Hang Seng Index

A brilliant analysis to make Einstein turn in his grave

PUBLISHED : Friday, 05 October, 2007, 12:00am
UPDATED : Friday, 05 October, 2007, 12:00am

You know the joke about how Pete tells Albert Einstein at the Pearly Gates that he's full up and Albert will have to go to shared accommodation.

Albert doesn't really mind. The first potential room-mate to whom he is introduced is a fellow astrophysicist with an IQ of 180 and the two of them are soon in discussion of the anomalous perihelion precession of Mercury.

The second is a musician with an IQ of 160 and soon they're having a giggle trying to hum Mozart in two part harmony.

Then a third potential room-mate shows up, who, when asked about the status of his Mensa membership application, scratches his armpit and says: 'Duhhh, ike you? Go ike yourself, buddy.'

'Never mind,' says Albert. 'I'm sure we'll have plenty to talk about. Tell me, what did the Hang Seng Index close at today?'

In the same vein, a friend of mine received the following from a Merrill Lynch broker recently. It bears quoting in detail just to show you the standards of brilliant critical analysis attained by the teenagers they allow in the market these days:

Paradigm shift!

Liquidity to drive HONG KONG to new highs for the foreseeable future. ML [Merrill Lynch] expects QDII [qualified domestic institutional investor] funds to accelerate into Hong Kong - lifting our daily turnover from a happy US$14b -US$16b in July & August, and to US$20b currently. It doesn't end here.

What to expect:


Hong Kong to tack on 15% a month into year-end. It's a bull market, get involved!


First, forget about fundamentals, or rsi's [relative strength indices] ...

Next, think like a Chinese portfolio manager.

Use dips to add.

Pull the trigger despite stocks trading at all-time highs.

Here follows a line of stock recommendations and then:

A few of Merrill Lynch's Price Objectives are outdated and need to be revisited by analysts. Risk to the upside in my opinion.

I assume that outdated in this context means that the share prices of some stocks are already higher than the target prices that Merrill Lynch analysts put on their research reports when recommending those stocks.

You might think that the writer of this note would then congratulate these analysts on their Buy calls and tell his readership that it is now time to sell as the targets have reached.

But no. What we have here is a lad who knows that the Hong Kong market can rise by 15 per cent a month until the end of the year, which, in case you wish to know, would put the Hang Seng Index over 40,000 just after Christmas. When you reach your targets you raise them again, that's how you do it.

And what about after Christmas? Why, that's easy. Buy more of course. A bull market wonder boy in full bellow will never change his tune. He only stops singing when one day his boss decides to 'pull the trigger' on him.

In the meantime the risks are 'to the upside', by which he means: 'You'll be sorry if you don't get in.'

Teenagers, do you remember when you were one?

A think tank close to Chief Executive Donald Tsang Yam-kuen has called on the government to require developers to contribute a percentage of building costs to artworks for new buildings in an attempt to boost Hong Kong's creativity.

SCMP, October 4

Back in college days at good old Ubyssey, best university in the whole wide world, it once came to happen that some stunning metal sculptures, cogs and levers welded into forms of transcendental cosmological truth, had been placed overnight on the lawns around the buildings of the faculty of arts.

These beeyoodeeful works were naturally lauded by the turtleneck-sweater set and you can imagine the dismay when two days later a group of engineering students marched to the faculty of arts with sledge hammers and cutting torches and destroyed every single one. Calls for dire punishment quickly ensued.

It turned out, however, that these same engineering students had also been the sculptors. The work had taken them only a few hours on the night they had placed them.

I shudder to think at what I will have to pass on my way into any new office building if this silly 'artworks' idea from the Bauhinia Foundation is ever adopted.

Those engineering students back in my university days actually hadn't done a half bad job when doing it in jest but I've also seen it done seriously in the Netherlands in towns where it is required by law for new buildings. Let me tell you the results are enough to create a whole new line of employment for eye doctors. It doesn't bear calling to mind, ughhhh!

Please, Donald, don't do it. Please, please, please, please.