Technical Analysis Archives

Trading Strategies for 4 Stages of Technology Stock Bubbles (趁势追击)

Posted on August 16, 2023 Written by Dr Tee (Ein55)

Many investors and traders like US technology stocks which could move up and down like a roller coaster with high potential gains in a shorter time. Similar to driving a car, despite there are many potential risks, a trained driver or stock trader could adopt best practices with experience for a smooth ride.

In general, there are 4 stages of technology stocks bubbles (see image above):
Stage 1
The first peak when technology stocks achieve high Ein55 Optimism > 75%, eg. during Year 2000 dotcom bubble and Year 2021 COVID online bubble.

Technology sector may not go through the entire 4 stages of bubbles. For example, for Year 2000 dotcom bubble, stock market crashed after Stage 1. For Stage 1, similar to surfing with a strong wave, trend-following position trading strategy with S.E.T. (Stop Loss / Entry / Target Prices) plan is key, buying with uptrend (eg. higher low higher high, breaking above critical resistance), sell / short selling with downtrend (eg. lower high lower low, breaking below critical support).

Stage 2
If it is a correction (eg. high inflation and interest rate hike in Year 2022), technology stocks would start to recover, eg Year 2023 has been recovering well with AI as the main driver.

Stage 2 has weaker trend than Stage 1, focusing more on recovery wave, usually stock prices need to break above certain patterns (eg. resistance of a double bottom neckline, etc) to sustain its recovery. Short term to mid term cyclic trading may be considered. If Stage 2 could not exceed the last high of Stage 1, then it may form a risky pattern (eg. Head & Shoulders, etc), therefore it is safer to trader than to invest in technology stocks with higher optimism level.

Stage 3
It is possible (although seldom) for technology stocks to achieve another new high than the peak of Stage 1 bubble. If inflation could fall down consistently below 3% while global economy is intact, US technology stocks may continue to recover. However, it may take time, especially No 2 economy, China is getting weaker, would affect global / US economy indirectly. Inflation may be stagnant around 3% +/- 1% for mid term until an economic crisis, only then it may fall down further.

Strategy for Stage 3 is focusing on shorter term trading with positioning sizing, leveraging on market momentum to trade uptrend.

Stage 4
This is the ultimate bubble (may or may not come), much higher peak than Stage 1 with high Ein55 Optimism >75%, mainly driven by stock market greed. The strategy is similar to Stage 1 but closer monitoring (daily) is required.

Besides uptrend trading, an experienced trader may also consider to short sell the market when it is falling down below critical support from high optimism level, potentially gaining from the crash of stock market which may be induced by the next black swan.

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Technology giant stocks are mostly major component stocks of indices, therefore the movement of NASDAQ index (mostly technology stocks, popular ETF is QQQ, 3X of Nasdaq) is also aligned with S&P500 index (500 largest US stocks, popular ETF is SPY). When market is bearish, there are also inverse ETFs for traders who don’t know how to short sell but more suitable for shorter term trading.

In additional to indices, a trader may also consider technology giant stocks, eg. leader (world largest company) is Apple (Nasdaq: AAPL), already passing Stages 1 & 2, approaching Stage 3 (but fail to create new resistance above $200).

The current bull run for technology stocks is still intact. However, during each correction, a trader may need to exit first, reenter when trend is reversed to uptrend or when a new high is created.

At the same time, for longer term investors who have invested in technology giant stocks or indices (eg. S&P500 or Nasdaq), may also consider to switch to short term investing (choosing stocks like an investor, buy/sell like a trader) during uncertain high optimism level, no need to take any major risk against potential black swans (eg. China economy slowdown, escalation of Russian-Ukraine war, etc) which stock market may fall more than 50% when the bubble is burst.

In summary, a smart investor or trader would leverage on technology stock bubbles (Stages 1-4) but adjusting the strategy accordingly (eg. shorter term trading with higher optimism level). Stock bubble could be the best friend for trader (trend-following trading with greed) and investor (crisis investing after the market crash with fear).

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There are over 2000 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.

Drop by Dr Tee free 4hr webinar (learning at comfort of home with Zoom) to learn how to position in global giant stocks during COVID-19 stock crisis with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

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, you could ask on any global and local stocks including but not limited to 30 STI component stocks:

Ascendas Reit (SGX: A17U), CapitaLand (SGX: C31), CapitaLand Integrated Commercial Trust (SGX: C38U), City Development (SGX: C09), ComfortDelGro (SGX: C52), Dairy Farm International (SGX: D01), DBS Bank (SGX: D05), Frasers Logistics & Commercial Trust (SGX: BUOU), Genting Singapore (SGX: G13), Hongkong Land (SGX: H78), Jardine Cycle & Carriage (SGX: C07), Jardine Matheson Holdings JMH (SGX: J36), Keppel Corp (SGX: BN4), Keppel DC Reit (SGX: AJBU), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), OCBC Bank (SGX: O39), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Singapore Airlines (SGX: C6L), Singapore Exchange (SGX: S68), Singtel (SGX: Z74), ST Engineering (SGX: S63), Thai Beverage (SGX: Y92), UOB Bank (SGX: U11), UOL (SGX: U14), Venture Corporation (SGX: V03), Wilmar International (SGX: F34), YZJ Shipbldg SGD (SGX: BS6).

Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Integrated Commercial 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

View quick preview video below, Dr Tee will introduce 10 key stock investment strategies (股票投资十招) to be learned in 4hr free stock webinar:

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8 AI Technology Stocks for Momentum Trading and Growth Investing (以智取胜)

Posted on July 14, 2023 Written by Dr Tee (Ein55)

After major correction of technology stocks in Year 2022, the technology sector recovers strongly in 2023 with the support of Artificial Intelligence (AI), initiated by popularity of ChatGPT, following by the healthy competitions and future AI plans of many technology giant stocks, pushing up the stock prices of technology stocks and even entire US stock indices (S&P500 and Nasdaq), nearer to the last peak in late 2021.

As mentioned in earlier Dr Tee articles, Golden Cross of inflation (now 3%) below interest rate (now 5%) help to support recovery of technology stocks which are sensitive to interest rate (likely will reach its peak soon). Since stock market is usually 6-12 months ahead of economy and businesses, a smart investor may take calculated risk with early actions (eg. big winner for those who took actions 6 months ago on technology stocks when inflation starts to fall from its peak).

Investing and trading in stocks may also apply AI (eg. following certain rules) but key difference is to personalize the strategies, eg holding for short term (momentum trading), mid term (cyclic trading) or long term (growth investing).

Dr Tee has shortlisted 8 AI stocks with potential for trading and investing, each stock requires unique positioning due to different types of LOFTP (Level / Optimism / Fundamental / Technical / Personal Analysis):

1) Nvidia (Nasdaq: NVDA)
Nvidia is a bigger winner in AI game as development generative AI requires strong demand of GPU chips, which is dominated by Nvidia. It projects significant increase in near future revenue which supports the share price to break above last high of $335 in Year 2021, exceeding by 50% to $460 so far.

Even before recent AI stock rally, Nvidia already has sustainable strong business fundamental. However, due to stock price is far above fair value with high Ein55 Optimism, it is more suitable for short term momentum trading, following the uptrend prices (eg. entering when breaking a new high, but it is crucial to set stoploss when price trend is reversed more than risk tolerance level).

2) Microsoft (Nasdaq: MSFT)
Microsoft is another direct AI winner because it is major investor for ChatGPT, even incorporating into BING search engine (challenging Google Search) and Windows 11 platform with Microsoft Office products. As a result, Microsoft share price has recovered back to its 2021 peak of $344, may achieve another new historical high if AI momentum continues.

Microsoft is veteran technology giant stock with over 50 years history since 1970s (comparable with Apple), products are diversified beyond traditional PC into cloud and gaming, etc. Strong business fundamental but it has price exceeding fair value with high Ein55 Optimism, more suitable for mid term cyclic investing (Buy Low Sell High) or short term momentum trading (Buy High Sell Higher).

3) Alphabet / Google (Nasdaq: GOOGL/GOOG)
Alphabet has been early AI developer (eg. DeepMind with AlphaGo could win human No 1 Go player in the world) but slow in commercializing the AI products, still focusing more on Google search engine which 85% market share (compared with BING only has 8%) for advertisement revenue (Youtube contributes to about 10% of Alphabet revenue). ChatGPT quick success has helped Google to introduce comparable BARD chat quickly to supplement Google search. It is not too late for BARD to catch up because they have strong foundation in development with wide Google network as potential customers, just need to focus on marketing and commercialization in future, helping to retain or grow the online advertisement revenue.

Relative to other technology / AI giant stocks, Alphabet / Google is relatively slow in stock price recovery (still below its peak of $150 in Year 2021), current price of $124 is near to its fair value, therefore still possible to be considered for long term investor for growth investing (Buy fair price and Hold). At the same time, Alphabet / Google may also be suitable for mid term cyclic investing (Buy Low Sell High) or short term momentum trading (Buy High Sell Higher). It is a rare giant stock which may be considered for both long term investors and short/mid term traders. However, since few technology giant stocks could last for decades, it is crucial to monitor its technology advantages over competitors (eg. ChatGPT vs BARD, Google vs BING, etc) for long term investors.

4) Meta / Facebook (Nasdaq: META)
Meta share price was seriously corrected in Year 2022 from about $380 to $90, partly due to venture into unprofitable Metaverse and headwind of technology sector then. Meta is early winner for technology stock recovery in 2023 (another is Netflix), growing with very strong momentum (comparable with Nvidia and Microsoft performances), current price of $313 is still below its 2021 peak of $380.

Even without AI (new plan) or Metaverse (old plan), advertisement revenue for existing Facebook and Instagram could already support and grow the business. The new Threads app is a strong challenger to Twitter, could be future revenue generator, making its social media network even wider (a strong economic moat). Meta share price is still below its fair value of about $360, may be considered for long term growth investor and also short term momentum trader.

5) Amazon (Nasdaq: AMZN)
Amazon share price was halved in Year 2022 from about $187 to $85, partly due to high growth during pandemic is not sustainable during post pandemic, business also becomes cyclic, affecting share price stability. Amazon has cloud businesses, AI concept has helped to recover its share prices together with other technology giant stocks, current price of $134 is still below its 2021 peak of $187.

Amazon is a trillion-dollar market cap giant stock (after Apple and Microsoft, ahead of Google and Nvidia), business becomes more sustainable as pre-pandemic. Current share is still below fair value of about $200, therefore may be considered for long term growth investing, mid term cyclic trading or even short term momentum trading.

6) AMD (Nasdaq: AMD)
AMD share price dropped to 1/3 from about $155 to $55 in Year 2022 technology sector crisis, partly due to high growth of chips demand during pandemic is not sustainable during post pandemic, business even suffered losses in the last quarter. Over the last few decades of competition, AMD is stronger and larger than Intel, supporting AMD share price growing by 80 times over the past 10 years. Despite AMD AI chip is still behind leader Nvidia, its latest chips are widely used by cloud platforms (eg. Amazon). AMD price has recovered strongly, current price of $115 is still below its 2021 peak of $155.

AMD is a young technology giant stock which would benefit from future AI sector expansion. Current share is still below fair value of about $200, therefore may be considered for long term growth investing, mid term cyclic trading or even short term momentum trading.

7) TSMC (NYSE: TSM / Taiwan TPE: 2330)
TSMC share price was corrected by more than half from about $140 to $63 in Year 2022 technology sector crisis, partly due to high growth of chips demand during pandemic is not sustainable during post pandemic, but business remains profitable with more sustainable growth rate. TSMC is the world leader for high end chip manufacturing (eg. 3nm), far ahead of competitors Samsung and Intel. With help of Warren Buffett (despite he sold it eventually due to worry of geo-political crisis) and technology sector rally, TSMC price has recovered strongly, current price of $105 is still below its 2022 peak of $140.

Semiconductor sector is cyclic in nature, similar for TSMC share price, more suitable to Buy Low Sell High for cyclic investor. Current share price is higher than fair price of about $80, therefore more suitable for mid term cyclic investing (not long term due to higher Ein55 Optimism) or even short term trading (since momentum is relatively weaker, may consider to Buy Low Sell High with short term swing trading).

8) ASML (Nasdaq: ASML)
Semiconductor sector is very specialized and inter-dependent, eg. design by Nvidia, manufacturing by TSMC but leading equipment supplier is ASML, etc. ASML business and even share price performances are comparable to TSMC since both are closely related.

ASML share price was corrected by more than half from about $868 to $379 in Year 2022 technology sector crisis, partly due to high growth of chips demand during pandemic is not sustainable during post pandemic, but business remains profitable with more sustainable growth rate. ASML is the world leader for high end chip equipment (eg. lithography for 3nm), far ahead of other competitors. US/China trade war may affect its future business expansion in China due to new export ban for high tech semiconductor equipment. Together with technology sector rally, ASML price has doubled from valley, current price of $750 is getting nearer to its 2022 peak of $868.

Semiconductor sector is cyclic in nature, similar for ASML share price, more suitable to Buy Low Sell High for cyclic investor. Current share price is higher than fair price of about $470, therefore more suitable for mid term cyclic investing (not long term due to higher Ein55 Optimism) or even short term trading (since momentum is relatively weaker, may consider to Buy Low Sell High with short term swing trading).

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Filed Under: Macroeconomy, Market Cycle Investing, Market Optimism, Market Outlook, Technical Analysis Tagged: cyclic investing stock, growth stock, momentum stock, technology stock, US Stocks

3 Exit Strategies When Crisis Stock Becomes Profits (Tianjin Da Ren Tang)(丰收季节)

Posted on April 17, 2023 Written by Dr Tee (Ein55)

With strong recovery of China / Hong Kong stocks after ending of zero COVID policy and strong rebound of US technology stocks with consistently lower inflation rates, some giant stocks surge to new historical high in share prices. This is a good problem to have for stock investor or trader when there are high capital gains (eg. more than 2 times).

Knowing What to Buy and When to Buy help to start the investing journey at the right time and right direction. However, knowing When to Sell (take profits) or How Long to Hold with alignment to own personality is the ultimate plan.

Let’s learn from Dr Tee on 3 Exit Strategies When a crisis stock becomes highly profitable (丰收季节). A recent Dr Tee Graduate success of a giant stock, Tianjin Pharmaceutical Da Ren Tang (SGX: T14 / China Shanghai: 600329) is applied as an example.

Congratulations to readers who may have taken action on Tianjin Da Ren Tang (strong fundamental China healthcare giant stock, dual listing in SGX and China) mentioned in Dr Tee articles on 2 Oct 2020 ($0.79 share price, Cyclic & Dividend investing), 31 Aug 2021 ($1.32 share price, Growth / Dividend investing) and 17 Feb 2023 ($1.30 share price, Growth / Momentum trading), as well as recent public webinar on 25 Mar 2023 ($1.39 share price, Momentum trading). Current share price (17 Apr 2023) is $2.26, exceeding the Ein55 intrinsic value of $1.50 mentioned, aiming for >$2.50 high Ein55 Optimism price with more greed recently.

Dr Tee graduates were assigned homework on this stock in May 2020 ($0.68 share price, low Ein55 Optimism level for Cyclic + Growth + Dividend + Undervalue investing, see chart below) and again in July 2021 ($1.20 share price), not only share price has climbed up with over 3X capital gains ($0.68 to $2.26), also enjoying an enormous dividend yield = (dividend / price) = ($0.17/$0.68) = 25%, after dividend payments have grown 4X over the 3 years, supported by strong earnings (>70% business is Traditional Chinese Medicine, remaining is western medicine, etc).

Unlike other business (eg. technology / glove) which may have huge earnings surge during the first 2 years of pandemic (then suffer when both earnings and share prices are corrected post pandemic as the high business growth is not sustainable), Tianjin Da Ren Tang has been consistent and sustainable in business growth before / during / post pandemic. With ending of zero COVID policy in China, Tianjin Da Ren Tang enjoys the free ride together to higher Ein55 Optimism level, exceeding intrinsic value (about $1.50) and driven by market greed recently towards high Ein55 Optimism >$2.50.

The stock formerly was named Tianjin Zhongxin, after change in major shareholder, later renamed to Tianjin Da Ren Tang, partly to reflect its true historical value for the past century (eg. comparable with the same TCM school of more famous Beijing Tong Ren Tang). Tianjin Da Ren Tang is relatively less well known to global investors (unlike other Top 10 largest TCM or healthcare stocks in China) which makes it significantly undervalue, especially for dual listed stock in SGX vs China (eg. on 4 Nov 2022, share price was US$1/share in SGX but RMB 28.26 / 6.87 = US$ 4.11), about 4X price difference in the past, but Tianjin Da Ren Tang in SGX catches up recently to narrow down the gap with China listed stock to (40.08 / 6.87) / 2.26 = 2.6 times on 17 Apr 2023.

Even so, it is still over 2X difference between SGX and Shanghai listed stock, therefore there have been some speculations that SGX listed stock (about 1/3 total shares) may be acquired one day. In fact, when there was a change in major shareholder a few years ago, due to regulation, a low-ball offer (less than US$1) was proposed but this was just for formality, “acquisition” was not successful. In fact, Tianjin shares in SG are mostly owned by retail investors, major shareholders (who own 2/3 shares in China) would need to buy up significantly (relative to 2.6X difference of China stock) if the stock may be acquired to delist one day.

By right, both 1/3 SGX stock and 2/3 China Shanghai stock should have close to 1:1 share price since stock value is the same. Therefore, the earlier 4X undervalue of SGX listed of Tianjin Da Ren Tang has make it an excellent dividend stock, especially its dividend is doubled during recent announcement on 31 Mar 2023, together with 2X in earlier 2 years, total of 4X dividend growth in 4 years, resulting in an unbelievable 25% dividend yield for medium term investors who could take action 3 years ago ($0.68 in May 2020 for Dr Tee graduates).

While celebrating the success for Tianjin Da Ren Tang with 3X Capital Gains and 25% Dividend Yield, an investor or trader may worry when to exit. If sell too early, one may regret as stock may goes up further to higher Ein55 Optimism level driven by greed and social media publicity. If sell too late, the rally may be over, corrected back to square one, less profitable. Therefore, even making profits could be a headache, although it is a good problem to have.

Let’s apply 3 Exit Strategies of Dr Tee with LOFTP (Level / Optimism / Fundamental / Technical / Personal) Strategies to take profits. This is not limited to Tianjin Da Ren Tang (one has to make own decision aligning to own personality), may be applied to any giant stock with profits gained so far.

1) Contrarian Sell (Counter-trend)
Similar to “Buy Low” at Low Optimism with bearish prices, a contrarian investor may sell at High Optimism (eg. >$2.50 for Tianjin Da Ren Tang) with bullish uptrend prices (counter trend). Contrarian is against the majority, eg Buy when others were fearful 3 years ago during pandemic and Sell when others are greedy one day (eg. current market).

However, this strategy requires to know where is Low or High (eg. need knowledge of Ein55 Optimism with intrinsic value of a stock), else Buy Low may get lower (worst may go bankrupt for a junk stock with weak business), Sell High may get higher (>2-10X). A useful finetuning strategy is selling progressively (eg. sell 10% share whenever price is up by 10%, selling 100% when it is up by 100% or 2X). This is similar to an investor who “Average Down” (entry in batches) to Buy Low a few years ago. The weakness of this method is potential profits could be limited with progressive sell, balanced by the benefits of multiple more predictable exit points.

A special smart strategy is to sell 50% shares whenever stock price is 2X (eg. Tianjin Da Ren Tang from $0.68 to $1.36, or from $1 to $2, exit price depending on entry prices X2). This way, the initial capital of an investor is recovered (assuming commission and dividends are neglected), this would give confidence to an investor to take higher risk to hold longer time for the remaining 50% shares, aiming for even higher prices as psychologically, the investor knows that one will not make a loss anymore when 50% profits are taken with 2X prices, even a company may go bankrupt in future.

Assuming there is a good problem to have, share price goes up by another 2X after selling 50%, then an investor may sell 50% of remaining 50% = 25% when share price is 4X (eg. Tianjin Da Ren Tang from $0.68 to $2.72). Continue to sell 50% each time on remaining shares if any stock may become rocket high next time (eg. buy IFAST stock last time during pandemic at $1, sell 50% when come to $2, sell 25% when come to $4, sell 12.25% when come to $8, only left 12.25% shares today, else IFAST stock is corrected to below $5 currently if buy & hold till today).

2) Follow-trend Sell
Many retail investors and traders are more suitable for trend-following trading, eg. Buy a stock (low or fair or high price) with support of stronger uptrend prices. Similarly, they feel “safer” or more comfortable to sell when trend is reversed from uptrend to downtrend. This requires knowledge of share price reversal, eg. application of Technical Analysis, however one may regret after selling as the signal could be too fast, eg. taking 10% profits but stock may continue to go up over 2X, unless the traders continue to buy back again in future to follow the uptrend.

A more practical trend-following is to define own personality first, eg. short term, medium term or long term. This way, one may identify the right indicator to sell (aligned to earlier buy signal). A simple but smart strategy is to apply a trailing stop with X% correction during uptrend price, short term trader may sell when it corrects down by 5-10% one day (eg. Sell if Tianjin Da Ren Tang drops by 10% or around $0.22), medium term trader may wait for 10-20% (eg. Sell if Tianjin Da Ren Tang drops by 20% or around $0.44), long term investor may even able to tolerate >20-30% (acceptable since they have hold with over 2-3X capital gains).

Alternatively, a trader may finetune with any systematic trading system (eg. moving averages crossover, MACD, stochastic, breakout of support/resistance, etc), daily, weekly or monthly, following own personality (buy & sell every few weeks, months or years). Success trend-following is when the system matches own personality, else it would be a failure (eg. feeling of selling too early or too late).

Personality is usually ignored by investors / traders, especially for beginners, who simply busy looking for the “secret method” to make money in stocks. Ein55 Optimism has considered effects of personality in both Buy / Sell signals, integrating with LOFTP strategies.

3) No Sell (Hold)
In fact, the last exit option is not to exit at all, which may be holding for long term or lifetime, especially when business is intact, still growing consistently each year. It means an investor may ignore the share prices volatility or even stock crisis, mainly monitoring the business performance (eg. earnings, revenue, cashflow and many other key fundamental indicators from 3 financial statements).

By the way, Tianjin Da Ren Tang is a very cyclic stock (eg. price could drop over 60% during past stock crisis, partly due to cyclic China and SG stock markets), may not be suitable for Buy and Hold strategy, unless it may evolve from cyclic to growth and dividend investing over time. With recent strong dividend growth (despite recent 2X dividend growth may not be sustainable as this is not supported by 2X earnings, only up by >10% earnings, share prices is mainly driven up due to large gap between SG and China listed stock, as well as market greed), it starts to evolve gradually.

For Buy & Hold long term or lifetime, an investor may need 10-20 giant stocks in a portfolio (eg. 50% dividend stocks + 50% growth stocks) for diversification. Stock price (usually cyclic) may not always reflect business fundamental (even it continues to grow). If 25% dividend yield may be sustainable (may not be unless Tianjin Da Ren Tang continues to grow >10% in earnings each year), then an investor has an option to hold a stock as it only takes 4 years of dividend x 25% yearly to recover the initial capital with holding of stocks. Current dividend yield for Tianjin Da Ren Tang is 8% (still high relative to other dividend stocks) based on current share price >$2.

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Filed Under: Market Cycle Investing, Stock Market, Technical Analysis, Value Investing Tagged: china stocks, crisis stock, cyclic investing stock, growth stock, High Dividend Stocks

Short Selling Strategies for Bearish Stock Market (反败为胜)

Posted on October 18, 2022 Written by Dr Tee (Ein55)

Over the past 6 months, the Fed starts to increase interest rate drastically to suppress the high inflation rates over 8%. As a result, global stock markets experienced second round of stock crisis since Mar 2020 (pandemic crisis) with over 20%-50% major correction in most stocks, especially technology stocks in US Nasdaq and Hong Kong.

Current global economy is still relatively strong but any black swan (eg. Russian-Ukraine war escalated to higher level, crash in property / bond / commodity /forex markets, political instability with major economy, new COVID variants, etc) may drag it into global financial crisis.

Instead of worrying about uncertain markets, a trend-following trader may leverage on market fear to potentially profit from falling stock prices with short-selling. As for smart investors, there is option to hedge against the declining portfolio value of long term position with inverse ETFs, especially for those who are not familiar with short-selling.

Crisis could be Opportunities if an investor or trader knows how to apply short-selling strategies during bearish stock market. Let’s learn further from Dr Tee on how to take action in current stock markets with shorting strategies:

1) Short Selling Strategies

It is more common to short sell a stock with CFD (Contract for Difference), making profit with falling of the prices over a period of time. Since the global stock market (especially indices for major economies) are growing in long term, therefore it is more suitable to consider shorting with short term strategy.

Since business fundamental has less changes in short term (eg. a few weeks or a few months), main focus for shorting is on Technical Analysis (TA) of share prices with consideration of Level Analysis (eg. L2 sector and L3 country performances)

Here are 2 main considerations:

1.1) Technical Analysis

In contrary to normal long position (Buy & Hold), shorting has higher probability in a bearish stock market with declining prices (eg. dropping over 10-20% in a few months). A trader may focus on stocks which show consistent trend of “lower lows and lower highs” of share prices, initiating shorting position when the price pattern below certain support (eg. neckline of double top, support of a price channel, etc) or recording a new intermediate low over the past few weeks / months (price just falls below the support).

Most experienced traders apply CFD for short selling with margins. Since it involves leveraging, it is possible a trader to lose more than initial capital, especially if there is no risk management such as stop loss. Therefore, it is critical to apply S.E.T. (Stop Loss / Entry / Take Profit) in a trading plan. Position size is also important to limit the potential loss within comfortable level before aiming for higher return with CFD leveraging.

For example, after shorting is initiated, a trader needs to set a higher price as stop loss (shorting is reversed strategy, making money with falling prices, making loss with rising prices), eg. if entry with price below the support, then stop loss is naturally when there is a false breakout (price is returned above the support). Each trader may have unique risk tolerance level, eg 5-10%, and difference profits target, with / without leveraging. When shorting selling is successful (price falling as expected), a trader may apply a trailing stop (eg. moving average, MACD and other common TA indicator), cover the shorting position (closing the shorting position) when there is a reversal signal with rising prices, taking profits at this stage while waiting for the next opportunity to short again.

Short term trading, especially short selling with CFD, requires strong commitment to trading plan, removing emotions due to volatile daily prices. Intra-day trading is more speculative as any unexpected daily news may cause a surge in daily prices. Ideally, short term trading requires consideration of price in a few weeks to a few months.

1.2) Level Analysis

Level Analysis is mainly to align individual stock (Level 1) with sector (Level 2) or country indices (Level 3) to maximize the strength of price trends. For example, when market leaders such as S&P 500 Index or Nasdaq Index (Level 3) records a new lower price over the past 6-12 months with bearish TA trends, if sector (Level 2, eg Technology Sector – XLR) also follows, then probability for Level 1 technology stocks (eg. FANG / software / semi-conductor and related stocks) to fall will be higher. The quality of shorting would be higher after such Levels 1-2-3 alignment.

Therefore, when indices are recovering (eg. reversed from bear to bull) one day, it would be more risky to short at a stock which may be still bearish. The consideration is similar to long a stock (Level 1, less than 10% stocks could still be bullish currently) while the indices (Level 3) are bearish, probability of success will be lower.

2) Inversed ETFs

For retail traders who are less familiar with short selling or CFD, may consider inversed ETFs, which would grow in prices (as if long strategy) with falling of indices. The application is limited to major Levels 2-3 indices (eg. certain sector and country indices ETF), very few on individual stocks (except for popular stocks such as Apple, Tesla, etc).

Even for investors who hold on to current stock portfolio, may apply inverse ETF as a hedging tool to limit or stop the losses in a bearish stop market. If Level 2-3 indices falling trends are aligned to long term position of Level 1 stocks, an investor may apply a suitable inverse ETF to hedge against the bearish stock market to limit the losses of holding to current stock portfolio (if not selling).

For inverse ETF, there is option of 1X, 2X, 3X reverse return, eg. when Nasdaq falls by 1%, SQQQ would go up by 3X = 3%. This indirectly includes CFD leveraging into inverse ETF, allowing higher volatility (higher potential return with higher risk).

Here is a list of common inverse ETFs, sorted by fund size (SQQQ is the most popular):

https://etfdb.com/etfs/inverse/equity/

Here are some common ProShares Short ETFs:

PSQ (-1X Nasdaq Index)

SQQQ (-3X Nasdaq Index)

SH (-1X S&P 500 Index)

SPXU (-3X S&P 500 Index)

DOG (-1X Dow Jones Index)

SDOW (-3X Dow Jones Index)

YXI (-1X China A50 Index)

It is relatively safer to apply inverse ETF than CFD for short selling because a retail investor could apply normal long strategy (eg. Buy Low Sell High, Buy High Sell Higher) which is more natural. In addition, the loss of inverse ETF is limited to capital invested (assuming no stop loss is applied). However, inverse ETF has lack of choices, trends of Level 2-3 indices may not fully aligned with Level 1 individual stocks interested (which would be more suitable with CFD).

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Shorting is mainly reversed strategy (aiming for lower prices) of usual long strategy (aiming for higher prices), riding the bearish share prices, breaking each critical support to start the shorting. It may be against the personalities of some investors, therefore it is possible to “Wait”, no need to “Short” during a bear market.

The global stock market continues to monitor the CPI (Consumer Price Index) or inflation, which likely to fall further over the next few months due to higher base for comparison 1 year ago (CPI is yearly economic data) unless there is another unexpected market surprises (eg. Russia stopping the supply of natural gas to Europe during the cold winter, US/China trade war escalated to the next level, etc).

Register Here (Dr Tee Free 4hr Stock Webinar): www.ein55.com

Filed Under: Market Outlook, Stock Market, Technical Analysis, Trading Tagged: crisis is opportunity, crisis stock investing, global financial crisis, shorting

4 Singapore Defensive Dividend Stocks and REITs (稳如泰山)

Posted on August 12, 2022 Written by Dr Tee (Ein55)

In this Dr Tee 1hr video education (4 Singapore Defensive Dividend Stocks and REITs), you will learn:
1) Formation of Defensive Stock Portfolio

2) Singapore Stock Market Outlook
– Short term, medium term & long term

3) Singapore Dividend ETFs
– Singapore Index Fund: STI ETF (SGX: ES3 & G3B)
– Singapore REIT Fund: CSOP Singapore REITs ETF (SGX: SRT)

4) 4 Singapore Defensive Dividend Stocks and REITs:
– CapitaLand Integrated Commercial Trust / CICT (SGX: C38U)
– Mapletree Industrial Trust / MIT (SGX: ME8U)
– OCBC Bank (SGX: O39)
– Challenger Technologies (SGX: 573)

5) Defensive Investing Strategies with Low Optimism Giant Stocks
– Kiasu Personality (Average Down)
– Kiasi Personality (Average Up)

6) Bonus / Q&A
– Hong Kong Hang Seng Index vs China A50 / CSI 300 Index
– Bottom Fishing of Giant Stocks with Falling of Inflation from the Peak
– Impact of Interest Rate Hike on Bank Stocks

Here is Dr Tee Free 1-hr Video Course. Enjoy and give your comments for improvement. You may subscribe to Dr Tee Youtube channel (Ein Tee) for future Dr Tee video talks.

Dr Tee Video Course: https://youtu.be/szvE8t_rqs8

Past readers could have profited with over 50% rally in share price if have taken actions during pandemic on similar giant stocks at low optimism level. No one could change the past but you could still change the future if taking action to learn now!

Investing with 30 STI Index Stocks (including 3 dividend giant stocks of CICT, MIT and OCBC) is a defensive strategy, indirectly diversifying the risks among 30 large size businesses in Singapore.

Register Here (Dr Tee Free 4hr Stock Webinar): www.ein55.com

Filed Under: Fundamental Analysis, Market Cycle Investing, Stock Market, Technical Analysis Tagged: defensive stock, dividend stock, reit

4 Defensive Undervalue-Dividend-Stocks of Singapore and Hong Kong against Black Swans

Posted on July 6, 2022 Written by Dr Tee (Ein55)

In this Dr Tee 2hr video education (4 Defensive Undervalue Dividend Stocks), you will learn:
1) Interactive Impacts of 5 Potential Black Swans
– COVID19, High Inflation, Interest Rate Hike, Supply Chain Disruption, Russia-Ukraine War

2) Singapore and Hong Kong Stock Market Outlook
– Short term, medium term & long term

3) 4 Singapore and Hong Kong Defensive-Undervalue-Dividend Stocks:
– Singapore Index Fund: STI ETF (SGX: ES3 & G3B)
– Hong Kong Index Fund: HSI ETF (HKEX: 2800 & 2833)
– Singapore Property Giant Stock: Hongkong Land (SGX: H78)
– Hong Kong Giant Reit: Link Reit (HKEX: 0823)

4) Defensive Investing Strategies with Low Optimism Giant Stocks
– Kiasu Personality (Average Down)
– Kiasi Personality (Average Up)

5) Bonus / Q&A
– Jardine Cycle & Carriage (SGX: C07)
– Alibaba (HKEX: 9988 / NYSE: Baba)
– Impact of interest rates (HDB / Banks) on Property Market

Here is Dr Tee Free 2-hr Video Course. Enjoy and give your comments for improvement. You may subscribe to Dr Tee Youtube channel (Ein Tee) for future Dr Tee video talks.

Dr Tee Video Course: https://youtu.be/U2JPD68YR94

Past readers could have profited with over 50% rally in share price if have taken actions during pandemic on similar giant stocks at low optimism level. No one could change the past but you could still change the future if taking action to learn now!

Investing with 30 STI Index Stocks (including Hongkong Land) is a defensive strategy, indirectly diversifying the risks among 30 large size businesses in Singapore.

Similarly, investing with 66 HSI Index Stocks (including Link Reit) is a defensive strategy (with additional protection of low optimism Hang Seng Index, leveraging on pandemic recovery and stimulus plans in China), indirectly diversifying the risks among 66 large size businesses in China / Hong Kong:

CKH HOLDINGS (HKEX: 1), CLP HOLDINGS (HKEX: 2), HK & CHINA GAS (HKEX: 3), HSBC HOLDINGS (HKEX: 5), POWER ASSETS (HKEX: 6), HANG SENG BANK (HKEX: 11), HENDERSON LAND (HKEX: 12), SHK PPT (HKEX: 16), NEW WORLD DEV (HKEX: 17), GALAXY ENT (HKEX: 27), MTR CORPORATION (HKEX: 66), HANG LUNG PPT (HKEX: 101), GEELY AUTO (HKEX: 175), ALI HEALTH (HKEX: 241), CITIC (HKEX: 267), WH GROUP (HKEX: 288), CHINA RES BEER (HKEX: 291), OOIL (HKEX: 316), SINOPEC CORP (HKEX: 386), HKEX (HKEX: 388), TECHTRONIC IND (HKEX: 669), CHINA OVERSEAS (HKEX: 688), TENCENT (HKEX: 700), CHINA UNICOM (HKEX: 762), LINK REIT (HKEX: 823), PETROCHINA (HKEX: 857), XINYI GLASS (HKEX: 868), ZHONGSHENG HLDG (HKEX: 881), CNOOC (HKEX: 883), CCB (HKEX: 939), CHINA MOBILE (HKEX: 941), LONGFOR GROUP (HKEX: 960), XINYI SOLAR (HKEX: 968), SMIC (HKEX: 981), LENOVO GROUP (HKEX: 992), CKI HOLDINGS (HKEX: 1038), HENGAN INT’L (HKEX: 1044), CSPC PHARMA (HKEX: 1093), CHINA RES LAND (HKEX: 1109), CK ASSET (HKEX: 1113), SINO BIOPHARM (HKEX: 1177), BYD COMPANY (HKEX: 1211), AIA (HKEX: 1299), CHINAHONGQIAO (HKEX: 1378), ICBC (HKEX: 1398), XIAOMI – W (HKEX: 1810), BUD APAC (HKEX: 1876), SANDS CHINA LTD (HKEX: 1928), WHARF REIC (HKEX: 1997), COUNTRY GARDEN (HKEX: 2007), ANTA SPORTS (HKEX: 2020), WUXI BIO (HKEX: 2269), SHENZHOU INTL (HKEX: 2313), PING AN (HKEX: 2318), MENGNIU DAIRY (HKEX: 2319), LI NING (HKEX: 2331), SUNNY OPTICAL (HKEX: 2382), BOC HONG KONG (HKEX: 2388), CHINA LIFE (HKEX: 2628), ENN ENERGY (HKEX: 2688), MEITUAN – W (HKEX: 3690), CM BANK (HKEX: 3968), BANK OF CHINA (HKEX: 3988), CG SERVICES (HKEX: 6098), HAIDILAO (HKEX: 6862), JD – SW (HKEX: 9618), NONGFU SPRING (HKEX: 9633), BABA – SW (HKEX: 9988), NTES – S (HKEX: 9999).

Register Here (Dr Tee Free 4hr Stock Webinar): www.ein55.com

Filed Under: Fundamental Analysis, Macroeconomy, Market Cycle Investing, Stock Market, Technical Analysis Tagged: defensive stock, dividend stock, Hong Kong Market, reit, undervalue stock

5 Stock Actions for 5 Black Swans (五内如焚)

Posted on June 13, 2022 Written by Dr Tee (Ein55)

Over the past 2 years of pandemic, global stock markets have been experiencing roller-coaster rides, down and up and down … mainly due to these 5 black swans with high uncertainties in cyclic manner:

1) COVID19 Pandemic

2) Supply Chain Disruption

3) Interest Rate

4) Inflation

5) Russian-Ukraine War

Global stock markets experienced mini dotcom bubble with over 30%-50% major correction in technology stocks, especially in US Nasdaq and Hong Kong. Both long term investors and short term traders are worried of high inflation over 8%, interest rate hike (may exceed 3% in 1 year), Russia-Ukraine War (higher commodity prices), supply chain disruptions and endless COVID19 cases (over 2 years) which contribute to declining stock prices. These 5 black swans (五内如焚) may spread the fears in technology stocks to most sectors, resulting in a global financial crisis.

Instead of worrying about uncertain markets, a smart investor may consider strong dividend giant stocks with protection by defensive sector business, a natural way to hedge against high inflation with interest rate hike while collecting growing passive incomes in a steady way. A wise trader would make friend with price trend, waiting for uptrend to reenter again (avoiding Buy Low get Lower). It is possible to integrate long term investing with short term trading to enjoy the best of 2 worlds.

Crisis could be Opportunities if an investor or trader knows how to take 1 of 5 critical actions (Buy / Hold / Sell / Wait / Shorting) aligning to own personality. Let’s learn further from Dr Tee on how to take action in current stock markets with 5 black swans:

1) Buy

With over 90% global stocks (especially in US & Hong Kong) turned bearish, “Buy” action for investors could be more suitable for defensive dividend giant stocks, taking calculated risks of limited downside, no need to time the market. A trader may still consider strong individual stocks from bullish sectors such as utilities, commodities, energy, etc, which still have potential to rise.

Most people wish to Buy Low Sell High but usually ending up do nothing when market is falling (fear of falling knife) and rising again (fear of “expensive” stocks).

Supply chain disruptions during pandemic becomes worse, especially for commodities (eg. agricultural products, crude oil and natural gas) during Russia-Ukraine War which is highly complicated (political, financial, humanistic, etc). While commodity stocks still enjoy higher profits in near future, it is more suitable for shorter term traders as Ein55 Optimism level of commodity stocks are generally higher, may not be suitable for long term investing.

2) Hold

A short term trader may have sold the stocks when stock markets start to turn bearish a few months ago but a long term investor may have option to hold on to certain stocks with condition that it is a giant with strong and defensive businesses.

During interest rate hike (to tame the high inflations), global bank stocks would have higher interest income due to higher Net Interest Margin (NIM). However, banks profits could be reduced if the stock correction ends up as a global financial crisis (eg. stagflation or hyper-inflation over 10%), there could be less borrowing of money by corporate. At the same time, non-interest income (eg. investment funds, insurance, credit card, etc) is highly dependent on economy condition.

The Fed of US is taking the lead to increase interest rate (from 1%) which is an art to control the high inflation (over 8%) with amount of adjustment. If the interest rate is increased too fast (eg. over 1% each time), investors may become fearful, resulting in bearish stock market which could limit hiring and expansion of business, ending as global financial crisis eventually. If the interest rate is increased too slow (eg. minimal 0.25% each time), it could not bring down the high inflation (already last 40 years high). The Fed could only do micro adjustment every few months (6 times each year) while giving “assurance” with more positive comments to cool down the inflation without spreading the fear too much.

Singapore stock market performs better than US stock market so far in Year 2022, mainly due to there are more banking and finance stocks (over 30%) than technology stock (only 1, Venture Corp) in 30 STI component stocks:

Ascendas Reit (SGX: A17U), CapitaLand Integrated Commercial Trust (CICT) (SGX: C38U), CapitaLand (SGX: C31), City Development (SGX: C09), ComfortDelGro (SGX: C52), DBS Bank (SGX: D05), Dairy Farm International (SGX: D01), Frasers Logistics & Commercial Trust (SGX: BUOU), Genting Singapore (SGX: G13), Hongkong Land (SGX: H78), Jardine Matheson Holdings JMH (SGX: J36), Jardine Cycle & Carriage (SGX: C07), Keppel Corp (SGX: BN4), Keppel DC Reit (SGX: AJBU), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), OCBC Bank (SGX: O39), SATS (SGX: S58), Singapore Exchange (SGX) (SGX: S68), Singapore Airlines (SIA) (SGX: C6L), ST Engineering (SGX: S63), Sembcorp Industries (SGX: U96), Singtel (SGX: Z74), Thai Beverage (SGX: Y92), UOB Bank (SGX: U11), UOL (SGX: U14), Venture Corporation (SGX: V03), Wilmar International (SGX: F34), Yangzijiang Shipbuilding (YZJ) (SGX: BS6).

Similarly, there are more value stocks in Malaysia 30 KLCI index component stocks:

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 (Bursa: 7113) TOP GLOVE CORPORATION BHD.

3) Sell

Some investors may feel that it is too late to sell stocks after over 30% – 50% correction in stocks, especially in technology sector. In fact, short term traders and long term investors have different risk tolerance levels, criteria to sell could be different as well. For traders, it is important to follow a consistent trading system to buy and sell (eg. every few weeks or months), mainly based on Technical Analysis with trend-following. For investors, more considerations on longer term stock performance including business conditions (not just based on stock prices), selling of stocks is an option, not a must.

Some investors may also worry after selling a stock (especially a giant stock), hard to buy back again at the same prices, therefore prefer to hold. If an investor could integrate trading mindset into investing, even if the current bearish stock market is only a major correction (eg. rebound when high inflation is tamed), it is never too late to buy back the same stocks (or stronger stocks) at the same selling price or even higher price (difference of selling and buying price is a premium of insurance to ensure a more bullish market).

Sell a stock (whether to take profits or minimizing losses) is not a mistake, even the stock may recover higher eventually. When business or fundamental analysis is core (value investing), stock price analysis (allowing Buy Low or Sell High) would help to enhance the probability of success with higher potential return. Partial consideration of only fundamental or technical is incomplete, there could be market traps in each method.

4) Wait

For investors or traders with no stock currently, some may want to wait for opportunities to buy low. Cash is king only when used at the right time in investment one day. Cash deposit in banks forever could be wasted if too much cash (beyond emergency fund for family) with little return (current bank interest rate is still far below inflation, therefore cash is shrinking in value with time).

For investors who could not any take action in stocks due to low risk tolerance level, may consider to invest in bank stocks (eg. getting 1% interest from cash deposit in OCBC vs over 4% dividend in OCBC stock), risk as stock investors could be lower (especially for lower price-to-book ratio stock) than cash depositor ($75k compensation if a Singapore bank go bankrupt).

“Wait” is an important action but window of opportunity may be widely opened while market is still chaotic or full with negative comments. It is easy to say “Be greedy when others are fearful” but it is possible to Buy Low get Lower as it is almost impossible to buy at the lowest point (similarly to sell at the highest point).

So, probability investing (eg. LOFTP strategies – Level / Optimism / Fundamental / Technical / Personal Analysis) is a solution, taking action (from Wait to Buy) when signal has appeared for own personality. As of now, mini bear (over 20% correction in indices) is confirmed but big bear (over 50% price correction) is still uncertain.

Waiting is meaningful only if an investor or trader could take action at certain point of time to buy stock again (eg. a portfolio of 10-20 giant stocks with strong businesses and recovery in share prices).

5) Shorting

“Shorting” is a higher probability of action in a bearish stock market with over 90% stocks correcting to lower prices, profiting from lower prices. However, it is more suitable for shorter trading and S.E.T. (Stop Loss / Entry / Target Prices) plan is required for trading because shorting could have infinite loss when a trader short sell a stock with rising price (sky is the limit for upward potential, eg. Tesla or iFAST have over 10X in share prices over the past few years).

Shorting may be conducted with CFD (Contract for Difference) platform but only selected stocks are available (many weak fundamental stocks may not be available in CFD). CFD may not be suitable for beginners, especially those who don’t have a trading plan. Alternatively, an investor may considered inversed ETF (higher prices or more profits when actual index is falling) which could be traded under most stock exchanges.

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While 5 black swans above could be uncertain in nature (therefore it is called “black” swan) but they are actually secondary factors. The primary factors of stock market prices up and down are actually Greed and Fear, which could be reflected under LOFTP (Level / Optimism / Fundamental / Technical / Personal). Despite we could not have a crystal ball to see the future stock market, probability investing aligning to own personality would enhance the winning chances.

Register Here (Dr Tee Free 4hr Stock Webinar): www.ein55.com

Filed Under: Fundamental Analysis, Macroeconomy, Market Cycle Investing, Stock Market, Technical Analysis Tagged: black swan, crisis stock investing, High Dividend Investing

6 Singapore Banking and Finance Giant Stocks under Potential Black Swan (因祸得福)

Posted on February 24, 2022 Written by Dr Tee (Ein55)

Are you worrying about the current stock market fears which may become the next Black Swan: Russia / Ukraine war, high inflation and interest rate hike, resulting in significant market correction? Is it time to Buy, Hold, Sell, Wait or Shorting?

In this Dr Tee 1.5hr video education (6 Giant Singapore Banking & Finance Stocks under Potential Black Swan), you will learn:
1) Impact of Political Economy and Business on Stocks
– Russia / Ukraine War
– High Inflation & Interest Rates Hike
– Recent Final Financial Reports of Case Studies

2) Singapore Stock Market Outlook
– Short term, medium term & long term

3) 6 Giant Singapore Banking & Finance Stocks
– SG Giant Bank Stock: DBS Bank (SGX: D05)
– SG Giant Bank Stock: OCBC Bank (SGX: O39)
– SG Giant Bank Stock: UOB Bank (SGX: U11)
– SG Giant Insurance Stock: UOI – United Overseas Insurance (SGX: U13)
– SG Giant Insurance Stock: Great Eastern (SGX: G07)
– SG Giant Financial Stock: Singapore Exchange – SGX (SGX: S68)

4) Long Term / Mid Term Investing vs Short Term Trading with 3 Strategies
– Optimism Analysis (Cyclic Investing)
– Fundamental Analysis (Value Investing)
– Technical Analysis (Trend-following Trading)

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.

English Video:

你害怕目前潜在的股票市场黑天鹅 (俄罗斯与乌克兰战争、高通膨、加息) 吗？应该买、卖、持有、等待、还是卖空？

在这Dr Tee 1小时教育视频（6只新加坡金融牛股在黑天鹅阴影），您可学习：
1）政治经济影响股市
– 俄罗斯与乌克兰战争
– 高通膨、加息
– 最新财表

2）新加坡股市展望

3） 6只新加坡金融强股
– 新加坡银行巨股: 星展银行 DBS Bank (SGX: D05)
– 新加坡银行巨股: 华侨银行 OCBC Bank (SGX: O39)
– 新加坡银行巨股: 大华银行 UOB Bank (SGX: U11)
– 新加坡保险巨股: 大华保险 UOI – United Overseas Insurance (SGX: U13)
– 新加坡保险巨股: 大东方控股 Great Eastern (SGX: G07)
– 新加坡金融巨股: 新加坡交易所 Singapore Exchange – SGX (SGX: S68)

4）长中期投资与短期交易三招
– 乐观指数分析 (周期投资)
– 基础分析 (价值投资)
– 技术分析 (趋势交易)

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。

Chinese Video (华语视频):

Register Here (Dr Tee Free 4hr Stock Webinar): www.ein55.com

Filed Under: Fundamental Analysis, Market Cycle Investing, Market Optimism, Market Outlook, Stock Market, Technical Analysis Tagged: bank stock, economy vs stock, global financial crisis, value investing

4 Undervalue-Growth-Dividend Giant Stocks in Singapore and US (股海四宝)

Posted on December 15, 2021 Written by Dr Tee (Ein55)

It may be a dream for an investor to find an all-rounded stock with strong business fundamental and growing share prices with regular dividends as passive income (monthly / quarterly / half-yearly) for long term investing or short term trading. In this Dr Tee 2hr video education (4 Undervalue + Growth + Dividend Giant Stocks in Singapore and US), you will learn:

1) US and Singapore Stock Market Outlook
– Short term, medium term & long term

2) LOFTP Investing Strategies for Growth Investing and Momentum Trading
– Level Analysis (L1 Stock, L1 Sector, L3 Country, L4 World)
– Optimism Analysis (0-100%)
– Fundamental Analysis (Strong / Weak)
– Technical Analysis (Follow-trend / Counter-trend)
– Personal Analysis (Short Term Trading / Long Term Investing)

3) 4 US & Singapore Giant Stocks from 4 Promising Sectors with 3-in-1 strategies (Growth + Dividend + Undervalue)
– Singapore Giant Property Stock: Hongkong Land (SGX: H78)
– Singapore Giant F&B Stock: Thai Beverage (SGX: Y92)
– US Giant Oil & Gas Stock: Magellan Midstream Partners (NYSE: MMP) – quarterly dividend payment
– US Giant REIT Stock: Realty Income (NYSE: O) – monthly dividend payment!

4) Long Term Growth Investing vs Short Term Trading Strategies
– Growth Investing (Buy Low & Hold, Long Term)
– Dividend Investing (Buy Low & Hold, Long Term)
– Undervalue / Cyclic Investing (Buy Low Sell High, Long Term)
– Short Term Trading (Buy Low Sell High, Buy High Sell Higher, Short Term)

5) Bonus: Discussions on 5 stocks during Q&A (only for those who view entire 2hr video)
– US Technology Stock: Zoom Video Communications (NASDAQ: ZM)
– Malaysia / Singapore Glove Stock: Top Glove (SGX: BVA / Bursa: 7113)
– Singapore Insurance Stock: Great Eastern (SGX: G07)
– Singapore Transportation Stock: ComfortDelgro (SGX: C52)
– Singapore Dividend Stock: Vicom (SGX: WJP)

Here is Dr Tee Free 2-hr Video Course. Enjoy and give your comments for improvement. You may subscribe to Dr Tee Youtube channel (Ein Tee) for future Dr Tee video talks.

View Dr Tee Video Here (switch on FB sound before viewing):
https://www.facebook.com/ifastgm/videos/363185765575573

Past readers could have profited with over 50% rally in share price if have taken actions during pandemic on similar giant stocks. No one could change the past but you could still change the future if taking action to learn now!

Register Here (Dr Tee Free 4hr Stock Webinar): www.ein55.com

Filed Under: Market Cycle Investing, Stock Market, Technical Analysis, Trading Tagged: dividend stock, growth stock, reit, undervalue stock

Buy Low Hold Dividend with Global REITS (为善最乐)

Posted on November 16, 2021 Written by Dr Tee (Ein55)

In recent 12^thEin55 Charity Course on Global REITs, we have raised fund of $24,000 to help needy families in Singapore. Under the spirit of charity, Dr Tee decides to share 3 Global Giant REITs with opportunities to Buy Low in 3 countries with readers (detailed strategies including Ein55 Optimism levels, Ein55 intrinsic values and Dividend Yield will be shared):

1) Singapore Giant REIT – Keppel DC REIT (SGX: AJBU)

2) Malaysia Giant REIT – Pavilion REIT / PAVREIT (Bursa: 5212)

3) Hong Kong / China Giant REIT – Link REIT (HKEx: 823)

Dr Tee, Ein55 Mentors & Graduates have together organized 12 charity investment courses (REITs in Nov 2015, May 2017, May 2019 and Nov 2021, High Dividend Stocks in Mar 2016, Oct 2017 and Nov 2019, Global Growth Stocks in Apr 2018 and Nov 2020, and Discounted NAV Stocks in Sep 2016, Nov 2018 and May 2021) in the past 6 years, donating net income of around $246,000 to Tzu Chi 慈济 Singapore.

We hope to inspire more Ein55 Graduates to reach out the society, helping others who are in need. More importantly, they have also learned the secrets of making money through investment. When more Ein55 Graduates are successful financially, they could also contribute back to the society to help more people in future.

Singapore and overseas REITs are popular investment for passive income through stable dividend stocks. By law, REITs have to redistribute 90% taxable income (from property rental income) back to shareholders in the form of dividend. Therefore, a retail investor could play the role of landlord of giant property (shopping malls, commercial buildings, hospitals, hotels, etc) with minimal capital (could be less than $1000), saving the hassle to buy/sell property (REIT manager would help), no need to deal with tenants or operations (property manager would help). Singapore REITs are exempted from corporate tax, therefore an Singapore investor could gain extra 1-2% rental or dividend yield compared with overseas REITs.

However, ordinary dividend investors (REIT / non-REIT) collect minimal passive incomes (eg. around 3-10% dividend yield) but long term growth may be limited (eg. Singtel (SGX: Z74) or SPH (SGX: T39)) and there could be high risk of capital loss with junk REIT (eg. Eagle Hospitality Trust (SGX: LIW) which has become bankrupt).

A smarter way of dividend investing is to wait patiently to Buy Low (low Ein55 Optimism during stock crisis) for a portfolio of 10 giant global REITs (or non-REIT dividend stocks) with reasonably strong business, waiting patiently (collecting consistent dividend during winter time of stock) for recovery of REIT with capital growth.

After the fear is fading, besides the minimal dividend yield (typically 3-10%), a smart dividend investor may choose to Sell High (cash out as opportunity fund to wait for next stock crisis to Buy Low again, especially for cyclic stocks including REITs) or hold long term for growth investing (for growth REIT), even possible for lifetime investing (selling one day only when need money or when it is no longer a giant stock based on Dr Tee criteria).

The best time to buy global giant REITs is always during global stock crisis (eg. Year 2020-2021 during pandemic, 2008—2009 during subprime crisis, etc), not only able to maximize the dividend yield (due to lower entry share price), also could have higher potential of capital gains (when market cycle moves from fear in low optimism to greed in high optimism). Global REITS investing is not based on dividend strategy (collect dividends as passive incomes) alone, may be integrated with cyclic investing (Buy Low Sell High), growth investing (Buy Low & Hold), swing trading, momentum trading, defensive investing and other Ein55 strategies.

There are thousands of global REITS (started in US a few decades ago, extending to the world, become popular in Asia). However, not all the global REITs listed are giant stocks. A growing business or consistent dividend payment in the past may not be sustainable during COVID-19 period and a REIT may remain lagging in share prices for many years, could end up as a crisis stock. Fundamental Analysis alone is not sufficient, a low PB or low PE or high dividend yield stock may be a value trap as this may be the result of lower share price with weakening businesses. Therefore, deeper analysis is required with LOFTP (Level, Optimism, Fundamental, Technical, Personal Analysis) Strategies.

Let’s learn these 3 global giant REITs in 3 countries (Singapore, Malaysia, Hong Kong), understanding the business nature, investment clock and unique strategy.

1) Singapore Giant REIT – Keppel DC REIT (SGX: AJBU)

In the internet era with more 5G applications, data usage will be enormous with explosive growth for next decade. So, Keppel DC Reit is positioned nicely to host data storage, collecting consistent growing rental as passive incomes. Keppel DC Reit has nearly 100% business in data center (recently extending to related business such as partnership with M1) while Mapletree Industrial Trust (SGX: ME8U) has about 1/3 businesses in this growing sector. Mapletree Industrial Trust is the largest Data Center REIT in Singapore but share price (near to fair value) currently is not as attractive as Keppel DC Reit, therefore not a focus in this article.

Over the past 5 years, Keppel DC Reit has experienced 3X in share prices from $1 to peak of $3 but the gains is not limited to share price appreciation. Its dividend is doubled every few years, therefore suitable to position as mid-fielder stock to have a balance of both growth (price appreciation) and dividend (passive income).

After reaching 100% Optimism level during peak of pandemic, Keppel DC Reit has experienced slower growth with sector rotation. The prices over the past 1 year has been bearish, declining by about 20%, falling to low optimism <25% currently, creating another rare opportunity for long term investor with dividend yield about 4%. However, due to bearish price trend, it is currently more suitable for contrarian investor who could apply Average Down strategy to minimize the risk of “Buy Low get lower”.

Therefore, similar to many other crisis giant stocks at low Ein55 Optimism level (eg. Top Glove (SGX: BVA / Bursa: 7113), Tencent (HKEX: 700) or Alibaba (HKEX: 9988 / NYSE: BABA)), an investor may need to “Wait” for “crisis” in prices (but strong in business) to Buy Low or entering in several batches, either Average Down or Average Up, eg. wait for next mini rally to Buy slightly Higher (only after uptrend is established for short term, eg when above $2.40-$2.50 resistance for Keppel DC Reit).

Due to defensive business nature of Keppel DC Reit, Ein55 intrinsic value is about $2.80, current price is only about 20% discount (despite low Ein55 Optimism level). It is more suitable for Buy Low and Hold Long Term, collecting 4% dividend yield (potentially doubled every few years). Keppel DC Reit has to grow bigger with more yield accretive acquisitions (eg. recent new REIT in Guangzhou of China) to sustain this high growth with many more global competitors (both demand and supply for data center increase at the same time).

2) Malaysia Giant REIT – Pavilion REIT / PAVREIT (Bursa: 5212)

PAVREIT is a young Malaysia Giant Reit, focusing in retail business. It has high concentration with 80% value in Pavilion KL Mall (second most expensive retail mall after KLCC (Bursa: 5235SS)), therefore business is affected during pandemic with lower property valuation and negative rental reversion.

Over the past 10 years, PAVREIT has doubled its share prices but behaving in a cyclical way, partly due to cyclical retail business and dynamic political economy (changes in regulations) in Malaysia. Its dividend is halved during pandemic, therefore more suitable for cyclic investing (Buy Low Sell High) while holding minimal 3% dividend yield.

After reaching high Optimism level before pandemic, PAVREIT has experienced weaker earnings and cashflow, especially after a few yield dilutive acquisition of smaller malls (eg. Damen Mall). The prices over the past 1 year has been bearish, declining by about 30%, falling to low optimism <25% currently, creating good opportunity for medium term investor with dividend yield about 3%. However, it is more suitable for cyclic investor or trader to apply Buy Low Sell High strategy. Average up strategy (need to overcome $1.45-$1.50 resistance to establish short term bullish trend) may be integrated as dividend yield is lower with weaker business (worst of pandemic likely is over), may not suitable to buy for long term (unlike Keppel DC Reit which is possible to average down with strong business).

Due to medium term cyclical business nature of PAVREIT, Ein55 intrinsic value is about $1.70, current price is only about 20% discount (despite low Ein55 Optimism level). It is more suitable for Buy Low Sell High in medium term (a few years), collecting 3% dividend yield while waiting for pandemic recovery in Malaysia for additional capital gains. Political instability and weak economy in Malaysia are potential threats for Bursa stocks, including but not limited to PAVREIT.

3) Hong Kong / China Giant REIT – Link REIT (HKEx: 823)

Link REIT is the largest REIT in Hong Kong and Asia, about 2 times bigger than CICT (SGX: C38U) which is the largest Singapore REIT). It is also the 3^rd largest retail REIT in the world, after Simon Property (NYSE: SPG) and Realty Income (NYSE: O) of US REITs. Link REIT has 80% value in Hong Kong (retail malls and carparks), 20% overseas.

Over the past 10+ years, Link REIT has grown its share prices by 10 times to peak of about $99 before pandemic with support of high growth businesses mainly in Hong Kong. Its dividend is stable during pandemic but high growth is slower (eg. rental reversion is reduced from 20+% in the past to 10+% in recent years), therefore still suitable for growth investing (Buy Low & Hold) while holding 4% dividend yield (would increase over the years with more expansion beyond Hong Kong, especially in mainland China).

After reaching high Optimism level before pandemic, Link REIT has experienced slower growth, price was corrected significantly by about 40% from $99 to about $57. The share price over the past 1 year has gradually recovered from low optimism <25%, despite uncertain political economy (eg. tighter market regulations by China authority) with bearish Hong Kong stock market, creating a rare opportunity for long term investor with dividend yield about 4%.

Link REIT is the most flexible among 3 global REITs discussed in this article, possible to apply either Average Down strategy (similar to Keppel DC Reit with strong business) or Average Up strategy (good price trend in short term). Its potential short term risk (or opportunity) is the bearish Hong Kong stock market which could slowdown its price growth (but little impact on business growth), share prices supported above $70 is a nice balance to consider as common entry point for both long term investors and short term traders, although each may have different price targets for exits.

Due to major correction during pandemic, Ein55 intrinsic value is about $100, current price is about 30% discount (still at low Ein55 Optimism level). Link REIT is an all rounded REIT, may be considered for dividend investing (Buy Low & Hold for dividend growth), cyclic investing (Buy Low Sell High), growth investing (Buy Low & Hold for capital gains) or even short term trading (Buy Low Sell high in short to medium terms). However, full mastery of each unique Ein55 investing or trading strategy is critical for ultimate success, especially on when to sell or how long to hold, not just on what to buy or when to buy.

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Readers may read earlier article by Dr Tee for more details on 100 Singapore Dividend Stocks (REIT / non-REIT):
https://www.ein55.com/2021/03/100-singapore-dividend-stocks-and-reits-for-retirement/

Not all global REITS are giant stocks, some could be junk stocks (eg. making losses or asking investors for reserved passive incomes through rights issues). Even for a giant stock, it requires at least yearly review with Dr Tee criteria to ensure it is still a giant stock or a change in strategy may be required (eg. crisis stock investing with Striker role if there is any potential high risk). Similarly, those stocks which are not highlighted in this article, some could be marginal giant stocks, may obtain the giant stock title one day, which worth longer term investing or trading.

Ideally, a smart investor should form a dream team stock portfolio (striker / mid-fielder / defender) with 10-20 giant stocks from over 3 sectors and 3 countries. REIT sector may contribute 1-2 stocks while it is important to diversify with more sectors (eg. Healthcare, Banking & Finance, F&B, Technology, Oil & Gas, Property / non-REIT, etc).

Since some REITs have overseas business, knowledge of Forex (eg. USD/SGD, SGD/HKD, SGD/MYR, etc) would be critical. A qualified REIT investor should also understand property market cycle, macroeconomy behavior, integrating with dividend investing or growth investing or cyclic / momentum trading.

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