Martin Lee @ Sg
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Review of Wall Street Weekend with Mike Bellafiore

Last Friday evening, I was at the Mike Bellafiore event organised by PhillipCapital.

The session had three segments, covering macro outlook, technical analysis and trading strategy.

The first speaker was Ng Weiwen, an analyst who was part of the Phillip’s research team. There were a number of charts that he showed but didn’t pay full attention as I’m not really a big fan of economic analysis. We can try to predict the economy all we want (which is already a tough act) but at the end of the day, the markets can still lead or lag the economy.

But the overall view that he gave was that he was negative on the US economy.

Weiwen recommended an overweight on bonds, and went on to talk briefly about the merits of corporate bonds, mortgage backed securities and long-dated treasuries.

The next speaker was a stockbroker with Phillip Securities. Just like Robin Ho, Kok Huan was previously with the uniformed services before he joined Phillips. He shared with us a little bit about his background, including his battle with cancer and its re-occurrence.

Kok Huan started by illustrating the merits of starting a regular savings plan when you are young, as the power of compounding will have a longer time to work its magic. For example, a monthly investment of $50 for a period of 40 years would give you almost $92k (assuming a 6% rate of return).

The annualized return of STI since inception would have been able to give you that kind of return.

This was followed by a short commercial for the Phillip’s Sharebuilder program, which allows someone to invest small amounts of money on a monthly basis into selected Singapore stocks.

Kok Huan then went on to share with us his trading strategy for people with a longer time horizon. Essentially, he relies on a simple system of using the 10-weeks and 40-weeks moving average cross-over as a signal. Using this signal, he will never go against the long term trend and try to predict the turning point. It seemed to work quite well for the examples he showed us.

There were three other signals that he used for confirmation:

  • For a bullish signal, to wait for the 40-weeks moving average to start turning up
  • The price at which you buy the stock must be above the 10 weekly moving average for a bull run and vice versa
  • There must be a volume confirmation

In my view, Kok Huan was easily the best speaker of the night as his passion for sharing and numerous jokes entertained the crowd.

I had a good laugh with his joke on using both fundamental analysis (FA) and technical analysis (TA). Combine them and you would get FATA (fa1ta2), which sounded like getting rich in mandarin.

It was unfortunate that his presentation was interrupted midway by some technical problems, which left the crowd waiting and restless for a while. Makes me wonder why they didn’t tested out the system beforehand.

The last segment was the part where we were supposed to experience live US stock trading. Just before the US markets opened, we had a video conference to one of the traders in Mike Bellafiore’s firm, who went on to talk about his pre-market procedures and some of the stocks he was looking at. Unfortunately, the session was done as a monologue and after a while, most of the people in the audience were lost as to exactly what was happening. The foreign accent didn’t help.

The format was then changed to have Mike Bellafiore providing commentary on what we were seeing on the screen. This was slightly better and it soon turned into a full Q & A session which was much better. Some of the questions asked were quite advanced (eg about dark pools) and I suspect those people who asked the questions were probably the stockbrokers who were in the audience.

A point Mike made about trading was that he would rather his traders obey the trading rules and lose money on a trade, rather than disobey the rules and not take the trade because of hesitation.

He also felt that nowadays, the Asian markets have a bigger impact on how the US markets will behave and he will look at how it performed before starting his trading.

And finally, there was a lengthy discussion on how he traded Knight Capital following their trading glitch.

So that sums up the Wall Street Weekend. I’m looking forward to the Jim Roger’s segment this Saturday.

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