Be a Contrarian: Buy When It's Down

Gerald Ambrose ... 'Markets are now operating on a trampoline. The safety net doesn't work anymore.'

Thomas Yong ... 'Risk aversion will remain for now and everyone will be cutting positions.'

They say never waste a crisis. Fund managers are cautious but see an opportunity in the midst of global markets tumbling on the back of Europe's tumultous debt problems.


Emerging markets are always known to be more volatile. As its ups and downs are always more extreme, would it be wiser to rejig one's portfolio or brace through the storm?

Fortress Capital Asset Management Sdn Bhd chief executive officer CEO Thomas Yong, who started trimming his position three weeks ago, is no longer selling, but waiting to see how things pan out.

“We are in a position to buy (in Malaysia), but it would be premature to act now. Risk aversion will remain for now, and everyone will be cutting positions,” he said.

He opined that Europe might not be as quick as the United States in implementing measures, hence uncertainty would continue to dominate sentiments for the time being.

Aberdeen Asset Management managing director Gerald Ambrose is a buyer of the market, and is in fact buying some of the stocks he could not previously buy because it had moved too fast. “For instance, the rubber gloves have done very well and have gone up a lot. With this correction, they also fall faster. Here's an opportunity,” he said.

He added that volatility was irrelevant, and Aberdeen's investment was not based on market volatility.
“Markets are now operating on a trampoline. The safety net, which had been the interest rates and financial stimulus used by central banks, have been used so much that it doesn't work anymore. Now that the safety net has been removed, there is a possibility that things could go really wrong,” Ambrose said.
Ambrose likes gold, and said it was the only insurance against the follies of the authorities of the world.

Meanwhile, HwangDBS Investment Management Bhd chief investment officer David Ng said that in view of what's happening in the euro zone, they had reduced the risk in their portfolios by cashing in on the less liquid stocks.

“Moving forward, we are still cautiously optimistic about the market as we expect the economic recovery to continue even if it might be reduced by the events in Europe. However, the market will need to further re-price this slower growth outlook before we opt to increase our invested levels,” he added.

On Thursday, BNP Paribas' Cliver McDonnell said that the euro zone crisis signalled that markets were about 40% through the crisis.

“We believe we are in the fear phase, don't buy stocks until capitulation is reached,” he said.
He added that for Asian equities, the two biggest worries were negative earnings translation due to euro weakness and the impact of a slowdown on euro-zone demand.

McDonnell listed his 10 steps to capitulation, four of them which he said had already occurred. These included worst recession, loss of investment-grade status, drying up of liquidity, and further de-rating of the euro-zone banks.

He said the next likely step was the nationalisation of a bank in southern Europe, as he thought it was improbable that not a single bank had racked up significant losses related to non-performing loans and trading losses as a result of the recent economic downturn and wild swings in markets.

Text, Don't Talk

This came from AFP/Relaxnews.

"Do you often have the urge to chat with a friend while stuck on a train, subway or waiting on a never-ending line? In a new study,Cornell University researchers are saying you should resist the urge to dial as it irritates and distracts all the people around you — yes, even if you whisper.

For those stuck by a chatty Kathy feeling frustrated and annoyed with the distraction, well that is completely normal according to Michael Goldstein, assistant professor of psychology at Cornell University and Lauren Emberson, PhD candidate in psychology at Cornell University in their research to be published in the June edition of the journal Psychological Science.

Eavesdropping cannot be avoided and someone else’s very important minutia or hot gossip becomes an irritant not because the person is loud but rather because only half the conversation or “halfalogue”, can be heard and understood. This rattles the brain coupled with the inability to ignore the chatter.

Apparently even your meditation mantra won’t do the trick. Emberson explained, “Hearing half a conversation is distracting because we are unable to predict the succession of speech. We believe this finding helps reveal how we understand language in conversation: We actively predict what the person is going to say next and this reduces the difficulty of language comprehension.”

“People are often more irritated by nearby cell phone conversations rather than conversations between two people who are physically present. Since halfalogues really are more distracting and you can’t tune them out, this could explain why people are irritated.”

So be kind, text don’t call, or read, take photos, play a game, surf the web, catch-up on emails — there are so many ways to keep you distracted with your smartphone’s applications that you do not need to distract everyone in your vicinity.

Also the results of the Interphone study, a multi-centre international control case study, published their findings in the advance online edition of International Journal of Epidemiology on May 17.

The researchers concluded that there is not enough conclusive research to support that cell phone use causes or doesn’t cause brain cancer — why not err on the side of caution since the participants of the study were not classified as long-term heavy-use mobile phone users"


so be kind to your neighbours on a journey, text don't talk.