Market update 11 May 08

There were few notable events for the last week:

Oil price hit record high again. This doesn't sound like a big news as most of us has get used to the record price news. However, the higher it goes, the more threat it posed for the inflation situation.

AIG big loss. AIG suffered big losses due to credit derivative linked to mortgage. Although most of the people believed the worst is over. It looks like the problem needs a longer time to settle down. Even the subprime situation has stabilized, we still don't know the full impact to other area of the market.

The inflation situation is still worrying. Citigroup announced more asset sales. Last Friday, Dow fell another 120 points. I think the recent rebound could be short lived. The economic situation is far from clear and more bad news might be coming back to market.

I still don't think it is a good time to be aggressive buyer, but depends on company situation and valuation. From the start of the year till now, I only bought some shares in FJ Benjamin. The valuation has fallen to more attractive level, the major shareholders like Peter Lim and Frank Benjamin were buying and the business still looks good for 2010. I also like the in house brand RAOUL, it might be a wild card.

Still waiting and hopefully market would correct to a more attractive level. Then, the margin of safety would be bigger.