Thursday, June 16, 2011

Lousy Performance In The Month Of June. World Equities Market Unstable.

The world equities market seems to be going down lately. Our Malaysian share market performance (FBM-KLCI) still standing quite well but there are so many counters didn't perform quite well but some of the good counters are moving higher. Its kind of mixed market with more downside rather than upside.

Based on the chart wise the FBM-KLCI still look stable and are moving side way but overall we are having a lousy market momentum and sentiments. It seems that if we really invested our money right now we are facing more chances of losing rather than profiting. With the share market turnover still stand at low (below 1 billion shares), staying out from the share market would be the best option at these moments as we can't find any good fundamental or news to push the share market higher.

Here are some of the latest news that we can share together (Info from Jesper Lee-CIMB)

Paulson's Advantage Plus fund off 20 pct this year.

For John Paulson, June may be one for the record books -- in the most unwanted way -- as one his largest funds lost 13 percent in the first two weeks. The billionaire hedge fund manager, who made his fortune on a short bet against sub prime mortgages, ironically is being crushed after a short seller issued a critical report on a Chinese forest company he owns shares in.

Paulson's Advantage Plus fund, one of the $38 billion firm's largest, has tumbled nearly 20 percent this year after losing 13 percent in the first two weeks of June. Part of the decline is attributed to shares of Sino-Forest Corp (TRE.TO) which plunged 82.50 percent this month, an investor in the fund who is not permitted to discuss performance publicly said.

In early June Carson Block, founder of investment firm Muddy Waters Research, called Sino-Forest a "pump and dump" scheme and accused it of committing fraud. Paulson's spokesman could not be reached for comment.

In some respects, the sharp drop off in June, following a 6 percent drop in May, is not surprising given both the decline in Sino-Forest and an ongoing drop in the banking stocks Paulson also owns.

The bulk of Paulson's assets are in the Advantage and Advantage Plus funds but he also offers other portfolios, including a gold fund, which are performing better. But the 20 percent decline is stunning nonetheless for a manager who is widely revered for his calls on the economy.

But the timing of the drop comes at an especially awkward time, only days after Paulson met with hundreds of his investors in Paris at a festive mid-year review.

At workshops and during in-depth information sessions held amid cocktail parties and an elegant river cruise, the hedge fund manager told his clients that the economic recovery is not as strong as he would like to be, investors who attended the meeting said. The weakest spot -- the U.S. housing market, he said.

While Paulson's investors saw a drop in performance early in 2010 as well, they were later comforted when he rallied late in the year to pull out another winner.

This year, however, the eye-popping loss might be giving some investors reason to pause especially as deadlines to withdraw their money come up, people familiar with investors' thinking said. In fact, Paulson stayed on in Europe after a meeting in Paris to try and raise more money. He traveled to Geneva where he met with investors, a person familiar with his travels said.

Who Is John Paulson ?

John Paulson is the most successful hedge fund manager in history because he is pretty much always right in his predictions. He’s the world’s 45th richest man and is worth approximately $12 billion. His fund, Paulson and Co., is the third largest hedge fund in the world with $32 billion of assets under management.

He made some of the best trades of all time, shorting the sub prime credit markets in 2007 and 2008. Not only was he dead on with the prediction of the crisis, but he also made great execution of the trades. He and his partners constructed complex portfolios of the instruments they believed would be worst-hit, rather than just shorting an index.

Mr Paulson had a take home pay of $3.7 billion in 2007, considered the richest bounty in Wall Street history. Then, after he made all that money from the financial crisis, he started covering his short positions and started a “Recovery Fund” in early 2009, pretty much exactly the right time.

In August of 2009 he began buying financial stocks including Goldman Sachs and Bank of America. Because of his recent successes, a flood of investing capital has been added to his fund in the last two years. Since early 2010, Paulson has had over 100% of his funds invested in the market. He’s oscillated between 150% and 107% fully invested. The market has done him well this year.

On November 2009, he started a gold fund. This is because he believes the US and other countries are devaluing their currency and with all the money being put into the economy, inflation is bound to happen. Although it went down 14% in January, 2010, its first month of operations, it has rallied back and is up double digits this year.

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