Wednesday, November 29, 2006

Zodiac-based stock picking 1 comments

(P.S: Sorry for any disturbances the advertisements above may have caused you)
I seldom recommend stocks down here in my blogs but I was inspired by a report in the Straits Times Money section today which cites studies claiming the effects of the lunar calendar as well as the Chinese zodiac on stock returns. For the latter, the recommendations reported were highly inadequate, given that it only says that "it is the year of the Dog, hence the underdog China stocks have had a bull run". So below, here're my stock picks for the twelve years of the Chinese zodiac calendar, to enable the discerning and astute market investor to practise market timing in a systematic and intelligent manner.

Year of the Rat
Given the the rat sparked the Black Death several centuries ago, and how people hate the colour black when it is associated with the stock market (such as "Black Friday" last week when in fact it was meant to signal the start of the US Thanksgiving season which propels retailers' bottomlines into the black), it is a year to avoid stocks.
However, for those really addicted, you may want to buy stocks which have a history of rodent-like behaviour, such as mDR (a.k.a. ACCS) and Centillion (a.k.a. Citiraya) and China Aviation Oil (a.k.a. US$550M).

Year of the Cow
The premier stock in this year must be China Milk. Cows love bull semen. Well, other milk stocks are also investible, such as China Dairy. Leather-related stocks like HTL and Man Wah could also benefit.
Also, to try another flavour, why not buy stocks from the Land of the Holy Cow, which incidentally only number the total of one on the SGX --- Meghmani. Never mind, since it removes the need for diversification.

Year of the Tiger
There can only be one Asia Tiger.
For the prudent investor, he can unlock intrinsic value in Haw Par which boasts the Tiger Balm Oil.

Year of the Rabbit
There can only be one China Kangda, which slaughters the white furry creature and packages it as exotic delicacies for the very cultured mainland Chinese.

Year of the Dragon
It is time for the China stocks to roar. By now, if you notice, the previous three Zodiac years have all involved China stocks. This explains why China stocks are the most investible category in the entire stock universe, according to the Chinese zodiac.
Although it is not listed on the SGX, investors should make an effort to open an account on the Hong Kong Exchange so that they can buy Nine Dragons Paper, the bluest of the blue in this red-hot Dragon year (for those less acquainted with Chinese culture, the number 9 is the ultimate in Chinese culture. The Chinese emperor had 999 rooms in his palace to house his concubines). Well, to pick on the "9" theme, more homely investors can choose Jiutian Chemical which means Nine Days in Chinese.

Year of the Snake
This is a bit difficult. It is a year for the really good stock picker. The Chinese Zodiac investment advisor, who is usually very good and accurate with his picks, cannot help here.
Ok, but for those who are desperate, understand that snakes are highly territorial creatures, and they guard their property jealously. Hence, property stocks are the pick of the bunch. Also, given their oft-quoted comparison with the reptilian creature, banks might be a good pick as well.

Year of the Horse
What else? The prime pick must be Interra, otherwise known as the Wonder Horse in its previous life as Van der Horst. I have plenty of research on this wonderful stock, in my Hotstocks pick on Interra.

Year of the Sheep
Time to go for all the penny stocks below 5 cents. This is the year when the Sheep can be easily led to whatever destination one wants to take it, similar to the way lemmings follow one another to their final noble destination.

Year of the Monkey
The Monkey is known for its mischief, and its ability to swing up and down trees. Expect a year of great volatility.
What thrives in volatile conditions? By the Black-Scholes option pricing model, it is options and warrants (this intricate understanding of academic theory shows Zodiac investment advisors are not to be trifled with).

Year of the Rooster
The obvious pick would be the pure-play Elite KSB, which slaughters chickens for a living. For those looking for dividend plays and stocks of slightly better quality, there's always Cerebos with its Brand's chicken essence. And wait, there's a new player on the chicken essence scene: Eu Yan Sang ..... and the good thing is, its chicken essence does not contain caramel! What a revolutionary concoction!
Panning out to the top-down perspective, the Zodiac outlook for the year also suggests that asset allocation strategy should shift to cash early in the year, because the rooster crows once at dawn and then remains silent for the rest of the day. A suggested manner of handling the cash is to head down to Geylang Lorong XX where there are plenty of young chicks around.

Year of the Dog
That's the current year we're in, and whatever the Straits Times reported in its article this morning, it must be true, hence I shall not elaborate further here.

Year of the Pig
There's no shortage of stock picks here. We have two pork processors from China, People's Food and United Food, to choose from.
Although, come to think of it, are these stocks that slaughter the relevant Zodiac animal stocks to be avoided, rather than picked? Frankly, that depends on how the Zodiac God dispenses his/her judgment. That is another story for another day --- the influence of astrology on the stock market is such a vast subject that we will all be glad for the national papers to cover it in more detail in the future.