Dr Tee (Ein55) FREE Stock Investment Course in Singapore
过去七年教书生涯，Dr Tee 主办了超过700堂投资课，没拿过一天病假。武汉病毒警戒，我取消二月份的12课程，为了保护学生安康，纵然心痛浪费学习机会。
危机，有危就有机。我应用了难得休假，学习 youtube 视频制作。几天的努力后，呈献给 Ein55 会员，华语视频：武汉冠状病毒生命周期与股票市场分析。
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这儿是 Dr Tee 华语视频 （英语视频也已完成，Dr Tee 双语皆行）：
After the reversal of new daily cases of Coronavirus to downtrend from 5 Feb 2020, it still follows the bi-linear predictive model (see earlier video talk for details), continue to fall for both World and SG (not obvious in trend based on 1 day as sample size is smaller).
Similar to Technical Analysis, when a clearer reversal pattern is formed, if data reported is reliable, Coronavirus could reach its peak by end of Feb 2020, then fading away in 1-2 months. However, if there is a second or multiple peaks with significant surge in new daily cases, then the duration of Coronavirus may be prolonged by 1 month for each new peak of new daily cases. So, we need to monitor daily from now.
Coronavirus monitoring is as if short term stock trading, daily price day has to be analyzed to form a longer term trend analysis (weeks / months) for better consistency in results.
Bullish US (strong economy) + Bearish China (Coronavirus spreading + economy slow down) = Mild bullish global stock market.
Despite both countries have comparable world GDP contribution (US 24%, China 15%) but for stock market value, US contributes to more than 50% of world stock market cap, therefore impact of US is much stronger than China.
Singapore is affected by both US and China, therefore the trends for stocks is sideways with moderate economy, close to 50% optimism, fair value.
During Coronavirus crisis time, demand for some commodities is increasing. Commodity market has been at low optimism for about 5 years, it is time to explore this area: Oil & Gas, Palm Oil, Mining, Agricultural, Precious Metals, etc.
You may learn from Dr Tee on how to position in global giant stocks in this current market condition. Sign up for free 4hr course: www.ein55.com
Some growing companies (especially in China but also applied to all countries including Singapore) depend on operational cashflow (which depends on high populations with lower prices to create a network of customers) to expand and pay for expenses, eg. transportation, F&B, consumer products, etc. When this cashflow is disturbed (eg. few people spending or shopping due to serious Coronavirus), the business or sector would go into short term cashflow bottleneck, if dragged longer (eg more than 6-12 months), some which could not get the loan, may need to close down, declare bankruptcy.
So, growth company supported with strong assets (eg. property & cash) is more likely to last through the winter time, even without additional loan as asset could be converted into cash. Another close example is Oil & Gas sector crisis over the past 5+ years, most company could last for the first year of oil & gas crisis but then weak companies would start to close down due to weak assets with little cashflow (fewer customers), eventually game over. Mobile bike business is another recent example, burning money to expand but could not last long as debt is increasing faster than cashflow growth.
Cashflow to business is similar to blood to human body. Cash is similar to blood, need to circulate (cash to produce products / services, earning more cash in return) more a healthy body or company. Sometimes, blood transfusion (take loan) is required to sustain a weak business but if dragged too long, the company still cannot last or recover, investors have to suffer permanent loss.
Investor has to balance between growth investing (earning /cashflow), value investing (high asset, low liability, strong net asset value) to avoid possible business crisis which may end up a permanent loss (Hyflux could be another example). For a giant stock, crisis in share price is fine (due to fear), as long as business is still strong (either growing income/cash or strong asset). A growth stock may do well in normal time but it may go into real crisis under certain condition, therefore an investor has to evaluate risk vs opportunity.
Learn from Dr Tee on balance among Growth Investing, Undervalue Investing and Dividend Investing in stocks: www.ein55.com
Similar to different taste for food for storage, an investor may consider different types of stocks aligned to own taste (personality or strategy), there are pros and cons for each type of stock:
1) Undervalue stocks
– Good for price less than value
– Bad for trading to buy low get lower (downtrend)
2) Cyclic stocks
– Good for swing trading in shorter term
– Bad for position trader to buy and hold
3) Growth stocks
– Good for buy & hold
– Bad for buy and run with weak holding power or low risk tolerance level
4) Momentum stocks
– Good for position trading
– Bad to buy low sell high for limited gain
5) Dividend stocks
– Good for passive income
– Bad for capital loss with downtrend price
6) Crisis stocks
– Good to buy very low
– Bad to buy rotten stock (weak FA)
… and more types of stocks in different sectors and countries.
When Ein55 readers have more time at home during Coronavirus crisis, besides storing food, collecting mask, also do homework on potential stocks to collect. Since current global/US stock market is still at high optimism, consideration will be mainly for shorter term trading or investing, despite certain regional market stocks (eg. Singapore, China, Hong Kong, Malaysia, etc) could be discounted by more than 30-50% in share prices, may not be a good choice to show hand for longer term investing with all the capital as the best investing opportunity timing is not ripe yet.
Learn more details of LOFTP Strategies (Level / Optimism / Fundamental / Technical / Personal Analysis) by Dr Tee: www.ein55.com
This is a preliminary Coronavirus life cycle model, assuming similar pattern as SARS (8 months duration), initiated in Dec 2019, currently 7 Feb 2020 with about 1+ month of reported data which was reported here.
We start to observe the first sign of slower growth on 6 Feb 2020 (number daily new cases started to drop from 5 Feb 2020, but downtrend only observed for 2 days so far, # death is still increasing). This early signal (mark as No 2 on chart) is significant as it shows that the isolation measures globally (especially in Hubei of China) may be effective but similar to stock market, longer trend (eg. over 1 week) is required to establish a more consistent trend.
If the slower growth may continue, there is a possibility that spreading of Coronavirus may reach a peak in Mar-Apr 2020, to be finetuned when there are more daily updates. From past experience, the virus lose its strength in summer, therefore it is a must to end it by Jun-July summer time, otherwise it may become a common flu, coming back every 6 months (2 winters globally in each hemisphere).
Here are past analysis data: https://www.facebook.com/ein55/photos/a.213596708842919/1226240390911874/
Similarly, stock market also has its own life cycle, bull (price growth) and bear (price drop) take turn to dominate, but stock market cycle is much longer, typically over 5-10 years, more dependent on optimism, not on exact duration.
For both life and stock investment, we could only focus on those we could control (eg. what stocks to buy, which places to go, etc). Stay neutral, the high probability of winning stock or low probability of getting virus would help us, don’t let short term emotions of daily stock prices or daily Coronavirus cases affect us.
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SARS and Coronavirus could be from similar family of virus but occurred at different timing of market cycle optimism, having different risks to global economy and stock market.
SARS started in late 2002, near to low optimism of global stock market after burst of Year 2000 Dotcom bubble, ending around mid 2003, so impact to stock market is limited. After ending of SARS, regional and global stock market start to recover.
Coronavirus started in late 2019, near to low optimism of China stock market but at high optimism of global stock market (US, World). Currently global/US stock market are mainly supported by US presidential election year with strong US economy, especially with cease fire of US-China trade war and end of impeachment on Trump.
Relatively, potential risk of Coronavirus to global stock market is greater than SARS mainly because:
1) Higher optimism level of global stock market, more potential to fall down when there is a black swan
2) Contribution of China to global economy in Year 2020 (15% world GDP) is 3 times more than in Year 2003 (5% world GDP)
3) Spreading of Coronavirus is faster than SARS, despite fatality rate is lower, total number of death (and therefore fear) could be more if dragged much longer without an effective medical solution
Therefore, the 2 main X-factors are mainly US election results (affecting US market, especially if Trump not elected or behind in winning rate) and severity and duration of Coronavirus (affecting China / Asia market).
Shorter term trading on more bullish US stock market (achieving new historical high again recently) is relatively safer. For China/Asia market, short term recovery could be cyclic in nature, could be suppressed when there is new unknown negative news of Coronavirus.
Learn from Dr Tee free 4hr course on how to invest stocks during global financial crisis. Register Here: www.ein55.com
Technical Analysis (TA) may be applied in all areas of life, eg stock investment and even on Coronavirus. People likes to know the unknown future, although it is unpredictable in nature to know what may happen tomorrow. If certain assumptions can be made, it is still a reasonable estimation with Technical Trend Analysis but value must be adjusted with each day of new development.
Based on the daily update given by this website, I have tabulated # infected and # death based on global data (mainly is within mainland China):
https://www.worldometers.info/coronavirus/
Trend Analysis is performed, tracking # infected and # death from 22 Jan 2020 (labelled as Day 1) till last reported daily data of 4 Feb 2020 (labelled as Day 14). For daily data from 5 Feb 2020, it is under projection mode as it is still “future” as of now when article is written.
Based on limited data of 14 days, it is observed that second order polynomial equation provides a very nice fit (over 99% correlation) for both # infected and # death:
# Infected = 134.42x^2 – 203.27x + 700.24
# Death = 2.4535x^2 – 0.7403x + 19.622
where x is number of days counted from 22 Jan 2020,
Today (5 Feb 2020) is Day 15, if projected (data highlighted in yellow), there will be over 27896 for # infected and 561 for # death. The difference with actual number could be numerical error and also daily variation (eg. x factors).
This trend analysis assumes the same factors applied, momentum continues each day. If there is no change to this momentum of growth rate, it is projected to reach 1 million # infected by 87 days (17 Apr 2020).
Of course, in the real world, this constant momentum unlikely to happen as this second order polynomial equation implies infinite # infected when # days is very long term. From past experience (eg. with SARS, seasonal flu), we know the growth rate with slowdown at certain time, the second order polynomial equation may eventually reverse in direction after reaching a peak, requiring higher order polynomial or a more complex equation.
Despite limited database, this function is still useful when updated daily for monitoring of growth rate, see if it still follows or deviates from the current momentum. The analysis above is based on total cases, predominantly for mainland China. For the rest of the world (excluding China), condition is much better, similar growth pattern may be observed but fatality rate (# death) is much lower.
With travelling ban among the countries and more local isolation, the growth rate would eventually reach a peak (eg. within Hubei of mainland China) and come down. If uncontrolled, then the base would be extended to the whole world (similar to common flu which affects the world 2 times yearly, during winter time in northern / southern world, every 6 months).
Networking (more interactions among people) is useful for business growth. Networking is also harmful for virus growth. So, there is a conflict of interest, virus growth and business growth are aligned at certain time. So, the virtual social network such as Facebook would benefit, future 5G technology may also encourage more networking without physically meet-up, minimizing the chances for new virus to spread.
Risk within Singapore is still low as all affected cases could be traced back to China tourists (which travelling to Singapore is banned from 1 Feb 2020) and fatality outside China is low (less than 1%, 0 death in Singapore).
We should still continue with the normal daily life (work, study, etc) while taking precautionary measures with positive habits in personal hygiene.
Each crisis (eg. Dotcom bubble crash, 911, SARS, Gulf War, Subprime Crisis, etc) could be potential opportunity for those who are prepared. Meanwhile, some stocks (eg. transportation, F&B, consumer discretionary, etc) could be under significant correction in price below value over next 6-12 months if Coronavirus continues to spread.
For short term (less than 3 months), global stock market has accepted the current condition of Coronavirus, starting to show sign of technical rebound. Positioning based on Technical Analysis for short term trading is still reasonable for bullish stock market such as US or selected sectors and stocks globally with bullish trends.
For medium term (less than 1 year), when China economy continues to slow down (eg. GDP drops from 6% to 5%), it will have significant impact on global economy. During 2003 SARS period, China contributed only to about 5% world GDP, but now China contributes to about 15% world GDP, implying effect of Coronavirus could be 3 times more than SARS as when China is sneezing, world would catch the cold.
For long term (5-10 years), the best opportunity of global financial crisis has not yet arrived as global stock market optimism is still high. However, a smart investor should prepare in advance (eg. sell at high or fair price, keeping cash as opportunity fund).
Learn to convert crisis into opportunity through stock investing with free 4hr Course by Dr Tee: www.ein55.com
Despite there are 6 new cases of coronavirus today in Singapore, all could be tracked, originally from China tourist group, before the total travel ban of China tourists to Singapore from 1 Feb 2020.
A few important keypoints:
1) The virus is transmitted within small group. So, avoid shake hands, talking in close distance or rubbing face (nose, mouth, eyes) would help to minimize the case.
2) Stay healthy is more important than feel stressful each day (affecting immune system when could not sleep well). Since coronavirus spreading or infecting is beyond our control, we just keep to the right habits, not to over-stress oneself, infected with depression even before the real virus.
3) Global stock market has accepted the fear over the past 1 month on this new virus, showing technical rebound in prices. In medium term (3-6 months), when real economy (quarterly GDP) and sector business (eg. tourism, hotel, F&B, transportation, manufacturing, etc) also show weaker fundamental, then there is an more room of downside, especially if the spreading of Coronavirus continues.
If Singapore has the first death case or uncontrolled spreading of virus to local people, then the crisis would become greater as people may be as fearful as during SARS time. Now the fear is still little, only 1 out of about 50 people wearing mask, after public sharing on no need to wear mask unnecessarily if not sick.
Light at the of tunnel will be waiting for effective vaccine or self-termination of virus around summer time (about 8 months if following SARS experience).
4) At the moment, this is just a minor crisis, not yet a lifetime opportunity as in global financial crisis (stock indices could drop more than 50%). Both investors and traders should monitor closely, minimize risks with exit plan and waiting for opportunities to buy low.
Learn to invest during global financial crisis: www.ein55.com
8% drop in China stock market yesterday seems significant but this is actually accumulation of 10 days of market fear since 24 Jan 2020 (eve of Chinese New Year).
Comparing with US S&P 500 and Singapore STI within the same period (about 3% correction), therefore additional correction due to fear of China coronavirus condition is about 8 – 3 = 5%.
More countries may follow one another to ban travelling from China. Despite fatality rate outside China is very low (only 1 death) but Coronavirus continues to spread further in China, especially in Hubei with limited medical resources.
When one observes a potential crisis with unknown severity, it is safer to exit first as if a shorter investor/trader when there is a reversal signal for individual signal (eg. breaking below short term support or more than X% drop following the trading plan). It is never too late when stock market is recovering to enter again as a short term trader, avoiding buy low get lower for short term.
At the moment, this is just a minor crisis, not yet a lifetime opportunity as in global financial crisis (stock indices could drop more than 50%). Both investors and traders should monitor closely, minimize risks with exit plan and waiting for opportunities to buy low.
When global stock market are at high optimism (over 75%), it is relatively safer to adopt shorter term investing or trading strategies (eg. trend-following) as each month could have new variable in the market (eg. besides Coronavirus, now there is news of H1N1 and H5N1 in other places in China. Later there is US presidential election, as well as next episode of US-China trade war), having potential to trigger the next global financial crisis.
Crisis is Opportunity if one is prepared, eg waiting patiently for price of giant stocks to drop much lower value, having holding power for recovery.
Crisis is Crisis if one simply follows other people’s views (especially mass market), fearful and greedy at the same time, not considering own personality (eg. risk tolerance, reward expectation, holding power, etc).
Stock market is driven mainly by both business fundamental and market emotions (eg. fearful in last 1 month), requiring LO-FTP (Level/Optimism/Fundamental/Technical/Personal) Analysis + BE (Business/Economic) Analysis, integrated to aligned with own personality. More details in www.ein55.com
I just found this article published in the famous Lancet Journal which projected Wuhan could actually have over 75000 cases as of 25 Jan 2020 and the number would double each week. It has been about 1 week since then till now, so current projected number based on this model published in Lancet journal is over 150000, aligned with my projection in yesterday article for Hubei = 7153 x 16.7, about 120000 with simple statistical method.
https://www.facebook.com/ein55/posts/1223598294509417?__tn__=K-R
Besides investment, my profession is in modeling and simulation, therefore having interest to perform additional analysis with simplified methods which could be applied in investment and also many aspects in life, including coronavirus projection.
Despite the official # infected could be much less than actual, the data reported is still useful for trend analysis (similar to Technical Analysis in stock investment) as long as it is consistently reported each day. One could monitor the daily new # infected (was 2000, now increasing to 2500 daily, sign of spreading continues) and # death (stable around 40-50 daily). Currently, there is still no sign of slowing down, the growth in number is under mild acceleration mode (# new cases daily is increasing from 2000 to 2500, likely higher in next few days).
Using investing jargon, the virus is a “growth” virus. We need to monitor the growth rate and external factors (eg collaboration among different countries to minimize the spreading) to determine the possible reversal. Time is a factor. Similar to investment, one may buy an investing stock in crisis but does not have the holding power, may fail eventually, buy low sell lower. For patient infected, as long as immune system is strong (as if strong fundamental business), able to last through the winter time (period for natural recovery even if infected), one could recover naturally without medicine, having new immunity to resist future new virus (similar to stock, each breakout of resistance could become the next support for future crisis with falling in prices).
When new # infected and / or # death on current day is lower than yesterday, it is the first sign of deceleration (slower spreading) but # new cases will still continue until reaching 0 one day (no new case), only then it reaches a peak. Since there is typically 14 days of incubation period for virus, there will be time delay of 14 days from last patient to actual ending of this wave of spreading (until another outbreak again, could be a few years later, if someone never learns from mistake, mess up with wild animal again). For SARS, it takes about 8 months for it to disappear. For common flu, it becomes part of our life, taking turn to visit us each season. For coronavirus, it may end up as SARS (1 time or rare virus) or common flu (if spreading could not be controlled, human has to make peace with this new virus, when most people are affected, there will be natural immune system build up, fatality rate may drop to as low as common flu of 0.05%).
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