Stock Market Archives - Page 28 of 28

Investing Strategy to Profit from the 10 most valuable brands in the world

Posted on June 19, 2015 Written by Dr Tee (Ein55)

Even if one does not know which good stock to buy, top 10 brands are definitely Giant stocks. Ein55 graduates could perform Optimism + FA (Fundamental Analysis) + TA (Technical Analysis) + PA (Personal Analysis) of these 10 brands to time the investing clock for entry/exit.

Even if it is long-term high optimism (quite likely based on current global stock market), not suitable for investing, you may still consider these giants in the next global financial crisis (when it will be at low optimism again at long-term), usually the share price will be cut by half. Alternatively, you could consider mid-term or short-term trading opportunities after correction to buy low and then sell high at the high of trading cycle.

This is how to profit from 4 steps of Ein55 Investing Styles (details will be given in Dr Tee workshop):

Step 1 = Find the Giant

Step 2 = Wait for the Giant to Fall Down

Step 3 = Help the Giant to Get Up

Step 4 = Say Goodbye to the Giant

If we are patient, we could find the most valuable investment (stock, property, commodity, forex, bond, etc…) at the lousiest price, owing to the greeds and fears of the majority. Ein55 Optimism strategy is a unique investing method, learning how to be the minority who are usually the big winners.

Buy or Sell in May 2015 with Bullish China and Hong Kong Stock Markets?

Posted on April 28, 2015 Written by Dr Tee (Ein55)

For a complete understanding of the investment market, we need to perform 4 levels of analysis:

L1 = individual stock, L2 = sector / industry, L3 = country / region, L4 = world.

These 4 levels will interact with one another to generate the complex stock market responses. From the past 5 years of regional stock indices (see Figure) in Singapore, China, Hong Kong and USA, we could observe the following important trends and correlations, which could help us in making the right positions for the next 1 year:

1) In the earlier stage, due to different political economy policies, US and China have been diverged in the trends, China has been bearish after the tightening of cash supply since 2009 while US has been consistently bullish after QE 1,2,3 with near-zero interest rate.

2) In the past 1 year, supported by strong recover of economy, US could still maintain the uptrend in stocks, continue to create new record high in stock market for S&P500, Dow Jones Index and Nasdaq.

3) With tapering of QE3, risk of domestic inflation is lower, China could loosen the monetary policy to accelerate the growth of economy, resulting in the recent rally of SSEC index from 2000 points to 4500 points, sentiment of market is very positive.

4) Singapore (STI) and Hong Kong (HSI) are closely correlated like twin markets over the past few market cycles. In the past 5 years, variations between 2 markets are within 10%. Fund managers and retail traders/investors know both market well, the fund could flow smoothly between 2 markets, although they are not officially “connected”.

5) Both Singapore and Hong Kong markets are followers, sandwiched between US and China, world No1 and No 2 largest economy.

In conclusions, China is fast in catching up with the lagging performance, pulling Hong Kong up along the way, while Singapore is likely to follow the twin in this rally.

Want to learn how to position yourself to profit from the current rally in regional stock markets? How far could STI, SSEC, HSI and S&P500 grow eventually? What are the stocks with tremendous upside? You could find all the answers here through high-quality free public workshops by Dr Tee

Filed Under: Market Outlook, Stock Market Tagged: sell in may

Mr Lee Kuan Yew – Life Investor of a Nation: Singapore

Posted on March 28, 2015 Written by Dr Tee (Ein55)

Transforming Singapore from a Penny Stock to a Blue Chip in 50 years

While Singapore is celebrating 50 years of independence, now is a sad moment for the entire nation for the leaving of Mr Lee Kuan Yew. Although he has left the physical world, his wealth of wisdom is a valuable legacy for us. As a tribute to him, I would like to relate his styles of governing the nation with the investment world, many similarities which we could learn from him to be a successful investor and contribute to the nation in a positive way.

Most people would agree that Warren Buffett is the most successful investor in the world. However, in my opinion, Mr Lee is the Ultimate Investor because Warren Buffett is only good in choosing good stocks or businesses, benefiting a small group of rich shareholders, but Mr Lee could transform a poor nation without much natural resources (as if a penny stock) into a developed country (as if a blue chip) in the last 50 years. More importantly, Mr Lee’s dedication to his only life investment, Singapore, not only benefiting 5 millions people living now, but also for many generations to come.

Let’s analyze the key management styles of Mr Lee, relating to the following Ein55 styles of investment (more details can be learned in www.ein55.com):

Optimism = FA + TA + PA

where FA = Fundamental Analysis, TA = Technical Analysis, PA = Personal Analysis

1) Fundamental Analysis (FA): National Leader <=> Company Management

The little red dot, Singapore, is a nation having the size of a city. Mr Lee has fully utilized its strength, most of the policies could be enforced effectively in a short time. If Singapore is a miniaturization of a company, the President is as if the Chairman, the Prime Minister is as if the CEO, ministers are as if the Department Heads, while the people are as if the hardworking staffs.

We know that a good company is like a good nation, both needs strong leadership. This is the first step for the success of a nation or a company. When we invest in a company or a stock, we need to consider the leader. Eg, a powerful leader such as Steve Jobs could bring new life the Apple Inc. Detection of a strong leadership is easy: within a period of 5 years (a typical market cycle) or longer, the company business is moving in a positive direction, eg. increasing earning and net asset value. A company business could seldom do well when the leadership quality is poor.

From a nation perspective, the measurement of performance could be also every 5 years, the term given by the voters in each general election. Mr Lee has a very different management styles, he may not need to “please” the voters with short term benefits to gain their votes, which may slow down the future national progress. Instead, he made decisions which he believes would be beneficial in a longer term, the people may not gain much immediately, but they would enjoy the bigger fruit eventually. 5 years is long enough for a company, also for a nation to show whether the past policies are truly working. Mr Lee is like a value investor who implemented the investing strategies consistently, different from a trader who may change positions from time to time depending on the situations. This is how he received the support again and again every 5 years when he showed the report card to the people.

Although we are not as good as Mr Lee who could build up a little giant of nation, we still could learn to select companies which are giants, having patience for their growth, naturally we will enjoy the reward of investment. This is different from some weak stocks which the businesses are poor, the management may still decide to give lots of dividend to retain the shareholders. This is also true for a nation, if the national reserve is not properly managed, the wealth of nation may only be enjoyed for one generation, then many generations to come would have to pay for the prices.

2) Personal Analysis (PA): Government System <=> Company SOP

Mr Lee himself could not build up the nation alone. He needs a strong team which requires a strong and transparent system. Mr Lee is a lawyer by his profession, fully integrating this legal belief to enforce a high integrity management system (eg. corruption free), selection of talented people regardless of races based on their capabilities (meritocracy), focusing in end results (eg. economy). Although Mr Lee was not directly involved in the daily government decisions for many years, the well-established system is like an automated program, executing on behalf of him. He has duplicated many “mini” Lee Kuan Yew through this system, an important asset for Singapore to last for many generations to come.

Early years of Singapore was like a growing penny stock, now maturing to be a blue chip. Similarly from a company perspective, a blue chip company usually has a well-established system, although the growth could be limited by the lack of creativity due to following the system, the upward trend could be gradual but stable. A good company SOP could help to improve productivity and also minimize major financial loopholes which are common in certain companies which went bankrupt suddenly.

3) Technical Analysis (TA): Global Trends <=> Stock Prices

TA is critical for both traders and investors to ride the upward trends, saving the waiting time which is an opportunity cost. Similarly, Mr Lee has world vision, he knows who and how to make friends and form alliance with other bigger nations while maintaining the integrity of a small nation. With the rise of China in the past few decades, Singapore has benefited greatly, not just depending on western worlds in the early years. Mr Lee was GIC founding Chairman, his understanding of Political Economy helps him in making critical investment decisions for the nation, speeding up the growth of Singapore economy. Working hard is not enough, one also needs to work smart. This is true for investing, a combination of FA + TA + PA will help us to look for the best investing opportunity with the lowest cost within our capabilities. We look for investment giants not when they are at the peak of their strength, but we wait for them to fall down due to the crisis, helping them at the right time to climb up again, the giants will reward us after they have recovered.

4) Optimism: Up & Down of a Nation <=> Company

A company, regardless good or bad, is susceptible to market cycling, doing well during bullish market, suffering during bearish market. Main difference is a good company will survive through the global financial crisis but a bad one may go bankrupt half way. Singapore is like a strong company, the national reserve is like net asset value (NAV) of a company, an anchor to the nation during the difficult time.

The optimism level of Singapore may not be high all the time, there is always up and down due to various reasons. Like a valued stock, Singapore will overcome the market cycling, having a positive CAGR (Compound Annual Growth Rate), moving upward in the long run, as long as the Singapore people (as if the investors of the nation) continue to have the faith and confidence, contributing their best to the nation.

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Many people may be wondering why Mr Lee could be so successful in his whole life, almost every major decision made becomes positive eventually. In my opinion, regardless of Mr Lee’s final choices, Singapore will still become successful (may be a different perspective or definition of success) eventually because as long as a government cares for the people with practical considerations, each of the policy could have a positive outcome eventually. This explains why in a post Mr Lee era, Singapore will continue to grow, as long as the basic principles or pillars remain intact. It is like a value investor with consideration of FA, regardless of final stocks chosen in the investment portfolio, the outcome will be positive eventually.

Lives are made up of decisions and choices, sometimes there is no right or wrong choice, as long as we have clear mindset of our beliefs, both personal and national levels, we shall move in the positive directions eventually. All roads lead to Rome!

Mr Lee has contributed his whole life “investing” in Singapore without personal benefit (if any, will be just self-satisfaction to see the growth of the tree planted with lots of ripe fruits to share with others). The entire nation should view his leaving positively as this is a natural life cycle. More importantly he has taught us many lessons with observation of the success of his life and Singapore as a nation. He is a true timeless giant and hope we could share his wisdom to benefit more people to grow the nation together…

Filed Under: Stock Market, Value Investing Tagged: Singapore Market

Global Market Rally from Bullish Years of Horse to Sheep

Posted on February 20, 2015 Written by Dr Tee (Ein55)

As pointed out in my article 1 year ago, a stumbling Year of Horse 2014 is indeed a blessing in disguise.

https://www.ein55.com/2014/02/stumbling-year-of-horse-a-blessing-in-disguise/

Year of Horse had a rough start but having a nice yearly performance as predicted 1 year ago. All the major global stock indices show positive yearly return, ranging from 10% to 50% gains (see graph below), despite uncertain stock market conditions at that time with gloomy QE3 tapering and China economy slowdown. As predicted, China Shanghai Stock Index (can be traded with A50 ETF) at 2000 points was a strong support as few country indices with strong fundamentals could have such a low optimism. Final results show that China Shanghai Index has experienced 70% rally from 2000 points to 3400 points, Ein55 market optimism strategy has successfully predicted this golden opportunity.

In addition, Temasek Portfolio with undervalued low-optimism have recovered successfully, eg, SMRT ($1 to $1.80), NOL (recovering from price valley), Capitaland ($3 to $3.60), there are many more “Temasek Giants” are waiting for recovery:

http://www.temasek.com.sg/portfolio/portfolio_highlights/majorportfoliocompanies

My investing philosophy is to look for investment giants, patiently waiting for the giants to fall down, helping the giants to get up, finally saying goodbye to the giants who will then reward us substantially for the help given. Learn how to position yourself to benefit from the stock market recovery, there are many falling giants from various sectors (oil & gas, retail sales, casino, palm oil, mining, etc) in many countries who are waiting for recovery.

Similarly in the Year of Sheep 2015, the stock market is again uncertain with predictable US interest rate hike, bearish global commodity market (including oil crisis), gloomy European market due to Greece deadlock and massive ECB quantitative easing. Risks are opportunities in Year of Sheep. In a bullish market, every risk will result in market correction, which can be a safe entry point.

To better understand the risk and opportunity in Year of Sheep 2015 for stocks and properties, you and your friends may attend my next free investment workshop (both English & Chinese versions are available, solid 3hr knowledge sharing), register through the link below:

https://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee/

Wish all the readers a successful investment in the Year of Sheep 2015!

全球投资市场：万马奔腾至三羊开泰

在一年前的马年市场展望报告，我准确地指出，马失前蹄乃塞翁失马、焉知非福。

https://www.ein55.com/2014/02/stumbling-year-of-horse-a-blessing-in-disguise/

马年开市不利，不过后劲十足，就如我所预言一年前。所有主要全球股票指数，全年正数回报，获利介于10%至50%（看以上图表），纵然当时QE3乌云密布，中国经济缓慢。正如所料，中国上证指数（以A50 ETF交易）于2000点是强有力的支撑，因为鲜有强国处于如此低乐观指数。结果，上证指数经历了70%的飞腾，从2000点回弹至3400点，Ein55市场乐观指数策略成功地预测了这个良机。

除此之外，被低估的低乐观指数之淡马锡投资组合已经成功恢复，例如SMRT ($1 至 $1.80), NOL (从谷底翻上), Capitaland ($3 至 $3.60)，还有更多的“淡马锡巨人”正在康复中。

http://www.temasek.com.sg/portfolio/portfolio_highlights/majorportfoliocompanies

我的投资理念是寻找投资巨头，耐心等待巨人倒下，然后帮助他东山再起，巨人将感恩图报。

学习如何定位自己，从股市复苏中受益，静待许多国家的各行业（石油/天然气、零售、博彩、棕榈油、矿物等）的重挫巨人再崛起。

同样地，在2015羊年，股市也是不稳定，包括可预测的美国加息，全球商品市场低迷（包括原油危机），阴郁的欧洲市场（希腊僵局、欧洲央行大规模量化宽松政策）。每个风险是羊年的良机。牛市中，每个风险会导致市场调整，恰也是一个安全的入市点。

为了更好地理解2015羊年股票和房地产的风险和良机，您与朋友们可以参加我的下一个免费投资研讨会（可选择英文或华文版,3小时充实的知识分享），通过下面的链接进行注册：

https://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee/

祝贺所有读者一个成功的投资年，羊羊得益！

Filed Under: Macroeconomy, Market Optimism, Market Outlook, Stock Market

Risks are Opportunities in the Year of Sheep 2015: China Market Rally and Crude Oil Crisis

Posted on January 15, 2015 Written by Dr Tee (Ein55)

Happy New Year to all readers. Here are some new updates on current market outlook (supplements to eBook on Global Market Outlook 2015) when we welcome the Year of Sheep 2015.

1) China Market Rally

As shared in several workshops and publications since 1 year ago, 2000 points was a golden entry point for China SSEC Index (through A50 ETF) as it was at 25% Optimism, a rare opportunity for a major country index to be corrected. Indeed, in the past few months, after the Shanghai and Hong Kong stock markets are connected, it provides a reason for the traders and investors to push up the undervalued SSEC Index to 3330, appreciation by 65%!

Although SSEC or A50 still has more than 50% growing potential (before reaching 75% Optimism), a safer strategy now could be looking for individual undervalued stocks with low optimism (<25%) which are still lagging but having more potential to rise.

2) Oil & Gas Correction

Brent crude oil price has been dropping in the past few months, from US$115/barrel to the lowest of US$47/barrel recently. Global commodity price index has been below 25% Optimism when crude oil was still above US$100, the unstable high oil price at over 75% Optimism was triggered by a complex interactions of:

2.1) Recovery of US:

The US dollar is strengthened after QE3 is fully tapered since Oct 2014, following by anticipation of US interest rate hike in 2015. USD and commodity (eg. gold, oil, etc) usually move in opposite direction. With US unemployment rate drops to 5.6% in Dec 2014, the US recovery will continue in the next few years, oil will be under pressure.

2.2) Political Economy

There could be political considerations for oil producer vs oil consumer countries, OPEC and non-OPEC countries, conventional vs shale oil technology. The demand vs supply principle of economy is disturbed, resulting in high volatility in oil prices. The crude oil price is halved, the impact is as if a new form of global QE (Quantitative Easing) to stimulate the economy because the energy cost is lowered, there is more saving for spending or investing in near future, at the expense of oil producers who have accumulated significant reserves of wealth during the super bull run of oil from 1999 to 2014.

2.3) Trader Psychology

Profit taking or cut loss when prices drop from high point, resulting in falling-knife trend, few traders dare to catch to support the price. With more hedging and shorting sentiments, the oil price will be under correction, following the old foot step of gold prices a few years ago.

A crisis is usually an opportunity, a blessing in disguise. Oil price has resulted corrections in many stocks in Oil & Gas, some are below 25% or even 0% Optimism, which usually only observed during Global Financial Crisis, not in the middle of a bull market. Commodity has a much longer market cycle (eg. 20-30 years), may not be aligned with economy cycle. Each investment market (stocks, properties, forex, bonds, etc) has different investment clock, % Optimism strategy could be applied to buy low sell high. For long term Brent crude oil, 0% Optimism is at US$44/barrel, over-correction by the market will provide an excellent opportunity to both traders and investors but a proper strategy must be adopted, especially to overcome the market emotional swing due to short term volatility. The timing of crude oil recovery then will be the timing for oil & gas related stocks.

The sector correction will be rotated from time to time among various industries due to imperfect market, following the Optimism level, higher one will have higher risk, lower one will have higher potential. The oil correction will help the shipping sector (eg. NOL, SIA, etc) at low optimism to grow, higher outlook for profitability with lower energy cost. The rally in China market will help the Singapore S-chips to recover gradually, especially after the China economy is improved further. The last example was severe Singapore REITS correction in year 2013 after 50% rally, now in recovery phase but will have limited upside due to increasing mortgage rate (anticipation of US interest hike) and gloomy outlook of Singapore property market. Earlier example was storm in penny stocks, correcting many stocks, resulting in low trading volume due to negative sentiments. Based on the survival of the fittest, each correction will make the “giants” or strong-fundamental stocks become stronger after recovery from the valley of lower price. We want to look for giants who are falling down, helping them to recover at the right time, then the giants will reward us when becoming strong.

For those who are interested in the details of market outlook 2015 or Ein55 styles with Optimism Strategies, you may drop by to attend the next free workshops conducted by Dr Tee. All the best to all in trading and investing for year 2015!

Filed Under: Commodity Market, Macroeconomy, Market Cycle Investing, Market Optimism, Market Outlook, Stock Market Tagged: Global Market, market outlook

eBook on Global Market Outlook 2015

Posted on November 14, 2014 Written by Dr Tee (Ein55)

It is fresh from the oven: I have just finalized 35-pages eBook on Global Market Outlook 2015. You could download here:

– Existing Newsletter subscribers: Please refer to the download link sent by email on 14 Nov 2014

– Non-newsletter subscribers: Please sign up (click on eBook image of ein55.com) before download

Aligning with the introduction of new eBook, I have prepared 3 exciting free workshop and short course (total worth $1000) in Nov & Dec 2014 for the readers:

1) Global Stock Market Outlook 2015

2) Best Timing to Profit from Singapore Property Market and REITS Stocks

3) Market Optimism Strategy with Integrated Fundamental and Technical Analysis

Free seats are limited (first come first served), please register through:

https://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee/

eBook Table of Contents (Global Market Outlook 2015)

1. Mass Market Sentiment Survey

2. Review of 2014 Global Markets

3. US Economy and Market Outlook

3.1 US Government Debt Limit

3.2 Tapering of QE3

3.3 Fed Interest Rate Hike

3.4 US Job Market

3.5 US Property Market

3.6 US Bond Market

3.7 US Dollar, Inflation & Gold / Silver / Crude Oil

4. Regional Economy and Market Outlook

4.1 Europe Market

4.2 China Market

4.3 Hong Kong Market

4.4 Japan Market

4.5 Southeast Asia Market

5. Singapore Economy and Market Outlook

5.1 Singapore Stock Market

5.2 Singapore Property Market

6. Stock Market Potential for 2015 and Beyond

7. Conclusions and Recommendations

Acknowledgements

Appendix

Filed Under: Bond Market, Commodity Market, Forex, Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Optimism, Market Outlook, Personal Analysis, Property Market, Stock Market Tagged: market outlook

Warren Buffett is also a Trader!

Posted on July 19, 2014 Written by Dr Tee (Ein55)

Most people know that Warren Buffett is a value investor who usually buys stocks (eg. Coca Cola, >40% of the investment portfolio) and hold for a long term. Few people know that sometimes Warren Buffett also “trades”, the annualized return (CAGR) can be even more impressive than his long-term-investing stocks.

In the last market cycle, he decided to buy his first China stock (H-Share): Petro China in the year 2003 with an average price HK$1+ using about $500 Million capital. In the year 2007, the market soared and he made a surprised move (against his style) to sell all the stocks of Petro China, above HK$12, taking 800% profit in 4 years, average of 200%/year return, perhaps his best “short” term record.

How he did it: knowing when to buy at very low and sell at very high?

Applying the Ein55 Optimism Chart (see figure below), we could notice that Warren Buffett actually entered around 25% Optimism while the price and optimism trend was up, existing around 90% Optimism (countered trend, his favorite investing style). His famous saying is to be greedy when others are fearful, vice-versa. However, he did not teach his followers exactly when is considered fearful and greedy. Some people may have to guess, when market are having a mid-term correction, they may think it is time to invest and hold for a long term. However, when the true global financial crisis comes, the past earning will be completely wiped out, value investing or long term investing could make a loss if timing of entry is not a low enough position.

Ein55 Optimism Chart is a solution, one could know when is truly low (eg <25% Optimism), when is truly high (eg >75% Optimism), not limited to stocks, but also applicable for any investment involving human (eg. Property Market, Bond Market, Commodity Market, Forex, Bank deposit, etc) because human’s weakness in emotional control resulting in most people tend to buy high sell low: following others to buy together during the last rally, then again to sell together near to the end of the crisis. A trader and an investor’s biggest enemy are themselves, not the market. One has to overcome one’s mind to be a successful trader or investor.

At the highest level, the difference between trading and investing is only a fine line. The “secret” of making money in any investment is always BUY LOW SELL HIGH. It is easy but how many people could fully follow this belief? Warren Buffett was considered a trader because he only used 1% of his capital or wealth ($0.5B out of $60B) to buy Petro China. He bought when the trend was up (trend rider), taking profit when the profit target is reached. Warren Buffett actually integrates trading techniques into investing, translating into Market Cycle Investing which usually gives higher return than value investing (following economy cycles to buy low sell high) but a more predictable outcome than trading.

Many people argued whether trading (eg from day trader to a few months of trading) or investing (eg period of a few years or even permanently) is a preferred choice to make money from stock market. In my opinion, results of both methods are comparable if one could be the best trader or the best investor. The key of success is to align the trading plan or investing strategy with own’s personality (eg. risk tolerance level, target for profit, amount of free time, emotion control, etc). Many people simply pursue the best methods of other trading experts or investing masters, trying to duplicate the key of success. They could be disappointed if the missing link is not awared.

Whenever I conduct trading/investing courses, I would conduct an investing profile analysis of my students, knowing their past trading / investing behaviors. This is like a doctor must understand a patient’s medical history before recommending the best medication, which usually must match the patient’s health condition.

Ein55 Optimism method could successfully integrate short/mid-term trading and long term investing under one roof with consideration of Fundamental Analysis (both individual stock and macroconomy), Technical Analysis and Personal Analysis. A trader or an investor will know which hat (trading or investing) to wear, depending on the Optimism level of the market, so that one could fully utilize their strength.

Back to Petro China, the regret was that we can only watch Warren Buffett making big money from the market in 2003-2007. The good news here is that the low optimism level is finally back for Petro China. It is now at 7% Optimism with uptrend. The “parent” of this stock, China SSEC is now at 26% Optimism, a very attractive low level to buy A50 (through A50 ETF in Singapore or Hong Kong) or related H-Shares and S-Chips, many stocks are at low optimism, some with very good fundamentals and a few with strong uptrend. I prefer to apply multi-perspective methods through Ein55 Styles to maximize the profit with low risk.

A stock with strong FA, low optimism, uptrend TA and positive PA is hard to find, but when the opportunity comes, one has to be prepared to grab it: knowing what to buy, when to buy/sell, how much to buy/sell, how to react for different market conditions. One may not have to chase after a bullish market to make money. We may earn much more from a bearish or sideway market, if the right strategy is applied.

Filed Under: Market Optimism, Stock Market Tagged: petrochina

Light at the End of Tunnel – SMRT

Posted on May 10, 2014 Written by Dr Tee (Ein55)

Due to busy schedule, it has been some time since I last updated the blog. STI has become bullish in the past few months, now 50-day moving average is above 200-day moving average, a long-term bullish indicator for TA believer. In investing, there is no need to watch the market everyday or even every week. We just have to position ourselves ahead of others and wait patiently.

When I conducted the Ein55 course in Feb 2014, my graduates applied the market optimism strategy, informing me there is a good opportunity to buy SMRT at 0% Optimism. There are 800+ stocks in Singapore and numerous in the world stock markets, therefore usually my students are the ones who gave me the “stock tips” (not the other way round as they have learned to fish, no need for me to give fish to them) using the Ein55 Styles learned. I analyzed SMRT and posted on 20 Feb 2014 in blog:

https://www.ein55.com/2014/02/stock-screening-by-ein55-optimism-method-smrt/

Buying low-optimism stocks at undervalue, one must also compare price vs value to ensure price is much lower compared to its value. There is also a winter period to endure because usually these low-optimism stocks will not recover in price in short term. For SMRT, it took about 2 months (considered short as it was at 0% Optimism) for its winter, last few weeks have been its spring time, having 30% rally since the last post in blog (price was $1.03 then). If 30% profit is considered great, then market optimism strategy is under-estimated because this method aims for average of 50 – 200% return. Buying SMRT at 0% Optimism, the maximum potential return could be as high as 200% but it depends on the personality of individual, some may want to take profit after 20-30% return, some could wait till 100% return, but may be only a few have the patience or courage to wait for 200% return.

Some may feel the rally of SMRT and some stocks are due to speculation. This is possible. However, we should understand why they are speculated and not other stocks? An undervalued stocks with low optimism, when the price was over-corrected in the past, naturally it becomes the star when there is a positive good news in future. Sometimes we may not know how long will be the winter period to wait but we just position ourselves when majority of others are not interested. This is only an early spring for SMRT, price could drop to wipe out those trend riders who buy high and hope to sell higher.

There are many more low-optimism stocks discovered by my graduates. The choice will require matching in individual personality. For example, buying NOL at $1 when FA or earning is declining for many quarters. The price could drop below $1 (it did) but when the shipping industry has fully recovered, NOL records the first positive earning of the quarter in near future, then you could expect similar “speculation” in price again. Do you prefer to buy something at discount during Great Singapore Sales or bid for higher price in a tender? This is your choice, one has to overcome one’s mind, before can be successful in trading or investing.

Filed Under: SMRT, Stock Market, Stocks A-Z Tagged: Light at the End of Tunnel, smrt

Stock Screening by Ein55 % Optimism Method – SMRT

Posted on February 20, 2014 Written by Dr Tee (Ein55)

Sorry for missing the last weekly article because I was too busy with the preparation of Feb 2014 class (4-day course) which requires my full focus and attention. Similar to the previous classes, I try to impart 17 years of my investing experience within 4 days, could be overwhelming for some students, especially when they went through the Day1 evening class till 10:45pm, then Day2 class from 8am+ to 8pm+ without giving in to tiredness.

I am very touched to see their strong spirit of learning, willing to sacrifice the next few days to complete the homework assigned (the knowledge can only be retained and become yours with own practice). One of the tasks is stock screening (what to buy) to identify stocks which could potentially give 50-200% return in future, applying the Ein55 % Optimism method. Other than NOL ($1) and China SSEC ETF (2000 points) with low optimism which I shared in the earlier articles, they have learned to apply and spot many other good investing opportunities.

One of the cases studied by the students is SMRT. Based on the preliminary FTP (FA + TA +PA) Analysis: Technical Analysis, TA (see chart below), trend in the last few years has been bearish (shorter moving average (MA) is below longer MA; parabolic SAR as resistance), partly due to weak Fundamental Analysis, FA (eg. higher cost of MRT repair, declining earning per share (EPS) and higher price-earning ratio (PE)) and negative Personal Analysis, PA (eg. cases of MRT breakdown, losing public confidence). Logically, most people would think SMRT is bearish, therefore not a good buy now.

For trend followers (traders / investors), they may apply MA, eg. when 50 day (about 2 months) MA is above 200 day (about 9 months) MA to enter in year 2012 (around $1.70/share, after prices came down from the peak of $2.30/share with about 30% discount) but then quickly cut loss when the signal changed to sell in a few months, dropping another 30% of the price till now (nearly $1/share). Most people would stay away from SMRT as they would not know how low it may go down further (eg. another 30%), probably below $1 as the historical low was around $0.50 in year 2003 during SARS crisis. Likely they would wait for the mega trend to reverse, eg. 50 day MA is above 200 day MA, before considering SMRT again. Some may not consider SMRT at all.

If one applies conventional support and resistance TA method, price of $1 is only a secondary support (similar to years 2005-2006) and $0.50 is the mega support, so the longer-term buying signal may not there yet using this strategy. Following Ein55 % Optimism principle, current price (nearly $1) of SMRT is just below 0% Optimism, implying a very good opportunity to buy low and sell high in future. For investor with holding power of a few years, buying at this price will have very high probability of >50% gain. Knowing what to buy does not mean one has to buy immediately (when to buy). There are several strategies available for timing of buy and sell, as well as how much to buy and sell.

For counter-trend method, now is a good timing (buying around $1) but one has to prepare to endure a possible period of short winter time (price may come down further but potential of “falling knife” is limited due to low optimism), while SMRT improves on its FA (eg. better EPS in 2014 compared with 2013), this will help to attract longer-term investors, then supported by speculation of short-term traders when there is a V-shape rebound in near future, especially when STI is moving upward. If one could not afford to lose money, even for a short period of time, then follow the trend to buy is recommended, however, a premium of >20% higher stock price may be required to confirm its longer-term trend reversal. Trend follower seems safer but the entry could be at its mid-term high and one with weak holding power may not able to hold through 10% price correction later due to market volatility, either will cut loss or make little profit. A combination of counter-trend and follow-trend method is possible, one may use shorter pair of MA (eg. 20/50 days MA using mid-term trading method) to buy SMRT now, minimizing the short-term downtrend risk, enable buying at relatively low point. The selling will be considered after >75% Optimism in future.

The % Optimism method will have much higher chances of success when combining with detailed FTP (FA + TA + PA) Analysis, considering both the individual stock and mega stock market and economy trends (sector, country, region, world). The holding power with knowledge of mega trend will minimize its long-term risk. Knowing what to buy is useful but the next step will be when and how much to buy and the ultimate results depend on when and how much to sell. Many investors know what stocks to buy (eg. blue chips with strong FA, hearing from stock tips shared by analysts) but still could lose money easily due to lack of personalized investing strategy.

Control of greed and fear is critical to maximizing the profit >50% (not only to gain / lose a few %), this can be guided by % Optimism of individual stock and also the mega market (eg. STI or major regional indices).

Filed Under: SMRT, Stock Market, Stocks A-Z Tagged: % Optimism, Singapore Stocks, Stock Screening

Stumbling Year of Horse – A Blessing in Disguise

Posted on February 3, 2014 Written by Dr Tee (Ein55)

Over 20% of the world populations are celebrating lunar new year of Horse 2014 but the “Wooden Horse” stumbled on the first trading day of global stock market, against the best wishes of traders to have a leading horse up the hill of bull market. This poor opening could be a disappointment to most stock traders and investors. However, for those who attended my earlier Global Market Outlook Workshops, they will understand that this is actually a blessing in disguise.

With the accelerated recovery of world economy, most regional stock markets have good performances in stock market in year 2013, except Singapore market (STI) continues to sleep, having virtually no change in position. The main mid-term risk of global investment market is US stock market which has climbed up the hill of bull market (reaching about 60% Optimism, a leading stock market) without a good rest of 10% or more correction, even after the announcement of the first QE3 tapering. US stock market requires a correction, so that the global stock market has the energy to go up further in phases of bull market. The recent second announcement of QE3 tapering (reducing QE from $75B to $65B) and slow recovery of emerging market (eg. China), giving a good excuse for some global stock traders to take the profit and wait for the next buying opportunity, leading to the overdue correction.

Even the stagnant Singapore stock market is affected, STI falls below 3000 points (ending 2990 points on 3 Feb 2014) for the first time since Nov 2012. This is also the 6^th time in the last 4 years for STI to go above and then below the 3000 points of psychological barrier during a mid-term cycle (usually a few months of duration). On 20 May 2013, STI was at mid-term high of 3454 points, there were traders who hoped to buy high and sell higher, especially for property related stocks. Since then, STI has been corrected by about 13% and REITS sector index is down by about 20%. Many people prefer to wait and see during this period, staying sideline, not taking any new action.

Some workshop participants asked me in the past few months whether it is a good time to enter the stock market. The question I asked in return was: “Do you feel scared?”. In fact, most people don’t feel fearful nor greedy in the past 1 year, aligning well with the sideway trend of STI. If you are not scared, then it is not a reasonably good time to enter the stock market. If not only you are fearful but over 75% stock traders or investors are pessimistic, then it could be a golden opportunity to enter the market. Although STI and many regional stock markets are near to 50% Optimism, upside is about the same as downside, but there are still individual stocks, sectors and even regions which are trading near to or below 25% Optimism with 3 times upside more than downside.

NOL today (3 Feb 2014) is exactly at $1.00/share, meeting my earlier recommendation to buy, this is the second time it has reached $1 since the global financial crisis in 2009, last dip was Nov 2011. Although NOL has poor FA, its poorer price has compensated for the weakness. Similar recommendation was to buy China SSEC Index related ETF when the index is at or below 2000 points, which happened for the 3^rd time about 2 weeks ago. There are also other fundamentally-strong stocks which are trading at low Optimism level. One who follows this simple strategy of buy-very-low sell-very-high, may not see these stocks to go uptrend immediately after buying at such low price. Instead, likely they have to endure a relatively short period of winter time before the spring time may come. STI or related blue chips, are considered reasonable good buy when STI is trading below the 50% average line (3000 points) of the index channel of 2700 – 3300 points, lower is better, depending on one’s patience and market opportunity.

Buy at very low will enable us to maximize the profit in longer term but one has to control the emotion of fearful market. Following the trend is a common trading method used by traders but one has to be the top 10% best traders or at least the lucky ones to enter during the initial phase of the uptrend, else the future upside will be limited when the uptrend is confirmed, eg. when STI is above 3300 points, susceptible to the next market correction. A stock trader or investor has to make the decision whether the ultimate goal is just to win (regardless of % gain) or to maximize the profit (may not immediate, having holding power of over 1 year), then aligning the trading or investing strategy accordingly.

Filed Under: Stock Market Tagged: Global Market, Singapore Market, US Market

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