 1 or 2 years, but since Indonesia is only had a very little impact on the European crisis, we still have the confident that the JCI could still reach 4000 or a bit more by end of year

Financial Sector is the sector that battered the most by the European financial crisis, because funds in Europe have to sell out their shares in emerging market to secure cash, because they are facing a lot of redemption, and they can't afford to fail, because a failure/default may lead to financial rush on banks and other financial institution

But in Indonesia, we had very few impact, or almost none in real sector. We can still see our companies earning are growing, demand are still high, the GDP rate estimation is still 6.4%, a bit correction from the previous estimation of 6.5%. But according to us, a 0.1% difference does not means much, so, all in all, Indonesia still provide a very good place to invest

To prevent default, printing money is one of the few options that US and EU Central Banks had. And printing money means there will me much more liquidity in the market,with excess of liquidity, means they had to pour/invest their money somewhere, and emerging market such as Indonesia is one of the country that provide good Return on Investment

We believe that the 3300 level of JCI is the bottom, because the foreign selling are easing at those level.

Notes of Simon Sim Sharing Session and The Joseph Cycle

Simon Sim is Singaporean Trader Guru, an author
of best-selling book "The Joseph Cycle"

At 22nd anniversary of PT Panin Sekuritas Tbk in Medan, our boss, Pak Darmin, invite Mr Simon Sim to attend our customer gathering party. 


Mr Sim is quite a famous financial author in Singapore, with his bestselling book, The Joseph Cycle, which predicted the market quite correctly in the past years including the 2008 crash. Lucky for us, Pak Darmin asks Mr Sim to gives us a few sharing about his thought about the market, and particularly about the Joseph Cycle, and well, Mr Sim kindly accept the request :D

So, here we are, in the same room with a best selling financial author in Singapore to receive some of his precious lessons about stockmarket and The Joseph Cycle.

Here are few trading lessons and tips that been shared by Mr Sim during the session:


Master Yourself
You must know your own strength and weakness

Cut Your Losses Short
Also means that you should know your own pain level, if the trade is going down to your pain level, just dump the stock, realize that there are still plenty of days to trade in the market, don't think of the dollars and pennies, otherwise you can't cut the losses, there are always time when you can re-enter the trade and make money

Don't Be Overconfident
Stockmarket is merciless, you might feel like a king when you win, and might also feels like a chicken when you lose, but remember, professional trader's biggest loss often occur after their biggest win  so, arrogant and ego do not belong in stock market.

Don't Let Your Emotion Interfere Your Trading
Emotion is dangerous in your trading life, when it's time to sell, just sell, don't let your emotion interfere your trading. Anger is very dangerous, don't trade if your motive to trade is to revenge or want to take back the money you lost. There are always next time to earn money. Keep your cool and be calm, and keep your focus to  your trading goal objectively

Know When to Buy, When to Sell, and When to Do Nothing
Generally, there are 3 kinds of trends: uptrend, downtrend, and sideway. Where the best position that we took is buy on uptrend, sell on downtrend, and do nothing on sideway. Always determine the market direction before taking any action, because you must be sure of it before you entering the market, if you  don't know about the market direction, then it's good to stop trading for a while

Do the Right Kind of Pyramiding
If the stock you buy is going up, the right way to average is by pyramiding, which means you buy less and less on the way up, and not more and more. That way you can get a lower average price that can protect you from losses if the stock goes down

Be Quiet When You Win and Always Ask Why When You Lose
It is important to be quiet when you win, to put your ego and pride in the proper place, and to keep asking why when you lose, because the most valuable lesson in trading always occurs when you suffer and learn from your big loss

Remember
Short term has no fundamental
Long term has no stop loss

The Joseph Cycle

Read the Cycle
1/3 of the world billionaires are Jewish, because they learn about Joseph Cycle, where they got 7 years of feast, and 7 years of famine. In other words, they knew about the cycle, they know when to expand, and when to contract. The problem by not knowing they cycle is, people tend to expand when they supposed to contract, and vice versa. Eg: when the business is good, they tend to over-expand by using loan, but when the economy is contracting, they might be defaulting, and go bankrupt. So, the ideal situation is to buy the business when the economy is contracting, and sell when it is stop expanding. But to know the cycle, you must do a lot of homework and research.

To Determine the Market Cycle
There are 7 years of feast, and 7 years of famine, such as years 2001-2008-2015-2022...
You can determine the market cycle using technical analysis and fundamental/mathematical analysis.
The fundamental analysis is use to determine the basic market trend, where as the technical analysis is use to determine the target price.
Another approach of determining the market cycle is by using the wave analysis.
Knowledge and experience is a very crucial part in determining the cycle.
A trader is like a wine, the more experience he had, the more valuable he is, that is, if he learns his experience well.

How to be Successful in Riding the Joseph Cycle ?
Patience and Discipline
Conviction
Wait for opportunity to come
Knowledge
Courage
Control of Greed and Fear

According to the Joseph Cycle, Don't get out of the stock based on the price, but by the time frame, in other words, just follow the cycle, because if we get out after let's say 50% or even 100%, we might not know if the stock is going to go to even 1000% or more
N.b: this is the case if we bought the right/inclining stocks, if the stock doesn't perform as expected, don't hesitate to cut the loss short


Supreme Trader

First of all, you need to determine the general market condition, whether it is up, down, or sideway. Then you should question yourself what you should do in order to profit from the market condition/trend.
If the market is up, how should you buy in ?
If the market is down, how should you sell out ?
For this trending market, you may buy or sell 20%, 30%, or 50% from the position that you want to establish
If the market is sideway, what should you do ?Maybe the best answer is for this is to do nothing. Don't play in the market you don't know, or if you really want to buy or sell, you can do it small, don't do it big, just play 10% of your usual position

Now, if the market is not going into the direction that we expected it to go, just sell the position. Don't hold the losing position. You can determine if you held a wrong position by looking at the chart, if it break down the trend line, then it is not performing right. The question is, how should you get out of the losing position ? The answer is quite the same, u may sell all your position, or maybe 50% of your position, or even 30% of your position, but don't do nothing ! When you are wrong, you should do something about it, and do it as soon as possible. Don't be paralyzed ! Because when you are wrong, you have to do it ASAP (As Small As Possible) don't resist the market, you cannot tell the market what to do, but you must follow the market instead

To be the supreme trader, you must overcome you DEFGH, which is: Desire, Ego, Fear, Greed, and Hope

Never average down. Because the stock that losing money is a wrong decision even from the first time you buy the stock. If the stock that you buy goes down, just exit the position, even if you still believe that the stock is performing good, just hold the stock until maximum 7% loss. Don't hope, hope has no place in stock market. When you you are losing money, just sell your position, don't hope, because it might make the wound got bigger and bigger.

You must set the flow rules to follow, it is an entry-exit strategy, where you should buy and sell, or even cut loss. Be discipline to the rules. The most dangerous part of setting a rules is when you make money by abandoning the rules, because the market might give you a one tight slap if you do not have a rule, or do not have enough discipline to follow the rules. You have to follow the rules by heart. it is better to lose money by following the rules, because when the opportunity comes, you might ended up earning big money by following the rules.

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And that's the end of the sharing session, and hey! Mr Sim turns out to be a humorous person, his presentation is really nice and lively, all of us brokers enjoy his presentation well. thanks to Pak Darmin for inviting him and asks him to do a little bit sharing about his experience ! it will be very useful for us :D

Oh yeah, an extra thanks to Pak Darmin that I got a chance to go to Brastagi with Mr Sim, that I can manage to conduct a little interview that is really informative so I can write a little more detail on this article. And on that vacation I knew that Mr Sim is really a very spiritual person, well, he write The Joseph Cycle that combining the Bible and trading, but I don't realize that until I really got to know this person. He even give me a book about Buddha during the trip ! :D

Thanks Mr Sim, it's really nice to know you :D