Stock Opportunity in Coronavirus Crisis

Posted on February 4, 2020 Written by
coronavirus crisis opportunity

8% drop in China stock market yesterday seems significant but this is actually accumulation of 10 days of market fear since 24 Jan 2020 (eve of Chinese New Year).

Comparing with US S&P 500 and Singapore STI within the same period (about 3% correction), therefore additional correction due to fear of China coronavirus condition is about 8 – 3 = 5%.

More countries may follow one another to ban travelling from China. Despite fatality rate outside China is very low (only 1 death) but Coronavirus continues to spread further in China, especially in Hubei with limited medical resources.

When one observes a potential crisis with unknown severity, it is safer to exit first as if a shorter investor/trader when there is a reversal signal for individual signal (eg. breaking below short term support or more than X% drop following the trading plan). It is never too late when stock market is recovering to enter again as a short term trader, avoiding buy low get lower for short term.

At the moment, this is just a minor crisis, not yet a lifetime opportunity as in global financial crisis (stock indices could drop more than 50%). Both investors and traders should monitor closely, minimize risks with exit plan and waiting for opportunities to buy low.

When global stock market are at high optimism (over 75%), it is relatively safer to adopt shorter term investing or trading strategies (eg. trend-following) as each month could have new variable in the market (eg. besides Coronavirus, now there is news of H1N1 and H5N1 in other places in China. Later there is US presidential election, as well as next episode of US-China trade war), having potential to trigger the next global financial crisis.

Crisis is Opportunity if one is prepared, eg waiting patiently for price of giant stocks to drop much lower value, having holding power for recovery.

Crisis is Crisis if one simply follows other people’s views (especially mass market), fearful and greedy at the same time, not considering own personality (eg. risk tolerance, reward expectation, holding power, etc).

Stock market is driven mainly by both business fundamental and market emotions (eg. fearful in last 1 month), requiring LO-FTP (Level/Optimism/Fundamental/Technical/Personal) Analysis + BE (Business/Economic) Analysis, integrated to aligned with own personality. More details in www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Macroeconomy, Stock Market Tagged: ,

Technical Analysis on Coronavirus and Stock

Posted on February 4, 2020 Written by
technical analysis coronavirus

I just found this article published in the famous Lancet Journal which projected Wuhan could actually have over 75000 cases as of 25 Jan 2020 and the number would double each week. It has been about 1 week since then till now, so current projected number based on this model published in Lancet journal is over 150000, aligned with my projection in yesterday article for Hubei = 7153 x 16.7, about 120000 with simple statistical method.
https://www.facebook.com/ein55/posts/1223598294509417?__tn__=K-R

Besides investment, my profession is in modeling and simulation, therefore having interest to perform additional analysis with simplified methods which could be applied in investment and also many aspects in life, including coronavirus projection.

Despite the official # infected could be much less than actual, the data reported is still useful for trend analysis (similar to Technical Analysis in stock investment) as long as it is consistently reported each day. One could monitor the daily new # infected (was 2000, now increasing to 2500 daily, sign of spreading continues) and # death (stable around 40-50 daily). Currently, there is still no sign of slowing down, the growth in number is under mild acceleration mode (# new cases daily is increasing from 2000 to 2500, likely higher in next few days).

Using investing jargon, the virus is a “growth” virus. We need to monitor the growth rate and external factors (eg collaboration among different countries to minimize the spreading) to determine the possible reversal. Time is a factor. Similar to investment, one may buy an investing stock in crisis but does not have the holding power, may fail eventually, buy low sell lower. For patient infected, as long as immune system is strong (as if strong fundamental business), able to last through the winter time (period for natural recovery even if infected), one could recover naturally without medicine, having new immunity to resist future new virus (similar to stock, each breakout of resistance could become the next support for future crisis with falling in prices).

When new # infected and / or # death on current day is lower than yesterday, it is the first sign of deceleration (slower spreading) but # new cases will still continue until reaching 0 one day (no new case), only then it reaches a peak. Since there is typically 14 days of incubation period for virus, there will be time delay of 14 days from last patient to actual ending of this wave of spreading (until another outbreak again, could be a few years later, if someone never learns from mistake, mess up with wild animal again). For SARS, it takes about 8 months for it to disappear. For common flu, it becomes part of our life, taking turn to visit us each season. For coronavirus, it may end up as SARS (1 time or rare virus) or common flu (if spreading could not be controlled, human has to make peace with this new virus, when most people are affected, there will be natural immune system build up, fatality rate may drop to as low as common flu of 0.05%).

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Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Macroeconomy, Stock Market Tagged: ,

Hidden Statistical Analysis of Coronavirus with Stock Investment

Posted on February 4, 2020 Written by
statistical analysis coronavirus

Some may be puzzled why there are so many death cases for Coronavirus in China, especially in Hubei (258) but 0 (zero) case outside mainland China. From statistics point of view, this drastic difference may be due to certain reasons.

Does it mean the virus is more deadly in China than outside China (quite unlikely as many who are infected outside China traveled from Wuhan). Does it mean China medical resources are less, resulting in lower survival rate (may be but unlikely to be so different)?

From statistical analysis (as of 1 Feb 2020), we may identify possible sampling or reporting error:

Area / # Infected / # Death / Fatality Rate (%)
==============================
Mainland China / 11757 / 258 / 2.19%

Hubei only / 7153 / 249 / 3.48%
Mainland China ex Hubei / 4604 / 9 / 0.19%

World ex mainland China / 108 / 0 / 0.00%

World inc China / 11865 / 258 / 2.17%
================================
There are a few key observations:
1) Using total sample size (world inc China) to compute 2% fatality rate of 2% may not be accurate. This results in great fear overseas but so far 0 death overseas, while common flu has more death in these countries.

2) Within mainland China, when comparing Hubei vs the rest of the region in mainland China, we can observe drastic difference of fatality rate of 3.48% (Hubei) vs 0.19% (other China cities, although not 0 but closer to observation outside China, a low fatality rate).

Assuming reporting are all true (one may argue), here are possible reasons:

Hubei could have much more infected cases but only those diagnosed officially in hospitals are reported, this lower down the base of # infected. At the same time, those minor cases or not diagnosed cases may recover gradually at home, therefore not reported. Those severe cases need to seek medical help, therefore were sent to hospital which eventually some are reported as death.

So, assuming Hubei vs other China cities should have the same fatality rate of 0.19%, this implies actual # infected in Hubei could be 3.48/0.19 = 16.7 times more than 7153 reported based on official / hospital cases.

This is same as common flu in the world, no one could be precise to tell the actual fatality rate because the # death could be accurate (sent to hospital) but # infected is just an estimation.

For world ex China, currently has 0 death case but let’s take the worst case of having 1 death based on current # 108 infected, then max fatality rate is 0.93%, which is less than 1%.

Based on different grouping of data above, the 0.19% fatality rate of China ex Hubei may be a more likely number for Coronavirus, which is about 3-4 times stronger than normal flu (estimated as 0.05%). The key is to control the base (# infected) for Coronavirus, therefore current moves to restrict travelling among the countries are correct. If not, if the base is similar to common flu (which have 12000 death in US yearly), the 3-4 times higher fatality could be disaster to the world. Despite Ebola virus is very deadly (over 50%) but # infected is less.

Crisis is Opportunity if one is prepared, eg waiting patiently for price of giant stocks to drop much lower value, having holding power for recovery.

Crisis is Crisis if one simply follows other people’s views (especially mass market), fearful and greedy at the same time, not considering own personality (eg. risk tolerance, reward expectation, holding power, etc).

Conclusions:
Coronavirus may not be as deadly as reported (2%), could be 10 times weaker, 0.2%, may be due to many cases # infected unreported (not sent to hospital). However, even if fatality is as low as common flu, it can still cause many deaths due large # infected, which should be the priority now to limit the spreading of virus while finding a medical solution.

The most deadly part of any new virus (Coronavirus or any future virus) is not death case but the FEAR emotion which drives humanity into selfishness, loneliness / isolation, depression, etc. So, science including statistical analysis would help us to stay calm but continue to keep the right habits to minimize the spreading, infection and fatality of viruses.

Application of statistics and sampling is everywhere. Eg. in Taiwan recent presidential election, we can observe poll from small sample is relatively accurate to predict the winning rates of different candidates (within 5% difference) but not on actual final number which depends on how many people present to cast the vote on actual day.

Similarly for stock investment, careful statistical analysis is required, not to just take a gross number, eg business is up or down within certain year (eg. Breadtalk). It is important to further divide into different divisions, each could have different performance (eg. Food court and Restaurant divisions are profitable, Bakery and 4orth divisions with external partnership are in loss).

Fundamental Analysis using some key numbers (eg. ROE > 5%) is fine as a quick filter but deeper analysis is required to understand the business (eg economic moat). Similarly for LOB-FTP (Level/Optimism/Business/Fundamental/Technical/Personal) Analysis, this requires much more time to evaluate a stock before making decision (Buy / Hold / Sell / Wait / Shorting) aligning with own personality (eg. short/medium/long term investing).

Interested readers may register for Free 4hr stock investment course by Dr Tee to learn the details. Register Here: www.ein55.com

Wish all readers Healthy and Wealthy at the same time!

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Macroeconomy, Stock Market Tagged: ,

Impact of Travel Ban on Economy with Coronavirus

Posted on February 4, 2020 Written by
travel ban

US follows Singapore, also ban those who visited China in last 14 days from entering US except US own people. Australia then follows US with similar move.

However, China criticizes on US’ move today, not Singapore’s move yesterday, showing the relationship among the countries. US is the world leader, many countries would follow its move, especially if elections may come soon, it is important to win the heart of own people.

Many major airlines in US have stopped the flight services between US and China, travelling is still possible through third country but will be significantly less. From economic point of view, this will be a major injury as China contributes to about 30% of global tourists, main source of revenue generation (eg. Thailand suffers a lot with both declining income with few China tourists, also having the most cases of Coronavirus outside China). Taiwan suffered over the past few years with high tension with China, less tourists to Taiwan, now become a blessing in disguise with few cases.

There is always a balance, gaining from China in the past due to more trades or more tourists but now may suffer more with drastic change.

Based on the statistics so far, growth rate of new coronavirus cases are stable at 2000 daily (about 40+ death daily), moving in 1 straightline until a peak is reached, then the growth rate will be slower. If it continues at the same rate for 100 days before arrival of warmer summer or spring, implying 2000 x 100 = 200000 cases, death or fatality rate will be around 2%). There is a high possibility that Coronavirus may become a common flu one day as it is more contagious than SARS or even flu. The R0 value is 3, implying 1 person affected could pass to another 3 persons. Next 3-6 months will be golden period for global scientists to come out with an effective vaccine (until it may be transformed to a new virus in the next season, similar to different types of flu spreading globally each year, killing thousands of people – average 12000 death in US yearly due to flu).

Singapore may be blessed with hot weather, virus may be less active or less deadly. So, try not to touch on anything in public place, then touch own face (eyes, mouth, nose).

If this virus continues even until summer, impact to global economy (especially to China) would be much higher than SARS in 2002-2003 (only 8 months). Investors need to monitor the global stock market and other possible black swan. SARS mainly affected Asia last time but Coronavirus could affect whole world, even it is not as deadly as SARS, less death cases than common flu, however the fear would be tremendous. this may be enough to cause global economy slowdown (less travelling, less trades, less shopping and therefore less spending), if not global financial crisis.

Let’s continue to monitor the trend of Coronavirus. The risk of viruses (common flu, SARS, Coronavirus, Ebola, H1N1, H5N1, MERS, etc) will be never ending. Human needs to learn to minimize the probability of happening (at least not to create new by eating wild animals), finding medical solutions (medical technology) for cure, as well as strengthen own immune system (health / diet) and following other positive habits. Learn to invest in stocks during crisis: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Macroeconomy, Stock Market Tagged: , , ,

Speculative Trading of Coronavirus Related Stocks

Posted on February 4, 2020 Written by
speculative trading

There are quite many speculative stocks (eg. surge over 100% in 1 day), may not be suitable for retail traders. It is fine to use small capital for speculative trading (小赌怡情) as now is still Chinese New Year, “buy very-high to sell very-very-high” may not be suitable for most people as volatility is very high, some may not able to cut loss when trend is reversed, holding the stock from original shorter term trading, becoming longer term investor which share prices could fall if business is declining without positive changes in direction.

With spreading of Coronavirus, some weak fundamental stocks in the right sector (eg. healthcare) are also supported due to speculation. Now even funeral service stocks may be speculated (unlikely for a few hundred death to change the fundamental of business). For example, Sinolifegroup (HKEx: 8296) does not have strong fundamental, speculation (price surged over 100% in 1 day) may be for very short term speculative trading with pure technical analysis, leveraging on market emotion. There are other much better funeral service stocks with strong fundamental (consistent growth due to predictable average lifespan of people).

Ein55 Mentor Kean Lim has shared a giant stock on funeral services (both in Australia and also Singapore – including the famous company – Singapore Casket, my mother-in-law was having ceremony there when passed away last year) in earlier Business Analysis (BA) course: Invocare (ASX: IVC) which has strong business fundamental for longer term investing but currently is bearish in short term prices.

In conclusion, each investor/trader should align the stock strategy (What to Buy, When to Buy/Sell, How much to Buy/Sell, etc) with own unique personality. Do independent thinking before making own decision in investing or trading.

Learn 10 safer strategies of stock investing/trading from Free 4hr course by Dr Tee. Register Here: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Personal Analysis, Stock Market Tagged: ,

Little Black Swan – Wuhan Pneumonia Virus

Posted on February 4, 2020 Written by
black swan

Wuhan pneumonia is an emerging black swan, real impact to stock market depends on the final scale (last SARS crisis results in regional stock market crisis), need to monitor closely.

Short term impact on stock market is speculative: some healthcare (eg. glove manufacturer) stocks are rising in prices, while airline stocks suffer due to potential lower number of passengers with less traveling in an enclosed transportation. When this virus has similar scale as SARS, there is a potential to result in a regional stock crisis (eg. China / Asia) or even global financial crisis (if becoming a new form of global flu without an effective vaccine).

As mentioned earlier, in the final stage of bull market with over 75% optimism level, we are walking on a layer of thin ice, shorter term trading/investing is safer, ok to be “kiasi” (fearful of danger) for both daily lives (don’t go crowded place, staying healthy for stronger immune system) and stock investment.

Scale of “black swan” depends on severity of Coronavirus, eg duration and population of people infected (assuming fatality is around 2%). Currently it is still a mini bear for China stock market but having potential to grow into bigger bear if it escalates from health to social and even political issue.

Under the best case, it is likely a medical cure could be formulated within months, based on past knowhow on cousin of coronavirus, SARS. Under the worst case, it may evolve into a common global flu, when most people (survivor) has antibodies, the fatality rate may drop to a normal flu (eg. 0.05%).

The worst virus in mankind history was “Spanish Flu” in 1918 with 50 millions people die of 500 millions infected (about 10% fatality rate, close to SARS). Even so, it stopped eventually. Life will find a way. Virus also depends on human, won’t kill all the human. With advance in medical technology over the past 100 years, chances of overcoming Coronavirus is very high, just a matter of time, whether active or passive measures (eg. SARS just stopped after months of spreading). However, if human continues to make similar mistake, next crisis (or this crisis) may not be a just a financial crisis.

For smart investor, safer approach is to be a shorter term investor or trader when global stock market has been in high optimism > 75% while tested by various potential wolves (US-China trade war, US-Iran conflict, Coronavirus, etc) every few months. Learn to invest for opportunity from crisis: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Market Outlook, Stock Market, Uncategorized Tagged: ,

Formation of Singapore Largest REIT by Capitaland

Posted on February 4, 2020 Written by
capitaland reit

More merging within Singapore REIT sector. This time is joint forces of 2 Capitaland Giant REITs, Capitaland Mall Trust (SGX: C38U / CMT) and Capitaland Commercial Trust (SGX: C61U / CCT), forming Singapore Largest Reit, also the third largest in Asia Pacific. CCT shares will be converted into CMT.

Both CMT and CCT are better than parent company, Capitaland, in the perspective of stock investment. CMT (which owns about 70% shopping malls in Singapore) is relatively stronger and more defensive than CCT, less susceptible to economic cycle.

A giant is not defined by the size. An investor may not need to buy the biggest REIT (eg. American Tower, NYSE: AMT – largest REIT in the world, or LinkReit, HKEx: 0823 – largest REIT in Asia), but it has to be the strongest REIT. There are hundreds of REITs globally, an investor should carefully select a suitable REIT aligned to own personality, eg. as a dividend stock for passive income or as a growth stock for longer term investing or even for short term gain with momentum trading.

Learn from Dr Tee free 4hr stock investment course to master global REITs giants, as well as 10 unique stock trading and investing strategies. Register Here: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Stock Market Tagged: ,

Ver 2.0 of Dotcom Bubble in Year 2020 (Nasdaq Index towards 10000 Points Milestone)

Posted on January 15, 2020 Written by

Year 2020 has the potential to become Ver 2.0 of Dotcom bubble (although Year 2017 has emerging bubble). In Ver 1.0 of Dotcom bubble in Year 2000, Nasdaq and technology stocks surged to sky high prices over 5000 points, then falling to about 25% level of 1200 points.

After 2 decades later, currently in Year 2000, Nasdaq has strong potential to challenge the 10000 points milestone, a great news for trader who buy high sell higher. However, the time bomb is waiting for those who could not control the greed, turning short term trading into long term investing for technology stocks.

The global stock market usually has to go to “paradise” (over 75%-90% optimism) first before falling to “hell” (below 10-25% optimism). The market cycle is fighting between bull and bear, while entire market is going up gradually over the years (eg. Nasdaq is about 2X from 5000 towards 10000 points for market peaks in 20 years).

Year 2020 could be ideal for shorter term investing with momentum trading. Some strong fundamental stocks could be used as excuse to support in share prices, for every 10% up in earning, price could go up more than 20%. In fact, share price is mostly greed driven, business won’t improve significantly in just a few months but people mindset could change overnight, eg after US-China trade war may “cease fire” soon.

Readers may search for global technology stocks which may benefit from ver 2.0 of dotcom bubble in Year 2020. Focusing on technology stocks with strong fundamental and uptrend prices for short term (eg. last 6-12 months). Main strategy would be buy high sell higher but S.E.T. (Stop Loss / Entry / Target Prices) must be set in trading plan.

Dr Tee will share more details of global momentum stocks with other 10 strategies for investing and trading in free 4hr investment course. Register Here: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)

Filed Under: Market Outlook, Stock Market Tagged:

US Stocks (Intel vs Micron, AT&T vs Verizon) & Sectors Comparison (Telco & Semiconductor)

Posted on January 8, 2020 Written by
stock sector

There is a good question asked by Ein55 investment forum member (click here to join forum for free) on comparison of these 4 US stocks from 2 sectors:
– Semiconductor / Technology: Intel (Nasdaq: INTC) vs Micron (Nasdaq: MU)
– Telco: Verizon (NYSE: VZ) vs AT&T (NYSE: T)

Here are my replies after application of “Giant Detector” tool just now, only personal views for educational purpose:

1) These 4 stocks generally are giant stocks, choice of stock or sector depends on investor personality which determines the strategy to apply, eg. short term trading or long term investing, whether buy low sell high (for cyclic stocks), or buy low & hold long term (growth stocks) or shorting (when trend is reversed in a bearish market). Micron may not for long term investing due to very cyclic nature.

2) These 4 stocks belong to the same country (Level 3), USA, therefore trends are mostly following US S&P500 / Nasdaq, generally bullish.

3) These 2 pairs of stocks also from the same sector (Level 2). Telco: Verizon (NYSE: VZ) vs AT&T (NYSE: T). Semicon / Tech: Intel (Nasdaq: INTC) vs Micron (Nasdaq: MU). Both sectors are also following Level 3 in US with uptrend prices.

However, these 2 sectors are different:
– Telco is a “growing” industry in US, suitable to buy low sell high, or buy low & hold.

– Semicon / Technology is a “cyclic” industry in US, more suitable to buy low sell high (especially for Micron)

4) The key differences are with individual stocks (Level 1):
– Micron is more cyclic than Intel (choice depends on personality on risk tolerances), both have strong fundamental but tech / semicon is susceptible to economic cycle. We may have version 2.0 of Dot Com bubble (Ver 1.0 was in Year 2000), which technology stocks usually would go to high optimism during bullish economy, eg now, both stocks are over 70% Optimism.

– Verizon has stronger growth than AT&T (difference is not very large), both have strong fundamental.

In the last Ein55 Charity Course, we have reviewed a strong Hong Kong Telco dividend giant stock, could be better than both Verizon and AT&T for long term investing. US stocks are more suitable for shorter term investing or trading due to high optimism level in the current US stock market. Please do your own analysis and make decision aligned with own personality.

For students waiting to attend 6-day Ein55 classes in Feb and June 2020, you will have chance to do similar homework to study the best giant stocks in each sector or country after learning Giant Detector on Day3 of the 6-day course.

For public readers (non-graduate) who are new to stock investing or Ein55 investing styles, you may sign up free 4 hours stock investment course by Dr Tee to learn LO-FTP strategies: Levels 1-4, Optimism, Fundamental, Technical, Personal Analysis. Register at: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Market Optimism, Stock Market, Stocks A-Z Tagged: , , ,

2 China Guangzhou Giant Property Stocks (H-Shares)

Posted on November 14, 2019 Written by

China Aoyuan (HKEX: 3883) is a giant property stock with strong business fundamental from Guangzhou, having properties in many China cities.

This reminds me of another China Guangzhou property giant stock, Yuexiu Property (HKEX: 0123), also strong in business fundamental. Main key difference is China Aoyuan is bullish in short term but Yuexiu Property is still catching up.

I plan to visit Guangzhou (广州) of China with family in coming Dec holiday period, leveraging on the low optimism Forex of RMB/SGD (1 SGD = 5.15 RMB, highest value of SGD over the past 8 years), tasting the nice Cantonese food (since Hong Kong is unstable), enjoying free & easy trip.

I will have chance to observe the changes in China (PA, Personal Analysis) since my last year Dec trip to Fujian of China. Guangzhou is also a good place to observe these 2 giant Guangzhou stocks, China Aoyuan and Yuexiu Property.

You could learn how to find global giant stocks (property, bank, F&B, healthcare, REIT, energy, etc) from Dr Tee. Register for FREE 4hr stock investment course: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Property Market, Stock Market Tagged:
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