Macroeconomy Archives - Page 4 of 8

Stock Market Fear with 0% interest rate and $700B QE

Posted on March 17, 2020 Written by Dr Tee (Ein55)

0% US interest Rate + $700B QE = Stock Crisis Fear

US Fed just cut interest rate to historical low of 0-0.25% + strength of $700B QE (Quantitative Easing) but introducing on bearish stock market. This is wasting bullet. In fact, global stock market falls more due to fear of such action, US stock market is halted due to circuit breaker with 7% fall.

A natural way is to let the market reset itself with a global financial crisis and falling of global stock market to low optimism < 25%. However, this would affect the chances of Trump second term presidential election as S&P 500 has been his report card, hard to show negative results to his supporters who may also be investors.

If US stock market (Level 3) falls to low optimism <25%, world stock market (Level 4) would also follow, officially falling into Global Financial Crisis which may last longer than 6-12 months, depending on the severity. It would be timely to consider cyclic giant stocks from sectors such as bank, property, airline, technology, etc, focusing on strong fundamental stocks only, don’t buy stock purely based on prices (eg. historical low price).

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A stock market could only reborn after falling to worse case of <25% optimism, then measures such as QE1 in 2009 could be effective (limited downside then).

US stock market is still at 50% optimism, Trump tries an uphill task to save the stock market by introducing interest rate cut to 0% and massive QE of $700, it is wasting money and effort. Stock market bubbles may be burst, money would escape from stock market, even from bond market (since bond yield is <1%), holding as cash which is king but low interest rate would push some investors to invest again in future, after global financial crisis with low prices of stocks everywhere.

It would take time to recover or if Trump is lucky, Coronavirus may end by summer, then it could still be a mini bear, but fear in stock market may spread faster than Coronavirus over the next few critical months, depending on global countries, need to fight 2 crisis (health + stock) together.

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Filed Under: Macroeconomy, Market Cycle Investing, Stock Market Tagged: interest rate cut, qe, stock market crisis

Cyclic Investing Stock: DBS Bank

Posted on March 16, 2020 Written by Dr Tee (Ein55)

DBS Bank (SGX: D05) is the largest bank in Southeast Asia, an iconic national bank of Singapore with Temasek as major shareholder (29% ownership). DBS also owns POSB, a common people’s bank in Singapore. DBS is a cyclical stock, performance depends on economic cycle and global stock market cycle, sensitive to changes in global central banks interest rates.

Due to Coronavirus induced stock market crash over the past 1 month, the Fed has decided to cut US bank interest rates, firstly by 0.5%, then again by another 1%, dropping to historical low of 0-0.5%, hoping to stimulate and sustain the current US economy. Global central banks include Singapore are expected to follow the footstep to lower the domestic interest rates.

In general, banks have several ways to make money, there are 2 main types:

1) Interest related income

Main revenue is through the difference of deposit (eg. 1%) and loan (eg. 2%), or the Net Interest Margin (NIM) to make money from cash in and out the bank. Usually when interest rates are at higher level (eg. over the past 5 years), NIM will be relatively higher, therefore most banks (including DBS, OCBC, UOB) would make money easily. Therefore over the past few years, there is no strong need to read the quarterly financial reports of 3 major banks in Singapore as the interest related income would be higher naturally.

However, with the downtrend US interest rates from over 2% to 0% over the past 1+ year, bank stocks have to work harder in other revenue generator to maintain the profits.

2) Non-interest related Income

Traditional banks mostly make money from interest income but modern banks also depend on investment (bank could use the cash obtained at low interest to make investment for higher return), insurance (many banks also have insurance business, eg. OCBC with Great Eastern (SGX: G07), UOB Bank (SGX: U11) with United Overseas Insurance (SGX: U13), etc), credit card (now you may understand why you may have so many credit cards issued by various banks, including DBS / POSB).

During bullish economy, investment income could be significant, therefore usually bank stocks prices following the economic cycle, especially for DBS. About every 10 years, there will be a stock market cycle induced by a global financial crisis, eg. Year 1997-1998 (Asian Financial Crisis), Year 2003 (SARS/Gulf War), Year 2008-2009 (Subprime Crisis) and potentially Year 2020 (Coronavirus Crisis?) which is still on-going, still a mini bear at the moment.

In every global financial crisis (eg. Years 1997/2003/2009), we may observe some fearful people queue up in front of DBS bank (and also other banks), worry bank may go “bankrupt”, therefore would like to withdraw the money to keep “safely” at home. As a result, DBS share prices dropped to less than $10/share in these crisis, but recovering above $10 or even $20 when people forget again several years later.

Banks usually keep only a minimum sum of cash (could be less than 10%) for regular operations, lending out most of the cash to make money. If everyone comes to withdraw money (see many years ago during Euro Debt Crisis, photo showing some elderly people crying in weaker bank in Greece, not able to withdraw money), then even the strongest bank in the world may not able to give the cash on time. Therefore, bank with strong sponsor is crucial, especially for DBS bank backed by Temasek with Singapore government with AAA credit rating supporting behind.

So, a smart way of stock investing is to wait for DBS bank share to drop to less than $10/share again during the next global financial crisis or observe any long queue in front of DBS bank to withdraw money again (not a reliable way, just a form of Personal Analysis, PA, for confirmation if needed).

Currently DBS is about $18+, below critical $20/share support, share price is about 40% optimism, just below the fair price of $21. The Price-to-Book (PB) ratio has dropped below the historical low of 1, currently at 0.97 (about 3% discount, not much, but rarely happen to DBS). In order to buy at unfair price (may not be <$10), one has to follow optimism strategy to consider DBS bank at share price <25% Optimism, a few may even aim for 0% optimism to take full advantage of crisis as many other giant stocks.

Value investing is simple, knowing the value, then wait for the discount before buying the stock. Only difference is how much discount is sufficient may depend on individual, eg. DBS share prices at $20, $15, $10, $5 … However, when one is too greedy for the highest discount (eg. looking at historical low price which usually is not a good way as history may not repeat in this way), eg. buying DBS at $1/share, as probability is low (although not 0%). Assuming DBS may drop to $1/share, I doubt few people dare to buy the stocks then because there could be a crisis similar to the scale of 1929 Great Depression.

In short, Buy Low enough (Sell High in future for cyclic stock such as DBS), no need to buy at the lowest (else one may miss the perfect timing, totally lose the investment opportunity). A smart investor may also integrate with trading to avoid buy low get lower to buy undervalue stocks during bear market. For further risk management, one may consider 10-20 giant stocks to buy strong fundamental stocks in 10 different sectors or countries for diversification, even if DBS really go “bankrupt” one day, the potential loss is controlled within 5-10% of investment portfolio.

There are 30 Banking & Finance stocks in Singapore (an investor needs to focus only on giant stocks) with DBS Bank as the leader:
AMTD IB OV (SGX: HKB), B&M Hldg (SGX: CJN), DBS Bank (SGX: D05), Edition (SGX: 5HG), G K Goh (SGX: G41), Global Investment (SGX: B73), Great Eastern (SGX: G07), Hong Leong Finance (SGX: S41), Hotung Investment (SGX: BLS), IFAST Corporation (SGX: AIY), IFS Capital (SGX: I49), Intraco (SGX: I06), Maxi-Cash Finance (SGX: 5UF), MoneyMax Finance (SGX: 5WJ), Net Pacific Finance (SGX: 5QY), OCBC Bank (SGX: O39), Pacific Century (SGX: P15), Prudential USD (SGX: K6S), Singapore Exchange (SGX: S68), SHS (SGX: 566), Sing Investments & Finance (SGX: S35), Singapore Reinsurance (SGX: S49), Singapura Finance (SGX: S23), TIH (SGX: T55), Uni-Asia Group (SGX: CHJ), UOB Bank (SGX: U11), UOB-KAY HIAN HOLDINGS (SGX: U10), UOI (SGX: U13), ValueMax (SGX: T6I), Vibrant Group (SGX: BIP).

DBS is a good cyclic bank stock which also pay dividend consistently (currently over 6% dividend yield) if one could align with market cycle, applying optimism strategies. DBS is not suitable for growth investing (OCBC Bank (SGX: O39) could fit better). So, selection of right stock with right strategy with unique personality is key for investment success.

Instead of watching for long withdrawal queue in DBS (not a reliable investing method), smart investors may learn from Dr Tee free 4hr investment course to apply LOFTP (Level / Optimism / Fundamental / Technical / Personal Analysis) Strategies in global giant stocks (including banks stronger than DBS), knowing what to buy, when to buy/sell or how long to hold.
Register Here: www.ein55.com

Filed Under: Macroeconomy, Market Outlook, Stock Market Tagged: cyclic investing stock, dbs, dbs bank, global financial crisis, stock market, temasek stock

Dr Tee (Ein55) Style of Stock Market Outlook

Posted on March 13, 2020 Written by Dr Tee (Ein55)

It is hard to wait for Level 3 (country) and Level 4 (world) stock markets to fall, sometimes need to wait for 10+ years. The current crisis may not be a global financial crisis yet (require confirmation with weaker economy with falling of related market such as property) but it is definitely a stock crisis. Grab on this opportunity may help one to save 5-10 years of time (comparing to buy & hold), especially for cyclic stocks.

Sharing below is for education purpose, please make your own decision, aligning with own personality based on strategies learned.

I have just shared more details with Ein55 graduates (since they are fully trained) to position in current stock market. Please login to Ein55 graduate forum for 3000+ Ein55 graduates. Pay attention to Article on Ein55 Style No 53: Entry / Exit with Optimism.

For 200 students waiting to attend 6-day Ein55 course (www.ein55.com/course) in Jun, Aug & Oct 2020, hope you could wait patiently to learn the complete 55 Ein55 investing styles before taking action. If it is a global financial crisis, it may take 6-12 months to fall in prices, so you will have enough time to take action for new stock investment.

Sharing here is not a “stock tip” as it could hurt those who are not trained, eg may buy a junk stock with weak fundamental at low optimism, buy low get lower. Please put in effort to learn in next 12 months in stock investment to grab the opportunity of current stock crisis. Here are my views of these 5 major stock markets:

1) World

After double top crossing down from 75% optimism, finally optimism is below < 50%, dropping to moderate low 38% optimism, a danger signal as it is hard to recover in short term with such a low optimism, unless US could reverse with strong stimulus plan by Trump.

2) US

After triple top crossing down from 75% optimism, there is a sharp falling knife in optimism from over 90% to only 52% which is still a fair value, not low optimism yet.

Since US economy is still strong, so far the stock crisis is fear driven (Coronavirus pandemic + oil crisis + global travelling crisis), there is still possibility it may end up as global financial crisis, if Coronavirus could end in summer (possible, based on 3-4 months virus spreading cycle pattern in China). Regardless this is a fake or real crisis, it is a major correction to stock, so opportunity could be mid term trading to long term investing, depending on severity.

For trading (long), US stock market has to recover by 20% first, not a mission impossible but requires political economy by Trump to come out with a massive stimulus plan. In fact, last US interest rate 0.5% cut in falling of stock market from high optimism is proven to be a negative help as investors may feel economy is really affected (actually not yet). Ein55 graduates have learned in earlier 6 day Ein55 course on impact of interest rate (Ein55 Styles # 21 & 22), can understand better here.

3) Singapore

Optimism at 29% yesterday, hit 25% Optimism at intra-day today but so far recovering above it. Again, Singapore could only follow the world, especially US, therefore apply US / world optimism for longer term investor to make decision, not just on Singapore. However, this is a rare opportunity for Singapore to near to low optimism of 25%, some blue chips (eg. 3 major banks) could fall more than they should if not supported by company share buyback.

4) Hong Kong

Optimism at 27% yesterday, hit 25% Optimism at intra-day today but so far recovering above it. Position for Hong Kong market is similar as Singapore, need to follow US but also China (Coronavirus condition has improved, first to start, first to end). However, China contribution to world stock value is much less than US (over 50%), therefore the direction of US stock is more important.

5) China

Optimism at 26% yesterday hit 25% optimism at intra-day today but currently recovering above it. However, short term China stock is still bullish, could be the strongest short term stock market in the world now. However, China could not be totally insulated from the fear of global investors (especially with Shanghai and Shenzhen markets connect with Hong Kong exchange), hard to be bullish alone while the rest of the world is bearish.

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So, there is alignment in optimism for most Level 1 (individual) and Level 2 (sector) stocks with Level 3 (country) and Level 4 (world) stock markets. Some may need to wait for TA (Technical Analysis) for reversal, some could enter in batches (Ein55 graduates may see example of different personalities as you have learned in earlier 6-day Ein55 class on Style No 53: Entry/Exit with Optimism).

For current Ein55 coaching students, please work harder in your coming coaching homework, showing potential actions, either spring cleaning (especially for weaker stocks) or dream team stocks to buy. Some experienced traders may also apply shorting in current bearish market but need to follow SET trading plan: Stop Loss / Entry / Target Prices.

In general, readers may look for 2 main types of giant stocks (following Ein55 investing styles with over 1500 global giant stocks, at least 10 different stock investing or trading strategies could be applied)

1) Growth Stocks (Buy Low & Hold)

– Add dividend and defensive stocks as extra protection if needed.

– Certain growth stocks may not drop to low optimism < 25% due to strong business fundamental, then one may apply Levels 3-4 low optimism as criteria to buy these very strong growth stocks.

2) Cyclic Stocks (Buy Low & Sell High)

– Trend-following is crucial for cyclic stocks (eg. many global banks and property stocks are more than 20-50% discount), so that it won’t Buy Low get Lower. Holding power is crucial when investing in bearish stock market.

– Align L1 (even individual stock is already low optimism) with L2 (sector), L3 (country) and L4 (world) low optimism for better quality of opportunity.

Of course, Ein55 graduate may also look for pure dividend stocks or specific sectors (diversification is needed) or even for indices / ETF (USO – oil ETF, S&P 500 ETF – SPY, World stock ETF, etc) for those limited in capital but need diversification. Ideally, diversify over a portfolio of 10 – 20 giant stocks (max 5% risk if 20 stocks), entry / exit in batches (eg. 2-3 times) if capital is sufficient.

For general public (non-Ein55 graduate), you may start your investment journey at the right time now with stock market crisis, learning from Dr Tee 4hr free stock investment course on LOFTP strategies (Level / Optimism / Fundamental / Technical / Personal Analysis). Register Here: www.ein55.com

Filed Under: Macroeconomy, Market Optimism, Market Outlook, Stock Market Tagged: dr tee, ein55, global financial crisis, market outlook, stock market crisis

What to Do in Stock Crisis Now?

Posted on March 13, 2020 Written by Dr Tee (Ein55)

Global stock markets (including US & Singapore) have fallen over 20% from the peaks of indices over the past 1 month, fulfilling the common technical definition of a “Bear Market”. Global and local stock investors who still have stocks now are worrying (stocks may have dropped by 20-50%), not sure what to do under dual crisis of Coronavirus and crude oil Market.

Although global financial crisis is not confirmed yet (so far is still a mini bear, even with 20-30% stock indices correction), it has potential to get worse if country economy is also affected (i.e. recession if next few quarters have negative GDP growth) and other investment market (eg. property, typically effect will be shown in about 3-6 months after stock crisis) may all fall.

Here are 5 KEY actions to take in stock crisis now, depending on individual investor:

1) Hold

This action is more suitable for longer term investors investing in defensive giant stocks with strong business fundamental, collecting dividend consistently, even during stock crisis. Only about 5% of global stocks are defensive (relative to stock indices and blue chips), could within the impact of global financial crisis. 95% of global stocks will be affected by this systematic risks of global financial crisis, falling down more than 50% in share prices.

2) Buy / Wait

Yes, it is time for Ein55 members to do homework to pick up dream team stocks aligned with own personality.

Ein55 graduates may consider over 1500 giant stocks globally. Many stocks are heavily discounted but currently more suitable for contrarian value investor who has strong holding power as short term price trend is still bearish. Integrate LOFTP strategies together to plan for this rare gift from heaven.

For general public (non-Ein55 graduate) who are not trained for Ein55 investing styles, you may attend free 4hr investment course by Dr Tee, you will learn how to position on global giant stocks: www.ein55.com

Each of you just needs to shortlist 10-20 giant stocks to form a dream team portfolio, then align strategy with personality to plan for entries in batches.

“What” to Buy does not mean “Now” to Buy. Since the short term stock market now is bearish, “Buy” action now is more suitable for contrarian investor (eg. Warren Buffett). There could be more downside (despite over 20% stock market correction), optimism analysis is required, especially for Level 3 (US) and Level 4 (world) for stock markets.

Some investors may prefer to “Wait” for reversal in prices, integrating trading into investing, buying low enough, but no need to aim for the lowest prices (no possible unless one is very lucky, but luck may only come once, as good as speculation). In short, don’t greedy to buy at the lowest, just buy low enough.

3) Sell / Shorting

Sell action could be a bit late (falling from 90% to nearly 50% optimism for US stock market, already a fair value but not yet low optimism which is undervalue) but it is never too late, especially if investor has stocks with weak fundamental. Loss aversion psychology may encourage potential sellers to hold on to junk stocks, resulting in more potential losses over next 6-12 months if stock crisis gets worse.

Alternatively, an investor could apply “Shorting” to hedge against the current position, buying an insurance from further downside of stock crisis.

Experienced traders are happily look for many opportunities during stock crisis now to short (profiting from falling of stock prices). However, shorting requires strict compliance with trading plan (SET: Stop Loss / Entry / Target Prices), especially during the volatile stock market which could move up and down by 5 to 10% daily for indices, 10-20% daily for individual stocks.

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Current stock market crisis could be just a flash crash (with V-shape recovery if Coronavirus may end in summer as China epidemic was about 4 months from Dec 2019 to Mar 2020, rest of the world is delayed in outbreak, could be Feb – Jun 2020 for pandemic). It could also trigger a more severe global financial crisis (if economy is affected starting from airline / consumer / retail sectors, together with falling of property market, over next 6-12 months).

Regardless it is a mini bear (major correction) or big bear (global financial crisis), both are significant opportunities, gifts from heaven for those who are prepared.

Take Action (Buy / Hold / Sell / Wait / Shorting) for Stock Crisis Now. If you are unsure how to take the right action for yourself (unique personality), learn from Dr Tee free 4hr course on formation of a dream team stock portfolio in this perfect storm, converting crisis into future wealth: www.ein55.com

Filed Under: Macroeconomy, Market Cycle Investing, Stock Market Tagged: global financial crisis, stock market crisis

Stock Market Crash with Coronavirus Pandemic

Posted on March 12, 2020 Written by Dr Tee (Ein55)

There are always 2 sides of news, outcome depends on which side you position. Learn further here to position in both Coronavirus and Stock Market Crisis.

1) Fear

Bad news: Coronavirus is now a PANDEMIC (declared by WHO).

Good news: It has been a fact (global speading) for weeks, only a label now

2) Wealth

Bad news: Global economy will get more hit (global travelling restrictions by most countries, consumer and retail sectors would lose money), global stock market would fall further (so far down by about 20%), people may lose jobs, etc.

Good news: Global stock market is cheaper now, investors could get highly discounted prices to buy stocks

3) Health

Bad news: Many people would die after infected

Good news: Fatality rate is actually less than 2%, even much lower for those less than 50 years old with stronger immune system.

There are in fact more people die in common flu each year, awareness in Coronavirus could directly help to minimize death in common flu, therefore more lives would be saved in this health crisis.

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So, stay calm, be cool, both for Coronavirus pandemic and also global stock market meltdown. However, one has to take active actions in both crisis:

Coronavirus

1) Enhance personal hygiene (wash hands, wear mask if unwell, etc)

2) Social distancing (avoid crowded places)

3) Stay healthy (exercise & healthy diet, optimistic, etc)

Stock Market

1) Buy – Mainly for contrarian investor (eg. Warren Buffett), aligned with lower optimism at country/world levels (L3-L4), stock market may have further downside.

2) Hold – Mainly for fundamental strong stocks which are defensive to sustain through possible global financial crisis

3) Sell – Mainly for trading stocks, exit following the plan (eg when down by 5%, 10% or 20% or breaking below certain price support).

4) Wait – Mainly for trend-following traders or investors for clearer market signal.

5) Shorting – Mainly for short term traders to align with current short term bearish market, profiting from shorting with breaking of support, following lower highs and lower lows pattern.

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Currently with 20% price correction in global stock market, it is still a mini bear, medium term investors may start to do homework but position only after there is a clear price reversal (eg. economic stimulus plans by G7 or fading of Coronavirus in summer time, etc) and cut loss has to be included in plan.

If not, need to be patient to align with longer term lower optimism, especially for Level 3 (US) and Level 4 (world), not just on individual stocks or sectors which are falling knifes in prices, not suitable for traders.

Do you feel better now that you have a choice to be positive or negative? More importantly, position in the right side with right action for both Coronavirus and stock market crisis. Learn from Dr Tee free 4hr investment course to convert the crisis into opportunity: www.ein55.com

Filed Under: Macroeconomy, Personal Analysis, Stock Market Tagged: global financial crisis, pandemic, stock market crash

Crashes in Global Stock Market and Oil Market

Posted on March 10, 2020 Written by Dr Tee (Ein55)

Global stock markets crashed yesterday, dropping as much as 7% (with protection of circuit breaker) for US stock market, 6% for Singapore stock market. There could be more downside if fearful emotion continues.

Oil crisis comes faster than Coronavirus spreading, Brent crude oil price dropped to about US$30/barrel overnight. Saudi could cut oil price because the production cost per barrel is the lowest. Price war is lose-lose for for both OPEC and non-OPEC, see who could last longer. Eventually, this could trigger Level 3 country financial crisis as national income would be reduced significantly.

Crude oil is a giant commodity by default, it could not drop to $0 (unless end of the world when energy is not required anymore, then investment or money is also no longer important) as a stock but it could stay at low optimism level for a long period of time, especially under manipulation of certain forces (eg. OPEC). This drama is not new, episode #1 was about 5 years ago, aiming to wipe out shale oil producers in US with higher production cost. Eventually, the shale oil producers still survive but becomes more efficient in operation, harder this time in Episode #2 of global oil price war.

It could be no-brainer investing when Brent crude oil dropped to or below US$30/barrel, one could position in crude oil through USO (oil ETF) as Saudi and Russia could not sustain in long term at this low price (perhaps only Saudi could still make a profit due to low production cost). However, such a contrarian investor (similar to Warren Buffett style) needs to have strong holding power, at least can hold longer than oil produce countries before they burned out first.

Similarly there are many blue chip stocks, buy low could get lower in bearish short term market, not suitable for speculator. Global stock market is not yet very bearish yet, so far is only a major correction. Again, shorter term trend-following strategy is safer during this uncertain market, either for exit (could have exited last week if following signal, eg. S&P 500 below 3000 points) or entry again.

Everything has 2 sides, when oil price is crashed, consumers such as car drivers are happier with lower petrol cost. However, one has to look at a bigger picture, lower inflation or cheaper price is not always a good news because when global economy is weak, one could even lose the job because company may be eventually losing money as well.

Learn further from Dr Tee to leverage on current Oil Crisis and potential global financial crisis with stock market crash. Register for Dr Tee Free 4hr Course to position with crash in global stock market: www.ein55.com

Filed Under: Commodity Market, Macroeconomy, Market Cycle Investing, Stock Market Tagged: crude oil, global financial crisis, stock market crash

Triple Short Term Crisis of Oil & Gas Stocks （屋漏偏逢连夜雨）

Posted on March 9, 2020 Written by Dr Tee (Ein55)

Global Oil & Gas sector has been under crisis mode over the past 6 years, Brent crude oil fell from US$115 (year 2014) to $27 (year 2016) per barrel, about 25% of peak price, a very low optimism for the past 2-3 decades, ending the mega bull run for commodity market (including crude oil, gold, agricultural products, etc).

Over the past 4 years, crude oil together with commodity market in general has been struggling with recovery in prices, achieving an intermediate high of US$86 (year 2018), falling down again to $50, then gradual growth, stable between $60-$70 in last 2 years with joint effort by OPEC and non-OPEC (eg. Russia) oil producer countries to control the oil supply, in an attempt to stabilize the market prices.

Unfortunately, Crude Oil is currently facing triple short term crisis over the past 2 months:

1) Coronavirus

There is less global demand for crude oil. There is less manufacturing in countries such as China which is a major energy consumption country. Some global airlines also cut down flights by more than 30%.

Less demand = Lower price for crude oil.

2) Fall in global stock market

Fear driven stock market fall (especially in US) has affected the confidence of global investors who also invest or trade crude oil, anticipating lower demand for crude oil.

Bearish emotion = Lower price for crude oil

3) Political Conflicts (OPEC vs non-OPEC)

After expiry (end of Mar 2020) of agreement on production cut, it is possible for supply for both OPEC and non-OPEC to increase significantly. Of course, it is possible for interested parties to extend the collaboration but their influence would be weaker each time. The global market share of crude oil could be taken by countries who may not follow the agreement (eg. Iran which needs cash or US with shale oil as new major exporter with lower cost per barrel).

Higher Supply = Lower price for crude oil

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As a result of triple short term crisis, Brent Crude Oil drops to US$45/barrel currently. $40-$45 is an important support zone (low prices during 2009 global financial crisis), if breaking below $40 while there is no quick solution in a few months with reversal for 3 short term crisis above, it may challenge the last long term support, $27/barrel recorded in early 2016 during the earlier Oil & Gas Crisis.

If so, global Oil & Gas stocks would be under price pressure, falling back to low optimism again. Upstream Oil & Gas sector (eg. exploration of oil) would suffer the most from falling in oil price, following by integrated oil & gas companies. Mid-stream (eg. storage and delivery of oil & gas) and Down-stream sectors (eg. refinery, processing of petro-chemical) would have less impact on its business. Careful selection of Oil & Gas stocks are critical, especially if the current Level 2 (Oil & Gas sector) crisis may be combined with bigger scale of Level 4 black swan (Global Financial Crisis.

Oil & Gas stocks are generally cyclic in nature due to fluctuation of oil price, therefore better to position with Buy Low Sell High strategy, more suitable for trading.

“Crisis is Opportunity” is true only if one knows What to Buy (giant stocks), When to Buy (timing, too early may catch the falling knife) and When to Sell in future (taking profits or potential cut loss if trading in an uncertain global stock market at high optimism).

Learn from Dr Tee Free 4hr investment course to position in global giant stocks with discounted prices, mastering the investment clock for entry / exit. Register Here: www.ein55.com

Filed Under: Commodity Market, Macroeconomy, Stock Market Tagged: crisis stock, crude oil, oil & gas stocks

Stop Financial Virus with Probability Investing System

Posted on March 8, 2020 Written by Dr Tee (Ein55)

Extreme isolation measures over the past 6 weeks in China Hubei has proven that spreading of Coronavirus could be terminated or reduced (if 0 data reported so far a few cities is still considered unbelievable by some people) after a period of time when breaking the people into “units” of family, the risk, if any, will be within this family. This concept is similar to “curfew” to limit the actions of people (eg. staying home at night) to minimize the possible instability.

This strict method (including locked down of city and staying at home with permit required to go out) could work in China or probably a few other countries with strong power of government authority and more obedient or understanding (politically correct term) people. In Europe (especially) and US with more “democracy”, these extreme measures may not work as people may not follow. Just read that some Italian people use the opportunity of no school (should stay at home) to gather in crowded cafe.

Democracy usually comes with a price. When rules (eg. Coronavirus prevention) are not followed by some people, the entire system could fail, all people would suffer together.

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Similarly for stock investment and trading, risk management is critical. Similar “isolation” measure could be done for stocks through position sizing (trading) or diversification (for investing) to limit the maximum loss when unexpected risk is encountered. This will help to prevent the financial “virus” (eg. market fear) to spread easily and “infect” all the stocks.

If a trader or investor could follow the rules strictly, eg. SET = Stop Loss, Entry & Target Prices, the potential loss could be limited within individual risk tolerance level, preventing from evolving into bigger loss of entire capital when holding to loss position (loss aversion personality).

Stock market and Coronavirus have many similarities, both are unpredictable but when certain rules are applied, higher probability outcome will likely to happen, even no one would know the future. For example, recommended practices such as washing hands more often, avoiding crowded places, etc, could help to reduce the chances of infection.

This is similar to filter out stocks with potential red flags (eg. high debt, unclear business outlook, etc), financial risk of stock could be reduced significantly. At the same time, if one could look for giant stocks with strong business fundamental and uptrend share prices with technical analysis, the probability of success in stocks would be even higher.

Apply “Probability System” in both Coronavirus control and Stock Market investing without emotions (greed and fear). Learn the LOFTP (Level / Optimism / Fundamental / Technical / Personal Analysis) strategies from Dr Tee free 4hr course to enhance the probability of success in stock investment: www.ein55.com

Filed Under: Macroeconomy, Stock Market Tagged: Probability Investing, stock market

Winter Time of Global Airline Stocks

Posted on March 6, 2020 Written by Dr Tee (Ein55)

First major airline in trouble after only 2 months of Coronavirus crisis. Flybe is the largest regional airline in Europe, cannot even sustain a few months of winter time, may not able to “fly” again due to lack of funding.

At the same time, Warren Buffett is indeed different from others, holding to 4 major airline shares: Delta Airlines (NYSE: DAL), American Airlines (NASDAQ: AAL), Southwest Airlines (NYSE: LUV) and United Airlines (Nasdaq: UAL). In general, airlines sector stocks (NYSEAcra: JETS ETF) have dropped about 1/3 share price over the past 1 month from its peak. There is more downside with bearish short term stock market, both at Level 3 (US stock market under correction, even recent 0.5% interest rate cut by the Fed won’t help to recover the confidence) and Level 2 (less travelling, “doom” for airline, burning money each month).

“Be greedy when others are fearful” is correct in principle but may not be suitable for everyone as it requires more investing skills than expected. Warren Buffett could be greedy now (eg. buying more Delta Airline stock) during crisis because he has a deep pocket with strong holding power with diversification over many industries. However, it may not be wise for others to follow Warren Buffett exactly as each person has unique personality, financial condition and investing strategy. Warren Buffett’s Berkshire (NYSE: BRK) loses 50% share price during 2008-2009 subprime crisis but he could still sleep soundly each night. Others may suffer depression with 50% loss in capital.

For retail investors and investors with small capital, weak holding power and low risk tolerance level, it is relatively safer to follow trend for entry or exit. Airline stocks are usually cyclic in nature, main strategy would be buy low sell high. Currently it is only a Level 2 crisis (airline sector earning drops significantly), but if Coronavirus drags longer than 6-12 months, it could become regional crisis (some countries economy will be affected) or even evolving into the next global financial crisis.

If we don’t know Coronavirus well (how it started and when it may end), shorter term investing or holding cash as opportunity fund would be relatively safer. In the meantime, smarts investors have to start to search for global giant stocks with strong business fundamental which can last through the potential financial crisis.

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Filed Under: Macroeconomy, Market Cycle Investing, Stock Market Tagged: airline crisis, airline stocks, airlines, American Airlines, coronavirus, crisis stock, delta airlines, JETS ETF, Southwest Airlines, United Airlines, US Stocks

Impact of Central Bank Interest Rate Cut on Global Stocks

Posted on March 5, 2020 Written by Dr Tee (Ein55)

For most countries, cutting central bank interest rate is an easy way to help weaker economy. However, there is a limit, eg from current 2.5%, still could allow further 10 times 0.25% cut for Malaysia.

For US, the Fed just cut interest rate by 0.5% from 1.5-1.75% to 1.25-1.5%, only left 5 times 0.25%, before falling to negative interests rate as in Japan and Europe.

Interest rate cut in bear market or weaker economy (eg Malaysia) is a danger signal. Buy low may get lower for stock market. In general, Malaysia has 2% higher bank interest rate than Singapore. However, the gap now is narrower to only 1% difference. Bank stocks in Malaysia would suffer due to smaller NIM (net interest margin), therefore trend of share price has been bearish.

Interest rate cut in bull market or strong economy (eg US) could help to prolong the 11 years bull run but more suitable for short term traders as US stock market is unstable at high optimism, any black swan (eg Coronavirus, surprises in 2020 US presidential election, China economy slowdown affecting the whole world, etc). If the short term stock market in US is recovered or even achieve another new historical high in near future, both traders and investors may need to seriously plan for exit strategy with trend-following strategies.

Last 2 years of interest rate cut in US is a preventive measure to sustain the bullish economy against any potential market threat. However, the bullets left are limited for the Fed to cut the interest rate further, implying QE (Quantitative Easing) may be the limited few weapons left for future global financial crisis at the expense of inflation with depreciation in currency, etc.

Negative interest rate is not the end of the world (could be a shock) as Europe and Japan have experienced, could become a norm in future. However, central banks of countries would need to print money with QE or leveraging on other stimulus plans during next global financial crisis.

So, holding cash for long term without investment (stock, property, commodity, etc) would lose to inflation with low interest rate for long term in future. Bond also has gloomy future due to sibling low bank interest rate.

There is no free lunch in the world. Market gets the reward (interest rate cut) first, implying future has to pay back in other ways.

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Filed Under: Macroeconomy, Stock Market Tagged: interest rate cut, stock market

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