stock market crisis Archives - Page 2 of 2

Time for Bottom of Stock Market (海底捞月)

Posted on March 23, 2020 Written by Dr Tee (Ein55)

No one would know the true bottom (the lowest point) of stock market unless having the ability to “Back to the Future”. Time for the bottom of stock market is ideal but may not be practical as it could be reaching the moon with underwater reflection (海底捞月), greedy for the lowest (cheapest price with most discount) with little considerations of other risk factors, may fall into water with market trap. For those without any action, there is also a fear of missing out, eventually may miss the boat of opportunity totally. So, it is a dilemma for some investors to Buy or to Wait when stock market is bearish.

Similarly, in a Bull market (last 10 years), it is also a headache for investors to “Hold” or to “Sell”. Over the past few years, I have reminded repeatedly readers and students to take note of the high optimism risk at Level 3 (country, especially US) and Level 4 (world) stock markets, safer to apply short term trading, walking on a layer of thin ice which finally breaks over the past 1 month (those who fell but did not sell as short term trader is now trapped with over 30-50% losses). So, even one may not know the highest point, as long as know “High Enough” (>75% optimism), one could escape from the 30% loss in global stock market, which may have another 20-30% potential to fall, if it becomes global financial crisis with declining economy.

However, it is possible to apply probability investing to start progressive entries (for contrarian investor) when it is “Low Enough”. 25% Optimism will be a point of “Low Enough”, 0% Optimism is considered a rare opportunity. However, “Buy Low” is insufficient, one has to align other Ein55 styles to form personalized strategy aligned with own personality, otherwise When “Buy Low” may “Sell Lower” or “Sell Lowest” one day for those with weak holding power, especially if global financial crisis is confirmed and become worse over the next 6-12 months after the starting of global stock crisis in Mar 2020.

Trump and G20 political leaders may join forces in the next 1-3 months to launch the most generous QE ever (eg. massive printing of money of a few Trillions of dollars through asset purchase by government and other feasible economic stimulus tools). However, this is borrowing money from the future generation (20 years from now), simply planting another time bomb for future investment market (similar to QE 1-4 over the past decade, finally triggered by fear of Coronavirus and crude oil crisis).

For smart investor, one could save 10-20 years of investing time by leveraging on current opportunity. However, the lost generation who does not know investment may suffer in future. See Japan ‘s example of lost 3 decades, some elderly people could not retire as retirement was evaporated and young people need to struggle with lower pay job without bright future despite inflation is low.

I am reluctant to reveal here exactly what are the prices of “low enough” (25% optimism) or “rare opportunity” (0% optimism) for each investment here (stocks, properties, commodities, forex, bond, bitcoin, car COE, etc). Main reason is readers may not be trained, sharing may be wrongly used as “tips”, when not supported by other Ein55 styles (eg. strong fundamental stocks and technical of prices, macroeconomic analysis, personality, etc), it could be a disaster.

Current global stock market crisis could be a gift from heaven but only if one knows exactly how to position with integration of minimum 5 Ein55 Styles of LOFTP strategies (Level 1-4, Optimism 0-100%, Fundamental – Strong/Weak, Technical – Up/Down, Personal – Trade / Invest).

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Filed Under: Macroeconomy, Market Optimism, Market Outlook, Stock Market, Technical Analysis Tagged: global financial crisis, stock market bottom, stock market crisis

Uphill Task to Invest in Stock Market Crisis

Posted on March 18, 2020 Written by Dr Tee (Ein55)

When Dow Jones Index drops below 20000 points during intra-day today (quickly recover above it, although may fall below again in near future), this is about last 3 years low. This implies an investor is saving 3 years of investing time if investing in current level. So, when one could invest in last 10 years low for a major stock index (eg. US S&P 500 or Dow Jones Index), it means the crisis helps one to “jump queue”, saving 10 years of waiting time.

So, when looking backward, history does help one to decide the entry and exit, especially the stock market cycle which could be 5 to 10+ years long. Current bull for global/US stock market (Mar 2009 – Mar 2020) is 11 years, the longest in the history of stock market so far, after US stock market lost more than 1/3 of market cap so far, Dow Jones Index falls from nearly 30000 to 20000 points in 1 month. Despite a bear market is confirmed, this is not yet low optimism < 25% based on Ein55 styles, only a mid-size bear so far.

However, the waiting time has to include the fall + recovery again, therefore some investors prefer to wait till the uptrend phase before entry which is easy to miss the boat (1 chance left) when an entry price is not defined. If an investor enters as contrarian approach first, there are at least 2 chances: fall below the desired entry price and again above the entry price after a period of waiting.

Ein55 members, please plan your entries, how many bullets to use: 1 shot or multiple shots. Don’t end up no shot at all when the game is over.

Learn from Dr Tee free 4hr investment course to plan for your “bullets” to shoot, investing in stock market with LOFTP (Levels 1-4, Optimism 0-100%, Fundamental – Strong/Weak, Technical – Up/Down, Personal – Trade/Invest) Strategies to leverage on current global stock market crisis. Register Here: www.ein55.com

Filed Under: Market Cycle Investing, Market Optimism, Personal Analysis, Stock Market, Technical Analysis Tagged: Dow Jones Index, S&P 500, stock market crisis

Stock Market Fear with 0% interest rate and $700B QE

Posted on March 17, 2020 Written by Dr Tee (Ein55)

0% US interest Rate + $700B QE = Stock Crisis Fear

US Fed just cut interest rate to historical low of 0-0.25% + strength of $700B QE (Quantitative Easing) but introducing on bearish stock market. This is wasting bullet. In fact, global stock market falls more due to fear of such action, US stock market is halted due to circuit breaker with 7% fall.

A natural way is to let the market reset itself with a global financial crisis and falling of global stock market to low optimism < 25%. However, this would affect the chances of Trump second term presidential election as S&P 500 has been his report card, hard to show negative results to his supporters who may also be investors.

If US stock market (Level 3) falls to low optimism <25%, world stock market (Level 4) would also follow, officially falling into Global Financial Crisis which may last longer than 6-12 months, depending on the severity. It would be timely to consider cyclic giant stocks from sectors such as bank, property, airline, technology, etc, focusing on strong fundamental stocks only, don’t buy stock purely based on prices (eg. historical low price).

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A stock market could only reborn after falling to worse case of <25% optimism, then measures such as QE1 in 2009 could be effective (limited downside then).

US stock market is still at 50% optimism, Trump tries an uphill task to save the stock market by introducing interest rate cut to 0% and massive QE of $700, it is wasting money and effort. Stock market bubbles may be burst, money would escape from stock market, even from bond market (since bond yield is <1%), holding as cash which is king but low interest rate would push some investors to invest again in future, after global financial crisis with low prices of stocks everywhere.

It would take time to recover or if Trump is lucky, Coronavirus may end by summer, then it could still be a mini bear, but fear in stock market may spread faster than Coronavirus over the next few critical months, depending on global countries, need to fight 2 crisis (health + stock) together.

Learn further from Dr Tee, strategies to integrate economy with stock market: www.ein55.com

Filed Under: Macroeconomy, Market Cycle Investing, Stock Market Tagged: interest rate cut, qe, stock market crisis

When will be End of Coronavirus Pandemic & Stock Crisis?

Posted on March 16, 2020 Written by Dr Tee (Ein55)

There is a repeatable pattern in global Coronavirus life cycle, although cycle duration and magnitude of peak.

China cases has nearly ended (Dec 2019 – Mar 2020), peak was end of Feb as projected in earlier analysis, would nearly end by Mar 2020. China is the first country to start, also the first country to end. So, experience of China (first country to start and end) is useful reference for other countries.

All the world with individual country cases are recorded here (paying attention to max new daily cases, when it is reached, would take about 1 month to reach the 95-99% peak of total cases, then another 1 month to fade away) https://www.worldometers.info/coronavirus/

Similar to stock investment and trading, if there are proven methods in the past 100 hundred years (eg. Fundamental Analysis and Technical Analysis), one could master them first, then gradually refine the strategies.

Korea epidemic is about 1 month behind China (subsiding from the peak, projected by end of Mar 2020), possible duration of Jan-Apr 2020.

This shows that if similar effort is put in (eg. active intervention by local government), the Coronavirus cycle may be about 4 months (2-3 months to reach a peak, 1-2 months to subside).

US and Europe is located further (require international flights to spread the Coronavirus), about 2 months after China pattern, active infection period could be Feb-May 2020 (reaching a peak by end of Apr 2020, fading away in May 2020). US was slow initially, now has started active intervention, possible to follow the 4 months duration. Each year, there are over 100 thousands American die of common flu but many are elderly people with weaker immune system. However, Coronavirus could also kill younger age people younger (mostly more than 40 years old), therefore many people are fearful of this unknown virus.

However, a few countries (eg. UK and Sweden) may not prepare to fight the Coronavirus actively, just let the nature takes its course, likely the peak cases will be more severe in the first 2 months (eg. Iran or Italy cases without active intervention in the first 1 month) with method of community immune system (hoping virus would end naturally or evolve into less deadly strain with many times of infection when over 60% people are infected). So, the duration of this new method of “no invention” as solution is yet to be observed, will be a useful reference for future epidemic but it comes with big price (many death) if it does not work (eg. fatality rate is much severe than common flu).

For Singapore and some countries (eg. Southeast Asia: Malaysia, Indonesia, Philippines, etc), spreading of Coronavirus is slower initially (could be due to warmer weather), but due to cross-infection by travelers of inter-countries (eg. Europe / US / Southeast Asia), start to grow in new cases. Therefore, even with active government control, duration could be longer (but lower peak), period could be 5 months (Jan – May 2020), ending in each country depends on when global pandemic may end unless the country could be totally isolated from the rest of the world (eg. Australia and New Zealand measures of isolating all international travelers for 14 days upon arrival).

Of course, if the last continent, Africa, may also be infected badly, then global pandemic could only end with Mar-June 2020, until all countries have gone through 1 cycle of 4 months infection within the country.

However, even the pandemic may end in summer (Jun-Aug 2020), it may come back as new strain of virus in the next winter (Dec 2020) in another unexpected country or city. So, vaccine development is still key. Last time SARS in 2003 ended too fast in summer, on-going vaccine development was stopped, otherwise it could be modified for Coronavirus as both belong to the same family of viruses.

Global stock markets experienced a minor correction (10% correction) during initial fear of Coronavirus, following by major correction (20% drawdown) when spreading is growing globally as pandemic. Under the worst case, if Coronavirus remains serious beyond this summer, coming back in new cycle of life in next winter, then global financial crisis would be waiting. Therefore, fighting against Coronavirus is not just for health (life), also for wealth later. Without health (life), then wealth is meaningless.

When Coronavirus pandemic and stock crisis are almost game over, it is time to master stock investment skill to improve quality of life in future, learning from free 4 hour investment course by Dr Tee here: www.ein55.com

Filed Under: Market Outlook, Personal Analysis, Stock Market, Technical Analysis Tagged: coronavirus, pandemic, stock market crisis

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

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

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

Level 3 Crisis in Malaysia Stock Market and Politics

Posted on February 24, 2020 Written by Dr Tee (Ein55)

The last 48 hours in Malaysia was like episodes of drama series “Games of Thrones”, more exciting than stock market.

Dr M is supported unanimously by both ruling parties (PH) and opposition (BN, PAS, etc) to be the Prime Minister of Malaysia, probably the first case ever in the world politics. However, Dr M decides to resign as PM and Chairman of own party today.

Now, all interested parties and alliances would fight for endorsement by Dr M over the next few days. As an expert in politics (94 years old PM, a world record of most senior political leader), Dr M would leverage on this political “crisis” to reshuffle the power distribution, without any party leadership (he has resigned from own party), he could select supporters from parties or individuals who align with his vision to continue as new PM. In short, he would have the full control in formation of new government alliance unless the parliament is resolved to have a new General Election (if so, he may not be part of the new game).

Political crisis could be an opportunity, smaller parties could become “kingmaker” when position right. Dr M may need more support of both alliances (PH & BN), so that he could have stronger control.

Malaysia stock market falls nearly 3% today, KLCI is below the critical 1500 points (nearly last 10 years low), correcting more than 20% from the market peak a few years ago, fulfill the technical criteria of a bear market. Many Bursa blue chip stocks are falling to low optimism, attractive low prices.

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There are 3 similarities between Stocks and Politics.

1) Investing / Politics during Crisis

Crisis is also opportunity for stock market, provided one could position correctly, focusing only the right stocks (similar to choosing the right parties to support) with strong business fundamental, waiting patiently for the prices to fall to attractive level (similar to Dr M waits for both alliances to fight for his support now).

2) Diversification in 10 stocks portfolio and 10 parties alliance

As a smart investor, one does not need to invest in only 1 or a few stocks as right could be high (eg. PH with 4 parties, could collapse when 1 party is withdrawn). So, diversification over minimum 10 giant stocks would be safer to minimize unsystematic risks. Similarly, Dr M may also diversify his supporters from 4 parties in PH to 10 parties in entire Malaysia, so that political risk is the lowest (not controlled by 1 single party who has critical votes).

3) Leveraging in stock market and politics

An investor or trader with low capital may leverage with CFD to achieve higher return when there is good investing opportunity. Similarly, Dr M could leverage on this rare opportunity with power of only 1 person by balance the power to align with own political vision.

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Crisis is opportunity only for those who are prepared. Malaysia bursa stocks are bearish but buy low may get lower. If wait too long, the “crisis” may be over, when fear is gone, the correction may be over.

So, learn to position in regional stock market through Dr Tee free 4 hour investment course, knowing the Malaysia / US / SG / HK giant stocks to invest (What to Buy, When to Buy/Sell). Register Here: www.ein55.com

Filed Under: Personal Analysis, Stock Market Tagged: Mahathir, Malaysia, stock market crisis

Winter is Coming – 3 Strategies for Global Stock Market Crisis

Posted on July 3, 2019 Written by Dr Tee (Ein55)

For fans of Game of Thrones, they are familiar with “Winter is Coming” as there are signs before the crisis in kingdom. However, for fans of stock market, it is important to know how to prepare for coming winter (global economic recession) after a long summer of bullish stock market over 10 years since recovery from the last global stock market crisis in year 2009.

Trump has been trying to prolong the bull run with various policies, eg. reduction of corporate tax from 35% to 21%, creating more jobs in US, trade war with China and the rest of the world for quick gains of US, etc. Unfortunately, economy usually behaves in a cyclic manner due to over-supply or over-demand at different stages of economy, requiring years to get back to normal again after reaching the extreme greed or fear in market emotions. When we see summer in US now (overheated economy with the lowest unemployment rate of 3.6% in 49 years in US, historical high of S&P500 index at 2973 points recorded recently, inverted bond yield, etc), we know “winter is coming” for global stock market crisis, the coldness of potential financial crisis would spread globally from US, the No 1 economy with more than 50% global stock value.

Here are 3 ways to prepare for global stock market crisis (financial winter time) for 3 fans of stock market: long term investors, market cycle investors and short term traders.

1) Stock Market Crisis for Long Term Investors
It is possible for long term investors to ignore the up and down in prices, including potential winter time (global stock market crisis) because the investors have prepared well in advance when investing many years ago, there is no need to exit at all during market correction. The conditions for long term or even lifetime investing (buy and hold permanently) are the stocks invested should be over a portfolio of at least 10 strong fundamental stocks at low optimism price, defensive in prices (less volatility with strong economic moat) with consistent growth in both share prices and businesses for capital gains, as well as some dividend payment (>2% dividend yield) as bonus, exceeding the bank interest rate.

This strategy requires knowledge of super giant stocks (what to buy from <5% of selected global stocks), ability to take action during the coldest winter (Level 4 – global financial crisis) and tremendous patience and calm to hold through a long term or even throughout the lifetime (continue to hold as long as quarterly or yearly review, confirming it is still a giant stock)

2) Stock Market Crisis for Market Cycle Investors
Market cycle investors integrate the best of investing (buy strong fundamental stocks) and trading (buy low sell high), leveraging on economic cycles (typically over 5-10 years) to safely maximize the return with natural investment clock.

This strategy requires a regional (Level 3) or global (Level 4) financial crisis to create tremendous fear in the stock market for majority of investors and traders to sell low unwillingly or willingly (over 50% discount in share prices at low optimism). However, a financial crisis could be a real crisis for weak businesses which may not last through the winter during economic recession (potential bankruptcy). Therefore, it is important to invest in a portfolio of at least 10 giant stocks with strong business fundamental, especially for stocks in cyclic sectors such as banking & finance, property, technology, airline, industrial, etc.

3) Stock Market Crisis for Short Term Traders
Short term traders could still enjoy the hot summer, eg. current bullish stock market to buy high sell higher with momentum trading or swing trading. This group of stock market fans could react faster to the changes in stock market, especially when it turns direction from bull to bear. In fact, short term traders could participate in all stages of stock market, firstly buy up in possible last phase of bullish stock market, shorting in bearish stock market crisis, finally buy up again when stock market is reborn again one day. However, the emotional control is the most critical (greed, fear, regret, etc) for stocks traders to be successful.

This strategy requires short term positioning (from weeks to months), successful traders need to follow proven trading plan to enter with bullish signals and exit when there are confirmed bearish signals (eg. trending down in share prices), continue to hold (position trading) when there are no major changes. Although short term stock trading may not require strong fundamental stocks as business may not have drastic changes in weeks or months, it is still useful for traders to consider profitable business (when long a stock) as both good fundamental and market greed could contribute to higher share prices in a bullish short term stock market.

Since summer is here and winter is coming, have you prepared for this rare opportunity? Any of the 3 fans above could profit from stock market crisis but should know the exact strategy (What to Buy, When to Buy/Sell). Don’t be ignorant with no action taken as there is great opportunity cost for missing in action in stock market crisis. Learn from Dr Tee with free 4hr stock investment course, preparing to profit from stock market crisis.

Filed Under: Macroeconomy, Market Cycle Investing, Market Outlook Tagged: stock market crisis

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