Market Cycle Investing Archives - Page 7 of 10

3 Strategies for Crude Oil ETF (USO) 大小通吃

Posted on March 29, 2020 Written by Dr Tee (Ein55)

When WTI crude oil falls below US$20/barrel during current Crude oil price war (between OPEC and non-OPEC), price is cheaper than mineral water (same volume) for some countries, it is attractive to buy USO (WTI oil etf) for long term, I am not surprised if Jim Rogers (long term commodity lover) may be accumulating when crude oil prices are at low optimism.

OPEC (Saudi, etc) and Non-OPEC (Russia, etc) could not sustain for long term (over a few years) with WTI < U$20, despite low production cost (about US$5/barrel for Saudi, about US$20/barrel for Russia) as national expenses of oil produces countries are also high, money from crude oil is main source of national revenue.

One may leverage on crude oil crisis, either investor or trader could benefit if aligned with own personality. WTI and Brent crude oil prices correlate well, differences are about a few dollars per barrel of oil prices. When Brent is below US$25/barrel, WTI would be near to US$20/barrel, so either price may be used for analysis, then easy to take action through USO (WTI oil ETF).

Here are 3 main strategies to invest in USO crude oil ETF:

1) Long term investors

1.1) Contrarian investors

This is suitable only if one could hold more than 3 years, use low optimism and strong holding power on a commodity giant (oil won’t drop to $0, similar to property or land, also a giant by default). Risk management includes diversification (not just invest in crude oil) with position sizing and progressive entries (eg. 10 times x 10%).

Assuming $20/barrel is the first target (use either WTI or Brent for analysis, be consistent), trigger the first buy, then when drop to $15, $10, $5, $1 (similar to car COE drops to $1, assuming something nearly impossible happens), trigger possible more entries until extreme low optimism (no one would know the lowest point but likely not $0).

Saudi and Russia are pressing the oil price down but US & China and global giant funds, may standby to buy low as national reserves. Crude oil in the world is limited in supply, therefore it has its intrinsic value, especially world needs crude oil for energy (more demand when Coronavirus crisis is over).

1.2) Trend-following (short term traders / long term Investors)

After reaching lowest point one day (only history could tell), crude oil would start to recover. The same group of investors may use the remaining capital to add more positions (still low optimism). Traders who long would also join at this phase for short term trading

Since the market trend now is bearish, trend-following investors or investors who long the market would choose “Wait” action.

2) Short term traders (shorting)
This is suitable for short term trading, aligning with current bearish trend, aiming for every major support, eg $20, $15, $10, $5, etc (these levels are just for examples)… whenever breaking below, shorting would be initiated. Traders protected by position size and cutloss (risk could be high for leveraged trade in a volatile market). S&P 500 trend over the past 1 month of falling 30% following by over 10% of weekly gain is a good example of intense fight between bull and bear.

So, one could “Buy” (contrarian investors), one could “Wait” (trend-following investor or traders who long), one could “Short” (short term traders), all 3 actions are correct if aligned with own personality. If one follows others to take action, then all 3 actions could be wrong.

Since crude oil is a giant, crisis in price is an excellent opportunity to invest with at least 3 strategies. Learn from Dr Tee 4hr Free investment course on how to take actions in crude oil and global giant stocks.
Register Here: www.ein55.com

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 8000 members:
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Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)

Filed Under: Commodity Market, Market Cycle Investing, Market Optimism, Market Outlook Tagged: crude oil, etf, investment strategies, uso

Source of Stock Market Fear (解铃还须系铃人)

Posted on March 27, 2020 Written by Dr Tee (Ein55)

Based on simple calculation, with over 13k new daily Coronavirus infected cases, US will overtake Italy in 1-2 days as No 2, then in 2-3 days will overtake China as No 1 for # infected cases (based on reported data, not actual happened). Italy has shown declining number of new daily infected cases over the past 5 days.

It means the Top 3 ranking of Coronavirus would change in position in about 3 days from:

1) China, 2) Italy, 3) US

1) US, 2) Italy, 3) China

In fact, based on # death cases (more reliable comparison as it is easy not to report mild infected cases but difficult to ignore death cases even happened at home), true ranking should be:

1) Italy, 2) Spain, 3) China, 4) Iran, 5) France, 6) USA

Reason is there are many mild cases not reported in Europe (limited medical resources).

In Europe / Iran, fatality rate of 8-10% is much higher than norm of 1-5%, not aligned with China (5%, which is already high) and Singapore / Germany (0.5%, both countries considered golden standard as most cases are detected and treated with top medical services). So, actual fatality could be around 1% (assuming full detection but average medical services), therefore actual cases in Europe / Iran should be 10 times higher than actual. So, the actual fatality should be close to 0.5 – 1% if most infected cases are considered (including those without symptoms).

US has about 1000 death cases from Coronavirus, assuming 10x more to 10,000 cases, still 10X lower than common flu (eg H1N1) which results in over 100,000 death in US yearly.

So, it is not the deadly virus which causes the crisis. It is the fear of unknown virus which immobilize the movement of people, causing loss in jobs and income, therefore falling in stock market and economy.

So, the root of the crisis is fear, which needs to wait for # new daily cases to decline over the next 1-2 months in the world (India started later, may end later), only then the crisis may be over. Even if Coronavirus is back in next winter in Dec 2020, strain likely will be lower, could be another H1N1-like of long term virus with mankind.

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Trump knows market greed vs fear very well. Therefore, unlimited QE is introduced. In fact, the highest level of QE is no need to spend 1 cent, just an announcement to restore the confidence but actual money may take months, eventually the fear of crisis could end in summer before actual QE money is printed.

Therefore, in the past, the Fed Chairman has to think twice in wordings after each FOMC meeting, especially during Alan Greenspan time, few people understands, therefore stock market has to guess his mind. From Ben Bernanke to Janet Yellen to Jerome Powell, it is more transparent and predictable.

Global stock market is similar to Coronavirus, fact or illusion is not critical. Most important is the perception which instantly affect the emotions, greed or fear, the winner would drive the stock market up or down.

Since the source of all “evils” are fear of Coronavirus started in Jan 2020, then the crisis could only end when the Coronavirus die down around summer (解铃还须系铃人、心病还得心药医). Jan-Jun 2020 will be a record in human history, 6 months of mass vacation for most people at home, spending more time with family which was a luxury last time.

If the market fear of Coronavirus disappear in coming summer, then global stock market would have good chance to recover, with condition that current global QE must provide quick short term help in next few months to both business and individual through direct money allocation (similar to blood transfusion to a weak patient), or literary “throwing money from helicopter” to everyone to manage the short term fear to sustain the economy, until the real evil of fear, Coronavirus is away for its summer vacation.

If it is flash stock market crash (falling in Mar-Apr 2020, then gradually recover by summer), this could be a record of fastest fear and quickest greed in human investment market history. If not, then the short term fear would bring along a long term pain of global financial crisis to the world. So, summer is critical.

Learn from Dr Tee free 4hr course on how to position in global stock markets before the critical summer (Jun-July) with both counter-trend investing and follow-trend trading strategies. Register Here: www.ein55.com

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 8000 members:
https://www.facebook.com/groups/ein55forum/

Filed Under: Market Cycle Investing, Market Outlook, Stock Market Tagged: coronavirus, global financial crisis, stock market crisis, stock market fear

Dr Tee Video Education: Global Stock Crisis Investing

Posted on March 21, 2020 Written by Dr Tee (Ein55)

In this Dr Tee video education (Global Stock Crisis Investing), you will learn:

1) Understand how the 2 black swans crashed the global stock market in last 1 month

2) Compare global stock market losses: US, Singapore, Hong Kong, China, Germany.

3) Technical Analysis of Coronavirus by country with stage of virus life cycle and estimated ending period.

4) Position in two possible scenarios for global stock market before summer 2020 (Jun-July).

5) Investment clock (When to Buy / Sell) with Optimism Strategies (long term / mid term / short term) for 5 global stock markets: World, US, Singapore, Hong Kong and China.

Here is English Version of Ein55 Video Course (Chinese version is available as Dr Tee is bilingual):

This crisis investing strategy may be applied to 30 Singapore STI index component stocks (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

This powerful strategy can be extended to global giant stocks including 30 Malaysia Bursa KLCI index component stocks (investor has to focus only on giant stocks for investing):
CIMB (Bursa: 1023) CIMB GROUP HOLDINGS BERHAD, DIALOG (Bursa: 7277) DIALOG GROUP BERHAD, DIGI (Bursa: 6947) DIGI.COM BERHAD, GENM (Bursa: 4715) GENTING MALAYSIA BERHAD, GENTING (Bursa: 3182) GENTING BERHAD, HAPSENG (Bursa: 3034) HAP SENG CONSOLIDATED BERHAD, HARTA (Bursa: 5168) HARTALEGA HOLDINGS BERHAD, HLBANK (Bursa: 5819) HONG LEONG BANK BERHAD, HLFG (Bursa: 1082) HONG LEONG FINANCIAL GROUP BERHAD, IHH (Bursa: 5225) IHH HEALTHCARE BERHAD, IOICORP (1961) IOI CORPORATION BERHAD, KLCC (Bursa: 5235SS) KLCC PROPERTY HOLDINGS BERHAD, KLK (Bursa: 2445) KUALA LUMPUR KEPONG BERHAD, MAXIS (Bursa: 6012) MAXIS BERHAD, MAYBANK (Bursa: 1155) MALAYAN BANKING BERHAD, MISC (Bursa: 3816) MISC BERHAD, NESTLE (Bursa: 4707) NESTLE MALAYSIA BERHAD, PBBANK (Bursa: 1295) PUBLIC BANK BERHAD, PCHEM (Bursa: 5183) PETRONAS CHEMICALS GROUP BERHAD, PETDAG (Bursa: 5681) PETRONAS DAGANGAN BHD, PETGAS (Bursa: 6033) PETRONAS GAS BERHAD, PMETAL (Bursa: 8869) PRESS METAL ALUMINIUM HOLDINGS BERHAD, PPB (Bursa: 4065) PPB GROUP BERHAD, RHBBANK (Bursa: 1066) RHB BANK BERHAD, SIME (Bursa: 4197) SIME DARBY BERHAD, SIMEPLT (Bursa: 5285) SIME DARBY PLANTATION BERHAD, TENAGA (Bursa: 5347) TENAGA NASIONAL BHD, TM (Bursa: 4863) TELEKOM MALAYSIA BERHAD, TOPGLOV (7113) TOP GLOVE CORPORATION BHD.

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There are over 1500 giant stocks in the world based on Dr Tee criteria, choice of 10 Dream Team giant stocks have to align with one’s unique personality, eg. for shorter term trading (eg. momentum or swing trading) or longer term investing (cyclic investing, undervalue investing or growth investing). Readers should not just “copy and paste” any stock (What to Buy, When to Buy/Sell) as successful action taking requires deeper consideration (LOFTP strategies – Level / Optimism / Fundamental / Technical / Personal Analysis) which you could learn further from Dr Tee Free 4-hr Webinar.

Zoom will be started 30 min before event, bonus talk (Q&A on any investment topics from readers) for early birds. There are many topics we will cover in this 4hr webinar, Dr Tee can have more time for Q&A if you could stay later after the webinar.

Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Mall Trust (SGX: C38U), Singapore Exchange (SGX: S68), Keppel Corp (SGX: BN4), Top Glove (SGX: BVA), Jardine Matheson Holdings JMH (SGX: J36), Vicom (SGX: WJP) and many others, Malaysia giant stocks, Hong Kong giant stocks and US giant stocks, both long term investing and short term trading.

There are limited tickets left for this 4hr free webinar, please ensure 100% you could join when register: www.ein55.com

Filed Under: Fundamental Analysis, Market Cycle Investing, Market Outlook, Personal Analysis, Stock Market, Technical Analysis, Trading Tagged: crisis stock investing, global financial crisis, video education

Uphill Task to Invest in Stock Market Crisis

Posted on March 18, 2020 Written by Dr Tee (Ein55)

When Dow Jones Index drops below 20000 points during intra-day today (quickly recover above it, although may fall below again in near future), this is about last 3 years low. This implies an investor is saving 3 years of investing time if investing in current level. So, when one could invest in last 10 years low for a major stock index (eg. US S&P 500 or Dow Jones Index), it means the crisis helps one to “jump queue”, saving 10 years of waiting time.

So, when looking backward, history does help one to decide the entry and exit, especially the stock market cycle which could be 5 to 10+ years long. Current bull for global/US stock market (Mar 2009 – Mar 2020) is 11 years, the longest in the history of stock market so far, after US stock market lost more than 1/3 of market cap so far, Dow Jones Index falls from nearly 30000 to 20000 points in 1 month. Despite a bear market is confirmed, this is not yet low optimism < 25% based on Ein55 styles, only a mid-size bear so far.

However, the waiting time has to include the fall + recovery again, therefore some investors prefer to wait till the uptrend phase before entry which is easy to miss the boat (1 chance left) when an entry price is not defined. If an investor enters as contrarian approach first, there are at least 2 chances: fall below the desired entry price and again above the entry price after a period of waiting.

Ein55 members, please plan your entries, how many bullets to use: 1 shot or multiple shots. Don’t end up no shot at all when the game is over.

Learn from Dr Tee free 4hr investment course to plan for your “bullets” to shoot, investing in stock market with LOFTP (Levels 1-4, Optimism 0-100%, Fundamental – Strong/Weak, Technical – Up/Down, Personal – Trade/Invest) Strategies to leverage on current global stock market crisis. Register Here: www.ein55.com

Filed Under: Market Cycle Investing, Market Optimism, Personal Analysis, Stock Market, Technical Analysis Tagged: Dow Jones Index, S&P 500, stock market crisis

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.

Learn further from Dr Tee, strategies to integrate economy with stock market: www.ein55.com

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

Strategies for Great Stocks Sales (狡兔三窟)

Posted on March 14, 2020 Written by Dr Tee (Ein55)

Over the past few years, due to high optimism (>75%) in Level 3 (US) and Level 4 (World) stock market, focus has been in shorter term trading / investing, as if carefully walking on thin ice. With recent sudden meltdown of global stock market from bull to bear market with over 20% correction, now there is more opportunity for longer term investor as significant discount is given for many giant stocks, especially for cyclic sectors (eg. bank / property / airline / technology stocks, etc).

We don’t have to buy stocks at the lowest price (not possible to time the market this way unless one is very lucky but even so, luck may once come once, speculative in this way) but we could buy at low enough prices, eg following discount in share prices below the intrinsic value. Warren Buffett is fine to buy “wonderful business at fair price”. If one could buy giant stocks with strong fundamental at undervalue prices (almost a steal for unfair price with fear created by market), then one should grab on the rare opportunity.

Similar as shopping, we don’t have to buy at the lowest price (best discount) of a handbag in a town because there could be always another competitor offering a lower price a few days later. If a buyer is hesitating (greedy to buy at the lowest or no deal), may end up not buying anything at all, when keep on waiting for the best deal with no clear ending.

Instead, define a discount comfortable to oneself (eg. 20%-50%) compared with regular prices, be happy with the purchase. As an investor, more importantly is to achieve a consistent profit over a longer period, not a cyclic performance (big win or big loss) in short term which could be stressful.

It is the same as searching process for life partner (potential husband or wife), one could not keep on waiting and hoping for the “best” as one may not have the time and luck, each opportunity missed, may end up a single for life. Some may have stricter criteria for boy friend or girl friend or life partner before settle down, this is personality based, but when criteria is too high, may not be realistic.

Luckily stock investment is easier than choosing a life partner. One could diversify the risk of timing into several entries or exits. For example, when stock market is falling to a desired low price (but may have further downside due to bearish trend), an investor may trigger the first buy with contrarian approach (similar to Warren Buffett styles) with 1/3 capital. When stock market has chance to drop to a historical low point (eg. low optimism of recent crude oil price, can be traded with USO oil ETF), then one has option to trigger another 1/3 capital. Finally, when market is recovering with clearer uptrend (but much higher prices than previous 2 entries), one may use up the remaining 1/3 capital. This strategy of capital allocation is best described with Chinese idiom of a clever rabbit with 3 caves to hide from potential enemy (狡兔三窟), similar to diversification of “timing risks” over a period of low or high optimism.

Unsystematic risks (eg. negative news related to business, management, etc) could be minimized with an investment portfolio of 10-20 giant stocks with strong business fundamental. Even one may have limited capital (eg $1000), may consider ETF (eg. MSCI World stock ETF) to diversify over 1000 global blue chip stocks.

At the same time, systematic risks (eg. black swans related to global financial crisis, changes in political economy – interest rate / inflation, etc) could be minimized with entry of global stock market at low optimism <25% (currently 38% optimism), exit at high optimism > 75% (eg. over the past few years). Apply probability investing strategy with optimism, instead of speculating in daily stock market, guessing what could be the next move of Trump or possible market responses.

In fact, over the last few years, global stock market has exceeded 75% optimism 3 times, creating 3 times of “wolf is coming”, currently the third wolf (falling down from 75% optimism) has become a mini bear with over 20% stock market correction, if market fear is not controlled over the next few months, resulting in real economy is affected (eg. lower quarterly GDP) or hurting other investment markets (eg. property), then it could evolve into a big bear, i.e. global financial crisis, which would have over 50% major correction in global stock prices.

“Luck” is an opportunity given fairly to everyone but only accepted for those who are prepared and ready to take actions when conditions for actions (Buy / Hold / Sell / Wait/ Shorting) are aligned with own personalized investing strategies or trading plans.

Learn from Dr Tee free 4hr investment course to accept this gift from heaven, saving 5-10 years of investing period when one could invest at the right time during severe stock crisis on global giant stocks. Register Here: www.ein55.com

Filed Under: Fundamental Analysis, Market Cycle Investing, Stock Market Tagged: global financial crisis, stock market crisis, stock strategies

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

3 Levels of Stock Market Crisis (Wolf, Mini / BIG Bears)

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

Every 10 wolves (eg. 10% minor stock correction, could be yearly) may lead to 3 mini bears (eg. 20% major stock correction, could be every 1-3 years), eventually only 1 becomes the BIG bear (eg. over 50% stock market crash, could be every 10+ years) or commonly known as Global Financial Crisis.

For stock investing or trading, one has to know own personality which includes preferred timeframe of investing and holding power, aiming for 3 levels of stock market crisis which could be represented by these 3 animals:

1) Wolf (Short Term Trading)

Short term investor (usually is also a trader) may need to take action every few weeks or few months, responding to daily positive/negative news which may cause the stock price to up/down by about 10%. A common tool is Technical Analysis, analyzing price trend and also support/resistance of stocks (eg. exit when S&P 500 is below 3000 points).

Trend-following strategy is flexible (similar to a wolf who is very alert to surrounding), suitable for traders, although many times, could end up as false alarms to longer investors who hear “wolf is coming” (eg. market recovers again after price correction).

2) Mini Bear (Mid Term Trading)

Mid term investor or trader could have higher tolerance level, able to hold longer (eg. more than 1 year) for up and down of about 20% in stocks. A Mini bear may come when there is a regional crisis (eg. Euro Debt crisis, US losing AAA credit rating, etc) or unexpected events (eg. Coronavirus, Oil Crisis, etc). It is a mid-scale crisis which could cause significant harm, but could be intermediate opportunity to buy low when crisis is over a few months later.

A mini bear is welcomed by both investors and traders as it won’t end the bull run but creating more opportunities along the long journey of bull market (eg. current bull run is already 11 years long from 2009 to 2020).

3) BIG Bear (Long Term Investing)

The scary BIG bear is a threat for global investors and traders who know how to buy stocks but do not know how to exit because the drawdown could be more than 50%. For junk stocks with weaker business fundamentals, some may be swallowed by the BIG bear, ending in bankruptcy, an investor could lose 100% investment permanently in this coldest winter which could last more than 1-2 years (Great Depression in 1929 could take more than 5 years).

At the same time, the BIG bear or global financial crisis provides an excellent opportunity to redistribute the wealth globally, from those who are ignorant to those who are prepared, smart investors who have found a portfolio of global giant stocks with strong business fundamental, using the BIG bear to scare away other competitors to get a huge discounted price to own them for another 10+ years of new market cycle (which the investor later could decide whether to hold for long term or sell at next market high).

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No one would know exactly when the BIG bear may come. We don’t have to scare ourselves every year whenever there is a wolf calling (action for short term trader) or even hearing the steps of mini bear (alert for mid term trader).

For longer term investor, one could apply probability investing with optimism to know when to stay alert, the time when global stock market at Level 4 (especially US stock market, Level 3) exceeds 75% optimism (eg. over the past 2 years). The investors who prefer not to exit first (to ride the price momentum in last rally of bull run), then need to protect oneself with shorter term trend-following strategy during the uncertain stock market at high optimism.

In summary, despite we may know not precisely when the global financial crisis may come, we could evaluate the probability based on signals received along the way, eg. stock market optimism (Levels 1-4 Analysis), business fundamental and country economy (Fundamental Analysis), Price trends (Technical Analysis), Market High or Low (Optimism Analysis) and more importantly, knowing if one’s personality (Personal Analysis).

Learn the unique LOFTP Strategies from Dr Tee free 4hr course to prepare for 3 levels of crisis (Wolf, Mini Bear or BIG Bear). Register Here: www.ein5.com

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

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

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.

Learn from Dr Tee free 4hr course on Crisis Investing Strategies (What to Buy, When to Buy/Sell), either for Coronavirus Crisis (affecting consumers related sectors such as airlines, retailers, tourism, F&B, transportation, etc) or global financial crisis (affecting all sectors and all countries in the world). Register Here: www.ein55.com

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

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