Is There X'mas Rally This Year?

30 October 2008

Many people expected a X'mas rally in stock market during the end of the year. Is there going to be one this year?

What is the chance?
If the past record or history is of any guide at all, there is a 5:2 chance that one would get a X'mas rally every year. But this year is quite different. It is a US election year and we have a global credit crisis and a global recession in our hands. But there is still a chance.

The X'mas Rally Years
Take DOW as an example. We have 53 good years for the past 90 years. DOW rallied through from 1 November right up to 24 December. For these good years shown attached, DOW gained more than 12%* in 1928, just before the Great Depression in 1929. DOW gained the least with only 0.12% in 1945, almost at the end of Second World War. The average gain stood at 4.2%. Most of the US Presidential Election year gave DOW the X'mas rally.

Note: * gain/loss compared to 1 Nov for the year. Same for the rest in this article

Doubleclick for enlarge view

The Bad Years
There are 7 bad years in DOW's 90-year history where there is no X'mas rally at all. DOW just fell straight from 1 November right through to 24 December. There was a nasty fall of 14% in 1973, when we had an oil spike triggering a World recession. The Black Monday on 1987 was not as bad though it had a fall of about 0.72%. The average was -4.6%.

Doubleclick for enlarged view

19 Half Cooked X'mas Rallies
There were altogether 19 X'mas rallies that started sometime near 1 November but fell short of running through to the X'mas day. Many of these were during US Presidential Election years where DOW gained more than 1.8%. There was the Dot.Com bubble year of 2000 where DOW rallied for 8 days. The Asian Financial Crisis and the Great Depression prevented DOW from rallying but they could still achieve a maximum gain of more than 1.4%. The most impressive gain was just after the Great Depression where DOW gained 12%. The Asian Financial Crisis did not dampen the spirit when DOW rallied and gained 6% on 5 December 1997.

Doubleclick for enlarged view

What are our Chances this year?
Judging from DOW's past performance, there is not a very good chance that the market will rally from 1 November right through to 24 December this year. However, there might be a chance that market will rally to a higher level mid way and form another half-cooked X'mas rally this year.

1997 and 2008 Stock Market

Introduction
Many claimed that the present stock market, affected by the America's credit crisis, looked more and more similar to the stock market during Asian Financial Crisis in 1997/1998.

The Asian Financial Crisis
The Asian Financial Crisis started sometime in late 1996 and the market recovered only in 1998. The market reclaimed its lost ground only in l Jan 2000, or about 3 years later. Then STI dropped from a high of 2,456 on 2 Sept 1996 to a low of 1,650 on 4 Sept 1998. That was about 800 points or 67% over a period of exactly 2 years. In between, STI saw a "dead cat bounce" of about 430 points or 35% from 1,245 on 16 Jan 1998 to 1,675 on 20 March 1998. This dead cat bounce lasted 2 months.



The 2008 Financial Crisis
The present financial crisis started from America. A bubble was formed in the US home sale market. It started to burst in mid 2007. Then a few hedge funds involved in the subprime home loan got into financial trouble in July 2007. This credit crisis grew bigger and bigger. First, a few smaller US banks gone bankrupt and finally, it affected larger banks like Bear Sterns, Freddie Mac, Fannie Mae and Lehman Brothers. Even AIG, one of the World's largest insurance company, was not spared. The crisis spread across the Globe. US Government cut interest rates and came up with more than US$1,000 billions of various financial packages to rescue the US economy.

During this crisis, DOW dropped from a high of 14,000 in Oct 2007 to a low of 8,145 on 27 Oct 2008. It lost a total of about 6,000 points or about 46% over a period of about 1 year. STI shed about 2,300 points from the high of about 3,900 to the present 1,600. This is a loss of about 60%, 14% more than DOW.


Are The Two Crisis Similar?
The Asian Financial Crisis and the US Credit Crisis are all connected to financial matters. There appears to have some similarity here. If we were to superimpose both time charts, they look something like this:


Has the Market Hit the Bottom?
Whether the market has hit its bottom or are there still more downsides to come, one will have to wait for Mr. Market to decide. The Asian Financial Crisis then was not as widely spread as the present US Credit Crisis. One would have to wait patiently to see the effectiveness of the rescue efforts put in by the various World's Central Banks.
The stock market could be taking a breather right now; but it may continue to dip if the rescue efforts put in by the various Governments were found not to be effective.


Related Articles
1. Bear Flag in Our Backyard 5 Sept 2008
2. Why STI Was Falling More than HSI, Shanghai and other Indexes? 4 Sept 2008

Power Savers. Do They Really Save Electricity Bills?

29 October 2008

Introduction
Electricity rate has gone sky high. Many will try to save electricity bills by trying out the installation of energy saving devices. Now, there are Power Savers available in the market. Do they really save electricity bills?

What are these Power Saver?
There are many different types of power savers in the market. Some are floor mounted, others are just small appliances with a 3 pin plug. All claimed to have saved electricity energy; some claimed to save up to 35%. This article will examine if they will really save your electricity bill.






The Salesman's Pitch
In the sale booth, the salesman can demonstrate to you that the Energy Saver can save energy.

Doesn't that Saves Energy?
What the salesman demonstrated is that by installing the Power Saver, the electric current is reduced. But that does not necessary mean that your monthly electricity bills will be reduced.

Why?
First, let us find out what are really inside these Power Savers. If one were to strip open the casing, one will find small electric capacitors.


What are these Electric Capacitors?
These are electronic components we often find in electronic appliances such as in Televisions. They may cost around $ 2 or $ 3 each. They are often used to smoothen electrical circuits to get rid of spikes. They can store up electricity energy just like our car batteries. In the application of Power Saver, the capacitors serve to correct the power factor of an electric appliance but they correct only the reactive and not the active power usage of an appliance.

What is Power Factor?
Power factor is a jargon used in electric and electronic power industries. It is nothing but a term defining the relationship between the active and reactive power of an alternative current or electric waves. Power factor is often referred to as the mathematical "cosine" of the angle between the active and the reactive power. It is one of measurements for the quality of the power supply system.

What are Active and Reactive Powers?Our electricity supplies active as well as reactive power to our homes. In simple layman term, the active power (measured in KW) is for us to produce work or heat whereas reactive power (measured in KVR) is related more to energy storage part of a system. For example, an appliance having pure resistances, such as electric heaters or irons, uses only the active power whereas an electric motor will use both the active power as well as the reactive power.

KWh Meters
By name, KWh meters measures only the active power (KW) of the electricity usage. The meters are constructed such that it ignores the reactive power usage. As Power Saver corrects only the reactive power, it does not save electricity bill directly.

Isn't the Reduction in Electric Current reduces KWh Meter Reading?
The ordinary home KWh meters are of electromechanical type. Each meter has 2 coils, a current and a voltage coil. They are arranged with 90 degree phase shift to always measure the active power usage of the electricity. Depending on the meter construction, many are affected only by the active power used by the network but the power factor of the network does have some effects on the meter reading.
In the case where the current drawn does affect the KWH meter reading, it shall be noted that most home appliances are either of resistive load or already installed with power factor correction capacitors in order to comply to the manufacturing specification. Therefore, additional capacitors provided by Power Saver will not serve much purpose. On the other hand, an over correction with more than enough capacitors may increase the current drawn.

It is therefore advisable not to install the Power Saver unless one is sure that the electric appliances to be used do not have the required capacitors already installed. Even then, the electricity bill saving may be minimal except for some heavy appliances such as air conditioners, where some users of Power Saver claimed to have saved some electricity cost.

DOW Jumped Almost 11%

29 October 2008

DOW jumped almost 10.9% last night, gaining about 890 points and lifted DOW from 8,175 to close at 9,065. This was the 2nd largest gain in the month. The last one was on 13 October 2008, just about 2 weeks ago. Then, DOW jumped 936 points or 11% to lift DOW to 9,387 from 8,451.
With such strong lift in DOW, does it mean that DOW has a total reversal?

Going through the above table, the matching days that DOW has made a gain of 10% or more are mostly done during the Great Depression period from 1929 to 1933.
The last time that DOW made similar gain was in October 1987, during the Black Friday/Monday. Then DOW gained about 10% on 21 October 1987 to compensate for the loss it had made on 19 October 1987, the Black Monday.
After that, DOW tanked for another 2 months. It then took off slowly over next 12 years and pushed its index up 5,000 points from 7.000 to 12,000, until the DOT.com bubble burst in year 2000.

(doubleclick to enlarge image)

Is this the wildest swing in HSI's History?

28 Oct 2008

Hang Seng plunged 1,600 points or 12.7% yesterday; it recovered 1,580 points or 14.3% today. Hang Seng went through a swing of about 3,000 points or 28% in the 2 days. Is this the wildest swing of Hang Seng's history? Is this an indication that Hang Seng has made a reversal?



According to record, Hang Seng made a similar swing during October 1997, the Asian Financial Crisis. On 28 October 1997, Hang Seng shed about 14% or 1,400 points to end the day at 9,060 points. The next day, on 29 October 1997, Hang Seng recovered 18.8% or 1,700 points as shown in the attached table.


A 3-year bull run pushed Hang Seng up about 10,000 points from 7,000 points in January 1995 to near 17,000 in August 1997. Then came the Asian Financial Crisis. This brought Hang Seng down to earth and made Hang Seng lost all the 10,000 points over next 12 months.
The October 1997 swing was then the largest swing since 1987. However, that swing did not manage to cause Hang Seng to make a total recovery. Hang Seng tanked for about 5 months after that and went down subsequently to recover in August 1998.

Is HSI's Fall of 12.7% the Highest in History?

27 October 2008

Hang Seng fell 12.7% or 1,600 points today in a volatile trade; it was down 15.4% for a brief moment with an intraday swing of about 2,000 points. It opened 12,373 and closed 11,015 just above a major support. In the morning trade, it went up to 12,737 but lost all its gain in the afternoon after Nikkei posted a 6% lost in the afternoon trade. The unwinding of Yen carry trade was said to be the cause.

According to the record, the last time Hang Seng closed 13% down was on 28 Oct 1997, during the Asia Financial Crisis. Then Hang Seng lost 14% to close at 9,060 although it opened about 600 points higher at 9,649.

The largest fall in the Hang Seng's history has to be the trade on 26 Oct 1987, exactly one week after the Black Monday on 19 Oct 1987. Then Hang Seng lost about 33% or 1,121 points.
It was reported that a 4-year bull run took Hang Seng to a record high of 3,968 points on 1 October 1987. On 16 October 1987, the Black Friday, global markets crashed. On the following Black Monday, 9 October 1987, Hang Seng shed 420 points to close at 3,362. This prompted the HK Exchange to suspend trading for the rest of the week to cool the market. When market resumed trading on 26 October, the following Monday, Hang Seng plunged 33 per cent on that single day.
With a fall of 1,600 points, Hang Seng slumped more than 65% from its peak of 31,958.41 in October 2007. This fall was more serious than the 62% fall experienced in the Asia Financial Crisis in 1997. On the other hand, Nikkie ended at lowest in 26 years with 7,162.

Replacing the Hard Disk

21 October 2008

After having scanned the harddisk using CHKDSK, the computer showed multiple error messages of “CHKDSK is performing additional checking or recovery…”. After having booted up the computer to backup the files, one received error messages.

What Could Have Gone Wrong?CHKDSK could have found bad sectors in the hard disk and making attempts to recover the bad sectors. This process usually takes less than 30 minutes. If the process takes hours with more than 20 error messages, one might have a faulty harddisk.

What should I do Next?
Back up as many files as possible. There might still be a chance that one could recover all the files if one can still boot up the computer. If one could not boot up the computer, try to repair the master boot sectors and the boot files. If the computer failed to start up after this, go and seek other solutions. One of the solution is to isolate the faulty section of the harddisk; the other solution is to repalce the harddisk. This article will describe the latter.

What do I need?
a) A copy of the XP installation disk
b) Another good harddisk of similar or bigger capacity

Why Not Use Existing Harddrive?
Unless one is sure about the condition of the harddisk, it is advisable to backup the files into another harddisk. Not only the existing harddisk might not have the necessary capacity, but also, the backing up operation might cause more damages to the harddisk.


Step by Step
1. Hooking up the new harddisk

• Switch off the computer and hook up the new harddisk as a slave drive
• Start up the computer and boot up the computer as usual
• Mount the new harddisk using available software such as Disk Manager or Partition Magic and Format the new harddisk

Mount the new harddisk with 2 partitions; one of them preferably with large enough capacity and formatted with NTFS system. This is because the normal FAT32 system has a limited capacity of 4 GB using the XP’s backup program.
2. Backing up the System/Program
If one has not backup the system/program before, should start to do so now. Back up as many programs as you can with priority giving to the following files
a) System state. This will restore your computer to its original condition
b) Important data, such as stock data, JPG, photos
c) Hard to get programs in “Program file”
d) One should also backup the necessary windows' drivers as one would have to install a new copy of the XP system on the new harddisk. This program can be used to extract drivers on the existing XP operating system.

Tips:

• Try to backup directory by directory. If there are error message, then select to backup sub-directory by sub-directory or file by file.
• Some program stores information in program/common file folder as well as in document and setting folder. When in doubt, try to backup as many files/directories as possible.
• Place the backup files in the new hard disk.
• If the backup file size is more than 4 GB, store the file in a NTFS partition
• Select to verify the data whenever possible.
• A lot to time and patient

3. Restoring the System/Program

• With the computer switched off, dismount the old harddisk and hook the new harddisk as the master drive.
• Reboot using XP installation disk
• Install new XP operating system in the new harddisk. Use the same username as the old copy of XP system when ask to create one

If everything is fine, restore all the backup files, one by one, starting in reverse sequent (though not important) as stated in

Why Not all the Menu Icons were shown?The restore should reinstate the computer to its original condition. If one has problem with missing icons in the menu, this could probably due to:

a) The username during XP installation is not the same as those in the old harddisk or the backup files
Check if there are more than one username folders in the “Documents and Settings” of the C: drive. Find the original username folder and check the sub folder , “C:\Documents and Settings\UserName\Desktop “ (username= your username) to see if it contains the menu icons that you have expected; if so, copy all the files/directories in this desktop folder over to the default username folder.

b) Some programs were not backed up properly
The programs or part of the program component could be missing.


Can One Re-Use the Old Harddisk?If one can boot up the computer, probably the damage in the hard disk are not as serious. If one want to reuse this faulty harddisk, one should

a) Try to re-run the CHKDSK again just to make sure that it has cleared all the bad sectors;
b) Clean the harddisk using the clean manager of XP system;
c) Defrag the disk, if possible in SAFEMODE

If everything else failed, one could always revive the harddisk .

Related Articles
1. How to Revive Faulty Hard Disk
1. Repair Damage Master Boot Record & Boot Sectors

How To Restart After Computer Hangs

17 October 2008

IntroductionThe computer just hanged. This article will try to offer some help step by step.

What can be wrong?
Restart the computer. If one can hear a soft and short beep sound, most likely the computer's hardware is working fine. The master boot record or boot files or the Registry of the XP's operating system may be corrupted.

What are the Usual Ways?
Usually, users will re-install the complete XP system. Some will choose to reformat the hard disk. One would lose all the personal documents, program files and other 3rd party programs. This article will describe a method that will not only save time for the restoration but also avoid having to reinstall all other programs.

What's Required?
a) A good working hard disk;
b) XP installation disk

How to?
Step 1 Suspect Faulty Master Boot Record or the Boot Files Follow the instructions in this article to repair the master boot record and the boot files and restart the computer. If the computer still hangs, then

Step 2 Suspect Faulty RegistryCopy the 5 files, namely: system, security, software, sam and default files from the “repair” sub folder to “config” sub folder in Windows and restart the computer to enter the safe mode. This Microsoft site gives the detailed instructions.

Thereafter:

a) If you have a Registry Backup copyFollowing this article to restore the Registry files from the backup copy and restart

b) If you do not have a Registry Backup Copy
Continue to follow the instructions given by Microsoft and restore the 5 files from a special “System Volume Information” folder. This folder is normally hidden from view. The system files are stored in this special folder when XP's System Restore is working. Note that the files in the folder may contain viruses as System Restore does not check for viruses when it stores the files.

Related articles
1. How to Restore Corrupted Registry
2. How to backup and restore Registry files
3, How to repair faulty Master Boot Record and Boot files

Back Up XP Registry and Boot Files

17 October 2008
Introduction
Viruses often attack the Registry of the computer’s operating system. After that, the viruses would be loaded to take control when the user starts the computer. This article will describe how we can back up a copy of the Registry and have it restored at a later date.

What is Registry and How Viruses Can attack it ?
Registry is a place where XP keeps all the information about the computer's hardware and software. It is being used by all the parties including 3rd party hardware and software. For example, if a new program has just been installed or files added, the Registry will be updated. Therefore, the Registry is the one place where it is most vulnerable to virus attacks. It is often difficult to get rid of them; sometimes, they may modify the Registry, making computers going hire-wired.
Viruses can be loaded into the Registry when we browse the Internet or when we run a program.
We can always restore the computer back to its earlier saved state if we have a backup copy.

How to Backup the Registry?
There are 3 methods:

Method 1: Using the System RestoreThis is part of the XP built-in program and can be set to save a copy of the Registry automatically or as and when required. Read this article.

Method 2: Backing up the whole of the Registry
Do this often manually or whenever we make some changes to the computer.

• Click Start, and then click Run. One will reach the following screen.
• In the drop down box, type "regedit"(without quotes), and then click OK

• In the next screen, select “My Computer” and in the File menu, click Export.

• In the "Save in" box, select a location where you want to save the Registry
• In the "File name" box, type a file name, and then click Save.

Note
1. This file will have an extension of ".reg" and is at least 5 Mbytes.
2. Make sure the computer is cleaned of viruses before saving.
3. Use separate file name each time as the copy of Registry to be saved could contain viruses.
4. Save this file in another hard drive or thumb drive or a RW CD ROM
Method 3: Backing up the System state
XP operating system has a built-in function called “Backup” in the System Tools folder. One can back up not only the whole registry but also the boot files in the Windows’ system 32 folder and the COM+ Class Registration Database.

• In the main Window, click Start, then in the All program/Accessories/System Tool folder, start the Backup program and follow the instructions, one should reach this screen

• Browse and select where the backup file should be installed and give the backup file a file name. Remember to use different file names if necessary. Click Next and one should reach the following screen.

• Select "Let me choose what to backup" and click Next to reach the following screen.

• Now, expand My Computer folder and then click the tick box next to "System State" folder as shown and click Next
• Select Advance button and after that, select "Normal" in dropdown box. Click next and one would reach the following screen to select the verification of file after backup. Tick that verification box and then Next. The computer will do the rest of job.
  
  
  Note
  1. One would need a free disk space of about 600 MB.
  2. Make sure the computer is cleaned of viruses before saving
  3. Store the backup file in a thumbdrive or RW CD or another harddisk so that it can be read and the backup file restored in case of harddisk failures.
  4. The backup file has a maximum limit of 4 GB for hard disk with FAT32 system rather than NTFS system. Check your system here.
  5. BACKUP is not installed by default in Windows XP Home Edition. Install it using the instructions available at: Q302894. A copy of Backup program can be downloaded here. Restoring the backup files
  To restore any Registry, always try to boot into the SAFE Mode. This will start the computer with minimum numbers of file and prevent viruses from loading.
  To boot into SAFE Mode, hit F8 continuously after the 1st welcome screen when one boots up the computer.
  When one is in the SAFE mode screen, might as well try if one could start the computer using the option "using Last Known Good Configuration".
  Method 1: Using System RestoreRefer to this article
  Method 2: Restore the whole of the Registry
  Go to the directory or the folder where the registry file was stored. Double click that file. The following screen will appear. Click OK
  
  Method 3: Restore the System state
  
  • Following Step 1 of method 3 in the backup section above, then choose "restore files and settings" instead, one should reach the following screen.
  
  
  • Browse through to the directory of the backup file and doubleclick the file, a new screen should show the folder "System State".
  • Tick the box to select file to restore and click Next. Click advance in the next screen. Change the default setting if necessary.
  Which of the 3 Methods is the Best?
  Method 3 appears to be the best; however, there were reports that it may not be compatible with some 3rd party software and may not restore everything in full. Sometime, it prompted users for CD keys etc after the restore.
  Method 2 is neat as it restores everything in full but it does not back up the boot file and Com+ file
  Method 1 is often the target of viruses. Very often, it would automatically save a copy of Registry complete with viruses. Some experts therefore recommended to de-activate the auto-saving function. To de-activate this function, just click start and the run in the main Windows and in the dropdown box, enter "sysdm.cpl" (without quotes). Then in the System Properties window, select the System Restore tab to untick box to turn off the system restore function.
  It is good to use all the 3 methods.

Related Articles
1. How To Restart After Computer Hangs

Fundamentals of Some STI Counters

The table (click the dates) will show the fundamentals such as shareholders' fund, long term debts, liquidity ratio and other financial data of about 200 counters in STI. It will be published once by the end of every month when most companies have reported its earnings. If there are additional counters to be included, please email skyjuicetse@yahoo.com.sg

1. 16 October 2008
2. 30 November 2008 30 November 2008(interactive-see note)

Disclaimer:
Information here is for sharing and learning. It is not intended to give any advice on any stock or movement or trend of any index. If a price or movment of a stock/index is given, it is only intended for illustration. The reader shall verify the information given here before using them.

Note: To use the interactive mode, one would need to download a add-in component for internet explorer from Microsoft website and one must also have Microsoft Excel 2003.

Forward and Swap Fuel Oil Prices

11 October 2008

Introduction

What is forward fuel oil price? What is swap fuel oil prices? How do they differ? Are there confusions in using the term "forward fuel oil prices" by the Energy Market Authority of Singapore (EMA)? What is the fair price to be used for evaluating electricity rates?

What is Forward and Swap Fuel Oil Prices?

They are just derivatives of oil trades similar to the Futures Oil prices traded in the New York Mercantile Exchange (NYMEX).

Forward fuel oil prices (FFOP) are quoted in a forward market. Unlike the NYMEX Futures market, the forward market is less price transparent because the forward contracts are traded informally between principals such as big oil companies who are not obliged to publish the details of any deal that is done.

Swap fuel oil prices (SFOP) are quoted in a swap market. It is a relatively new form of OTC derivative trading market. It is very much like the NYMEX Futures except it is commonly used by banks & big oil companies nowadays; hence, big quantities with relatively few trades. The oil trades are quoted in metric tonnes instead of barrels. Like FFOP, it is still a private agreement between two parties to exchange cash at pre-arranged dates in the future according to an agreed price formula. But unlike FFOP, the SFOP quotations can be found in public exchanges such as ICE; also, SFOP does not involve physically delivery of fuel oil at the end of the contract. More details about FFOP and SFOP can be found here.

Confused Terms Used
The EMA's website clearly shows that EMA has been using the term Forward Fuel Oil Price (FFOP) for evaluating the electricity rate. This term is also being used by EMA in all its clarifications in the press and newspapers. But if one clicks the link on FFOP in EMA's website, one will be led to a published SWAP quotation from ICE. Is EMA confused between the terms used?

Click for enlarged view

Click for enlarged view

The ICE's Quotation

The ICE's quotation for 4th quarter 2008 which is quoted in July 2008 is shown attached. They are quoted in US$ per metric tonne. To convert from metric tonne to numbers of oil barrel, one would have to divide it by 6.6.

Click for enlarged view

The quotation clearly shows that there are not more than 300 bids/offers and 11 deals were settled in the month of July 2008. The highest quote was US$ 795 per metric tonne (or US$ 120 per barrel) and the lowest quote was US$ 698 (or US$ 105 per barrel).

Which Market is Fair?
There just isn't a market price that can be used to accurately predict the fuel oil price to be used in the future. This is because NYMEX futures, forward, swap, options are all derivative instruments of the spot oil market. They are only good for use as hedging tools. They are all subject to manipulation, in particular, the FFOP and SFOP because of the private dealings and the small numbers of active trades.

Among the markets, NYMEX futures is the most transparent and most actively traded; therefore, a better market. Alternatively, we can use spot fuel oil price.

SP & Power Generating Companies would never lose out in any pricing that EMA has adopted and agreed upon. This is because SP & Power Generating Companies have the means to hedge such price against any future price variation like what SIA has been doing all the while.

If EMA wanted to be fair to both SP & Power Generating Companies and the consumers, they could always do a price adjustment at the end of a period, like the Public Utilities Board (PUB) used to before 2000. Using SFOP or FFOP to evaluate the electricity rate is not necessary fair to the consumers.

Other related Articles

1. Forward Fuel Oil Pricing Used by EMA

2. Is it fair to use Forward Fuel Oil Pricing

Biggest Fall in DOW in a Week?

10 October 2008

DOW fell another 678 points in 9 October 2008 or about 7.4%. This makes the total fall to be more than 20% in 7 trading days, from 1 October to 9 October 2008 or about 1 week. Is this the biggest fall in DOW's history?

Doubleclick for enlarged picture
Comparable Falls
There are 2 occasions where DOW fell for about 20% or more in 1 week.
1st Fall
The first was from 9 October 1987 to 19 October 1987. DOW fell from 2,516 to 1,738, a total of 778 points or more than 30%. That day on 19 October, the famous Black Monday, DOW registered the biggest fall of 22% in a single day. The market did not recover from this damage until 01 August 1989, about 2 years after the fall.

Doubleclick for enlarged picture2nd Fall
The second was from 13 May 1940 to 21 May 1940. DOW fell from 144 to 114 or about 30 points or about 21%. The market did not recover until 15 July 1943 or about 3 years later. This was in the midst of 2nd World War.

Doubleclick for enlarged picture

The Biggest Fall
The biggest fall in the history of DOW has to be the fall during the great depression in 1932. Although this is not the biggest fall in a week, DOW fell by about 50% over a period of about 2 years. The market did not fully recovered until 1953 or about 20 years later.

Forward Fuel Price ; Is it Fair?

8 October 2008

Introduction
EMA used forward fuel oil pricing (FFOP) quoted in July 08 for the next 3 months to peg electricity rate in Singapore; as a result, the electricity rate went up by 21%. This article will examine if this FFOP is a fair peg.

What is Forward Fuel Oil Price(FFOP)?
FFOP is quoted in a forward market just like the Futures market in New York Mercantile Exchange (NYMEX). But unlike the Futures market, the forward market is less price transparent because the forward contracts are traded informally between principals such as big oil companies who are not obliged to publish the details of any deal that is done. For more details about forward fuel oil contracts, please refer to this article.

Why the High FFOP?
EMA explained that the FFOP quoted in July 08 for delivery of fuel oil between October 08 and December 08 is being used to determine the electricity rate for this period. As the fuel oil price increased sharply in July this year, there was a corresponding spike in the July forward fuel oil price for October 08 until December 08. This appears on the surface to be very fair to both the Power Generating Companies as well as the consumers.

Why July's FFOP Not Reflective?
Rightly speaking, if fuel delivery is for period between October 08 and December 08, it should reflect the present fuel oil price; however, this is never the case. Lets examine the oil prices quoted in the NYMEX (FFOP is not available) for delivery in Feb 09 and for delivery in Nov 08. One could immediately identify that these 2 quotes are almost identical.

Doubleclick for enlarged picture

Doubleclick for enlarged picture

Why So Identical ?
This is because the Oil Price for future delivery is always affected by the prevailing spot price. When the traders do not know what is in stored for them in the future, they would invariably use the present spot price as the base price.

What's the Implication?
The FFOP quoted 3 months ago will be forever lagging behind the spot or the present fuel oil price. If the oil price continues to climb, the electricity rate will become very reasonable; on the other hand, the electricity rate would become very unreasonable if the oil price continues to fall.

Is It Fair to Use FFOP?
On the surface, it would appear very fair to use FFOP to peg electricity rate because SP and the Power Generating Companies will take actual delivery of the fuel oil at the end of the period. On further examination, it would appear to be unfair to the consumer because:-

a) This FFOP rate is less transparent; for example, the NYMEX Futures for oil was quoted at US $ 147 per barrel at the peak of July 08 whereas the FFOP used to peg the electricity rate was quoted as US $ 155 per barrel. Whether the FFOP deal in July 08 was done at its peak is not known publicly;

b) FFOP contracts can be traded in the market. If SP and Power Generating Companies found advantages to trade the contracts, they can do so and buy cheaper oil from the spot market;

c) It is very common for oil consumption companies, such as airlines and power generating companies to hedge present fuel oil price against any future price variation. For example, SIA has been known to hedge its jet fuel oil price. With the correct hedge, they will never lose out and might even gain handsome profits. On the other hand, the consumers will never have any choice but the pay for the electricity rate.

Conclusion
The FFOP as a peg for electricity rate does not seem to be fair to the consumers who have no alternative but to pay for the electrcity rate.

Afternote:

1. EMA was referring to SWAP fuel oil pricing as Forward Fuel Oil pricing

2. The USD 155 per barrel should be read as SGD 155 per barrel

Related Articles

1. Confusion in the use of Forward and Swap Fuel Oil Pricing
2. Forward Fuel Oil Pricing Used By EMA

Refrigerator Repair

1 December 2009

Repairing RefrigeratorsRefrigerator is one of the most common household equipment. This article will give some tips on how to locate and repair some common faults in refrigerators

What are the common faultsModern refrigerators need little or no maintenance except for the regular cleaning of blocked ventilation holes if it is located in a dirty environment. Poor cooling is often caused by faulty or aged components. One of the common fault is frozen cooling coils. Other faults can be motor related; for example, motor starter problem. Because the refrigerant system is a total sealed system, leakage of refrigerant is not usually the problem.


How to Check if the Fridge is Working Properly
A working fridge should:

1) Feel warm on some part of the panel. This is because fridge uses these panel to dissipate heat;

2) Have noise coming out of the electric motor;

If the fridge panel is always cold or there is no running motor noise for a long period, most likely the fridge is dead; otherwise, it could be due to the following problems:

a) Frozen cooling coils
b) Faulty components

This article will concentrate on how to clear frozen cooling coils

Frozen Cooling Coils

Frozen cooling coils could happen under 2 conditions:-

a) Refrigerator is short of freon gas;
b) Faulty defrosting circuits

Like any refrigeration equipment, coils are easily frozen when there is a shortage of freon gas in the system. However, this is quite unlikely in the case of refrigerators because most refrigeration system is sealed and there is little chance for freon leakage. When the coil is frozen, it will not allow air to pass through the colling coil and hence, cooling is affected.

Checks for Frozen Cooling CoilsModern refrigerators are frost free. Cooling is achieved by a circulating fan and defrosting is done by a defrosting heater.





Because the cooling coil and the fan are hidden from view, visual inspection is often not possible. However, one could deduce if the coil is frozen by checking if the compressor is working and also by observing if defroster is functioning.

How to CheckStep a) Check if the defroster is working
If the refrigerator has a defrosting tray underneath, check the tray for some water. The defrosting heaters will be turned on automatically once a day by a self running time, during which, ice if any on the cooling coil will be drained to the defrosting tray.

For refrigerator that has concealed defrosting tray, then the only way to check if the defroster is working is to turn off the refrigerator for more than 1 hour, allowing ice to be defrosted. If by turning on the refrigerator resume the cooling function, one can confirm that the defroster circuit is faulty; then, proceed to step c);
Important Note: The compressor panel consist of electrical components. Proceed to step b) & c) when you know what you are doing.
Step b): Check if the compressor is working properly
1) Open up the compressor chamber by removing the back panel of the refrigerator;

2) Check for oil leakages in the refrigerator pipe and tube; if there are traces of oil anywhere, most likely the system have a freon leak;

3) Check if the compressor motor is running. If it is running, check for its proper working by hand feeling the temperature of the compressor's discharged and the suction tubes. One should notice the discharged tube is always warm and suction tube is always cool. If there is not much temperature difference, most likely the compressor is not working properly and it is time to change the refrigerator.

Step c)
The defrosting components normally consist of a timer and a few heaters. Check the heater circuit for fault using an ohm meter. If the heaters are ok, most likely the timer is fault. Repair or replace the timer.

The Foward Fuel Oil Price Used by EMA

5 October 2008

Introduction
The Energy Market Authority (EMA) recently announced that our electricity rate would increase by 21%, the highest one-time increase in seven to eight years. This is because EMA has pegged the electricity rate to the forward fuel oil pricing for the next 3 months.

EMA’s Explanation for the Price Hike
EMA, the electricity and gas industry regulator, explained that since 2004, electricity tariffs had been pegged to the "forward fuel oil prices" for the next three months. This price was $155.14 per barrel, up 38 per cent from $112.35 per barrel for the current quarter.

What is “Forward Fuel Oil Price” ?
There are about 4 types of oil market:
a) The Spot market
b) The forward market
c) The Futures market
d) The Swap and options market

More information about the various oil markets can be found here
There are also more about futures and forward contracts in here and here.

Forward contracts are traded in the forward market. Like the futures contracts, forward fuel oil contracts are traded for the delivery of fuel oil on a future date at a pre-agreed price; but unlike futures contracts, the forward contracts are traded informally between principals such as big oil companies who are not obliged to publish the details of any deal that is done. The forward market has therefore lesser price transparency than a futures market such as NYMEX Oil Futures traded in the US.
Deals in forward contracts are usually done over the telephone. Participants either trade directly between each other or through specialist brokers (like Goldman Sachs) who provide a useful service by quoting bid-ask levels for forward Contracts. The main difference between forward and futures trading is as shown in the following table:
Why EMA used Forward Pricing of Fuel Oil?
EMA explained that “forward fuel oil” prices are the prices of fuel delivered to the Power Generating Companies; also, they are less volatile than the 'spot oil' prices quoted for immediate deliveries. To illustrate, EMA used the following graph:-

While there is no way to verify the authenticity of the forward fuel oil prices quoted by EMA, the following 2 curves in this article about forward contracts of West Texas Intermediate (WTI) and Brent will illustrate that forward pricing can also be very volatile.

Correct for EMA to use Forward Pricing?
Forward pricing, like future pricing, is often used as a hedge against any future price variation . If it is used for other purpose, it can act as a double-edged sword, working for as well as against an investor. In this case, as a peg for electricity rate for the next 3 months, it will work for consumers if the oil price is rising and against the consumers if the oil price is falling. Furthermore, EMA uses forward fuel oil pricing quoted 3 months ago, it is forever lagging months behind the actual fuel oil prices.

Forward pricing is less transparent as spot pricing. To protect the interest of the consumers, it would be better to use the spot or futures pricings that are traded in public exchanges such as NYMEX.

Will SP & Power Generating Companies lose?
SP and Power Generating Companies will not lose out with any price set by EMA if the set price has been agreed upon. This is because SP and Power Generating Companies can always hedge against any future fuel oil price variations. SIA's hedging policy on jet fuel price is one of the good examples. On the other hand, if consumers were to be asked to pay higher fuel price today for the next 3 months and if SP and the Power Generating Companies could hedge the future price correctly, they stand to earn a good profit.

As no contract or hedge will be able to cover all future price variations, at some point, consumers inevitably will have to pay for any higher fuel cost incurred by SP and Power Generating Companies. This is when EMA can come in to mitigate. Asking the consumers to pay electricity rate upfront based on a forward contract price is not necessary the way to protect the consumers’ interest.

Conclusion
EMA has chosen the forward fuel oil pricing to be "peg" to evaluate electricity rate but this pricing has lesser transparency. They also used forward fuel oil pricing quoted 3 months ago. There will always remain a question as to whether this forward fuel oil pricing is a good peg to protect the consumers' interest.

Afternote: EMA was referring to SWAP fuel oil pricing as Forward Fuel Oil pricing

Related Articles

1. Confusion in the use of Forward and Swap Fuel Oil Pricing
2. Is it fair to use Forward Fuel Oil Pricing?

Repairing Ultrasonic Humidifier

2 October 2008

Ultrasonic humidifiers have been used extensively in temperate as well as in tropical countries. They are used to keep room humidity at comfortable level. They are pretty cheap and simple to operate. They need little maintenance except for the frequent topping up of the water. This article will describe the workings of various electrical and electronic components and touch on how to repair some common faults.

What is Ultrasonic humidifier (UH) ?

Please refer to this article




What are the components inside the humidifier?

The humidifier consist of the following components
a) Control Panel (analogue or digital)
b) Mechanical fan
c) Water container and water level sensor
d) Electronic ultrasonic Generator
e) The piezo-electric transducer






How do these work?

a) Control Panel

Analogue or digital type. This panel will allow users to control the amount of mists generated and/or speed of the fan. Some humidifiers have built-in humidistat that will regulate the amount of mist to a preset control;



b) Mechanical fan

This is usually a small mechanical fan used to distribute the mists. It is made from using a small single-phase shaded pole a.c. motor with a centrifugal fan attached.
c) Water container and water level sensor (aka float switch)

The water container is usually an inverted container that can hold about 4 to 5 litres of water, enough for one day’s operation. The top end of the container is always sealed such that as water is being drawn from the container, it will create a vacuum on top of the container which will hold the water above the water level. All UH has a water level sensor or float switch that will stop the operation of the humidifier when the water level is low.



d) Electronic Ultrasonic Generator

This usually consists of a power switching transistor arranged as a Colpitts oscillator to provide power to the piezo-electric transducers. The oscillating frequencies are around 0.8 MHz to 1.7 MHz.




e) The Piezo-Electric Transducer
Connected to the output of the electronic ultrasonic generator is the peizo-electric transducer, which looks like a 50 cts coin or a lithium battery of that size.

During the humidification process, the peizo-electric transducer will vibrate at ultrasonic speed and water will be broken up into mists of 1 to 3 microns when they come into contact with the vibrating transducer.

What Can Go Wrong?

When the humidifier stop working, it could be due to many factors but this article will concentrate on one of the most common problem: the humidifier is working but it is just not strong enough to create the mist. Some water circulation is seen on top of the transducer.

There are a few reasons:
a) Clogged Transducer

This normally don’t happen if one uses soft water as recommended and cleans the transducer often. However, should a de-scaling required, do not use any chemical or soap or scrap the transducer surface with any hard objects. They might attack or damage the thin coatings of the transducer. A soft brush, brushing the surface may be sufficient. If this cannot remove the scaling, try some soft cleaners such as alcohol or other soft cleaners and rub against the surface of the transducer softly.
Handle the transducer with care. Transducers are made of ceramics. They are hard and very brittle. They will break into pieces once they fell onto the floor.
One can buy replacement ceramic disc from some aquarium shops that sell mist makers for fish tanks. They are packed together a key as shown and they are pretty cheap.

b) If the cleaning of the transducer does not work, it is likely that the oscillator may be at fault. It might be due to the following reasons:

1) Faulty Power Supply Unit

The power supply is from a 35-40 volts power transformer. This power is fed to a set of 4 diodes that form a rectifier bridge. The output of the bridge is filtered by a smoothing capacitor in the range of 2 to 50 uF (C5 or capacitor connected immediately after the bridge). If this smoothing capacitor is faulty, it will not deliver enough d.c. power to the oscillator circuit
2) Faulty Oscillator

The capacitors that form the oscillator could have been faulty and as a result, the oscillator is oscillating at other frequencies that could not deliver enough power to the transducer

3) Fault Power Switching Transistor

If this transistor is faulty, it is likely that oscillator will not work. Check the transistor for proper operation. Not every transistors are made the same for operation. Equivalent transistor may not work properly.


Schematic Circuit of other Brand
 Other reference circuitary on application of ultrasonic transducers can be found here.

Fuji Ceramics Corporation

Note: If you find schematic diagram of other brands, please email me.


4) Bad Contact at the Transducer

The transducer is usually connected to the circuit through a spring to allow the transducer free to vibrate. Bad electrical contact between the spring and the transducer may cause the unit to stop working. Dismantle the transducer and polish the contact surfaces at the transducer and the spring to ensure good electrical contact.

Related Articles
1. Soft Water Supply for Ultrasonic Humidifiers
2. Cut Electricity Bills by up to 90%

Cut Your Cooling Bills by 50% to 90%

1 October 2008

Introduction

Electricity rate in Singapore went up by 21% from 1 October 2008 from $0.26 per kWh to $ 0.30 per kWh. It is likely that this rate will remain high because of the ever increasing higher energy consumption that has driven up the energy price. We are addicted to comfort living and working nowadays. This article will tell how one could use available gadgets in the market to get some desired cooling and to cut electricity consumption by as much as 90% at the same time.

How?

a) Cut up to 50% by reducing the space of cooling and by introducing spot cooling. Please refer to article for this method ;
b) Cut up to 90% by using ultrasonic humidifiers (UH) and fans for direct cooling. This article will concentrate on how this can be done.

Using Humidifiers in Singapore?  (added 17 December 2021)

Some doubted that Singapore,  being a tropical country with very high humidity, is not place suitable to use humidifiers for cooling.   This is quite true especially when this kind of cooling is less effective in areas of higher humidity.  Buut one can still feel the cooling because the fans will help to evaporate those mists that fell onto the face and body faster than those from other parts of the body.   This cooling is like one cleans his face with a piece of wet cloth and stand in front of a fan.     Moreover,  in a hot dry weather day,  Singapore's humidity at certain parts can be as low as 70%. 

What is Ultrasonic Humidifiers (UH)?

It is an electro-mechanical device that can generate aerosol mists, much like the steam vapour that we produce when we boil the water. UH is cheap and easily available in Supermarkets, Homefix etc. They cost around $ 80 to $ 300 per unit.

How does UH work?

UH has 3 basic components:-
a) an ultrasonic vibration unit to generate the fine mists;
b) a small mechanical fan to distribute the mists and
c) a water container


The more sophisticated ones may have various controls for the fan speed and humidity adjustments. The heart of UH is a piezo-electric transducer that looks like a 50 cts coin or a Lithium Battery cells of that size. This transducer is electronically driven to vibrate at frequencies in the range of 0.8 MHz to 1.7 MHz. When water comes into contact with the vibrating transducer, the water is immediately broken down into fine mist, about 1 to 3 micron in diameter. Unlike boiling of water, no heating is required to produce this mist and therefore, little energy is used for the operation. A medium sized UH would consume only about 50 Watts of electricity.

How Effective is the UH Cooling?

UH will not be able to cool a room to the comfort of an air-conditioning unit especially in a hot and humid environment like Singapore. However, its direct cooling effect is much better than an electric fan. This cooling feels like when we are next to a strong water stream when we are in a shower.
Normally, Singapore's ambient air temperature stays around 23 -34 oC with humidity varies from 60% in the afternoon to 100% during rainy days. One can expect UH to lower the cooling temperature by 2 to 4 0C according to the following table.


UH will work better under a high ambient temperature and low humidity environment. Further cooling effect can be achieved if a strong mechanical fan can be used to create Flash Cooling.

What are the other Advantages?

Besides saving electricity, the unit will operate quietly with very little maintenance except for the frequent topping up of water as it evaporates. For those who constantly stare at computer screens, the higher room humidity will help them keep their eyes moist to prevent “dry eye” problem. Because UH operates at ultrasonic frequencies, it should have some bacteria killing effects.

What are the Health Concerns?

UH operates in frequencies between 0.8 to 1.7 MHz. This range of frequency is known to have effect of killing germs or microbes . However, there were no evidence that commercial UH also have these effects.
UH, like all equipment, will require regular maintenance to keep the unit hygienically clean. Legionnaire's bacteria , said to be found in water systems such as cooling towers and evaporative condensers, has not been reported in UH applications.

What about People with Rheumatism?

Scientists have found that weather or temperature and humidity's variation doesn’t cause rheumatism and doesn’t damage joints but they did find that weather does affect the severity of rheumatic pain. This is because bones, tendons, muscles, and joints have different densities and expand or contract differently when exposed to drops or rises in temperature and humidity. These weather sensitive people may found it uncomfortable with this kind of cooling.

What Water to be Used?

Ordinary tap water can be used if they are soft water (contained less minerals); however, distilled water is recommended by most manufacturers. Hard water has been found to be not suitable for UH because they have bicarbonates and sulfates that will form scaling to "kill" the transducer.
Distilled water is expensive although there are other alternatives. It may be more cost effective to use ordinary tap water and have the piezo-electric transducer replaced regularly.

Getting soft water from air-conditioning units is one good alternative to save money.

What size of a UH Unit should I purchase?

There is a co-relationship between the moisture of room air and the additional moisture to be added to achieve the desired cooling effect. One could use a psychromatic chart to determine the number and the unit sizes if one wishes to cool the whole room. However, for the purpose of achieving a direct cooling and not room cooling, a medium size UH that is capable of delivering about 400 ml/hr has been used successfully.

Related Articles
1. Soft Water Supply for Ultrasonic Humidifiers
2. Repairing Ultrasonic Humidifiers