Blessing in Disguise: US Interest Rate Hike

Ein55 Newsletter No 062 - 2017-03-14 - Interest Rate Hike

We could observe the emotions of market, how it affects the stocks in both ways. Last few years, when global economy was lagging, news of US interest rate hike is a negative factor. Now, interest rate hike becomes a neutral or even positive news as the market assumes it means the economy is strong, therefore stock market and other investment market (property, etc) will follow the uptrend.

Stock market is emotional, people interpret the market based on the mass market sentiment, following the herd mentality. If we are one of the herd, our investment performance could be average. If the market is a zero-sum game, who will pay for the people who are making money?  Unfortunately, some people need to lose money.

Ein55 Investment Style #22 (Blessing in Disguise) describes exactly the stock market and economy relationship in the last few years till now. When I taught this principle several years ago, some graduates may not fully understand why it is a blessing disguise until they observe the QE tapering about 2 years ago and then US interest rate hikes over the past few years. Ein55 Investment Styles will be appreciated more if we could relate to stock market behaviours. This is the reason of my sharing from time to time here.

I have also pointed in many earlier public workshops and investment eBook (Market Outlook) that both QE tapering and US interest rate hike would become blessings in disguise. However, this opportunity is more suitable for a trader to ride the uptrend and one must know when to get out from the uncontrolled roller coaster at new peak one day.

A blessing in disguise could become a real crisis when more people are optimistic.  Pay attention when US interest rate is over 2-3% range, a black swan may swim in quietly while others are celebrating for the bull.

 

Summary of Seminar with Hu Liyang 胡立阳 in Singapore (14 Jan 2017)

 

Ein55 Newsletter No 049 - image - HLY Seminar Summary

I was invited as a co-speaker in this seminar (14 Jan 2017, Singapore) with Hu Liyang (胡立阳), a famous stock investing guru in Asia. As requested by a reader, I am giving a summary here to show the similarities and differences of my views with Hu Liyang (HLY) on Market Outlook for the next few years.

The last time I met HLY was probably 4-5 years ago. The first impression of him again is that both of us are getting much older. He has a few more “railway tracks” on forehead while I have many more white hairs.

Both of us have observed many economy cycles in the past few decades, although HLY is probably 10+ years more senior than me, that’s why we are mostly aligned in many understanding on market outlook. HLY hinted a retirement which I think he deserves it. For me, I don’t feel I am “working” on my interest of investment education, so I don’t feel tired yet. Perhaps one day I may also start a new phase in life, hoping investment is also part of lifelong learning for all the readers.

 

Ein55 Newsletter No 049 - image - Agree

Similarities in Market Outlook

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1) Final Phase of Bull Market

Both agree that the market is entering the final phase of bull run. I am supported by high optimism of stock market at Level 3 (especially US) and Level 4 (world), while HLY is mainly based on interest rate cycle: “bull market starts when interest rate is cut, ends about 1-2 years after interest rate hike in US”

2) Danger Signals for Investment Market

Both agree that bond market is at high risk, bond yield has been at historical low, when bond yield hits 3% (now is 2+% for US 10 years bond yield), the fund is moving from bond to stock and property market, creating risky investment bubbles.

3) Market Cycle Investing

Both agree on market cycle theory. HLY uses “pendulum theory”, market will swing from high to low, low to high, sometimes may be even over-corrected, applying his 50% discount theory and other correction factor. I mainly use Optimism to declare the market risk (>75% Optimism) or opportunity (<25 Optimism). Despite the exact methods may be different, both are suggesting buy low sell high based on economy cycles.

 

Ein55 Newsletter No 049 - image - Disagree

Differences in Market Outlook

==========================

1) Timing of Global Financial Crisis

HLY has been trying to predict the timing of global financial crisis. I remember a few years ago, he predicted the great crisis may come around year 2013 or 2014. This time, the time bomb is extended to around year 2019. With political economy such as global QE and near zero interest rate for so many years, the current market cycle duration is much longer than last time. I could understand why HLY still tries to predict the future as there are too many audience really hope to have a crystal ball to see the future, especially HLY has an amazing record to predict the ending time of last global financial crisis in year 2008.

My view is that market cycle duration is unpredictable because it depends on the rate of optimism reaching danger zone of 75-100%. However, there is a predictability within the unpredictability. We just let Optimism shows us the risk level, no need to guess the future. If US takes 10+ years to reach high optimism, market cycle duration will be prolonged. If US behaves like China, stock index is doubled in 1 year, then market cycle will be shorter. This is one of my Ein 55 Investment Styles (of course, HLY also has his 100 Investment Styles in his famous book), Optimism is a market thermometer. We will never know when we will have the next fever (eg >38 deg.C), but we will know when we have a fever because we could feel overheated, temperature measured is too high. It is never too late to find a Panadol to cool down the body when we really have fever. Similarly, we will not know when the next crisis may come, but we could guess the probability with market temperature using optimism. When market is having a mild fever (38 deg.C or 75% Optimism) or high fever (40 deg.C or 100% Optimism), we will know as well.  The key challenge is whether a trader or investor is willing to take profit (as if taking Panadol), admitting the market is feverish. Based on my observations of past market cycles, more people work harder despite having high fevers, ending up losing what they have accumulated when the market bubble is burst.

 

2) Factors for Success in Stocks

HLY believes the stock market is a probability game of 3 possibilities: up, flat or down in share prices (more of a TA believer); fundamental or business are not as important. He mainly uses “money analysis” to analyze the money flow in economy cycles, combining with many TA methods to predict the mega stock market low and high, both in prices and timing.

I believe in an integration of 3 pillars to be successful in stocks:
2.1) Optimism + Fundamental Analysis (FA, buy giant stock with strong business fundamentals).

2.2) Optimism + Technical Analysis (TA, investment clock to wait for giant to fall down and recover),

2.3) Optimism + Personal Analysis (PA, emotional control) to take actions.

 

I also believe there is a need to match the strategy with our unique personality:

– short term trader (buy/sell every few weeks),

– mid term trader (buy/sell every few months),

– long term investor (buy/sell every few years),

– life time investor (buy and not need to sell for life).

Warren Buffett, Jim Rogers, Hu Liyang, Jesse Livermore, etc, each investing master or trading guru, could have their own styles of making money, but it may not be suitable for everyone, unless you share the same frequency in mindset. This is the reason I teach the complete Ein55 Styles with consideration of both short term trading and long term investing, FA, TA & PA with economic analysis, showing Ein55 graduates how to customize an unique trading or investing style for individual.

We should learn to find Top 10 global giant stocks as players of our dream team, buying good business at discounted price at low optimism, ahead of others who may be fearful.  Mastery of investment clock is very critical to profit consistently from stock market.

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

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

The unique Optimism Strategy developed by Dr Tee provides a special advantage to know which investment (stock, forex, property, commodity, bond, etc) to buy safely, when to buy, when to sell, including option of long term holding.  So far over 10,000 audience have benefited from Dr Tee high quality free courses to the public.  Take action now to invest in your financial knowledge, starting your journey towards financial freedom.

Bonus #1 for Readers:  Choose 1 Free Investment Course by Dr Tee

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Table (2017-03-05) - Clock

Banner 2017-02-23 - Market Outlook 2017 with Value Investing Strategies

Table (2017-02-23) - MO2017 Value Investing

 

Bonus #2 for Readers:

Download Free eBook by Dr Tee (Market Outlook 2017):

Click Here or the “eBook” logo in www.ein55.com

 

Bonus #3 for Readers:  

Dr Tee Investment Forum with 3000 members (Private Group)

  • Market Outlook (stocks, properties, bonds, forex, commodities, macroeconomy, etc)
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  • Investment risks & opportunities
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https://www.facebook.com/groups/ein55forum/

(Please click “JOIN” with link above and wait for Admin approval of membership)

New Ein55 Investment Style 2017: Frog Cooking Theory

Ein55 Newsletter No 048 - image - Frog Cooking Theory

 

Although both were/are at historical peak stock prices with high optimism, there is a key difference between bullish stock markets of China SSEC (Year 2015) and US S&P and DJI (Jan 2017).  The chart below shows that the rate of index growth is much faster for China SSEC, therefore the high optimism was not sustainable, going up and coming down within months. US stock market is a gradual warming process, although feverish, it is more sustainable.

We may have heard the story of a frog swims comfortably in warm water, could be killed unknowingly when the water is heated up gradually. A frog could adjust the body resistance to temperature change, but there is a limit for the tolerance, eventually it will get killed if the water temperature is too high because it is so used to the environment, does not know how to jump out of the danger.

Sounds familiar to those in the stock market? If a stock trader or investor behaves like a frog, adjusting to the cooling water (i.e. stock market correction) and warm water (i.e. stock market rally), mild bearish or mild bullish market, but eventually when stock market hits extreme high optimism, one may not know how to escape when the market melts down, not able to react fast enough as they may not feel the risks when stock market prices grow up gradually.

The US stock market has been bullish recently, leading the global stock markets in the same direction, ideal for short term traders to buy high sell higher.  Dow Jones Index is above the critical 20,000 points, which could be the next future support over the time, while S&P 500 is near to the next milestone of 2300 points.  As long as the water temperature of stock market is heated gradually, best with some cooling in between, the “frogs” could still be safe for a prolonged period of time until a Black Swan swims in one day, then the unprepared traders or even investors, could be caught by surprise, may not know this will be a real crisis.

Ein55 Newsletter No 048 - image - Indices Growth Rates

You could call this as a new Ein55 style but since Dr Tee already has established 55 Investment Styles, I won’t give a new number, eg. #56. You may know the reason if you have attended my free courses to the public before.  This investing concept was already integrated into Optimism Strategies, it is just I did not label with a style in the past. We need to monitor the rate of change in Optimism which is different from Technical Analysis which focuses only on stock prices.  Ein55 Investment styles are usually generalized concepts with interesting stories, helping learners to apply the methods easily in daily life experience of investment markets.

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

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

 

 

Which is the Real Black Swan? Learn to Profit from the next Global Financial Crisis

ein55-newsletter-no-039-image-black-swan
In the ancient time, Europeans thought that swans are all white in colour until one day, black swan was found in Australia, it became a surprised news.  Black swan event is a financial term used to describe an unexpected event which later evolved into global financial crisis.  There were people and company went bankrupt during the downfall of global stock market.  There were also people who took advantage to buy good business at low price, making many times of fortune in a short time when the crisis is over.

Every crisis is an opportunity. However, there are different scales of financial crisis, from Level-1 (company level, eg. Swiber or Noble), Level-2 (sector level, eg. Shipping Industry), Level-3 (country level, eg. Russia) to Level-4 (global financial crisis).  Level-1 crisis happened almost all the time, weak company could wind up the business when the earning, asset or cashflow is insufficient to pay for the debt. Level-2 crisis follows the unique sector market cycle, eg. Oil & Gas crisis, casino crisis, opportunity could be found every few months, suitable only for trading if it is not aligned with higher level of crisis.  Level-3 crisis could happen every year, eg. Euro Debt Crisis (2010-2012), US losing AAA credit rating (2011), China stock crisis (2015), Brexit crisis (2016), creating a good opportunity for both traders and investors.  However, none of them could be named as Black Swan event or Level-4 crisis (global financial crisis), similar to Dotcom Bubble (2001) and Subprime Crisis (2008).

The greatest investment opportunity requires the most fearful financial crisis in an in unexpected way.  Every year in a bull market, many “Dr Doom” will try to predict each event could become the next global financial crisis, but why it usually ended up just a smaller scale of regional crisis?  In fact, each of the yearly financial crisis could become the next global financial crisis but it requires greater fear to trigger.  Based on Ein55 Optimism Strategies (see chart below), global financial crisis will more likely to occur when world stock index is over 75% optimism, eg. in year 2000 (which triggered the dotcom bubble in 2001) and year 2007 (which triggered the subprime crisis in year 2008).  For other smaller scale crisis (Euro Debt, Brexit, US credit crisis, etc), world stock market was at mid optimism level (<60%), it was not greedy enough, therefore the global investors were also not fearful enough to escape at the same time when crisis happened.

In the past 20 years, world stock market has gone up 3.4 times in share prices (see chart below), a highly profitable investment option. World stock market index was at the critical 75% Optimism in year 2015, the global stock market correction has helped to cool down to moderate high level of 60% Optimism.  With US S&P500 index reaching historical high every few months, world stock market has been increasing in optimism level, risk is getting higher each day (40% upside, 60% downside) but not back to the critical level yet.  If there is still a last rally, global stock market could be speculated to a high optimism level, the black swan of the next global financial crisis will be likely to wait there.  We don’t have to guess what and when is the black swan event because it is unpredictable in nature, therefore it is called a black swan. However, Ein55 Optimism Strategies could help us to prepare for that golden opportunity in future.  As long as we are not too greedy, taking profit at high optimism (>75%), we could save enough capital, overcome our fear to buy low at low optimism (<25%) and hold until recovery of world economy, making profit from global financial crisis.

ein55-newsletter-no-039-image-world-stock-index

 

 

Stock & ETF Investing Opportunity in BRICS – Emerging Countries

Ein55 Newsletter No 026 - image - BRICS

Due to global economy slowdown in the last few years, stock markets in the emerging countries have suffered significant corrections, resulting in Level-3 (country/region) crisis.  The leaders of emerging countries are BRICS (Brazil, Russia, India, China & South Africa), stock prices are now at very attractive prices.  When the global economy starts to recover and accelerate, these emerging stock markets will benefit as well.  One could use ETF to trade or invest global stock indices.

Due to economy and political instability, Brazil stock market now is at 18% Optimism, after 57% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - Brazil

Russia has suffered from falling in global oil price, economy is severely affected. Russia stock market now is at 16% Optimism, after 65% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - Russia

India is relatively stronger compared to other BRICS, stock market now is at 34% Optimism with only 13% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - India

China is world No 2 economy, although Optimism is similar to India at 34%, stock prices have heavily corrected by 43% after the last round of speculative bull run, falling down from peak of 5200 points (see chart below).

Ein55 Newsletter No 026 - image - China

South Africa is relatively smaller in economy size, Optimism now is at ideal 25% Optimism with only 20% correction in stock market (see chart below).

Ein55 Newsletter No 026 - image - South Africa

The level-3 crisis and opportunity mentioned above requires longer investing strategy because global economy recovery is a gradual and longer term. Political economy is also crucial for the recovery of stock markets.  BRICS have to compete with US which is now at moderate high Optimism of 68% (see chart below) with more bullish economy, challenging the next historical peak in stock prices.

Ein55 Newsletter No 026 - image - US

If there is still a last global rally in stocks, BRICS may recover strongly with US stock market may rise to new historical high.  Other smaller emerging countries stock markets (eg. Southeast Asia) and many individual stocks may follow BRICS as well. However, after the next bull run, there could be another perfect storm waiting ahead, level 4 global financial crisis may severely injured all the global stock markets, both US and emerging counties. The ability to know when to sell to take profit will be crucial.

 

 

Fresh from Oven – Download eBook by Dr Tee: Global Market Outlook 2016

Ebook Cover 2016

I have just finished writing the eBook on Global Market Outlook 2016.  You may download from this link:
http://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee/

Please feel free to forward the latest eBook 2016 to friends. You and your friends are also invited to attend the workshop on Market Outlook 2016, next 2 dates will be on Nov 26 and Dec 20. See below for details of registration.

====================================
Table of Contents
1.  Mass Market Sentiment Survey
2.  Review of 2015 Global Markets
3.  US 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 vs Commodity (Gold / Silver / Crude Oil)
4.  Regional Market Outlook
4.1  Europe Market
4.2  China Market
4.3  Hong Kong Market
5.  Singapore Market Outlook
5.1  Singapore Stock Market
5.2  Singapore Property Market
6.  Conclusions and Recommendations

 

Global Stock Market Crash?

Ein55 Newsletter No 017 - image - Market Crash

Global stock markets of 4 major economy: US, China, Japan and Germany have achieved 75% optimism. Therefore, it is not a surprise to see major correction in the past 1 month. We should follow Optimism from Level 1 (individual stock) to Level 2 (sector) to Level 3 (country/region) to Level 4 (world).

Although Singapore STI and Hong Kong HSI have been only 50+% optimism in the past few years, they are smaller market, we need to follow a bigger market to evaluate our probability of success with Optimism. High optimism = high risk, 75% World Optimism means the chances of falling down is 75% while there are only 25% chance to go up. Don’t over-trade or over-invest, keep at least 75% cash as world Optimism has reached 75% optimism. If we follow the rule of money management, taking profit with higher optimism, the risk could be minimized.

For those who want to grab on the opportunity of falling giants of global stock markets, adding Technical Analysis (TA) will be helpful because the falling knife could be severe, your personality may not be suitable to buy low with downtrend. Regardless it is a major correction (mid-term) or Level-4 (world) crisis at longer term, we should consistent to buy low (either long term, mid term or short term) and sell high later. If we could diversify over 10 different giants (through Fundamental Analysis, FA), even if the giants fall down, the chances of recovery is very high especially if the price correction is mainly due to the human greeds and fears (Personal Analysis, PA), not the FA (economy or company business performance).

TA = FA + PA

 (Share price is a reflection of business performance and traders emotions)

We shall continue to apply this FTP (FA + TA + PA) analysis around the Optimism Strategy to profit from the global stock market in a safe way. There is no need to guess the direction of the market, low enough, we could enter; high enough, we will exit. The low and high shall follow our personality for short term trading, mid term trading or long term investing. New Level-3 giants are falling down (eg. Malaysia, both stock and currency markets), grab on the opportunity to time yourself with consideration of Level 1-4 Optimism.

 

 

 

Global Market Rally from Bullish Years of Horse to Sheep

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

http://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:

http://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!

Ein55 Newsletter No 013 - image - Year of Horse Performance

 

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。

http://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:

http://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!

 

 

 

 

 

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

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!