"We all have secrets

there is nothing wrong with that 

but we all need the confident

a friend 

to share our secret with

in a way a shared secret tell us who our real friends are

they are the people we trust the most"

An extract from the US tv series 2014 "FOREVER", who is an immortal living in New York as a doctor in the morgue, solving crimes.....

Similarly the stock market, like what Gary Shilling said, will not last FOREVER.  Gary was referring to the new high achieved of the US market, has been saying US market is over valued for the last couple of years.  He recommended some defensive stocks and forecasted the equity market in US was going to drop, i.e. going back to its mean, average Shiller's CAPE of about 13 times.

Currently, he said the market is overvalued based on Shiller's CAPE of 26.5 times.  The earnings improvements over the last few years are driven by COST CUTTING (not revenue improving) and borrowed money for share buyback, basically, they borrowed at almost zero cost.

However, this share buyback are also indication that the CEOs of the S&P 500 is running out of ideas to improve their earnings through expansions and competitions instead of via financial engineering (i.e. share buyback).

Anyway, crude oil has came down to below USD60 (for WTI).  Soon, it will be below USD50.

According to some biz owners in Krabi, an island resort in Thailand, 2014 biz is pretty bad, they claimed that there was a substantial drop of biz from Europe this year.

Anyway, Gary was not accurate on the timing of market drop, but, his advise on defensive stocks do pay good return as well as his view on the 10 yrs and 30 yrs tresuries will continue to fall.

Dow Jones has dropped about 400 points over the last 5 market days.  Looks like more to come.

So, DEFENSIVE is the solution.  Those who went back into oil and gas stocks in Bursa is like catching a FALLING KNIFE.  Look at SKPetro, dropped to almost RM2.20 when the peak was close to RM5.00 (not too long ago).  So are other oil and gas stocks, which dropped almost from 30% to 50% per cent.  I believe, more than RM2 billion was wipe out of the market.

So which stock shall we invest in, low PE, low beta, HIGH DIVIDEND, double digit growth, ROE above 15%.  Look for these type of stocks, and the risk of going wrong in the long run is low.

This may be my last piece, nothing last FOREVER.  

A wise man once said,

He who control others, is the leader

but 

He who control himself, is the master