Market Cycle Investing Archives - Page 8 of 10

Invest in 4 Credit Card Giant Stocks (Visa, Mastercard, AMEX, Discover)

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

credit card stock visa mastercard amex discover

Would you like to pay by Card or Cash or Cheque? When Dr Tee was still a university student about 30 years ago in US, this was the common question asked at that time. During university time, as a student without income, I was “given” or mail directly to home, a few credit cards each year (the T&C was to use it to activate, else just discard it to reject). Until today, the question is still about the same but having more choices for electronic payment.

With increasing cashless and credit payment over the decades, both credit card companies and banks (issuers of credit cards) can make a lot of profits with fees paid by merchants. At the same time, consumers are tempted to purchase more (pay later, sometimes with discount), therefore merchants could gain back the “losses” of fees paid to credit company.

So, technically, the more one spends, the more everyone gains, until one day, when there is a credit crisis (eg. during global financial crisis: dotcom bubble after year 2000, subprime crisis in 2008-2009), then when consumers spend less, then the lower gains (not even loss) to the credit card industry, would induce a crisis in credit card company share prices.

Here are 4 credit card giant stocks with strong business fundamental behind each of them which requires 2 main investing strategies, cyclic investing or growth investing:

1-2) Visa (NYSE: V) & MasterCard (NYSE: MA)

Visa or MasterCard? This is the question asked 30 years ago, still asked today, could be 30 years later by most merchants for payment. This is a duopoly, dominating the credit card industry for decades. They have a wide global network of payment which is a strong economic moat, younger competitors are hard to get nearer.

For both Visa and Mastercard, the share prices has gone up about 20 times (yes, 2000% profit) over the last decade since recovery from the last financial crisis. Visa is relatively more defensive than Mastercard.

Both credit card companies are more suitable for growth investing strategy (Buy & Hold), buy low during global financial crisis and hold for long term capital gains. Even for short term, sometimes they are suitable for momentum trading (Buy & Hold for a period of time, eg weeks or months), but more suitable for bullish stock market with strong uptrend (Buy High, Sell Higher)

3) American Express (NYSE: AXP)

Technically, American Express (AMEX) is not a credit card (a charge card instead). For convenience, we group it under credit card stock for comparison. AMEX is more costly to merchants (higher fee), therefore the coverage is not as wide as Visa or Mastercard.

AMEX is considered a relatively weaker (among 4) credit card giant stock, growth is slower. It is more suitable for cyclic investing strategy (Buy Low Sell High), share price has gone up about 10 times over the past decade since global financial crisis.

4) Discover Card (NYSE: DFS)

Discover Card is still considered a “young” credit card, despite Dr Tee has used it about 30 years ago when I was still a student in US. I like Discover card 30 years ago as I remember it could give about 2% cash rebate which was a new idea at that time (getting cash back by spending) but now very common in many other credit cards.

Discover card is listed under Discover Financial Services (DFS.NYSE). It is a giant credit card stock with strong fundamental but more suitable for cyclic investing (Buy Low Sell High), share price has gone up about 10 times over the past decade since global financial crisis.

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Warren Buffett also has 3 credit card companies shares (AMEX, Visa, Mastercard) under his stock investment portfolio. When others in the world are spending money, these credit companies including Warren Buffett are making money around the clock, every second.

As a retail investor, you may not have the capital as Warren Buffett to buy so many stocks. Therefore, we need to be selective in stocks for investment. You can start your investment journey to establish a dream team portfolio of 10 best stocks in 10 promising sectors / countries, leveraging on the next global financial crisis to buy low, either sell high or hold long term in future.

Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

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Filed Under: Market Cycle Investing, Stock Market Tagged: american express, amex, Blue Chip Stocks, credit card, discover, growth stock, mastercard, US Stocks, visa, warren buffett

Coronavirus Life Cycle (Dec 2019 – ? 2020)

Posted on February 7, 2020 Written by Dr Tee (Ein55)

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.

Learn to control your investment, learning from Dr Tee on What to Buy, When to Buy/Sell for global giant stocks in a dream team portfolio. Register Here. www.ein55.com

Filed Under: Market Cycle Investing, Personal Analysis, Stock Market Tagged: coronavirus, life cycle

Impact of SARS 2003 and Coronavirus 2020 on Global Stock Market

Posted on February 7, 2020 Written by Dr Tee (Ein55)

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

Filed Under: Market Cycle Investing, Market Optimism, Stocks A-Z Tagged: coronavirus, global stock market, sars

Trend Analysis on Coronavirus Number Projection with Stock Market Positioning (Short / Medium / Long Term)

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

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

Filed Under: Market Cycle Investing, Stock Market Tagged: coronavirus, trend analysis

Top 10 Singapore REITs for Passive Income and Capital Growth

Posted on November 4, 2019 Written by Dr Tee (Ein55)

There are total of 40 Singapore REITs, a popular investment option for retirement through passive income. By law, 90% of disposable income from Singapore REITs must be redistributed back to shareholders through dividends. However, not all the Singapore REITs are profitable, an investor could lose money if choosing the wrong one, eg. pursuing the highest yield REIT. REIT is an integrated investment between stock market and property market, knowledge of both markets are required to be successful.

In general, a good REIT should have strong fundamentals and DPU (Distribution per Unit) should grow over the time. At the same time, we could also profit from good REITs through capital appreciation of share price and net asset value of properties. A good REIT investor not only knows how to choose the REIT, but also masters the investment clock to buy / sell / hold the REIT. Let’s learn together with the case study below on Capitaland Mall Trust.

Capitalmall Trust (SGX: C38U) is one of the Top 10 Singapore REITs, based on Optimism Strategy with consideration of FA (Fundamental Analysis), TA (Technical Analysis) and PA (Personal Analysis). The DPU, dividends and operating cashflow are increasing over the years, current dividend yield is about 5%. At the same time, an investor could have profited over 3 times in capital gains of share price ($0.75 to $2.50) from IPO till now (see chart below).

Singapore REITS Optimism Strategy - Capitalmall Trust

Ein55 Optimism of Capitamall Trust is 48% now, implying the upside is about the same as downside for its share price in long term perspective. When Optimism is below 25% for Capitamall Trust (Level 1), Singapore REITs Index (Level 2), Straits Times Index (Level 3) and MSCI World Index (Level 4), it will be an ideal time to become REITs investor. The dividend yield could be significantly increased if an investor could wait patiently for this REIT giant to fall down in share price during the next regional or global financial crisis. After buying low, when the REITs have recovered again, an investor will have an option to sell high to take profit for capital gains or hold long term for passive income.

We should learn to find the Top 10 Singapore REITs with excellent business for our investment portfolio, buying at discounted price at low optimism, ahead of other potential big buyers who are also looking for these valuable assets. Certain REITs stocks could be in crisis when the interest rates are higher and the property cooling measures last for another few more years. Therefore, we should only consider giant REITs stocks with strong fundamentals, not just any stock with price discount, buy low and sell high or hold patiently for both capital appreciation and passive income.

The safest time to buy a stock is when everyone is afraid the sky will fall down while the business is still operating normally with consistent performance. This could be a rare opportunity to buy during a crisis, we should learn how to take this advantage to truly buy low sell high.

When Optimism Strategies are combined with Fundamental Analysis (value investing & growth investing), Technical Analysis (support / resistance / trends), and Personal Analysis (mind control of greed and fear), it is very powerful when one is able to take the right action (Buy, Hold, Sell, Wait or Short) at the right time aligning with own personality.

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Swing Trading Strategy （短期波段交易策略）
Position Trading Strategy （长线头寸交易策略）
Bullish & Bearish Setups （牛市与熊市布局）
Critical Candlestick Patterns （K线主要阴阳烛）
SET Price Strategies (Stop Loss / Entry / Target) （SET 股价策略 – 止损/进场/平仓）
Summary of Winning Trading Strategies （致胜投资策略总结）

Table of Contents (FREE Stock Investment eBook #2: Global Stock Market Outlook)

Mass Market Sentiment Survey （大众市场情绪调查）
Review of Global Stock Markets （环球股市回顾）
US Market Outlook （美国市场展望）
Regional Market Outlook (Europe, China, Hong Kong) （区域市场展望）
Singapore Market Outlook (Stock & Property) （新加坡市场展望）
Conclusions and Recommendations （总结及建议）

Table of Contents (FREE Stock Investment eBook #3: Top 10 Global Stocks – Dream Team Portfolio)

Personalized Stock Investment Portfolio （个人化股票投资组合）
Ein55 Global Top 10 Stocks （10大全球高潜能股票）
Summary of Actions （投资方向总结）

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Market Outlook (stocks, properties, bonds, forex, commodities, macroeconomy, etc)
市场展望 (股票、房地产、债券、外汇、商品、宏观经济等)
Optimism/ Fundamental / Technical / Personal Analyses
（乐观指数 / 基本分析 / 技术分析 / 个人分析）
Investment risks & opportunities （投资风险及机遇）
Dr Tee graduates events and activities updates （Dr Tee学员活动最新消息）

Filed Under: Market Cycle Investing, Property Market, Stock Market Tagged: reit, Singapore REITs

Stock Market Cycles & Potential Crisis (1937 vs 2020)

Posted on October 28, 2019 Written by Dr Tee (Ein55)

Smart investor, Ray Dalio has compared 1937 vs 2020 market cycles (you may google for more), many good insights to show the similarities (eg. share prices went up over 300% for both cycles as shown in chart above). Here are my additional views, different from or similar to other analysts:

1) 1937 crisis did not really took 17 years to recover (unless counted from peak to peak), there were actually 2 market cycles in between, about 8-9 in each cycle, quote comparable with last few decades of market cycle. Global financial crisis is scary but typically it should not last more than 1 decade long.

2) Owning gold would not help much, especially buying gold at higher price or even at fair price because gold won’t be able generate income, simply a tool to preserve its value. However, buying gold at low optimism price (eg < $800 which is undervalue) would help in long term but it may not be required (property could also hedge against inflation)

3) Buy dividend stocks to fight against crisis should not be the main strategy, has to be combined with other considerations. Capital gains, dividend and business fundamental are closely related. A smart investor would not focus in dividend alone, also need to pay attention to potential capital loss (eg, when holding a stock through a bear market).

4) Agree that cash is king when used at the right time. Knowledge of market is important to buy low but knowledge of fundamental is important to avoid buy low get lower.

Market cycle ending 1937 may not be exactly the same as 2020 as exact history may not repeat itself. However, greed and fear would repeat itself as investors 100 years ago were also human who care about the hard earn money.

However, smart investors need to take proactive actions, eg:
A1) Do spring cleaning, take profits or cut losses, converting to more cash as future opportunity fund.
A2) Prepare for dream team portfolio with at least 10 giant stocks for diversification. Know What to Buy, When to Buy / Sell
A3) Train up oneself, aligning the investment strategies with own unique personality, so that one would execute actions A1 & A2.

An integrated approach would help, eg LOFTP strategies (Levels 1-4, Optimism, Fundamental, Technical & Personal Analysis). Opportunities are for those who are prepared! Interested readers may hear 2020 Stock Market Outlook in free 4hr stock investment course by Dr Tee. Register Here: www.ein55.com

Filed Under: Market Cycle Investing

Winter is Coming – 3 Strategies for Global Stock Market Crisis

Posted on July 3, 2019 Written by Dr Tee (Ein55)

For fans of Game of Thrones, they are familiar with “Winter is Coming” as there are signs before the crisis in kingdom. However, for fans of stock market, it is important to know how to prepare for coming winter (global economic recession) after a long summer of bullish stock market over 10 years since recovery from the last global stock market crisis in year 2009.

Trump has been trying to prolong the bull run with various policies, eg. reduction of corporate tax from 35% to 21%, creating more jobs in US, trade war with China and the rest of the world for quick gains of US, etc. Unfortunately, economy usually behaves in a cyclic manner due to over-supply or over-demand at different stages of economy, requiring years to get back to normal again after reaching the extreme greed or fear in market emotions. When we see summer in US now (overheated economy with the lowest unemployment rate of 3.6% in 49 years in US, historical high of S&P500 index at 2973 points recorded recently, inverted bond yield, etc), we know “winter is coming” for global stock market crisis, the coldness of potential financial crisis would spread globally from US, the No 1 economy with more than 50% global stock value.

Here are 3 ways to prepare for global stock market crisis (financial winter time) for 3 fans of stock market: long term investors, market cycle investors and short term traders.

1) Stock Market Crisis for Long Term Investors
It is possible for long term investors to ignore the up and down in prices, including potential winter time (global stock market crisis) because the investors have prepared well in advance when investing many years ago, there is no need to exit at all during market correction. The conditions for long term or even lifetime investing (buy and hold permanently) are the stocks invested should be over a portfolio of at least 10 strong fundamental stocks at low optimism price, defensive in prices (less volatility with strong economic moat) with consistent growth in both share prices and businesses for capital gains, as well as some dividend payment (>2% dividend yield) as bonus, exceeding the bank interest rate.

This strategy requires knowledge of super giant stocks (what to buy from <5% of selected global stocks), ability to take action during the coldest winter (Level 4 – global financial crisis) and tremendous patience and calm to hold through a long term or even throughout the lifetime (continue to hold as long as quarterly or yearly review, confirming it is still a giant stock)

2) Stock Market Crisis for Market Cycle Investors
Market cycle investors integrate the best of investing (buy strong fundamental stocks) and trading (buy low sell high), leveraging on economic cycles (typically over 5-10 years) to safely maximize the return with natural investment clock.

This strategy requires a regional (Level 3) or global (Level 4) financial crisis to create tremendous fear in the stock market for majority of investors and traders to sell low unwillingly or willingly (over 50% discount in share prices at low optimism). However, a financial crisis could be a real crisis for weak businesses which may not last through the winter during economic recession (potential bankruptcy). Therefore, it is important to invest in a portfolio of at least 10 giant stocks with strong business fundamental, especially for stocks in cyclic sectors such as banking & finance, property, technology, airline, industrial, etc.

3) Stock Market Crisis for Short Term Traders
Short term traders could still enjoy the hot summer, eg. current bullish stock market to buy high sell higher with momentum trading or swing trading. This group of stock market fans could react faster to the changes in stock market, especially when it turns direction from bull to bear. In fact, short term traders could participate in all stages of stock market, firstly buy up in possible last phase of bullish stock market, shorting in bearish stock market crisis, finally buy up again when stock market is reborn again one day. However, the emotional control is the most critical (greed, fear, regret, etc) for stocks traders to be successful.

This strategy requires short term positioning (from weeks to months), successful traders need to follow proven trading plan to enter with bullish signals and exit when there are confirmed bearish signals (eg. trending down in share prices), continue to hold (position trading) when there are no major changes. Although short term stock trading may not require strong fundamental stocks as business may not have drastic changes in weeks or months, it is still useful for traders to consider profitable business (when long a stock) as both good fundamental and market greed could contribute to higher share prices in a bullish short term stock market.

Since summer is here and winter is coming, have you prepared for this rare opportunity? Any of the 3 fans above could profit from stock market crisis but should know the exact strategy (What to Buy, When to Buy/Sell). Don’t be ignorant with no action taken as there is great opportunity cost for missing in action in stock market crisis. Learn from Dr Tee with free 4hr stock investment course, preparing to profit from stock market crisis.

Filed Under: Macroeconomy, Market Cycle Investing, Market Outlook Tagged: stock market crisis

US-China Trade War Investment Opportunities

Posted on June 5, 2019 Written by Dr Tee (Ein55)

Economy and stock market are closely related, as if Master (economy) walks the Dog (stock). Master (economy) usually moves slowly but Dog (stock) is more active, responding fast to changes in environment (financial or political markets). The Master may walk several Dogs (stocks, properties, commodities, forex, bond, etc) at the same time, each Dog may respond differently (eg. Bond may get more attention when Master or economy becomes weak).

For an investor, we need to monitor both the Master & Dog, are they moving the same direction (uptrend)? Are they strong giants (strong country economy at Level 3 & stock with strong business fundamental at Level 1). What are their optimism levels? Are correction in investment markets, fear or weaker fundamental driven?

Currently trader war between US and China is mainly driven by Trump with complicated considerations, unlike usual black swan (global financial crisis) which is both a systematic & unsystematic risk. Trump may need to monitor S&P 500 index regularly to know when to adjust the political strategy. When S&P 500 is corrected below 2500 points, fear driven stock market could evolve into weaker economy driven stock market, could be too late to reverse then.

“Wolf is coming” may end up into a real big bear market (when S&P 500 falls into or below 1500-2000 points) when real economy is hurt by falling in stock market below the critical level. Many people’s wealth is based on investment market (stocks, properties, bonds or even cryptocurrencies, etc), capital losses or reduction in capital gains would result in cut down in spending or investment, the downtrend price and economic cycle may get worse this way.

If Trump takes reverse action in trade war by end of 2019 (eg. finalize agreements with other major economies such as China, Europe, Japan, India, etc), the timing may be just nice for year 2020, creating a nice intermediate correction, stock market rebound to support a mid-term bullish or side-way market to support the second term US president election.

Economy is a slower indicator, when it is confirmed downtrend, stock market could have fallen more than 50%. At the same time, stock price is a faster indicator, today falling down, tomorrow could recover higher. There is a balance in between, integrating these considerations in own LO-FTP (Level 1-4 + Optimism + Fundamental + Technical + Personal Analysis) strategies.

Crisis is always an opportunity for investment, including the current trade war between US and the rest of the world. However, a crisis could be a real crisis if one does not know how to position, eg. buy low get lower in stock prices, or even a business could go bankrupt during the bear market. The right way of crisis investing is to form a dream team portfolio of 10 giant stocks, overcome own fear to buy low and wait patiently for the recovery to sell high in future. It looks simple but without proper training, it could be a disaster for speculators.

Learn from Dr Tee free 4hr stock investment course to learn the integrated LO-FTP strategies for trade war investment opportunities in stocks, properties, commodities, forex and bonds.

Filed Under: Macroeconomy, Market Cycle Investing Tagged: trade war

Cyclic Trading (Buy Low Sell High) vs Growth Investing (Buy Low & Hold)

Posted on April 22, 2019 Written by Dr Tee (Ein55)

Usually before a black swan could become a black bear for stock market, there are many market signals, eg:
1) High stock market optimism > 75% at global level (fulfilled)
2) Inverted bond yield for US (partial fulfilled)
3) Strong US job data < 4% unemployment rate (fulfilled)
… many more stock market and economic indicators

The global stock market is indeed feverish but it may get excited for a period of time first before falling down. Since global stock market at country level is a giant, it would recover one day as well, therefore a no-brainer way of investing could be simply invest in stocks of major economy (eg. US S&P500 ETF, Hong Kong HSI ETF, Singapore STI ETF, etc), buy low & hold long term.

A black swan is a market surprise, therefore not predictable. However, if we guess each month for 10-20 years based on everyday global financial news, one of them could turn into a black swan or global financial crisis eventually.

Therefore, a more practical way could be to allocate our funds based on market optimism. When optimism is higher, we could gradually take more profit, converting stocks into cash. At the same time, position more with shorter term trading with lower risk (assuming no leveraging), one could react faster when a true black swan is here.

We should view the economic cycle positively as it provides an opportunity for smart investors to buy low sell high with cyclic trading.

At the same time, there are defensive growth stocks which are not affected much by global financial crisis, suitable for buy low & hold with growth investing until the business growth is not sustainable, can be as long as lifetime as some businesses could transform and continue to grow.

In shorter term timeframe, traders could also apply swing trading (cyclic trading to buy low sell high within weeks or months) or momentum trading (buy & hold for a period of time until the momentum is over)

Ein55 graduates have learned various types of cyclic vs growth/momentum stocks for long term investing vs short term trading. Use the unique market condition to create various opportunities for us, aligning to own unique personalities.

For general public, you could learn the 5 pillars of Ein55 investing/trading: LO-FTP (Levels 1-4, Optimism, FA, TA, PA) through free 4hr stock investment course by Dr Tee. You will learn how to Buy Low Sell High, as well as Buy Low & Hold. Register Here: www.ein55.com

Filed Under: Macroeconomy, Market Cycle Investing Tagged: buy low sell high

5 Stock Investing Lessons from Car COE

Posted on November 28, 2018 Written by Dr Tee (Ein55)

Latest Singapore Car COE for Cat A (Nov 2018) is $25000, falling from nearly $100000 over the past 6 years till now. Many people wonder if it is possible to get COE at $50 or even $1 again.

I review the last year Ein55 Graduate Homework (Nov 2017) in application of Optimism on Singapore Car COE, here are the 5 lessons which can be learned and extended to stock investing.

1) Trend of long term car COE is up, indicating COE has become an asset (although limited lifetime of 10 years) or commodity which has value.

– Similar to investing, even for giant stocks which could grow in share price over the decade, they may not be suitable for everyone, only for longer term investors. A key difference is stock value could remain or stronger after 10 years but Singapore Car COE would drop to value of $0.

2) Optimism has been declining over the past 6 years, COE price trends have been bearish in short term and medium term. Over the past few years, each time COE shows a record lower price since the peak of $100000, potential buyers would get attracted to buy car but get disappointed later as price continue to drop further the next year.

– Similar to investment, even for long term value investing stocks, their share prices could fall in short to medium terms. Therefore, integration of trading into investing is crucial, avoiding buy low get lower. More importantly, an investor should know the fair value of a stock, buying at a low optimism price.

3) Few people is able to buy at $1 historical low price of Car COE as usually it happens during global financial crisis when most people are fearful with limited cash or purchasing power. The timing of next possible $1 Car COE price depends on when will be the next global financial crisis and also the degree of low optimism.

– Similar to stock investment, we don’t have to guess when a crisis would come. Instead, we just wait for the low prices come to us. When the great sales of global stocks (global financial crisis) has come, one needs to prepare in advance, eg. selling stocks at high optimism first, converting to cash, waiting patiently for prices to drop below value again, more precisely, a low optimism price. This way, we don’t have to speculate on future happening, depend on known facts of value and prices available now to make a high probability decision: Buy, Hold, Sell, Wait, Shorting.

4) In general, Car COE Category A < $10,000 could be considered low Optimism price, any lower price (eg. $1 to $9999) is just a bonus. Value is what you get (10 years COE) and price is what you pay. Therefore, for 2 different car buyers, one may buy COE at $10000 while another one may be lucky to get at $1, but both will be happy, $10000 buyer may not think “losing” of $9999 when comparing with lucky case of $1.

– Similar to stock investing, investors should not speculate to buy at the lowest price as it is nearly impossible to know (reverse is also true, to sell at the highest price). Instead, we should apply Optimism to know when to buy low enough, when to sell high enough, which is more reliable from probability point of view. Some stock investors who acquires stocks at high value (eg. high quality assets of property or cash), they may still feel “lose” money when share prices fall down. One should train to view value and price as if buying a handbag at 2 different sales, one could be 50% sales, another one could be 70% sales, both are bargains, no need to buy at the best sales which no one would know exactly.

5) For car owners with COE expiring soon, there is an option to renew with 5 or 10 years extended COE (at the current rate of $25000), using the next 5 or 10 years to wait for the next global financial crisis, if it happens 2 years later, just sell back the remaining years of COE (eg. 3 or 8 years) at the original price of $25000, buying a new car with lower optimism COE price (eg. less than $10000 for Category A), “earning” from the difference.

– The strategy above is similar to shorting in stock trading, sell high buy low. Although there is no shorting in Car COE, this is a strategy as car owners may not able to wait for a period of time without car to buy car at low optimism price. However, it is possible for stock investors to keep 100% cash, waiting for the next global financial crisis to buy low safely with 10 global giant stocks, assuming one has the holding power through the winter time of stock market.

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Filed Under: Commodity Market, Market Cycle Investing Tagged: Car COE

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