Courage Marine: Range bound.

Price seems range bound between 19.5c and 18.5c. The BDI has been rather anemic of late and that could perhaps partly account for the lethargy in Courage Marine's share price.

The MFI, OBV and RSI have all recently flatlined.  Nothing seems to be happening. In a range bound situation, look at the Stochastics and we see it high in the overbought region.  This suggests that price, which happens to be at the upper end of the range identified, could find it hard to move higher for now.

The good news is that MACD has been rising slowly in positive territory above the signal line.  The return of positive momentum provides some cheer although we should remember that it is a lagging indicator.

FSL Trust: Where to from here?

I have blogged about how a past decision to invest in FSL Trust was a mistake. Over time, I have discovered more reasons why FSL Trust is a high risk investment and how, in the long run, it is doomed to fail as it is operating based on a flawed business model.

An article, Shipping Trusts: A closer look, 13 July 2010, in Next Insight says it well:

"... problem arises when the trust managers market the trust as a going concern, but then pay out cash as if the trust were self liquidating ... This misleads investors who think that the high payouts are sustainable and do not realise that part of the cash received is a return of capital...

"Until recently, FSLT paid out 100% if cash generated and did not pay down its debt. This essentially made the trust behave like a self-liquidating vehicle, regardless of any management claims to the contrary."

I know of at least two blog masters who have liquidated their investments in FSL Trust recently at a loss: Mike Dirnt and Musicwhiz, admitting that their investments were mistakes.  JW of Wealthbuch almost put some money in FSL Trust just before the recent crash from 60+ cents based on the posts by Grandmaster89 in an investment forum. Grandmaster89 has become more grounded in his views since. More recently, Alvis of A Investor bought some units at a price close to the bottom at 30+ cents based on TA.

I still have units in FSL Trust bought at $1 in the early days, probably at about the same time Musicwhiz bought his units.  I have been thinking of divesting these units but was not as deft as Mike Dirnt to divest at >60c at the recent high; nor did I divest last week like Musicwhiz at a rather much lower price.

I also have some units which I bought in the recent crash. Why? I explained that the purchases were made based on TA and are for a trade. Looking at the charts, FSL Trust's price has not just found a floor, it has most probably bottomed.  So, would I sell at the bottom?  No. 

In fact, the low formed on 11 Jun at 36c would be a strong support if price does decline to that level again.  Market participants would remember that price as the low and they could have made some money if they had bought more then.  More likely, however, the recent many times tested support at 37.5c would act as an effective breakwater in case of a decline. What about the upside? For now, it seems that the price could remain trapped in between the 20d and 50d MAs for a while. These assumptions are valid as long as everything else in FSL Trust's business remains constant.

From a FA perspective, it is true that FSL Trust has very high risks and its propects seem bleak in the longer term but would it go belly up in the next few months? Rather unlikely as the world economy is still on the mend and the fortunes of the shipping industry are looking up.

Related post:
High yields: Successes, failures and the in betweens.
Charts in brief: 26 Jul 10.

High yielding REITs.

I came across an article which reported Morningstar analyst John Coumarianos saying "I guess people are so exasperated with earning nothing on money market [funds], so they're opting for the 2 to 3 percent [yield] that they're getting on a REIT fund".

This is a reference to the situation in the USA.  2 to 3 percent yield? That's peanuts compared to what we are getting from REITs in Singapore!  I mentioned before that a 5 to 6 percent yield in a REIT is not enough to attract me because I can get an almost 10 percent yield in some REITs here. I think investors in REITs here are spoilt!

After the subprime mortgage crisis, all types of real estate investments were punished. Many experts thought that commercial real estate would be the next big bust. "The headlines were all so bad with the housing market," Sorensen says. "REITs don't have a ton to do with the housing market, and expectations there were so depressed. The reality has been better than expected."

Read the article here.
Will the REITs Rally Continue?

Ben Baden, On Thursday August 5, 2010, 11:43 am EDT

Related post:
Create more passive income with limited capital. 

Property prices in Japan.

Property prices in Japan may be near the bottom because transactions are picking up as loan default rates begin to decline....

.... Investors including Chuo Mitsui Trust & Banking Company and CLSA Capital Partners have said they will invest in real estate in Japan this year after the nation’s commercial land prices fell to the lowest in at least 36 years....

.... ‘The best time to invest is before things hit bottom, because if everyone were to agree we are right at bottom, they would all come rushing back in. If you have a longer term outlook, now is a very interesting time to be looking,’ said Buddy Ferrie, a general manager of the investment division at property consulting firm Colliers Halifax in Tokyo....

Read complete article here.
Analysts indicate property prices in Japan may be near bottom, Property Wire, Friday, 04 June 2010 .

I first put up this video on 13 March but I think it is worth watching again.  A video interview with Marc Faber (Posted Mar 12, 2010 07:30am EST by Peter Gorenstein):



"If you are going to put money to work in stocks both market watchers think Japan is the place to be. After a 20 year bear market and despite high-debt-to-GDP levels, the pair think the market has become too cheap to ignore. Always a contrarian, Faber believes the lack of interest in Japanese stocks makes it one of the most compelling buys in the world. "

Related post:
Buy Japanese real estate.