There is a Chinese saying that "personality determines destiny". i agree, to a certain extent, but not totally. In the investment world, at least, there are so many uncertainties and possibilities that two people with identical personalities could have very different returns if they invest in different markets and years, and receive different information. However, the personality of an investor indeed makes a whole lot of difference when making investment decisions. For instance, those who are reluctant to admit mistakes tend to hold onto losing investments too long, while those who learn from mistakes would move onto the next opportunities where they see fit.
Like it or not, there are Chinese rituals to follow around Lunar New Year. (Fortunately, these rituals are only practiced AROUND Lunar New Year!) All the people in town become extraordinarily superstitious about what to eat, say and wear. All things are done to bring good luck for the year ahead. Yes, there are so many things uncontrollable. The fun part is fortune telling based on Chinese Animal Zodiac.
People born in different years in a cycle of 12 have specific personalities, according to the zodiac calendar. Not a single type specifically represents successful investors. i believe that an all-rounded investor should adapt certain animal characteristics. He should be as courageous as tigers, tolerant as pigs, clever as monkeys, hardworking as horses and suspicious as rats. See it positively, we, human beings, are capable of learning. We learn from birds how to fly.
Summarizing Master Peter So Man Fung's predictions on wealth, people born in the Years of Pig, Rabbit and Horse would have good fortune in the coming year. Those born in the Years of Dog and Dragon will receive hard-earned money. All the others' fortune will be fair.
i would base on investors' personalities indicated by the Animal Zodiac, as well as Quam's 2005 outlook, to predict the fortune the investors will have this year.
THE YEAR OF THE ROOSTER:
(1933, 1945, 1957, 1969, 1981 and 1993, etc.)
"Roosters are courageous, hardworking, shrewd, arrogant, reckless, selfish and eccentric. They are thirsty for knowledge, devoted to work and definite involved in decision-making. They are skilled at what they do and attentive to details. However, they tend to seem boastful to others."
There are fewer no-brainer market opportunities in 2005 than 2004. Skill and attention to details are required. The market would likely go flat. Eager roosters may need more patience. Their aggressiveness may lead them to invest in property stocks, which could be rewarding. Quam believes that property-investing companies would be outstanding performers, thanks to increasing demand for office and retailing space, but limited supply of it.
THE YEAR OF THE DOG
(1934, 1946, 1958, 1970, 1982 and 1994, etc.)
"Dogs are honest, quiet, intelligent, generous, stubborn, loyal and faithful to those they love. They are introverted listeners, dedicated but also cynical and prone to letting their external anxieties get the better of them. Constant worry, a sharp tongue, and a tendency to be a faultfinder will always plague them."
Dog's loyalty and faithfulness might make them long-standing investors of HSBC #5, Manulife #945 and CLP #2. Their patience would likely pay off this year. The share price of HSBC could probably reach $160. Funds would likely continue to flow toward high-yield stocks, including CLP. Manulife might have reached its short-term target at $350-360, but remains to be a solid long-term investment.
THE YEAR OF THE PIG
(1935, 1947, 1959, 1971, 1983 and 1995, etc.)
"Pigs are honest, reliable, sincere, tolerant, shy, affectionate, kind, impulsive and short tempered. They are splendid companions, intellectuals with a very strong need to set difficult goals and carry them out. In addition they are extraordinarily naive. Their unquenchable thirst for knowledge will facilitate their success whereas their quest for material comfort will frustrate it. Pigs also will sacrifice their lives for good causes."
It sounds like pigs would make good stockbrokers. As investors, pigs' thirst for knowledge pushes them do research studies. If their talents show up in the technology side, they would pick up a few opportunities, such as China Mobile #941. It doesn't take a genius to know that demand for telecommunications in the PRC will go up continuously.
Does investing in H shares means "sacrificing their lives for good causes"? Not so dramatically. We expect to see more austerity measures to cool down the overheating economy, but remain optimistic about the long-term prospects of China's economy.
THE YEAR OF THE RAT
(1936, 1948, 1960, 1972, 1984 and 1996, etc.)
"Rat was the first animal in the Chinese zodiac cycle. It is usually considered aggressive, ambitious, suspicious, power-hungry, honest, generous, quick to anger and prone to spend freely. They are imaginative, charming, and truly generous to the one they love. However, they have a tendency to be hot-tempered and overly critical."
Ambitions might lead rats to the admirations of commodities. Quam predicts that commodities would see further corrections in prices after China passed the supply bottleneck last year.
But if their ambitions are put on China's trades, rats will have a good year. It would take some imaginations, which rats are never short of, to invest in China Merchant #144, as the share has climbed to record highs.
THE YEAR OF THE OX
(1937, 1949, 1961, 1973, 1985, 1997, etc.)
"Ox is a symbol of powerful individuals with unyielding and stubborn personalities. They are natural born leaders who typically succeed when given the chance and will also make outstanding parents. They are upright, inspiring, easy-going and conservative."
Stubbornness and conservativeness would direct Ox's focus to the blue chips. Generally speaking, the downside for most large caps is limited at the current levels. At the current level, 13,700, the Hang Seng Index is priced at about 16 times 2004 P/E and hopefully 15 times 2005 P/E. The current valuation is even lower than the beginning of 2004, when the HSI, at 12,600, bore a 17x historical P/E and 15.4 times prospective P/E.
THE YEAR OF TIGER
(1926, 1938, 1950, 1962, 1974 and 1986, etc.)
"As the fighting animal, tigers are sensitive, aggressive, unpredictable, charming, emotional, courageous and capable of great love. Often risking themselves, they have a carefree life."
Investing in small-caps fits tigers' adventurous style. Those tigers who took great risks by investing in Macau-concept stocks should have had windfalls. But if they haven't cashed in by now, they might soon realize they have fallen into hunters' traps. The Macau-concept might turn out to be a mirage.
Tigers may consider buying some small-caps with solid businesses, such as Chen Hsong #57 and Baltrans #562.
THE YEAR OF THE RABBIT
(1927, 1939, 1951, 1963, 1975 and 1987, etc.)
"Rabbits are affectionate, talented, obliging, always pleasant, valuing security and tranquility. They have a tendency to get too sentimental and superficial and to avoid conflict and emotional involvement. Being cautious and conservative, they usually take no risk and are successful in business."
Caution and conservativeness might lead rabbits to invest in bonds. Rabbits must pay attention. Interest rates would continue their steadily upward trend, which implies a downward trend of bond prices. Moreover, the fixed coupon payment by bonds would catch up with inflation. There are signs showing that rises in prices of raw materials are making their way to the consumer level. In general, stocks would outperform bonds.
Prudence would help protect rabbits from losing their investment principals, which is crucial to long-term capital accumulations.
THE YEAR OF THE DRAGON
(1928, 1940, 1952, 1964, 1976 and 1988, etc.)
"Dragons are considered intelligent, gifted, bossy, loud, garish, and unfaithful, but also popular and successful, full of vitality and enthusiasm. They usually look stubborn on the outside, but softhearted inside."
Dragons should manage their investment portfolios well, given their vitality and enthusiasm. Li Ka-shing is a dragon, a model investor. He is a long-term investor in Cheung Kong #1 and also an adventurer on 3G operations in Europe.
THE YEAR OF THE SNAKE
(1929, 1941, 1953, 1965, 1977 and 1989, etc.)
"Those born under this sign are usually considered clever, passionate, determined, romantic, intense, rich in wisdom and charm, but vain. Women born under the Snake are often beautiful. Snakes will be strongly guided by their intuition. They certainly will win a lot of money, but have to avoid procrastination and a stingy attitude towards money."
Intuition makes snakes great traders, especially of currencies. The long-term trend for the US dollar would be down, given its twin deficits. But the short-term rebound could burn fingers. Snakes need their cleverness and intuition to dance in probably the world's most unpredictable market.
THE YEAR OF THE HORSE
(1930, 1942, 1954,1966, 1978 and 1990, etc.)
"Horses are hardworking, intelligent and friendly, cheerful and popular, but impatient. Usually they consider themselves superior to others. They have a strong streak of selfishness and sharp cunning and should guard against being egotistical."
Studiousness might drive horses to put their hopes on industrial stocks. Manufacturers were hit hard last year by rises in production costs and keen pricing pressure. With oil prices remaining buoyant and excess production capacity in China, environment for manufacturers will remain tough this year. i recommend horses buy companies with in-house know-how, diversified markets and products, economies of scale and quality management. Chen Hsong and Lung Kee #255 are good candidates.
THE YEAR OF THE RAM
(1931, 1943, 1955, 1967, 1979 and 1991, etc.)
"Rams are creative, artistic, passionate, elegant, warmhearted, honest, charming but pessimistic, timid, disorganized and vulnerable. Too dependent on material comforts, they are easy to complain and do not respond well to pressure, but will find their own natural solution to a problem when given space."
Rams must love shopping. A natural way to make investment decisions is to do spot checks. Rams would probably find investing in retailers interesting. Ram's fortune this year would likely be as lucky as last year. We expect local retailing to continue to recover. Our top picks in this sector are Veeko #1173 and Luk Fook #590, but we are increasingly concerned about Luk Fook's corporate governance after it said it is paying premium rents to the boss' father. We also like Mirabell #1179.
THE YEAR OF THE MONKEY
(1932, 1944, 1956, 1968, 1980 and 1992, etc.)
"Monkeys are intelligent, inventive, clever, entertaining but also dangerous and easily discouraged. Because of their extraordinary nature and magnetic personality, they are always well liked and make close friends. However, they can't be trusted. They should guard against being an opportunist and distrusting other people."
Monkeys play with warrants (Tony Measor is a monkey). The derivative markets are zero-sum games. Trading volume was record high last year. There must be increasing number of participants, losers and winners. We don't discourage adult investors from gambling. If they choose to, we suggest they buy HSBC calls with long maturity. They should also consider the premiums before committing.
Monkeys could earn windfalls if they spot the next rally after the Macau fever.
Kung Hei Fat Choi! Wish all Quam readers have a prosperous Year of Rooster!
Source of information about Chinese Animal Zodiac: Chinatoday.com
Feb 8, 2005
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