Friday, 14 September 2007

Disposed of Entire Virtual Share Fund and bought put warrants ahead of volatile week

3 Key events in US next week could make or break the recovery of global share markets:

(1) Fed meeting on 18 Sep - The billion dollars question: Will Fed cut interest rate? How much? What to expect next?

(2) Major Bank Earnings - Morgan Stanley to report on Wed and Goldman Sachs and Bear Sterns on Thurs.

(3) Expiring of Option and Futures Contracts (This is very "chim" to explain). The impact will probably not as big as the other 2.

The above factors could swing the global market in a big way. The rate cut has been priced in the recent market recovery. If Uncle Ben decides to do otherwise, investors will be done for. Bank earnings have also been widely estimated. What remains is negative surprises.

Due to all these uncertainties, I decided to unload my entire virtual share portfolio. I bought some put warrants in anticipation of a selldown.

Total realised profit = $23,429 = 4.69%

Warrants bought:
STI3500BNPePW070927: 500,000 @$0.095 = $47,500
HSI21800BNPePW070927: 1,000,000 @$0.04 = $40,000
DBS DBePW071001: 500,000 @$0.045=$22,500
Sum invested = $110,000
Cash Holding = $413,429

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