China HongXing - Head & Shoulders Formed!

China HongXing has formed a Head & Shoulders and the stock price has broken below the neckline. However, this stock bounced back from $0.19 support line (50% Fibonacci Level).
$0.20 to $0.205 is a very critical resistance level (neckline and 61.8% Fibonacci Level) to break to have pattern failure for China HongXing to go north. Another important thing to watch is whether the trading volume returns to help to break this strong resistance.

Keppel Corp - Breakout to go NORTH or go SOUTH?

Keppel Corp has formed an Ascending Triangle but it may form a Triple Tops if the stock breakdown from the Ascending Triangle. If the stock can stay within the Ascending Triangle and breakout from the resistance line of $8.42, the stock may go up to $10.30.
However, if Keppel Corp breakdown from the Ascending Triangle at around $8.20 and goes below $7.80, a Triple Tops is formed and send the stock to $7.20.

I have also compiled Analysts' recommendation in the following table:

Keppel Corp still has upside potential base on today's closing price of $8.19. The key consideration is to time the right price to buy to maximise the gain.

DRYS - Breaking Critical Supports!

DRYS chart looks very bearish as DRYS broke down the Wedge channel support. The stock price is currently below 20D, 50D and 200D MA. Another scary thing is DRYS 200D MA is heading south implies that the DRYS is still on the long term down trend.

Technical Indicators also confirm that DRYS is bearish:

• Stock price is at the lower Bollinger Band.
• Stock price is below the Parabolic SAR.
• MACD is moving into lower half of the graph.
• RSI and Stochastic are heading south.

Yanlord - Testing the support

Yanlord retraced back to $2.33 to test the falling wedge resistance turned support line.

• If Yanlord bounces back from this support tomorrow, head & shoulders pattern failure is still valid and the target price is $2.85.
• Next very important support is at $2.20 and this is also the neckline. If this support is broken, the stock price may be sent down to $1.55.

My trading plan:

• Enter only when Yanlord bounces back from falling wedge resistance turn support level. Entry price between $2.30 to $2.40
• Exit around the target price of $2.85.
• Thing to watch out: Yanlord Q3 result announcement in 2nd week of November.

Wilmar International - Due for a Correction?

Wilmar has been on a up trend since Mar 2009 without a healthy correction to climb further. The recent chart shows that Wilmar is moving sideway into consolidation phase but also at 20D MA support line. 20D MA just crossed down 50D MA recently and this is a first sign that the correction may begin. If Wilmar stock price cannot hold above the current 20D MA support of $6.35, it has the potential to retrace back to $4.99.

GoldenAgri - Trend Reversal Pattern Spotted!

GoldenAgri closed at $0.45 today and formed a Bearish Abandoned Baby pattern (reserval pattern). $0.44 is 20D MA immediate support and next critical support is $0.412. I exit my trade today at $0.455 as downside probability is much higher than upside probability.

Capital Land - Head & Shoulders Pattern Failure!

Capital Land had a Head & Shoulders pattern failure and have almost reached the target price of $4.40. Capital Land will probably have a correction to retest the $4.12 resistance turned support line. This stock has the potential to go up to $4.686 if this support level can be hold.

Synear - In consolidation phase now!

Synear has moved into consolidation phase with reduction in volume. Nothing interesting to trade Synear now until there is a clear pattern observed.

StarHub - Trend Reversal?

StarHub was on a free fall for last few trading days. Yesterday StarHub closed at $1.93 with a bullish harami candles formed. This pattern implies a pause in a down trend and is a realiable signal for a possible change in sentiment. The down trend may have stopped and the StarHub may move sideway or reverse the trend. Next session candle is important to confirm the subsequent movement. If next Monday StarHub opens with a gap up with increase in volume, a Three Inside Up pattern is formed which confirm a trend reversal.

 

 

StarHub looks very bearish and the stock price is below 20D, 50D and 200D MA. 20D MA crosses down 200D indicates strong down trend momentum in the short term. The sentiment is bad towards StarHub after losing the EPL right to SingTel and the downgrade by analysts. I am avoiding StarHub for the time being until everything is stabling down. Although the dividend yield is attrative (ex-dividend payout date in mid November), I have to be careful that I may lose more money in the stock price than the dividend payout. StarHub's share price will probably move into consolidation phase before deciding the next move. I don't want to put my money in StarHub and get my money stucked there long term.

 

Key indicators to watch:

• Next immediate resistance at $1.94 and critical support at $1.83. Can StarHub break the resistance and hold above these critical supports?
•  When can 20D MA crosses up 50D and 200D MA?

Semiconductor Sector Recovery

Additional Semiconductor related news for investment consideration in SMH.

http://stock-triumph.blogspot.com/2009/10/semiconductor-industry-recovering.html

http://stock-triumph.blogspot.com/2009/10/semiconductor-recovery.html

http://stock-triumph.blogspot.com/2009/10/semiconductor-recovery-part-2.html

China HongXing - Breakout to North or to South?

China HongXing has formed a Head & Shoulders and at the edge of breaking out from a triangle. If China HongXing breakout from the triangle and go north with huge volume, the stock may go up to $0.27. Conversely, if the stock breaks out (the triangle support is also the neckline) and heads south, the stock may go down to $0.13.

China Fishery - a bigger picture (Elliot Wave)!

China Fishery closed at $1.26 (a critical support level) with a hammer today (a trend reversal). Looking at a bigger picture, China Fishery is forming a nice Elliot Wave (in blue) and currently is probably ended with Wave 4, and the hammer may indicate the start of Wave 5 (the biggest wave).
Coincidently, a smaller Elliot Wave (in red) is observed and probably at the end of Wave C currently. This ABC retracement is approximately at 61.8% Fibonacci Level.
Base on the chart pattern and candlestick, plus the healthy correction, China Fishery will probably go on a medium term bullish upside.

Allgreen - Forming a Right Shoulder?

Allgreen appears to be forming a right shoulder. If the complete Head & Shoulders is formed and Allgreen breaks the neckline of $ 1.08, it may go down to around $ 0.94 region. If the pattern fails, Allgreen will be bullish.

Yanlord - Head & Shoulders Pattern Failure!

Yanlord appears to have Head & Shoulders pattern failure and breakout from the falling wedge. When there is a pattern failure, the reverse will happen. Current price is above 20D, 50D and 200D MA. My plan is to go long when Yanlord retest $ 2.41 support level and bounces up. Exit Target = $ 2.85.

China Fishery - Dropped out from the up trend channel!

China Fishery dropped out from the uptrend channel and broke the 50D MA support line. If  China Fishery stays above $1.263 (61.8% Fibonacci Retracement level) and bounces back from this support, this is considered a healthy correction before continuing the up trend. It looks like a Head & Shoulders is formed too with neckline at around $1.263. If this critical support is broken, it may send the stock down to $1.06 level.

KS Energy - Forming a wedge!

KS Energy is forming a wedge and the volume is dropping. It also broke 20D and 50D MA support levels.  $1.161 is the critical support as it is 61.8% Fibonacci retracement level and also the wedge support. Base on the chart, probability of breaking down from the wedge support is higher than breaking the resistance of the wedge (which KS Energy has tried 4 times). The current level is not the entry point for me.

FRE & FNM - Broke the critical support level!

FRE & FNM broke the critical support level (61.8% Fibonacci Retracement level) after a KBW analyst downgraded the two to the firm's lowest rating, cut price targets on both stocks to zero from $1. KBW said their common and preferred shares would be "worthless" given the nearly $100 billion they will continue to owe the government, even if recapitalized. FRE broke the critical support level of $1.705 and FNM broke $1.483 support level. Both stocks are below the 20D & 50D MA, all other technical indicators show bearish convergence.

I sold all my stocks to take profit after sighting a bearish convergence signal. I plan to buy back at a lower price when the down trend ends. I think the US government will continue to run the companies, and the companies will not go bankrupt. However, the value of their common and preferred equity will probably be re-capitalized. Thus, buying at a very low price limits the downside risk.

GoldenAgri - Short Term Momentum Play!

I predict a short term rally after seeing a hammer candle (a trend reversal from short term down trend) yesterday. Today GoldenAgri closed at $0.45 with 86.3 Million shares traded (#3 Most Active Stock). The 10D MA just crossed 20D MA and the stock price is trying to cross above the 10D MA line. All other indicators showed some bullish strength. Strong support at $0.43.

Jaya Holding - Long White Candle for the third time!

Jaya Holding closed with a long white candle at $0.485 with 21.6 Million shares traded today. Jaya Holding is also top 30 gainers (%) and top 30 most active stocks today. This big one day gain had happened for the 3rd time within three months. The bull failed in the past two attempts to drive the stock price higher. Can the bull win this round and break the $0.51 resistance? Or, the bear will win this round again to form a triple top? Technical Indicators show bullish strength but past two incidents told me that the bull is unable to sustain its run due to lack of volume.
Mr. Bull, do you need a Red Bull so that you can berJaya (successful in Malay)?

Mobile One (M1) Fundamental & Intrinsic Value

Base on Q3 2009 (end of Sept, 2009) financial report:

• PE = 11.03
• Current Price = 1.85
• Dividend Yield = 7.24%
• NAV = $0.26
• Net Earning = 20% (21.3% in 2008)
• Current Ratio = 0.23 (0.48 in 2008, Similar industry is 0.55). M1 borrowed S$292.5M in this financial year.
• ROA = 18.68% (Base on 2008 Full Year)
• ROE = 67.3% (base on 2008 Full Year)

 

Stock Background

• Historical high = about $2.268
• Current Price = $1.85

Intrinsic Value Calculation

 PE Model

• Fair value PE = 15, intrinsic value= $2.52 (base on EPS $0.16771)
• However, M1’s historical high PE is 11 and never reach PE = 15 before. Thus, it is unrealistic to use PE = 15 to calculate the intrinsic value.
• Base on PE = 11, intrinsic value (base on EPS $0.16771) = $1.84
• EPS Growth Rate = 3.6%
• PEG = 3.09 (Overvalue!)

 DCF Model

• I am unable to calculate the intrinsic value because M1 Free Cash Flow is very inconsistent and have negative growth for past 3 years.

 Discounted EPS Model

• EPS Growth Rate = 3.6%
• Discount Rate = 5%
• 2008A EPS = $0.16771
• Intrinsic Value = $1.56

 Regardless of which method to calculate the intrinsic value, M1 is over value (base on Discounted EPS Model and PEG ratio). The top line (Revenue) and the bottom line (Profit) are not growing significantly year over year. M1 is also losing out to her competitors SingTel and StarHub on the TV bundling services. Furthermore, the stock price moves sideway since the IPO.

 

Summary of my reasons for not to buy M1:

1. No significant competitive advantage to compete with SingTel and StarHub in the long term.
2. Sales & Profit are not growing significantly.
3. Stock moves sideway so no great upside potential for capital gain.

I am avoiding M1 after this analysis because there are other better Telco companies to invest in.

Development Bank of Singapore (DBS) - Breaking out from the wedge?

DBS is trying to break out from the wedge. It may also bounce back from the wedge resistance because there is no volume to support the breakout and go up to $14.7 target price.

DBS stock may go up in the short term because all Six Standard Technical Indicators show bullish strengths.

• Stock price above 20D, 50D and 200D MA.
• Stock price at upper Bollinger Band.
• Stock price on top of Parabolic SAR.
• MACD just had the crossover and stay on the upper half.
• RSI is rising above 50 level.
• Stochastic is rising and moving into 80 level.

 However, I am sticking to my original plan for not buying DBS now due to the following reasons:

1. DBS is definately not at the low base on historical chart.
2. The whole market is due for correction. STI index is not showing strength to break the 2700 resistance level. For the past few days, STI opened up and faced selling off in the evening. STI also did not show big response although DOW and S&P500 showed positive movement.
3. DBS volume is dropping.
4. Probability of going down is higher than going up.

My constant reminder to myself:

• Buy Low Sell High
• What comes down, must go up. What goes up, must come down.

So, I am not in the hurry. Furthermore, there are so many stocks for me to choose to invest. That's the reason why I am doing so many stock analysis especially on blue chips recently.

OCBC Bank - Forming of Head and Shoulders?

OCBC Bank appeared to be forming a Head and Shoulders. If the stock price breaks below $7.50 neckline, it could potentially send the stock price down to between $6.80 and $7.10 level.

Singapore Airlines (SIA) - When are you going to take a rest?

Almost all the analyst reports recommend a SELL rating on SIA but the stock price defied the odd and move upwards for the past few months. The stock price is irrational and I don't see why SIA stock can keep moving up amid the recession. In addition, the general economy is bad. The passenger traffic drop YOY, cargo traffic and cargo capacity is also falling YOY, the SIA staffs was asked to take unpaid leave, the company is losing money for the first time, but the stock price is UP and UP!

I still believe that SIA will come down at certain point because there is no fundamental to support the continuous uptrend for this blue chip stock.  Looking at the bigger picture, SIA has been on a nice up trend since April, however there is a price volume divergence when the stock price goes higher and higher. The key question is when SIA will start the correction?

Today SIA closed the day with a long black candle. Base on the past few months SIA stock price behaviors, the stock price will probably retrace back to 20D MA when there is long black candle or bearish marubozu candle formed. Can SIA bounce back from the 20D MA and continue its up trend or SIA breaks down the 20D support line to start a bigger correction? We will wait and see. But one thing for sure, it is not the right time to buy because this price ($14) is definitely not at a low price.

Keppel Corp - Testing the resistance for the 3rd time!

Keppel Corp is testing the $8.45 resistance for the 3rd time! If it cannot break the resistance, a triple tops may be formed. There is also a divergence in price vs volume. If tomorrow market open gap down and end with a bearish candle, an Evening Star is formed and the trend will be reversed. The price may move down to around $7.00 level.

Epure - it is time to take a breather!

Epure International closed with a black marubozu candle today at $0.61. It has also formed a Head and Shoulders and will probably retrace back to test the 20D and 50D MA support lines again. If it breaks these MA support lines and move south, the trend reversal is confirmed. The chart and candlesticks pattern look bearish. However, a retracement back to $0.46 (61.8% Fibonacci Retracement level) is good for a healthy long term up trend.

Semiconductor ETF (SMH) rides on semiconductor growth in 2010

Semicondutor industry is a cyclical industry. It is forecasted this industry will grow at a minimum of 10% in 2010. Recent semiconductor industry reviews:

• Global semiconductor revenue could grow about 10 percent next year after two years of declines, as new computers and feature-jammed smartphones help boost chip demand - Gartner
• Global pure-play semiconductor foundry revenue will decline about 11% in 2009, but then increase 21% in 2010 - iSuppli
• The chip sector has been struggling over the last few years as the global economy, oversupply, and price pressures have stalled sales. But as the oversupply and under-demand cycle has stabilized, sales have improved, according to recent reports from the Semiconductor Industry Association.
  

SMH is the Semiconductor HOLDRs trust ETF and its top ten holding as follow:

SMH broke the long term Fibonacci 61.8% resistance of $24.763 and this level had become a very strong support level.

SMH is currently testing its another strong resistance at $26.24. If SMH can stay above this resistance turned support level, the uptrend is confirmed. Otherwise, it may retrace back to $21.809. SMH has not retraced back to this 61.8% Fibonacci level yet to build the base for future up trend. SMH is currently above 20D, 50D and 200D MA.

SMRT - Fundamental & Intrinsic Value

Base on FY2009 Financial Report

• Current Price = $1.73
• PE = 16.1
• Dividend Yield = 4.5%
• NAV = $0.5074
• Net Earning = 18.5%
• Current Ratio = 0.942
• ROA = 10.8%
• ROE = 22.5%

Intrinsic Value Calculaton

PE Model

• Fair value PE, base on FY2009 EPS $0.10726
• EPS Growth = 16.2%
• Intrinsic Value = $1.61
• PEG = 0.99

Discounted EPS Model

• EPS Growth Rate = 16.2% (capped at 15% for calculation)
• Discount Rate = 5%
• FY2009 EPS = $0.10726
• Intrinsic Value = $1.83

DCF Model

Unable to calculate the Intrinsic Value because the Free Cash Flow is not consistent year over year. SMRT is not buying MRT trains every year and thus Annual Free Cash Flow is not increasing consistently due to inconsistent CAPEX.

SMRT intrinsic value is between $1.61 to $1.83. The current SMRT stock price is at its fair value.

GoldenAgri - A strong resistance to break!

GoldenAgri is having a very stong resistance at $0.493 to break before the stock price to move uptrend. It is also testing the 20D and 50D MA resistance level. It looks like a double top has been formed too. Base on the chart, bear will take charge in the short term. GoldenAgri really needs a strong bull to break all the resistances to go north!

DRYS - Forming A Wedge

DRYS has formed a wedge and currently testing its 20D & 200D MA. I will accumulate DRYS shares if it retraces back to $6.20 to $6.50 price range (wedge support). $6.00 is another very strong Fibobacci support level. 

The probability of the stock price goes below $6.00 is low because the global economy is recovering and the Baltic Dry Index (BDI) is showing an uptrend. If this upward trend continues then that will be the proof that the economic uptrend will continue into 2010. The BDI is a great indicator for the demand of Dry Bulk goods (Coal, copper, lead, silver etc.). Increase in BDI equals increase in global economic activity. That also indicates the Dry Bulk Shipping Companies will have a better earning performance in the next few quarters.

China Fishery - Insiders Buying

Two substantial shareholders of China Fishery (Pacific Andes Limited and Golden Target Pacific Limited) started the shares acquisition at $1.16 since Aug 18, 2009.

The shares acquisition is still on going and the trading volume is pretty thin for the past two weeks. Normally it is a good sign if there are insiders buying.

In addition, the stock price is on a nice trend (200D MA on a up trend). Although I have sold half of my positions to take profit, I am still holding half of it as long term investment amid the concerns of big correction. I am watching very closely whether the stock can stay above the 20D & 50D MA if the correction comes. If yes, I will probably increase my position in this stock.

Is Material ETF (XLB) ready to run?

The Material ETF (XLB) is another ETF which will be benefited from the economy recovery. Raw material is the basic of all manufacturing products & infrastructures. Those mining companies and material makers will be doing well when there is huge demand of the basic material during the economy recovery. Another point to note is China is buying energy and material companies aggressively to ensure enough resources for future growth.

This XLB is primarily composed of companies involved in such industries as chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products. Among its largest components are Monsanto, E.I. DuPont de Nemours & Co., and Dow Chemical Co. Top 20 stocks as of Oct 8, 2009 as follow:

The ETF is currently is on the long term up trend (200D MA on the up trend). 3 years high at $46 and current price is about $31. The immediate support level is $28.739 and subsequent support at $26.776.

My investment Plan

Entry Level: Between $27 and $29 (but need to monitor whether the price is still above 20D & 50D MA)

Time Frame: 1 to 3 year

Singapore Exchange (SGX) - Fundamental & Intrinsic Value

Base on latest FY2009 Financial Report

• PE = 29.4
• Dividend Yield = 3.07%
• NAV = $0.7326
• Net Earning = 51.4%
• Current Ratio = 1.928
• ROA = 21.6%
• ROE = 39.3%

Stock Background

• 3 Years High = $16.3
• Current Price = $8.47

Intrinsic Value Calculaton

PE Model

• Fair value PE, base on FY2010 Forward EPS $0.37843 (Average EPS of 2007, 2008 and 2009)
• Intrinsic Value = $5.68
• PEG = 1.49

Discounted EPS Model

• EPS Growth Rate = capped at 15%
• Discount Rate = 5%
• 2010F EPS = $0.3783 (Average EPS of past three years)
• Intrinsic Value = $6.46

DCF Model

• 2010F Net Operating Cash Flow = $380.429 Million (Average Net Operating Cash Flow for past three years)
• Growth Rate = capped at 15%
• Discount Rate= 5%
• Number of Shares = 1,062.062 Million
• Intrinsic Value = $6.11

SGX stock price is currently overvalue and furthermore a double top has been formed in stock chart. I am waiting SGX to retrace back to about $7.00 (61.8% Fibonacci Retracement Level) and re-assess the entry point again. SGX is a good stock for long term investment due to its monopolistic business and long term growth prospect in Singapore (as APAC key financial hub).

United States Natural Gas Fund (UNG)

United States Natural Gas Fund (UNG) is an ETF to track the Natural Gas prices of Futures contract. Natural Gas is energy commodity and the price is influenced by the supply and demand condition. The ETF price has been beaten down 81% since its historical high of $63.48.

I am preparing to long the stocks as the economy will recover eventually and the energy consumption will increase in the long run. Furthermore, natural gas consumption will increase in the coming winter and this energy commodity price is expected to go up.

UNG is breaking out from its down trend channel and going to test $12.22 resistance level (61.8% Fibonacci Retracement). If it breaks and stay above the resistance turned support line, the stock price will probably be moving upward. The stock price is currently above its 20D & 50D MA support lines. If the stock price fails to break the resistance, it may move down to about $9.00 level.

UNG has just to trigger a “Parabolic Stop and Reverse” buy signal on the daily chart. MACD, RSI and Stochastic are very close to show bullish convergence.

My investment plan
Entry point = about $12. If the stock price fails to break the resistance and retrace back to $9.00, I will buy more and do a dollar cost averaging down.
Investment Time Frame =  1 to 3 years.

SingTel - Fundamental & Intrinsic Value

Base on latest 2009 full year financial report:

• PE = 14.9
• Dividend Yield = 3.87%
• NAV = $1.39
• Net Earning = 23.1% (26.7% in 2008)
• Current Ratio = 0.74 (Similar industry is 0.55) 
• ROA = 10.4% (Base on 2009 Full Year)
• ROE = 16.8% (base on 2009 Full Year)

 

 

Stock Background

• Historical high = about $4.10
• Current Price = $3.23

 

  

 

 

Intrinsic Value Calculation

PE Model

• Fair value PE = 15, intrinsic value= $3.24 (base on EPS $0.21648)
• EPS Growth Rate = 11.3%
• PEG = 1.32 

DCF Model
I use Free Cash Flow instead of Net Operating Cash Flow to calculate the intrinsic value. The reason is SingTel is a telecommunication company which need to continuously invest in the networking infrastructure to generate revenue and profit constantly. The intrinsic value is $2.45.

 

Discounted EPS Model

• EPS Growth Rate = 11.3%
• Discount Rate = 5%
• 2009A EPS = $0.21648
• Intrinsic Value = $3.02

Regardless of which method to calculate the intrinsic value, SingTel seems to at its fair value or over value (base on Free Cash Flow DCF Model). Furthermore, the stock price moves sideway for the past 10+ years. I will not buy SingTel unless the stock price falls below $2.50 and there is an increase in dividend yield in future.

How do I plan my exit point?

Selling off requires lots of discipline & determination because this decision determine whether we lose money, make money or make less money. It is not uncommon that we fail to execute or change of the exit plan depends on what we see, what we hear and what we feel.

Below are my “own guidelines” or “rules” when selling off my positions:

• When the profit target is met (for momentum investing) or the stock price exceeds the intrinsic value (for value investing). I normally sell off 50% of my position to take profit and leave 50% to let the stock price continue its course as long as there is not trend reversal spotted in the chart.
• When the stock price reverse its trend when the reversal pattern (e.g. head & shoulder, double top or triple top, etc) is formed.
  
• When the stock price starts the down trend & the stock price below 20D, 50D and 200D MA. This is a very tough decision to make to cut loss and I have to keep reminding myself that I can buy the stock back at lower price next time! I look for opportunity to sell when the stock rebounds on a down trend.

• When the price move sideway for a long time unless this is a dividend stock. I can use my money to invest in other stocks for better gain.
• When there is a fundamental change in the stock and I don’t foresee the stock price will rise in the near future. I sold Creative Technology which close to 40% loss because Creative Technology has lost its competitive advantage in Sound Blaster and its MP3 products.

Though I have worked out my entry and exit points, I still have to take full control over my emotion of Greed and Fear and need to have very good discipline to stick to my trading rules. I am learning to control this emotion every day & every trade, having buddies like Wilson & Daniel help me a lot in improving in this aspect.

Risks & Rewards of Investing in FRE & FNM

I bought FRE & FNM at about $0.60 and I have made 150% paper gains for these two stocks to date. Despite getting frequent reminders from my buddy to take profit, I am sticking to my original trading plan.


My trading plan
• Stock price target: $25 (FRE historical high is about $70, FNM is about $80)
• Time frame: 3 to 5 years

Potential Rewards
• 4200% (from $1,000 to $42,000) each stock


Risks
• I can lose EVERYTHING if FRE & FNM bankrupt or delisted from the stock exchange due to company re-structuring to clear all the bad debts & toxic assets! I am prepared to lose a total sum of $2,000 on FRE & FNM when I first buy the stocks.

My Risks Assessment on why I think this is a good bet!
(This is more like a gambling instead of calling it as investment!)

• FRE & FNM will not go bankrupt as US government has spent some much tax payers’ money to bail them out. They should have gone bankrupt long time ago if US government wants to do so.

• Real estate is one of the three main pillars of the economy recovery besides transportation/communication and finance sector. FRE & FNM play very the important roles to ensure real estate and property market in proper recovery path.

• FRE & FNM may not go back to previous high or reach its past performance. There is an extremely high probability the price will go up in the long term and the upside potential is huge!

Thus, in my opinion, FRE & FNM are good investment with calculated risks. The profit potential is extremely handsome even though it does not reach my price target. Of course, the assumption is they will not get de-listed during my investment time frame. Hope Murphy’s law does not applied here!