Dr Tee Video Education: Divergence of Stock and Economy (股票与经济：背道而驰之谜)

Posted on May 16, 2020 Written by
divergence of stock and economy

In this Dr Tee 2-hr video education (Mystery of Divergence in Stock and Economy ), you will learn:
1) How to position with different direction in global stock and economy.
2) Master 3 key economic indicators for global economy (US, Singapore, China, Europe).
3) Mixed signals in investment clock of global stock markets, comparing US, Singapore, Hong Kong & China.
4) Technical Analysis of Coronavirus by country with stage of virus life cycle and estimated ending period.
5) Defensive Investing Strategies during Stock Crisis.

Here is English Version of Dr Tee Video Course (Chinese version is also available as Dr Tee is bilingual). Enjoy and give your comments for improvement. You may subscribe to Dr Tee Youtube channel (Ein Tee) for future Dr Tee video talks. Collect 3 extra bonuses here.

English Video: https://youtu.be/Gs3tsbncBS4

在这Dr Tee 90分钟教育视频（股票与经济：背道而驰之谜），您可学习：
1） 学习定位全球股票与经济各奔东西。
2） 掌握三大经济指标，把脉环球经济（美国、新加坡、中国、欧洲）。
3） 各国新冠病毒技术分析：疫情周期，预估结束点。
4） 投资时钟的交叉讯号（短期、中期、长期）：全球、美国、新加坡、香港、中国。
5） 危机入市的防御性投资策略。

这儿是 Dr Tee 华语视频 （英语视频也已完成，Dr Tee 双语皆行）。请欣赏鄙作，留言求进步。您可订阅 Dr Tee Youtube 频道(Ein Tee)，链接未来投资视频。这里得额外三红利。

Chinese Video (华语视频): https://youtu.be/uaPHWaRFuEM

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

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

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

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

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

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

Filed Under: Macroeconomy, Market Cycle Investing, Market Outlook, Stock Market Tagged: , , , , , , , , ,

5 Stages of Stock Market Patient in Pandemic (心中有数)

Posted on May 7, 2020 Written by
stock market Singapore US Hong Kong China Europe Germany World Coronavirus

Global stock market so far has experienced 6 months of Covid-19 pandemic (Dec 2019 – May 2020), struggling between greed and fear, falling badly (20-40%) during initial fear of Coronavirus, then V-shape recovery (recover more than half of earlier correction) with support of unlimited QE or stimulus plans by global government, currently uncertain (gradual sideways stock movement) due to uncertain ending of global Coronavirus (especially for US) with worry of historical worst monthly economic data since Great Depression 1929 may become a norm beyond recovery.

There is a mismatch among stock market, world economy and Coronavirus conditions. Main reason is stock market is forward looking (usually a few months ahead of time), past or current news (eg. Coronavirus condition) or predictable outcome (eg. worst economic data during lockdown) has been considered in stock prices.

China is the first country to start and end Coronavirus, restarting economy gradually now, serving as leading indicator for the world (eg. Korea, Europe, US, Singapore, etc, which hope to restart economy as well). World is following similar footsteps of China for both Coronavirus cycle (start, peak to end / minimal), stock market cycle (down and up) and economy cycle (down and possibly up). Likely scenario for world economy and stock market would be 5-Stages models, similar to a patient:

stock market Singapore US Hong Kong China Europe Germany World Coronavirus

1) Early Symptom (Start of Coronavirus Pandemic), Dec 2019 – Jan 2020

During the initial phase of Coronavirus outbreak, the stock market was not fearful due to limited spreading to the world (mostly concentrated in China) and world economy is still not affected. So, the stock correction was limited, mainly within infected Asia countries in Dec 2019 – Jan 2020. US controls over 50% of stock value, was not affected in this period, even achieving high optimism in stock market in Jan 2020.

2) Heart Attack (Lockdown), Feb-Mar 2020

When Coronavirus was spread to Europe and US, which contributes greatly to world stock market, there was a crash (20-40% stock correction) in Feb – Mar 2020 for global stock market, mainly due to the fear with stock market at higher optimism before the pandemic was declared. The global stock crisis was complicated by crude oil price war between OPEC (Saudi) and non-OPEC (Russia), extending the fear from stock market to oil market.

Most of the countries in the world started to under lockdown to stop the spreading of Covid-19, the fear of people and business (not able to operate) is similar to a patient under heart attack without blood supply, falling down suddenly, not able to function at all. Global government have to do blood (cash) transfusion to save the patient (local economy), eg. supporting the salary of employees, giving loans to business in crisis sectors (transportation, F&B, consumer, etc).

3) Wake up from Coma (First light at the end of tunnel), Mar 2020

After experiencing the worst month and worst day (23 Mar 2020), global stock market started to recover, similar to a patient wake up from 1 month of coma, seeing hope in future. There was still no real proof of economy recovery (in fact, still bad) and Coronavirus was still severe but since there was no new fear factor (thanks to world news agency and social media for effort in spreading all possible bad news each day), stock market responded ahead of time with a reversal, hopeful of future, especially with support of local government.

No one is able to predict the future, but stock market prices could reflect the consensus of global stock investors after struggling between greed and fear.  However, the price trend was not smooth, especially for daily stock market which was still volatile.

4) Initial Recovery (Economy Support), Apr-May 2020

Despite Q1/2020 economy data is poor (predictable due to global lockdown for about 2 months for each country), the global stock market experienced V-shape recovery in Apr 2020, as there is clearer light at the end of tunnel, less daily new cases of Coronavirus infection in most countries (US and world are stable at peak cases, having high chance to improve in condition) and more government subsidies for business and individual with financial crisis.

The daily global stock market prices start to cross above 20 days moving averages, the first technical indicator to show at least technical rebound in share prices. This helps to motivate more global traders to start entering stock market again. The stock market (bullish for short term) is deviated from monthly economic data (bearish for short term, eg. GDP, PMI, unemployment rates, etc).  Eventually the gap between stock and economy would be narrower after clearer signals on Coronavirus condition, especially whether it may end in summer 2020.

5) Full Recovery / Economy Restart, Jun 2020 and beyond

When economy is restarted for each country (started for China and Korea, some EU countries, more countries in the world including Singapore will follow), due to low economic monthly data during lockdown period, there would be strong month-to-month relative rebound. Statistics could be an illusion as comparison is between 2 sets of data at 2 conditions (eg. before/after crisis, before/after economy restart, etc), therefore would generate a dramatic difference.

The key is whether a patient could fully recover to function normally. Similarly, whether global stock market could back to full strength again, depends on whether global Coronavirus may end or fade away in summer (hottest period, higher chance to end the pandemic). If yes, economy could be restarted smoothly, global investor confidence could be restored, injured business could recover in a few quarters, even airlines could start to fly again (lower capacity but able to survive on its own).

If not, Coronavirus may continue for another 1 more year until an effective vaccine is developed or more deadly strain may come back in next winter, then the world would need to struggle with slower economy recovery. when dragging over 1 year, world economy may end up similar to Great Depression 1929 as there is limited financial assistance could be given by local government. Although US has “unlimited” QE but this may be a time bomb for bigger future crisis with high national debt.

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There is no need to predict the future which is not predictable in nature. A long term investor could protect oneself with a strong portfolio of 10-20 giant stocks, ideally some could provide stable passive income with dividend to last through winter time and some are supported by growing business (eg. technology, healthcare, etc) which are not affected much by pandemic crisis.

For counter-trend investor, multiple entries strategies may be applied for capital allocation (eg. 10 x 10%, 5 x 20%, 3 x 33%, etc) to take advantage of each major correction in giant stock prices at low optimism due to market fear. A follow-trend trader could also benefit from stock crisis by following the stock market trend (eg. clearer reversal signal from bear to bull, trading timeframe based on personality), protected by S.E.T. (Stop Loss, Entry, Target Prices) plan with position sizing.  As for follow-trend investor, one may integrate giant stocks selection with timing to buy/sell aligned with trading (trend-following), to have the best of 2 worlds (fundamental and technical).

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

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 members.

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

Riding the Dark Horse Stock with Economy Wagon

Posted on March 4, 2018 Written by

Stock with Economy

US job market has improved further, jobless claim as of Feb 2018 is the lowest over the past 50 years, implying more Americans have jobs, having salaries monthly, therefore stronger spending power which would help the bullish US economy to grow further. Currently it is employee market, the company may need to pay higher salary to keep the staff. The bullish No 1 economy (US) would help the rest of the world stock with economy to grow together.
 
The corporate tax reduction by Trump from 35% to 21% has helped the companies to achieve higher earning by saving of 40% tax. Warren Buffet’s Berkshire Hathaway book value has gone up tremendously by $65 Billions in year 2017, about $36 Billions is from company business, remaining $29 Billions from the recent tax reform. It means for every $2 value gained by Warren Buffett in year 2017, $1 is from the business, another $1 is contributed by Trump through the tax reduction. This is not limited to Warren Buffett company. This is applied to entire US companies, therefore the hidden stimulus plan is massive.
 
The impact would be tremendous over the next few years, may result in overheated economy and bullish stock market with over-spending, higher inflation, therefore higher interest rate. The recent global stock market correction is healthy, bringing the stock market (price) closer to economy (value). If the wild horse of stock is not tamed, sooner or later it would fall off the cliff (black swan) or tripped over a rock (crisis), hurting the master (economy) and global investors and traders.
 
It is fine to ride the horse with economy wagon, up the hill of stock market. The rider (stock trader) has to monitor the emotions of horses (especially for unpredictable dark horses, stock which perform inconsistently) as upside will become when running too fast for too long. If the horse could rest from time to time, having enough food (supplied by master through stable economy), the journey of bullish stock market could be longer. Learn how to manage the stock with economy.
Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Macroeconomy, Stock Market Tagged: , , ,

Stock Market Time Bomb

Posted on February 15, 2018 Written by

Time BombAn investor has to be careful of stock market time bomb. S&P500 has to prove its recovery this week, breaking 2700 points will be a test of strength for US stock market. If this 2700 intermediate resistance could be broken, Asia stock market can only catch up next week after the Lunar New Year holidays.

A smart short-term investor who plans to buy low after recent 10% stock market correction, may integrate with trading strategies, waiting for uptrend market momentum and greed to come back. The recovery process may not be smooth after the recent market shock as some traders will be more cautious, not as “crazy” as before.

If the sell down last week is proven to be just a correction (stirring to cool down a pot of hot soup), then the next peak will be even more thrilling as it may potentially form double top or even Head & Shoulder pattern or Shooting Star, which can be risky in a high optimism global stock market.

In short, positioning in high optimism stock market has to be short term (following the trends closely) unless it is a truly defensive stock to resist the stock market time bomb.

When US 10 years bond yield is approaching or exceeding 3%, the Stock Market Time Bomb could be triggered by any potential black swan, the last straw which may break the camel’s back. Until then, enjoy the bumpy ride of crazy bull.

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

 

 

Filed Under: Stock Market Tagged: ,

Walking on Thin Ice of Stock Market

Posted on February 8, 2018 Written by

Thin Ice of Stock
After the surprise dip of 666 points on 2 Feb 2018, Dow Jones Index dropped another 1175 points on 5 Feb 1018, there is total of about 7% correction over the last 2 trading days, strong enough to drive short term traders (who long) out of the game temporarily.  The thin ice of stock market is getting fragile.

Those algorithmic trading tools which follows the TA rules, when critical short-term support is broken, would rush to find the nearest exit to sell down with high volume recorded, adding to the power of market correction in a short time. There are over 70% stock trading in US is done by robot or algorithmic trading, mostly are trend follower, therefore when there is a flash crash, the robots will follow one another to exit from the stock market or even start the shorting process.

The 7% stock market correction is overdue, especially for US and Hong Kong stock markets which have been over-heated in the past few months. Macroeconomy and stock market are connected loosely, when the fear emotion is over (intra-day VIX was 50 but subsiding quickly), fundamental will have influence over the technical again, before the greed emotion takes over again.

There is nothing wrong for short to medium term traders to take profits of last few months as this was the exit strategy. After all, US was at very high Optimism (over 90%), any potential risk could be the next black swan, resulting in the global financial crisis. In year 2000, the dot com bubble was simply too large, price over value, therefore a high optimism stock index, itself can be a potential crisis because when most people are profiting from the bullish market, any shake would change the greed into fear, breaking the thin ice of stock market.

Trading in a high optimism stock market is as if walking on a layer of thin ice of stock market. Sometimes it could be a false alarm (wolf is coming), sometimes it could be a real crash of ice and stock market. Therefore a systematic and disciplined trading plan is needed.

Investors would want to wait for the global financial crisis to come ASAP to buy low for strong fundamental stocks. However, political economy could add more complexity and traders could buy low again in short term if it is only a regular correction. Therefore, patience is crucial for investors.

Allocation of funds (cash vs stock) is critical to manage the emotions for a trader and an investor. When one invests too much at high optimism, the self control is weak. It is fine to cut loss in a trading market when the future price trend is against the earlier assumption. The worst is a mismatch of personality with strategy, eg. entering as a short term trader for a quick return, ending up holding as a long term investor when stock market is confirmed a crash.

This Chinese saying is a good summary of strategy at high optimism stock market:
《詩》云：「战战兢兢，如临深渊，如履薄冰。」

Learn from Dr Tee to match the stock trading or investing strategy with own personality, mastering Walking on Thin Ice of Stock Market.

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

Filed Under: Stock Market Tagged: , , ,

New Year 2017 – Bull or Bear Market? Learn 2 Winning Strategies for Stocks

Posted on January 10, 2017 Written by

ein55-newsletter-no-047-image-bull-or-bear-2017

New Year 2017 will be an exciting year for global stock market with Donald Trump as the new US president, recovery of emerging markets and crude oil market, rising interest rate and a bullish US economy. Let’s learn how to position in stock market with 2 winning strategies: 1) Buy Low Sell High, 2) Buy High Sell Higher.

US contributes to 40% of global stock value, therefore it should be a key focus to understand the stock market outlook in year 2017.  US economy has been consistently bullish, supporting the stock market.  US unemployment rate has declined by half from 10% to 4.7% in Dec 2016.  Based on the historical unemployment rates of US since year 1950 (see chart below), we could observe that US economy is entering the last phase of bull run as the unemployment rate is falling below 5%, moving towards the critical 4% value, reflecting the peak of US economy.

Lower unemployment rate implies more new jobs are created, therefore more spending power, which helps the business to grow with higher sales, eventually reflecting as higher stock prices due to stronger fundamental in financial statements.  US stock market has been bullish in the past few years, following the trend of US economy, likely will continue in the New Year 2017.

ein55-newsletter-no-047-image-us-unemployment-rate

US S&P500 stock index has achieved new historical high on 6 Jan 2017 with 2276 points.  Based on Dr Tee (Ein55) Optimism Strategy, US stock market is close to danger zone with 74% Optimism in long term (see chart below), implying the probability of bear market risk is 74% while the upside potential is limited, only 26%.

There have been mixed feelings in the stock market. Some people have stopped investing, worrying about the peak of US stock market but unknowingly the stock prices become higher and higher with time, they may regret of missing the train, hoping to have the last ride.

There are actually many mechanisms to make money in stocks.  Here are 2 winning strategies for the New Year 2017, to be aligned with one’s unique personality:

1) Buy Low Sell High

This strategy is suitable for long term investors who hope to invest safely, buying good fundamental stock at low price, selling high in future or holding for long term.  Since US and global stock market are approaching higher optimism level, the chances of global financial crisis is high, any unexpected global event in near future could trigger the bear market.

An investor will need to be very patient, ignoring the temptation of the bullish market, taking profit while others are greedy (Optimism >75%), standby enough capital to prepare to buy low when Optimism of global stock market is below 25% again.  Control of emotions is critical to buy low when others are fearful one day.

 

2) Buy High Sell Higher

Not everyone is an investor, having the patience to wait.  Some people are more suitable for short term trading, which they could follow momentum trading to buy high and sell higher in near future.  A stock price could be at high price but the trend is bullish, therefore the price is sustainable for short term, having the potential to go up even higher with time.

This strategy is more suitable for short term trading in the last phase of bull market, following the trends of stock prices, supported by news, speculations, business, economy, etc.  When the trend has stopped, the traders have to stop as well or applying reversed trend in trading.  Control of emotions are very critical as daily news could affect the traders’ psychology.  The ability to take profit or cut loss is important as the elements of probability are stronger here.

There are other variations of the strategies, eg. an investor could buy low for strong fundamental stocks, sell high for short to medium terms.  This way, an investor could also enjoy the last phase of the bull run in stock market with integration of trading strategies.

ein55-newsletter-no-047-image-sp500-optimism

 

 

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

Enter or Exit Stock Market with S&P500 at Historical High Now?

Posted on July 17, 2016 Written by

Ein55 Newsletter No 034 - image - S&P500

After breaking the triple top resistance of 2100, short term S&P500 becomes very bullish, setting new record high each day. Current US stock market is only suitable for short term trader to apply breakout strategy, buy high sell higher with trailing stop.

When S&P500 enters danger zone of >75% Optimism again, any future crisis could potentially become the next global financial crisis. Since global stock traders have not reached the euphoric stage yet, US stock market could remain bullish, sustainable if there are intermediate cooling measures, eg. news of US interest rate hike or another regional crisis, while the US economy is still growing.

Short term bullishness of S&P500 (another historical high at 2163), winning of Japan Prime Minister Abe (more QE is expected), lower fear factor (VIX is at low), have helped the global stock market to recover and achieve short term high. The trend is ideal for short to mid-term trading. Even Malaysia has lowered down the interest rate, this could be a gradual growing bull market.

For long term investors, it is important to learn to take profit at the right time, so that there is enough cash, which is king, to buy blue chip stocks at low price during the next global financial crisis.  For value investors, it is possible to hold the stocks without selling with condition that these are truly giant stocks, which the business can still be profitable even during economy recession.

 

 

Filed Under: Market Outlook, Stock Market, Technical Analysis Tagged: ,

Roller Coaster Investment Strategy with Walt Disney in Global Financial Crisis

Posted on July 7, 2016 Written by

Ein55 Newsletter No 033 - image - Disney

You are tortured with turning upside down, but still willing to pay to exchange for this experience. This is the glamour of Disneyland, a defensive recession-proof entertainment industry, which you could profit through investment partnership with Walt Disney stock, a nearly 100 years old business.

There are many mega theme parks in the world, why there are so many people fascinated about Disneyland? Personally I have been to Disneyland in Florida, California, Japan and Hong Kong.  The new Disneyland is opening in Shanghai, overwhelming response, a new gold mine for the company.  Disney’s power is with its intangible asset of brand, for so many years, from watching Disney cartoons to movies and all kinds of Disney related products. Everyone of us still has a childhood dream which becomes real only in the world of Disney.

Enjoy the rides, including the roller coaster. My first experience with roller coaster was in Six Flags Texas when I was still an undergraduate many years ago, trying the world Tallest wooden roller coaster at that time. The outcome is predictable, I was so nervous and scared, not enjoyable at all. After so many years of roller coaster experience, I learn to be flexible, following the trend of movement (eg. move the body when turning together), imagining it is only a swing or a bird flying in the sky, then I could enjoy it.

We can learn a lot about investment from the rides:

1) Following the mega market trend. It is painful when we try to move against it.  Each of us should define our comfortable levels of rides, from short term trading, mid term trading to long term investing.

2) Cyclic movement, what goes up will come down. That’s why we should buy low sell high, not following our emotions of greed and fear.  For experienced riders, they actually becomes fearful when roller coaster is hanging at the peak because they know the predictable next move: falling down!

3) At the end of ride, you will be fine.  If we learn how to find giant stocks, regardless up and down in share prices, eventually the business is still making money each month and each year, we will become the final winner.

Ein55 Newsletter No 033 - image - Disney Chart

Walt Disney stock (NYSE: DIS), is falling from its peak of $120, currently at 65% long-term Optimism (see chart).  In the last stock market cycle, an investor could apply Optimism Strategy developed by Dr Tee to buy Walt Disney at $24 (25% Optimism) in year 2009, selling at $120 (75% Optimism) in year 2015 with potential gain of 5 times.  For investors, they should have sold the stock in 2015 as the risk of falling is 65% with limited upside (35%).  At the same time, regional crisis including Brexit and economy slowdown, has created a mid-term low optimism, suitable for trading Walt Disney.  The right action or strategy depends on our personality.

Walt Disney is a global giant stock worth consideration during crisis at Level 3 (country/regional crisis) or Level 4 (global financial crisis) for investing.  The earning per share over the past 10 years is consistently growing (see chart). I am not surprised if this brand could exist for another 100 years because our children will pass this unique memory to future generations who may continue to pay for this childhood dream.  We should learn when and what price to buy Walt Disney for trading or investing.

 

Filed Under: Market Cycle Investing, Stock Market, Stocks A-Z, Value Investing Tagged: , ,

Preludes to Peak of Stock Market: QE3 Tapering & Fed Interest Rate Hike

Posted on March 25, 2014 Written by

Ein55 Newsletter No 006 - image - QE & Interest Rate HikeThe current bullish global stock market since Mar 2009 has been 5 years as of now (Mar 2014), comparable with the maximum 5 years duration of bull market in the last market cycle (Dow Jones Index from valley of Oct 2002 till Oct 2007).  It is likely for the current market cycle to be much longer than the previous ones because there are major corrections along the way, limiting the increase in % market optimism, therefore lower risk in reversal into a mega bear market.

In the last Global Financial Crisis in 2009, the world #1 economy, US, adopted extraordinary measures of Quantitative Easing (QE1, QE2, QE3) and near-zero interest rate by the Fed.  As a result, the US and global markets were artificially recovered, forming the phase1 of bull market in the initial first 2 years.  However, the double-edge sword of QEs made the global market pay for the advance credits during the QE tapering process, resulting in a few rounds of market corrections, together with other regional financial crisis.  At the same time, the global economy (US, Europe, Asia) recovers gradually, in a more natural way to support the global stock market.

At this junction, before the peak of stock market or economy may be reached, QE3 must be tapered and completely stopped, so that a more natural market cycle can be formed.  Either introduction of QE during a bearish market or tapering of QE during a bullish market, gives confidence to the global investors. The Fed has done a good job to pre-alert the global investors with a few rounds of fire drills last year on the possible timeline of QE3 tapering.  The market reacted fearfully initially, then it becomes a norm, most investors are able to “predict” $10 billion per month of QE3 tapering after each FOMC meeting by the Fed.  Meanwhile, the US economy recovery was accelerated, approaching the psychological checkpoint of 6.5% unemployment rate while the inflation rate is still well below the critical 2.5%.

With the initial success in QE3 tapering, now the Fed hopes to apply the same strategy to alert the global market on timing of interest rate hike (investors like a predictable market).  After a few rounds of pre-conditioning in near future, global investors are likely to accept the fact that interest rate has to go up from the valley.  Besides, the Fed hopes to buy more time for change in bullish market sentiment, modifying the earlier criteria of 6.5% US unemployment rate and 2.5% inflation rate, to a larger group of economic indicators, to ensure a more sustainable and stronger sign of economy growth.

After QE3 is fully stopped (estimated in year 2014 if there is no surprise to the market), the Fed is expected to increase the interest rate in about 6 months later.  The Fed interest rate will chase after the 10-year US Treasury Bond yield, likely will take about 3-5 years (average of about 1%/year, depending on economic conditions) to catch up and even exceed the critical rate of 4%, when the peak of economy may start to form.

If the global stock markets continue to grow in a bumpy way with market corrections from time to time, the condition for market fever with >75% optimism may not be ready, then it is possible to have a super long (over 7-10 years) but gradual growth bull market.  It is critical for investors to position themselves with visibility of at least next 3 years, applying the preferred market strategy.

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

Stumbling Year of Horse – A Blessing in Disguise

Posted on February 3, 2014 Written by

Newletter-003 - HorseOver 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 6th 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 3rd 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: , ,