Tuesday, November 22, 2016

Triumphant China


Hey Folk

So far I am so right about the market. US market soar. China market Soar. Whoever have funds in your policies or own funds in those area….Congratz.

Let talk about Trump

Businessman that wish to make America Great again. His fiscal stimulus lead to bond price lowering, stock price to move higher and increase inflation. Lay man term is he spend money within his country to build facilities like road, railway, builidngs, refurbish old builidngs etc etc….some sort like in SG, we always see them dig things on the road and make the road newer.

These will improve employment, with improve employment people are more willing to spend and thus increase inflation. But these will increase tons of debt to their own country. But they are a big country and leader of the world (slowly will not be so significant), so they can do this.

Slowly after these are done, they will still need to look outwards of their country but depend on who is the next president to play the game. It is always like that for many civilization in history.

China, Capitalism or communism??

A last time inward looking country now turning outwards. They are flexing all money they have like the obnoxious friend, throwing money at any country that are willing to work with them.
They wants to be the leader and this is their chance. The one belt one road if successful will be awesomely magnificent plan. They will practically connect the world to them. The plan is extremely ambitious. But being Chinese, I know they can do it. It just take time and determination and they will make it happen.

China in the olden days, (cant remember which dynasty) have the largest GDP in the world and are the richest. The Chinese know the power of unity.

They are too shaking up their internal problems and extending economic growth to the world. It take time but they will do it. Also being Chinese myself, I do believe that in business they are selfish. In hardship we can thrive and endure together, but in fortune is only mine. I do see some of these playing out in China and Singapore relationship. Just my opinion.

These are the advantage of big countries with huge population and sheer land mass and resource. Honestly, however miracle Singapore is, we cant do that. Unless we can be the next Silicon Valley as the GDP of just that state is among the top in the world.  I love this place but let be realistic and think about it.

I was having a conversation with some friends and I said our grandfather migrate from China to escape war and to find a better future for themselves. I think there will be a day that our grandson will need to migrate back to China or other places in Asia to look for better future.

So in short. For funds wise stay in US and China. They are the better ones. The rest will be follower. These 2 areas might bring enough money for us to relax one corner.
one more thing, that is I do think facebook, alphabet and tesla will have a very good future. if spacex is listed it would be too.
Cheer


Saturday, September 3, 2016

Compare and Conclude


Hey Folk

Let do some stock indices comparison.

First we have the Shanghai Composite (SSE) VS S&P500
The above picture is a 10 years data.
You can see that SSE have a better performance than S&P500. If you invest 10 years ago 1 Sept 2006 till 31 Aug 2016, you will profit 90% for SSE and 68% for S&P500.
SSE perform better than the S&P500, but note that the new high created in 2007 in the SSE is not taken out. So it is not a perpetual uptrend yet unlike the S&P500.
S&P has taken the time of test to perform for many decades. You can look it up from google. SSE is a relatively new market and have not perform so well too. Looking back into 2000 till now, SSE usually have a ‘burst’ movement which mean they will have extreme expansion for a couple of years and then slump for many years in other words is extreme volatile. But for these 10 years, if you invest in SSE, you almost double your investment. Maybe they will be the next star.
Let see the next comparison
S&P500 VS Hang Seng index (HSI)
The above picture is a 10 years data.
HSI is performing at 35% while S&P500 is at 68%
 The last comparison
S&P500 ETF ( SPY) VS Straits time index ETF (EWS)
The above picture is a 10 years data.
Why ETF? There are no data on google for STI. So I got to use ETF. Note that ETF can be directly invested and have charges, thus the return for the same period is lower.
For 10 years, SPY have 67.9% while EWS have 19.9%. I am quite sad about this as Singapore market is always such a lagger.
Zoom into the picture in the year 2015 and 2016, when the SPY come off abit, the EWS elaborate it but the other way up is not like that.
If you have a chance to google it yourself these 2 ETF and compare them to the maximum duration, you will realize that STI is always lagging. These pictures above take reference from 1 Sept 2006 as the start of comparison. So you might see certain expansion that is exaggerating. If you compare them longer, you realize S&P are always the leader.
Another thing about the stock market are they are correlated. They move in synchronous.
However only S&P right now created historical new high but the rest of the other indices have not. This show the strength of S&P and the weakness of others.

Jobs data was bad yesterday, rate raise anot 2 weeks later? Stock market maintain the pose.
For Gold Bug, I still do not think gold will go back up, probably it will rebound to 1500. But still I am bearish on Gold

Cheers


Monday, August 8, 2016

Herding or Sheparding


Hey Folk

Price rules once again in the US market, there show a divergent in indicator Vs price. Indicator are showing that price should go down. Price on the other hand just keep moving up. So that why we see S&P500 making historical high again.

Will there be lesser upside if an indices moved to historical high?

The answer to this is no. No statistical proven that this has happen. What went high can go higher and what go low can go lower. These happen during certain period of time. Honestly there is no indication in the fundamental data that I have that a huge drop is coming. These data actually show and support the up move and further up move. But I do think a dips or consolidation should take place.

Seasonal trend?

Traditionally these period into Sept will have wild market swing in a consolidation range. Then into October is when the market will start to have up lift. This is just a guide so do not follow it like a holy grail.

Asia

The up lift in the market will be a global issue. The strongest market will move and bring the weaker ones along. China in my analysis will bottom soon and should be the next engine in the equity area.

Why actually market goes up these question had a lot of people asking me. If I had to answer them the right way I will say that the global economy are turning better. It is slow but there are slow progression. There is a US election coming up in Nov so chances are the market will move higher.

The real and right way that is in my own reasoning and I see from my data and indicators are there are lots of buying going on. More retails account are selling or shorting. The big boys on the other hand are accumulating since the start of the year. Knowing the real reason do know fetch you profit. Knowing what they are doing does.

Gold

I do see that gold will come off. But it is in a no mans zone now. More to the upside in price. But fundamental data totally do not support this price. I do see more retail buying and the big boys are selling.
In investing that I know and learnt is do not follow the herd. Usually following the herd do know get you anywhere. However the Shepard is always the one that divert the herd to the desire place. Follow the shepard but don't trust the shepard. Because sometime we need to know when not to follow a person too closely, when to let go. The trick is how to differential a herd or shepard and how to differential when shepard is killing other shepard.

Cheer

Tuesday, July 19, 2016

Historical high 2

Hey Folk

Part 2 of it.

Let look at Dow Jones Industrial from yahoo finance

It had already form historical high. Now is about 18,500. Probably it will pass the psychology 20,000 mark. Which is about another 10% for 3 to 6 mths.

Next look at the line that is drawn, the start of the line happen about in 2011. (This is a illustration base on me and my peers age. We graduate about 2010, working for 6mth to a year and have enough saving to invest. )
At that point of time, Dow Jones is about 11,000. Over 6 years till to date, if you invest in Dow Jones you will have a profit of 68%. Just putting your money to work. There are shorter term technique to capture good gains but that need a lot of effort. So if you think thats too much effort and  is not your cup of tea, just find something good and invest in them.

Next STI from yahoo finance




It clearly has not break the historical high of 3805 created in Oct 2007. Now it is 2928. It is clearly a lagger. If you have invested at the start of the line that I drew, it is about end of 2010 which is about 2750. For 6 years, you only had a profit of about 7%. Compare that with Dow Jones of 68%.

Even if before the Lehman Crisis you buy into Dow Jones at 13,930 VS STI at 3805 ( these are historical high price in 2007) . For Dow, one will have a profit of 32.8% while for STI one will have a lost of 23%. These scenario actually happen to a lot of older folk that buy into CPF investment or any other forms of investment during that period of time.

So
1) Invest in a good horse. Easiest to identify is to compare throughout the  breadth eg same industry and get the best.
2) Conditions will change as time. When condition change leader and trend will be changed.

There is no one regime/ruler/party that rule forever, there is no one era the same, there is no one idea that stay forever. Even for a family, you cant keep your children by your side forever. Most of the time is when the best of the best happen and these best usually become a history.
Look for the condition that will displace the current leader, when the condition occur look for another runner. Now the US market is the leader, will it change to Asia market one day?? Look for that condition.

Also lots of data are publicly available from yahoo and google. One can pluck them and do loads of research on it.

Till next time
Cheers

Monday, July 18, 2016

Historical high

Hey Folk

Quick and dirty. Market are bullish. So many things happened and is going to happen but is ok. it is a BUY as of now.

This is Nasdaq Composite from yahoo finance

The line that I drawn is the historical high created in 2015. It is about 5200+. Now Nasdaq is about 5000. I do think that it can storm pass that historical high. As Nasdaq is suppose to be the leader of the leader of all market, one can use this as an example to calculate roughly where to profit take. The horizon for now is about 3-6mths. Where exactly will it land is a billion dollar question. This can only serve as a guide.

Taking bond and stock relationship as another guide. The bond market had make new high again and again. So if stock are lagger and it follow the bond movement, it may too have these phenomenon.

Another indicator, taking the week advance stock vs decline stock,( this indicator usually is use to pick the top) are showing that it is supporting stock up move.

Another indicator, VIX have show buy on the 3rd day after Brexit which I follow till today. VIX not showing anything else as of now.

Talking about S&P500, is a weekly uptrend but most of the technical indicator are showing divergent and overbought so becarful. But this do appear in extended up run.

However the run is Pls do exercise due diligence and proper money management.

quote from  Jesse Livermore 'The market does not beat them. They beat themselves, because though they have brains they cannot sit tight'
quote from Soros 'If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring'

cheers

Friday, July 1, 2016

Brexit


Hey Folk


Britain have decided to exit the EU. It is the beginning of something new. Disintegration

More countries will follow suit what Britain have done and even within Britain, Scotland wants to stay in the EU. They too can hold a referendum to be independent and join the EU.

This will surely impact Euro dollar and Sterling directly for a period of time. So I think these 2 currency towards the USD will be suppressed. Despite central bank coming to intervene the market.

However, Britain and EU will take 2 years for the ‘divorce to be sealed’. New trade deals, regulation and legislation have to be discussed and implement. New border control law and etc. For now it is more of a political catastrophe than a financial catastrophe, however I do think that there may be certain hidden ‘financial catastrophe’ factors are building up, maybe worse than the magnitude of Lehman.

If you happen to have this book titled “one man view of the world” by Mr Lee which was publish about 5 years ago, he had pointed out that EU will fail eventually unless a great leader come about. When ask about in his life time who he consider a great leader he mentioned Deng XiaoPing.

I did go through the book again and I found many similarity of things that is happening now was mentioned in his book.

So how does it relate to our pocket??? Short Euro and GBP for the long term. Europe stock market will not be good either. My pick will be US and follow by China.

I also obvious that there are not much impact on Shanghai market when Brexit happen. So maybe the next run will be there.

With this exit, I think the FED will not be able to raise rate again. Bank of England said that they are going to do some easing this summer. So rate hike maybe delay again. Which i think is good for the stock market.

Conspiracy theory, FED Yellen is a democrats she is more in favour with Hillary than Trump. And Trump said he will replace her if he is elected. Maybe she want to boost the market up for Hillary.

Cheer

Tuesday, June 21, 2016

Britain Exit or not? This Friday Black or not


Hey Folk


This Friday Britain decision to be in or out of EU.

So what if it is out. My analysis as follow

There are surely effect if Britain leave EU, probably that explain the sluggish performance of the England team as the players are very worried of their future.

So what would happen?

1)    The bank of England have assess the long term economic consequences of Briexit, it is a loss of 3000 to 5000 pound annually per household for the next 5 years before Britain settle down.



2)    The pound will surely depreciate very quickly. I think it would drop about 15% to more than 20% from current price. Which will bring the pound to be almost the same value as the Euro. That’s mean joining Euro despite out of EU. However one can argue that a devaluation will be helpful for the economy, but these effect now is less significant than what happen in 1992.



3)    The Bank of England do not have the ‘necessary ammunition’ to reduce interest rates as rates are low. I think there is very little the monetary policy can be done for these.





4)    Trading condition now have changed so devaluation of currency might not help England at all as compare what happen in 1992. This is mainly due to regulation and cross border issues.

However the reasons, people are driven by emotion at times rather than logical deduction. That why the other side of the Atlantic Ocean ban immigrants is a good idea and people likes it so much.

I do agree this is a golden opportunity to make a lot of money, or lose a lot of money. Like how Georges Soros broke the Bank of England in 1992. But according to him the planning, analysis and execution take 10 years.

Anyway it goes good luck to everyone.



Cheer