global financial crisis Archives - Page 3 of 4

Strategies for Great Stocks Sales (狡兔三窟)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dr Tee (Ein55) Style of Stock Market Outlook

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

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

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

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

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

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

1) World

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

2) US

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

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

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

3) Singapore

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

4) Hong Kong

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

5) China

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

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

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

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

1) Growth Stocks (Buy Low & Hold)

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

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

2) Cyclic Stocks (Buy Low & Sell High)

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

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

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

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

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

What to Do in Stock Crisis Now?

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

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

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

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

1) Hold

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

2) Buy / Wait

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

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

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

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

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

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

3) Sell / Shorting

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

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

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

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

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

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

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

Stock Market Crash with Coronavirus Pandemic

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

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

1) Fear

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

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

2) Wealth

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

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

3) Health

Bad news: Many people would die after infected

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

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

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

Coronavirus

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

2) Social distancing (avoid crowded places)

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

Stock Market

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

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

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

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

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

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

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

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

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

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

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

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

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

1) Wolf (Short Term Trading)

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

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

2) Mini Bear (Mid Term Trading)

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

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

3) BIG Bear (Long Term Investing)

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

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

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

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

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

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

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

Crashes in Global Stock Market and Oil Market

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

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

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

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

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

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

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

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

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

Evolution of Bear Market

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

Mini bear (short term downtrend) and mini bull (short term uptrend) usually would take turn in uncertain markets until a major trend (longer term trend) is confirmed.

As of now, US short term stock market is losing short term momentum with S&P500 below intermediate support of 3000 points (was a critical resistance before that). The current global stock market correction of about 10% has reflected the initial fear of Coronavirus, similar to Asian stock market 5-8% correction during lunar new year in late Jan to reflect the initial fear of China Coronavirus condition.

Currently it is still fear driven stock market correction but when the real economy is affected with longer period of pandemic (over 6-12 months) with manufacturing supply chain broken, reduced spending globally (less tourists, less shoppers, less spending), then the big bear will not be too far as it would be fundamental driven (country economy will fall and many business which depends on consumers would be less profitable or even making losses), share prices would be bearish for over 6-12 months, worse if coupled with falling of stock market from high optimism.

Therefore, whenever stock prices up or down, evaluate if it is fear or fundamental driven. Coronavirus crisis so far on stock market is still fear driven but having potential to be fundamental driven when dragging too long.

New virus (stock market is at mercy of Coronavirus):

-> initial spreading, initial fear, stock fall 10%

-> more spreading (pandemic), more fear, stock fall 20%

-> quarterly economy falls, more fear, stock fall 30%

-> yearly economy falls, great fear, stock fall 50%

-> continue the downtrend circle of stock <—> economy until Low optimism at L3 to L4 (world level)

Learn to take action in stocks, converting crisis into opportunity. Learn from free 4hr investment course by Dr Tee: www.ein55.com

Filed Under: Macroeconomy, Stock Market Tagged: bear market, global financial crisis

4 Signals for Global Financial Crisis – Dr Tee Important Sharing in Invest Fair 2019

Posted on August 21, 2019 Written by Dr Tee (Ein55)

Dr Tee has been sharing his views on market outlook over the past 6 years of Invest Fair (2014-2019). The stock market condition each year is unique, a result of complex interactions with other investment markets (commodity, property, forex, bond), major economy and global political events.

In year 2019, stock market continues to be bumpy, especially for US and world stock markets at high optimism level. Dow Jones Index drops by 800 points over 1 day recently due to news of inverted bond yield (US bond yields, 2 years is higher than 10 years) which has been a reliable market recession signal over the past few decades.

Dr Tee has shared the following 4 major signals in Invest Fair 2019 to monitor for Global Financial Crisis:

1) Stock Market
Both world stock market and US stock market are falling down from higher optimism of over 75% optimism to current 63% Optimism, forming triple top with 3 trials so far. Political economy interventions (eg. cut down of interest rate or gentle ending of US-China trade war, etc) could prolong the bull market but the global stock market may require a crisis to reborn, forming another decade-long of natural market cycle.

2) Bond Market
US government bond yield is generally aligned in direction for longer term with stock market. With both short term and long term bond yields are falling downward from critical 3% to less than 2% (Optimism currently at 36%), money could be flowing at faster rate from stock market to a more defensive bond market or keeping as cash in banks. The inverted bond yield in US (especially for 2 years bond yield to exceed 10 years bond yield) is a risky signal for stock market, historically over the past 50 years, leading to 7 global financial crisis after 6-18 months when signal was observed.

3) Global Economy
US economy is still strong, job market (unemployment rate of 3.7%) is near the best performance over the past 50 years. However, the rest of the world (50% of world economy) are slowing down, including Singapore with current GDP growth rate of only 0.1% (42% Optimism with bearish trend). At the same time, US GDP growth rate is 2.3%, showing early sign of weakness with 71% Optimism in economy after falling down from past high level of 3% GDP.

4) Black Swan
Usually global financial crisis could be formed only after earlier 3 signals are aligned: falling down from high optimism global stock market, bond market and economy. However, an unexpected black swan (any negative global events, eg. political economy – US-China trade war, forex crisis, property crisis, commodity crisis, large-scale war, major natural disaster, etc) could trigger to accelerate the pace or prolong the duration of global financial crisis.

Externally, the uncertainty of US-China trade war continues to be a threat to global stock market, especially Trump’s first term of US presidency would last till end of year 2020, drastic change in political economy becomes a possible black swan. There is also risk of currency “war” if major economy choose to weaker own currency to have unfair advantage in export.

Trump may introduce more stimulation to economy (eg. requesting the Fed to cut more interest rate) over the next 1 year if want to keep the S&P500 at high optimism to show as report card to voters before running for second term presidential election next year.

“Crisis is a crisis” for those who are ignorant, junk stocks could go bankrupt in business, while blue chip stocks may also fall down in price with more than 50% capital loss. “Crisis in an opportunity” for those are prepared from now, learning to take the right actions (eg. sell high before buy low again for strong fundamental stocks, or position with short term trading in current stock market to profit from market volatility).

Learn from Dr Tee on 5 critical strategies to position in current stock market (LOFTP – Level / Optimism / Fundamental / Technical & Personal Analysis), profiting from global financial crisis with early preparation. Sign up for free 4hr stock investment course by Dr Tee.

Register Here: www.ein55.com

Filed Under: Uncategorized Tagged: global financial crisis, invest fair

Bond Market Danger Signal for Global Financial Crisis

Posted on March 26, 2019 Written by Dr Tee (Ein55)

Gap between global short term bond yield (eg. 3 months or 2 years) and long term bond yield (eg. 10 years) is approaching zero or negative.

See chart of (10 yr vs 2 yr) and (10 yr vs 3 months) bond yields gap, historically after 1-2 years when this signal is triggered, global financial crisis would follow after a very bullish stock market. Will the same pattern be repeated this time as last few market cycles, eg dotcom bubble after year 2000, subprime crisis after year 2007?

Bond price and bond yield move in opposite direction because Bond Yield = Bond Interest / Bond Price. Bond yield is the % return from the bond market.

There are 2 general trends which cause the abnormality in global bond market now with short term bond yield closes to or more than long term bond yield:

1) More people buying long term bond (eg. long term investors who worry about stock market may crash), therefore long term bond price goes up, long term bond yield starts to drop (eg 10 years US bond yield drops from over 3% last year to about 2.45% in Mar 2019).

2) More people selling short term bond (short term fund is transferred from low-return short term bond to other more attractive opportunities, eg short term trading in bullish short term stock market or even deposit cash in bank with rising interest rate which competes with bond market), therefore short term bond short term bond yield has been going up (bond price drops) consistently, especially since year 2015 till now when US starts to increase the interest rate regularly.

Initially, long term bond yield was uptrend together with stock market but with falling of global stock market from level 3-4 high optimism (>75%) last year, long term bond yield has starts to drop from the last peak of over 3%, gap between long term bond yield (eg 10 years) and short term bond yield (eg. 3 months or 2 years) is getting narrower or even reversed (short term bond yield has higher return than long term bond yield) which is abnormal.

This is a danger signal but may not be immediate crash for global stock market. Historically, bullish stock market could still run for 1-2 more years after this abnormal bond market signal is observed. Investors need to pay attention to trend of short term bond yield (eg. 3 months), when it starts to fall down together with long term bond yield from a peak, this will show great fear in global stock market. Currently, short term bond yield still go up (bond price drops) under the momentum, this trend may be stopped or even reversed when US has stopped increasing the interest rate or start to cut down interest rate (signal of weaker economy), then bear market would come again.

Are you worried of the global bond market which may affect the global stock market with the next global financial crisis? As a stock investor/trader, one may position using 2 different unique strategies:

1) Investor – hold (for stocks bought at low last time) and prepare to sell stocks at high by riding the short term bullish stock market.

2) Trader – Buy High Sell Higher if the strong momentum in short term stock market could continue over the next 1-2 years.

Learn from Dr Tee free 4hr stock investment course to learn to grab the golden opportunities to profit from both immediate short term bullish stock market (as a trader) and also next future from global financial crisis (as an investor). 10 secrets of trading and investing will be shared.

Filed Under: Bond Market, Stock Market Tagged: global financial crisis

Crisis Stock Investing with 4 Qualities of Low Optimism Stocks

Posted on April 26, 2018 Written by Dr Tee (Ein55)

crisis stock investing

Crisis stock investing is investing in cyclic giant stocks, ideal for Buy Low Sell High investing strategy. Usually crisis may happen at business (Level 1, company losing money), sector (Level 2, bearish sector), country (Level 3, recession) or global (Level 4, financial crisis), creating different degrees of fear in the stock market, resulting in fall of share prices. Subsequently, when the market fear turns into greed, these crisis stocks may become uptrend momentum stocks, ideal for selling high.

There are 4 different qualities of crisis stocks with long term low optimism. An investor has to carefully identify the nature of crisis stock investing, understanding how the falling in share prices are induced.

1) Low Quality Low Optimism (L1 Crisis Stock Investing)

Long term optimism of stock is low, driven by decline in L1 business but L2-L4 are fine. Noble Group could be an example. Without consideration of sustainable business, pure strategy of Buy Low may result in Get Lower in share prices, which is a common pitfall for Technical Analysis. Both Fundamental Analysis (FA) and Technical Analysis (TA) should be integrated with Optimism Strategies with consideration of Personal Analysis (PA)

2) Average Quality Low Optimism (L2 Crisis Stock Investing)

Long term optimism of stock is low, driven by decline in L1 business & L2 (sector), while L3-L4 are fine. Examples include oil & gas crisis stocks in the last 1 year, casino crisis stocks 2 years ago, etc. It happens during the sector rotation which the sector market cycle may not align with the country/global economy cycle. If the sector is not a sunset industry, usually it would recover again as there is unique demand vs supply within each sector for investment.

3) High Quality Low Optimism (L3/L4 Crisis Stock Investing)

Long term optimism of stock is low, driven by decline in L1-L4 (business/sector/country/global financial crisis). More than 50% global cyclic giant stocks during global financial crisis would be affected in both business (drop in earning or even losing money) and share prices (L1-L4 from individual stock to global stock indices). Since the market fear at L3/L4 may not last long (global political leaders would take actions by then to save the whole world), the downside of global stock market is limited but an investor needs to have sufficient holding power through the cold winter time of global financial crisis. For example, many cyclic giant bank stocks may behave this way.

4) Excellent Quality Low Optimism (L4 Crisis Stock Investing with strong L1 Business)

Long term optimism of stock is low, driven by decline in L2-L4 (sector/country/global financial crisis) but L1 business is fine. Less than 10% global growth giant stocks during global financial crisis could still be profitable or even growing in business while the share prices falling relatively less (defensive in nature) than the average in global stock market. In fact, defensive growth giant stocks are suitable for Buy Low & Hold for long term investing, sell is an optional strategy.

The safest time to buy a giant 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 but many people are too normal, do not know how to take this advantage to truly buy low sell high.

A smart investor may not need to consider only crisis stock investing. There are other strategies such as growth stocks, dividend stocks, undervalue stocks and momentum stocks, etc, may be integrated to form a balance stock investment portfolio.

Learn from Dr Tee through high-quality free stock investment courses.

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

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