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


Friday, May 27, 2016

300% per annual return investment


Hey Folk


Technology have increase competition. The way business are done is different. The above article is more like a CFD firm. Usually they don’t have commission, they earn from the deposit we bank into their account, they earn from the spread, some real bad ass CFD firm earn from the bet that is against your position. Good and bad at the end of the day.

The hard truth of investing.

A lot of people want to earn a lot from investing. The truth is if any money manager can achieve 10% per year for a extended period of time he/she is consider the real deal.

There are lots of system or method out there that generate much higher return say up to 60% to even 300% a year. But usually they do not last the test of time. My painful experience tells me that these system usually last for a good 1 month to a year before collapsing.

The simplest and easiest way of investing is a monthly contribution of the same amount of money or a lump sum into a very good assets class and wait. The next question is how to identify the good assets class. These take some skills to do that. Also with these fast changing environment, one have to be on top of the game to know when to change asset.

Investors usually make a mistake of believing in short term gain and not long term benefits. I had tried, tested and experience these part of investment that I agree there are system that give very high returns in a short period of time but these system have got very high risk and short period of effectiveness. Buying a long term investment and wait for 20 to 40 years like what Warren Buffet does is still the single best lazy man and idiot proof method of making money.

Confession

I do have many accounts that trade different instrument and different method.

Over the last few years, the short term trading method account do perform well in the initial period, and as time passed they will go under water. These are the account that give you the excitement, but do not give u the reward as time pass. The swing trading account perform fairly well. These are the account that usually ride a trend until it get exhausted.

I do have long term accounts, I buy SPY (S&P 500 ETF) and keep for a long time. These are soooo boring, but you will see it grow slowly. There are no excitement at all, no stress, just buying them when the market is right. I did a calculation, if you buy a 10k amount and the instrument rise at the rate of 8% per year. In 40 years you will have a value of 21 times your capital.


Cheer

Friday, May 20, 2016

Rate raise Alert


Hey Folk


Rate raise alert again. The Fed had say that most likely they will raise the rate in June. The same condition must be met for rate raise, they are inflation and jobs.

I am not going to predict if it going to raise the rate eventually in June, I really do not know if that is really going to happen or are they just trying to prepare the market. The job of a trader is to read and understand current situations then act on it and not trying to predict the future. So let not speculate about all these.

The situation now for stock market is still short term downtrend, long term up trend. You can choose to stay at the side line for now until things are more clear to buy again.

The above chart predicts the move of Gold. The chart is in weekly. It will not tell the magnitude but duration of the direction. The chart show the relationship between gold and bond price inverted.

These are some interesting tools to share. During my research I manage to get them out. Again these are not timing indicators, it just tell us what to expect in the near future. As much as I cant predict, but there is certain intermarket relationship that can tell us some stories. Market is moved by conditions and not charts.

Cheer

Friday, May 13, 2016

Shaky moment


Hey Folk


The market now is like what we have in December last year. Shaky again.

Overall we are still in a low interest rate environment and the Advance/Decline also show that is moving up. Bond price is still in the up move and no big divergent against the stock market.

The big picture is still up, but in the near term the market maybe coming off.

Stock market top is much easier to spot than stock market bottom. There is no sign that the market is toppish for now. I wish to point out something, stock market are usually upward bias. To beat the market, we can just maintain a long term buy position and spot the toppish picture and short the market. In this case, one will beat the market.

Take note some swiss based bank in Singapore are going to charge u interest for depositing Euro or Swiss franc. So instead of getting interest you are paying interest. This is the negative interest rate environment.

Cheer

Tuesday, April 5, 2016

BUY BUY BUY


Hey Folk

I witness the Commitment of Traders report on the stock market have multiyear high commercial buying. In Layman, the Big Boys are accumulating position in the stock market at a record high level. This level was seen in 2011, where the market went higher thereafter. The S&P500 had also change from downtrend to up trend. I still think we have some rooms to the upside. However there are certain key price level in the S&P500 that is still a resistance.

If these wave of up move realize, it will naturally bring the rest of the market in the world to go up as well.

Gold on the other hand had commercial selling to multi year high. In short the Big Boys are selling these precious metal at record level. This precious metal will go lower in prices in a slow manner. Gold can hover in a price range for a period of time and then a break down.


Cheer

Wednesday, March 30, 2016

Recession??


Hey Folk


Maybe there is a chance for Spore stock market to be alive again. But is always a double age sword. More hot money in mean retail investor are easier to lose out.

So let see how things are rolled out.

Last week most important things FOMC

I quote from FOMC statement

Information received since the Federal Open Market Committee met in January suggests that economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft. A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation picked up in recent months; however, it continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.”


Who say there is recession???

Market continue to go higher.

See this very recent event. Singapore budget day

Find the full text in here http://www.singaporebudget.gov.sg/budget_2016/BudgetMeasures.aspx

Quote “The global economic outlook has softened since the start of the year, alongside a fall in oil prices and increased volatility in global financial markets. The advanced economies are expected to see continuing modest but uneven recovery. US growth is expected to improve slightly compared to 2015 as domestic demand improves. The Eurozone is expected to pick up slightly due to an improving unemployment situation and continued easing of monetary conditions. However, uncertainty remains over whether China’s transition to a more sustainable growth path may encounter short-term challenges. 

The Singapore economy grew 2.0% in 2015, and is expected to continue growing at a modest pace of 1-3% for 2016…..”

Direct copy and paste, see what our finance ministry have said.

I think the market still have some rooms to go up.

Cheer

Saturday, March 12, 2016

Quantitative Easing


Hey Folk

Let take a look at some QE or in long quantitative easing in different places.

QE in short is central bank try to simulate the economy where traditional method is not useful anymore. Layman term…..

US started QE program in Nov 2008 that is call QE1, then QE2 in Nov 2010 and QE infinity in Sept 2012 till 2014.

European Union start QE program in May 2009, argue for very long over EU itself and fundamental problems, still cant solved. Then another QE infinity in Jan 2015. Another expansion of QE is on March 2016. Mario also say that this is about all they have.

Japan is in a very deflation mode ever since 1980s. So they start QE in Oct 2010, Aug 2011, QE infinity April 2013 and expand QE infinity in Oct 2014.

The UK started the QE in March 2009.

We can see that most of the region or country started later than the US. US have a better frequency than EU. EU have got too much internal problems like Greece and their internal structure. Their QE frequency are so long apart so expect them to recover much slower than the US.

Japan had already be in deflation for more than 20 years, the QE now may take much longer to take effect.

Thus this is one of the reason we see US market rallying. The rest of the market are following.
China are getting through its problems. Maybe they are seeing some light at the tunnel.

Cheer