I was invited as a co-speaker in this seminar (14 Jan 2017, Singapore) with Hu Liyang (胡立阳), a famous stock investing guru in Asia. As requested by a reader, I am giving a summary here to show the similarities and differences of my views with Hu Liyang (胡立阳) on Market Outlook for the next few years.
The last time I met Hu Liyang (胡立阳) was probably 4-5 years ago. The first impression of him again is that both of us are getting much older. He has a few more “railway tracks” on forehead while I have many more white hairs.
Both of us have observed many economy cycles in the past few decades, although Hu Liyang (胡立阳) is probably 10+ years more senior than me, that’s why we are mostly aligned in many understanding on market outlook. Hu Liyang (胡立阳) hinted a retirement which I think he deserves it. For me, I don’t feel I am “working” on my interest of investment education, so I don’t feel tired yet. Perhaps one day I may also start a new phase in life, hoping investment is also part of lifelong learning for all the readers.
Similarities in Market Outlook
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1) Final Phase of Bull Market
Both agree that the market is entering the final phase of bull run. I am supported by high optimism of stock market at Level 3 (especially US) and Level 4 (world), while Hu Liyang (胡立阳) is mainly based on interest rate cycle: “bull market starts when interest rate is cut, ends about 1-2 years after interest rate hike in US”
2) Danger Signals for Investment Market
Both agree that bond market is at high risk, bond yield has been at historical low, when bond yield hits 3% (now is 2+% for US 10 years bond yield), the fund is moving from bond to stock and property market, creating risky investment bubbles.
3) Market Cycle Investing
Both agree on market cycle theory. Hu Liyang (胡立阳) uses “pendulum theory”, market will swing from high to low, low to high, sometimes may be even over-corrected, applying his 50% discount theory and other correction factor. I mainly use Optimism to declare the market risk (>75% Optimism) or opportunity (<25 Optimism). Despite the exact methods may be different, both are suggesting buy low sell high based on economy cycles.
Differences in Market Outlook
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1) Timing of Global Financial Crisis
Hu Liyang (胡立阳) has been trying to predict the timing of global financial crisis. I remember a few years ago, he predicted the great crisis may come around year 2013 or 2014. This time, the time bomb is extended to around year 2019. With political economy such as global QE and near zero interest rate for so many years, the current market cycle duration is much longer than last time. I could understand why Hu Liyang (胡立阳) still tries to predict the future as there are too many audience really hope to have a crystal ball to see the future, especially Hu Liyang (胡立阳) has an amazing record to predict the ending time of last global financial crisis in year 2008.
My view is that market cycle duration is unpredictable because it depends on the rate of optimism reaching danger zone of 75-100%. However, there is a predictability within the unpredictability. We just let Optimism shows us the risk level, no need to guess the future. If US takes 10+ years to reach high optimism, market cycle duration will be prolonged. If US behaves like China, stock index is doubled in 1 year, then market cycle will be shorter. This is one of my Ein 55 Investment Styles (of course, Hu Liyang (胡立阳) also has his 100 Investment Styles in his famous book), Optimism is a market thermometer. We will never know when we will have the next fever (eg >38 deg.C), but we will know when we have a fever because we could feel overheated, temperature measured is too high. It is never too late to find a Panadol to cool down the body when we really have fever. Similarly, we will not know when the next crisis may come, but we could guess the probability with market temperature using optimism. When market is having a mild fever (38 deg.C or 75% Optimism) or high fever (40 deg.C or 100% Optimism), we will know as well. The key challenge is whether a trader or investor is willing to take profit (as if taking Panadol), admitting the market is feverish. Based on my observations of past market cycles, more people work harder despite having high fevers, ending up losing what they have accumulated when the market bubble is burst.
2) Factors for Success in Stocks
Hu Liyang (胡立阳) believes the stock market is a probability game of 3 possibilities: up, flat or down in share prices (more of a TA believer); fundamental or business are not as important. He mainly uses “money analysis” to analyze the money flow in economy cycles, combining with many TA methods to predict the mega stock market low and high, both in prices and timing.
I believe in an integration of 3 pillars to be successful in stocks:
2.1) Optimism + Fundamental Analysis (FA, buy giant stock with strong business fundamentals).
2.2) Optimism + Technical Analysis (TA, investment clock to wait for giant to fall down and recover),
2.3) Optimism + Personal Analysis (PA, emotional control) to take actions.
I also believe there is a need to match the strategy with our unique personality:
– short term trader (buy/sell every few weeks),
– mid term trader (buy/sell every few months),
– long term investor (buy/sell every few years),
– life time investor (buy and not need to sell for life).
Warren Buffett, Jim Rogers, Hu Liyang (胡立阳), Jesse Livermore, etc, each investing master or trading guru, could have their own styles of making money, but it may not be suitable for everyone, unless you share the same frequency in mindset. This is the reason I teach the complete Ein55 Styles with consideration of both short term trading and long term investing, FA, TA & PA with economic analysis, showing Ein55 graduates how to customize an unique trading or investing style for individual.
The safest time to buy a stock is when everyone is afraid the sky will fall while the business is still operating normally with consistent performance. This could be a rare opportunity to buy during a crisis; we should learn how to take this advantage to truly buy low sell high.
When Optimism Strategies are combined with Fundamental Analysis (value investing & growth investing), Technical Analysis (support / resistance / trends), and Personal Analysis (mind control of greed and fear), it is very powerful as one can take the right action (Buy, Hold, Sell, Wait or Short) at the right time aligning with his own personality.
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Learn 10 Strategies of Stock Trading & Value Investing (股市投资十大策略)
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3) Long-term investing strategies to outperform portfolio return of Temasek, Li Ka-Shing, Warren Buffett, major stock indices/ETF and other funds (长期投资策略)
4) High-probability Shorting techniques for short term traders to profit from falling stock market while others are losing money or doing nothing (短期卖空技巧)
5) Generate consistent Passive Income with REITS and real property with knowhow of high dividend stock and property market cycles (房地产信托股的被动收入)
6) Methods of Spring Cleaning for own stock portfolio to eliminate junk stocks without any hope (股票大扫除)
7) Time for Global Financial Crisis to buy blue chip stocks on sale (危机也是良机)
8) What to buy (stock screening), When to buy/sell (buy low sell how), How much to buy/sell (risk management): (股票三部曲：买何股？何时买卖？买卖多少？)
9) Fundamental Analysis (FA) + Technical Analysis (TA) + Personal Analysis (PA), integrated with unique Optimism Strategy by Dr Tee (乐观指数：三法一体)
10) Global Stock Market Outlook: emerging opportunities with high potential in Singapore, US, China & Hong Kong stock markets (环球股票市场展望： 新美中港，股票良机)
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