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Summary of Monthly Season Effect on Global Stock Market

Posted on October 3, 2018 Written by Dr Tee (Ein55)

For medium term trading (buy & sell every few months), a stock trader may feel the importance of relative monthly stock performance. If one could apply statistics to understand the months with relative stronger or weaker performance, the knowhow could help in advanced trading plan. Here is a compilation of season effect (monthly stock performance, green is a gain, red is a loss) over the past 12 years on global stock markets in Singapore, US, Hong Kong and China.

1) Singapore (Straits Times Index – STI)

Worst Month: Aug (Losses in 12 out of 12 years)

Best Months: Mar/Apr (Gains in 10 out of 12 years)

2) US (Nasdaq Composite Index – Nasdaq)

Worst Month: Jun (Losses in 8 out of 12 years)

Best Months: Apr/May/July (Gains in 9 out of 12 years)

3) Hong Kong (Hang Seng Index – HSI)

Worst Months: Aug (Losses in 9 out of 12 years), May (Losses in 8 out of 12 years)

Best Month: Apr/July (Gains in 10 out of 12 years)

4) China (Shanghai Composite Index – SSEC)

Worst Months: Apr/Jun (Losses in 7 out of 12 years)

Best Month: Oct (Gains in 9 out of 12 years)

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After comparison, we may conclude the following based on 12 years of monthly stock performance in these 4 global stock markets:

1) Common worst month is Aug for Singapore and Hong Kong; Jun for US and China. The season effect for worst month is regional, not global.

“Sell in May and Go Away” is only observed in Hong Kong with relatively poorer performance in May, not a strong factor for other stock markets. In fact, US has strong record of stock performance in May. So, believe in statistics, not in this myth, unless trading in Hong Kong.

2) Common best month is Apr for Singapore, US and Hong Kong; Oct for China. China is not as aligned as other global stock markets as it has its own unique regional market cycle.

Although May is not the worst performing month but due to relatively stronger performance in Apr, traders could feel the relative change with “poorer” performance in May, therefore believing in selling in May to protect the gains in Apr.

3) Singapore is much more seasonal than other global stock market, very clear in worst (12/12 years in Aug) and best (10/12 years in Mar/Apr) month performance.

STI with 30 component stocks are highly dependent on 3 major local banks (30% of STI), Telco (only left Singtel after Starhub is replaced by Dairy Farm recently), Jardine Group (15% of STI) and property (20% of STI) stocks. Many of them are dividend stocks, announcing final dividends in Q1 (XD in Q2) which could attract potential seasonal buyers, may contribute to better performance in Mar/Apr for Singapore.

Medium term swing trading (buy & sell within a few months) could give better results in general for Singapore stocks with season effect.

4) US is not as seasonal, general trend is upward, more suitable for medium term position trading with buy & hold till the uptrend has ended.

5) Season effect is not strong in China, performance has been quite evenly distributed among the months.

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By right, there is no logic to the season effect on stock market but when there are many believers, it could become a trend. A short term trader should focus more on the unique price pattern in each individual stock of each regional stock market. A long term investor may ignore the monthly season effect, focusing on the growth with capital gains in years.

Learn from Dr Tee through 4hr high quality stock investment course (free for readers) on 10 practical trading and investing strategies with global stock market outlook. Register Here.

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Filed Under: Uncategorized Tagged: Season Effect

US Interest Rate Hike to 2.25%

Posted on September 29, 2018 Written by Dr Tee (Ein55)

US interest rate hike US consistently increases the interest rate, latest adjustment is to 2-2.25%. Despite the US and global economy are still bullish, this implies less time remaining for the bull market.

When US interest rate exceeds 3% and/or when 10 years US bond yield is over 4%, investor has to be very careful, especially over the next 12 months for possible black swan which could trigger the next major financial crisis.

It does not mean crisis will come immediately when interest rate is over 3%. It is based on probability approach. Despite higher interest rate now, since stock and property markets are still bullish in US, people are not concerned as they could use higher salary (employee market, currently 3.9% unemployment rate in US), higher profit from stocks/properties to pay for higher inflation or interest/mortgage rates.

A safer way is short term trading/investing, one could leverage on the last phase of bullish market (at least for US) and also prevent the big bear when trend is reversed. However, buy and sell in shorter term may not be suitable for everyone, especially in a volatile market (when VIX is over 20-30 points).

Learn from Dr Tee through free 4hr stock investment course to time for the next global financial crisis through integration of Macroeconomic Analysis (MA), Fundamental Analysis (FA), Business Analysis (BA), Technical Analysis (TA), Personal Analysis (PA) and Optimism Analysis (OA). Register Here.

Filed Under: Uncategorized Tagged: interest rate

Impact of US-China Trade War on Stock Market

Posted on September 13, 2018 Written by Dr Tee (Ein55)

China may need to make significant compromise to end the US-China trade war. The worst is once US has the first big bite in Round 2 of negotiation, it might continue to ask for more advantages in future. In fact, US and China have reached agreements a few months ago in Round 1 discussions but it has been forgotten easily.

Should China shows its strength or weakness, this is a Trillion dollar question. It is a mind game as US may not want to end up with lose-lose situation as well, especially mid term election is coming soon. Ideally, US may hope China could be similar to Japan, compromise as a follower for decades.

China has 3 main wild cards:

1) Ability to endure, use Lose-Lose situation to fight back US

2) Financial (Foreign Reserve / US Debt / RMB Depreciation …)

3) Political (International Alliance – BRICS + emerging markets / WTO / 50% opponents of Trump in US / US businesses have significant gains in China market…)

In the current US-China trade war, 50% of the world (except US) is affected. Both China and Hong Kong stock markets are technically bear markets considering stock indices have dropped more than 20% over the past 1 year.

There are 3 main stock strategies for the current market:

1) Momentum trading for US stocks (buy high sell higher)

2) Shorting for stocks with bearish trends (emerging markets)

3) Crisis investing for undervalue stocks (especially China & Hong Kong)

Learn from Dr Tee in high quality 4hr stock investment course to position in current global stock market with 3 stock strategies above during US-China trade war. Register Here.

Filed Under: Uncategorized Tagged: US China Trade War

Impact of Currency with Hyperinflation on Economy

Posted on August 15, 2018 Written by Dr Tee (Ein55)

If you think Venezuela hyperinflation of 1 million % is a crisis, then Zimbabwe dollar would be a disaster. Political induced crisis of Zimbabwe results in hyperinflation of 79 Billion %, Zimbabwe dollar becomes nearly worthless, a collapse of currency system. The largest note is $100 trillions Zimbabwe dollar which could probably could exchange for just a loaf of bread or just a collector item, becoming a commodity.

The Venezuela crisis remembers me of the Japanese Banana money in Singapore/Malaysia after World War II. Money could become a junk paper but asset such as property still could preserve the value during crisis.

Venezuela highly dependent on income from crude oil which price was falling down since a few years ago, resulting in country financial crisis, which now a humanity crisis with hyperinflation of 1 Million %. For a mature country, a few percentage of inflation is considered healthy for a moderate growth and steady economy but too much inflation will be a disaster. The role of central bank is critical to moderate various factors contribute to national economy.

Inflation is related to purchasing power. 100% inflation, meaning price of a product or service is 2X. 1000% is about 11X.

1 Milllion % inflation means $1 product / service now becomes about $10,001. Technically, the Venezuelan Bolivar, purchasing power with this currency has dropped by 10,001 times.

It means if a loaf of bread is $1, it would cost $10,001 now to get one. So, whoever holds cash as fortune, wealth would drop significantly with very weak purchasing power due to hyperinflation. If one owns commodity or property as wealth, then will be safer.

Lira crisis is Turkey is related to Forex + Politics + Economy, trigger point is different but results could be similar, country financial crisis.

It shows the importance of diversification in one’s wealth, not just invest or keep 1 asset class, eg cash or stock. Property is also a form of commodity, it has certain worth. In ancient time without “money”, one could use commodity/service A to exchange for commodity/service B, paper money is just an easy way to facilitate the exchange. However, there is different level of trust in each type of money in different country, i.e. currency, therefore the knowhow of forex is important, at least knowing which currency to keep.

Singapore may not be a good place to trade in stocks but it could be a good choice to invest in property for long term (island country with limited land and nearly unlimited future population), Singapore Dollar (SGD) also appreciates gradually over the decades against other major currencies under MAS long term policy, supported by long term political stability (the longest so far for 1 party to rule a country), pro-business economic policies, etc.

Remember, currency is only a piece of paper (similar to USD), it has value only because of trust and confidence of users and owners to use it for exchange of product and services. In the past before 1970s, USD was backed by gold, therefore inflation was not an issue. When USD dollar and global currencies are just a piece of paper, then the definition of value would be more complicated. A smart investor would learn to diversify wealth, not just holding to one particular currency. USD, CHF and JPY are considered safe haven currencies, usually demand is higher when global economy is uncertain, eg. since early this year, USD has strengthened against many currencies including SGD.

Currency, inflation, interest rate, stock, bond, commodity, property, economy, or even politics are inter-linked. Learn from Dr Tee free 4 hours investment course to have a holistic view of entire investment markets, understanding their inter-connections.

Filed Under: Uncategorized Tagged: Hyperinflation, Impact of Currency on Economy

Stock Strategies to Reduce Unsystematic and Systematic Risk

Posted on August 3, 2018 Written by Dr Tee (Ein55)

A smart stock trader or investor has to learn to manage the risks before one could achieve the goals of profit. There are 2 main types of risks for stocks, unsystematic and systematic risk.

1) Unsystematic Risk (Level 1-2)

This risk is related to specific stock/business or an industry/sector. For example, there could be an unexpected business scandal or company having difficulty to pay debt, etc, resulting in major correction in share prices which may not be reversible. Sometimes the scale could be for a specific industry, eg. Unsystematic and oil and gas crisis which affects more stocks with similar type of industry.

In general, diversification of investment portfolio with 10-20 stocks over 3 or more sectors / countries, could help to reduce the unsystematic risk significantly as each stock only contribute to 5-10% of portfolio. As a retail investor, due to lack of time for close monitoring, a portfolio of 10 stocks with strong fundamental in business will be sufficient.

2) Systematic Risk (Level 3-4)

This risk applies to entire stock market, affecting most of the countries, sectors and businesses globally. For example, global financial crisis (subprime crisis in year 2008, dotcom bubble in year 2000, etc) or regional financial crisis (Euro Debt Crisis over the past decade, Asian Financial Crisis in 1997).

In general, diversification could not help to minimize systematic risk since most of the stocks would be affected for this large scale of stock market risk at country or global level.

Instead, a smart investor could apply market optimism strategy to minimize systematic risk through capital allocation in different asset classes. When global stock market is at high optimism (over 75%), one could reduce the risk in stock market through progressive profit taking, converting the stocks into cash as short to medium term opportunity fund. When there is any regional or global financial crisis, the unsystematic risk would become opportunity to buy low.

An all rounded investor would combine these 2 key factors to improve the winning rate in stocks:

1) Formation of stock portfolio with 10 stocks with strong fundamental to reduce unsystematic risk

2) Follow optimism of global stock market to buy low sell high, going against the systematic risk.

The public may learn from Dr Tee 4hr free courses to establish a defensive dream team stock portfolio to reduce unsystematic risk and applications of optimism strategies to minimize systematic risk.

Filed Under: Uncategorized Tagged: Systematic Risk, Unsystematic Risk

Video on Becoming Warren Buffett – Money is just numbers

Posted on July 27, 2018 Written by Dr Tee (Ein55)

This is a short but powerful 11 min Chinese video (Becoming Warren Buffett) about Warren Buffett strength and weakness. The most touching part is final few minutes on why he decides to donate his fortune accumulated in life.
https://www.youtube.com/watch?v=0YJx2VkQPHc

For English version, you may search for “Becoming Warren Buffett” (see longer version below with 1hr 28min, thanks to suggestion by a member) but I could not find the same short and sweet version as this Chinese video.
https://www.youtube.com/watch?v=PB5krSvFAPY&feature=youtu.be

Warren Buffett initially only focused on buying undervalue stock (Buy Low) but this business partner, Charlie Munger, influenced him to buy good business at fair price (may not low price). The is the key difference of value investing vs growth investing, which Ein55 graduates have learned how to integrated with optimism strategies, including value growth investing to have the best of both worlds.

However, for investing, each of us should establish our own personalized investing styles, there is no need to follow Warren Buffett or Charlier Munger. Berkshire share price dropped by 50% during subprime crisis in 2008-2009, this max drawdown may force many investors out of the stock market, only those with strong faith, applying fundamental analysis, instead of technical analysis, still able to hold through the winter time to be the final winner.

The title of video is an important lesson for everyone: “Money is only numbers”. If we look at frugal lifestyle of Warren Buffett (eg. living in an old house, drive a small car, eating $3 McDonald burger for breakfast, etc), then we can understand money is only an indicator to show his performance in an hobby called investment. This is the same as computer gamers, scoring high from level 1 to 100 is important to their hobbies.

In fact, when we detach making money from investment, just focusing on how to push up the score of investing game with $ amount, our performance could be better.

General public can learn value investing and growth investing from Dr Tee free 4 hour course. Register here: www.ein55.com

Filed Under: Stock Market, Uncategorized, Value Investing Tagged: Becoming Warren Buffett

Acquisition of Undervalue Property Stock (Wheelock Properties) by Parents / Grandparents

Posted on July 20, 2018 Written by Dr Tee (Ein55)

In the last 5-day Ein55 class in July 2018, a student submitted homework on a portfolio of giant property stocks in Hong Kong including Wharf Holdings (HKEX: 0004). The major shareholder is another giant stock, Wheelock & Co (HKEX: 0020) which also own an undervalue Singapore property stock, Wheelock Properties (SGX: M35).

Similar to many other Singapore property stocks, Wheelock Properties has been undervalue (Price to Book ratio < 1) for many years, as much as 40% discount at one time. Besides, the company has not been appointing a CEO since 2012 as there is little activity for expansion, a strong signal of potential acquisition.

In Jan 2016, share price of Wheelock Properties dropped to around $1.35, below 25% Optimism, an excellent opportunity for acquisition by major shareholder. The opportunity was missed, share prices went up for last 2 months but again corrected down over the past few months from $2.09 to $1.55 after the global stock market correction, as well as 8th round of property cooling measure in Singapore, price was less than 30% Optimism. This time, the parent company from Hong Kong, Wheelock & Co is not hesitating anymore, showing hands to propose the acquisition at low price. With full ownership of Wheelock Properties, especially after the development, all the undervalue assets could give much more return to the major share holders.

Although an investor may be too late now to act on recent news with acquisition of Wheelock Properties (SGX: M35), but one could still consider the parent stock, Wheelock & Co (HKEX: 0020), which is much stronger and still undervalue with 50% discount in Price to Book. The grandparent stock, The Wharf Holdings (HKEX: 0004) is also as strong. However, patience is required for these undervalue asset to appreciate. From Optimism and Fundamental Analysis, Wheelock & Co (HKEX: 0020) is the best choice of all 3 generation of stocks, having undervalue assets, moderate Optimism (39%) and very strong fundamental with active businesses. There are many other undervalue property stocks in Singapore, much undervalue and stronger in fundamental than Wheelock Properties.

There are close connections among regional stock markets (Singapore, Hong Kong, Malaysia, etc), especially for property stocks, either through common major shareholders or family own businesses. Therefore, when an opportunity is missed, an investor may seek the next best opportunity by understanding the company structure to understand the children (subsidiaries) or parents/grandparents (major shareholders stocks).

For Ein55 graduates, you could learn the advanced strategy for regional property stocks and other undervalue stocks in the next charity course on 20 Oct 2018 with Discounted NAV Stocks, Ein55 Mentors Chye Tin and Isabel are busy with the preparation of course notes and new case studies (different from previous DNAV course). Details will be email to Ein55 coaching students about 1 week before the course, if there are seats available, then we will share with remaining graduates (you may contact Dr Tee if invitation email is not received and interested in joining this charity course).

For general public, you may learn about undervalue property stocks with discounted asset strategy from Dr Tee free 4 hour course, register next course in www.ein55.com

Filed Under: Uncategorized Tagged: Acquisition of Wheelock Properties

Crisis Stock Investing – Buy Low Sell High (Not Buy Low Sell Lower)

Posted on July 5, 2018 Written by Dr Tee (Ein55)

Crisis stock investing is attractive to buy low sell high with potential huge capital gains when share prices recover one day. Here are a few general rules to follow:

1) Capital allocation less than 10% (striker position in a portfolio) as the investment is higher risk to exchange for higher potential gains.

2) Before Buy Low, ensure the stock is still a giant stock with reasonable fundamental (accepting the facts business could decline over the past few years due to crisis), eg positive earning or cashflow, despite in declining mode.

3) Ensure it is a higher level induced crisis, eg. sector correction (L2), country crisis (L3) or global financial crisis (L4). If it is only a business crisis for individual stock (L1) while the competitors are healthy, do not buy low as the company could bankrupt eventually, one could lose all the investment this way. Even a stock is traded at 1 cent per share (previous high could be $1), it is still expensive as it could drop to $0 value or price.

For Ein55 graduate, I have posted the details of Ein55 strategies (quantitative) for crisis investing in Ein55 graduate web forum under thread of “investing strategies” – “Crisis Investing Strategies”, specifically on What to Buy & When to Buy.

For general public, you could learn more about crisis investing at Levels 1-4 from Dr Tee free course, register here.

Filed Under: Uncategorized Tagged: crisis stock investing

Robert Kuok Giant Stocks

Posted on May 11, 2018 Written by Dr Tee (Ein55)

Trump (USA) and Kim (North Korea) will meet on 12 June 2018 in Shangri-La Hotel of Singapore, the same place for historical meeting of Xi Jinping (China) and Ma Ying Jeou (Taiwan) in 2015. Sometimes when we read the news, need to read in between the lines to understand the stock investment opportunities.

Singapore:

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Establish reputation similar to Switzerland as a neutral country. This is crucial for a small country to survive in a competitive international market, both in economy and politics.

Shangri-La Hotel:

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Owner of Shangri-La Hotel is Robert Kuok, the richest person in Malaysia, who also owns businesses through major shareholding of giant stocks such as PPB (Bursa: 4065), Wilmar (SGX: F34), Shangri-La Asia (S07), Kerry Properties (HK: 0683), etc.

Robert Kuok is a very successful businessman, known as “Sugar King” of Asia. His family giant stock is PPB Group, listed in Malaysia Bursa, also a major shareholder of Wilmar. He has good political and business relationship with China, similar to Li Ka-shing, benefiting through assisting China in expansion over the past few decades.

A safe investing strategy is to be the business partner of global multi-billionaires, buying their shares with strong business at low optimism price with the huge discount in price over value obtained. The best part is as a retail investor, we don’t have to spend any effort in running these multi-billions businesses but need to know the investment clock to buy and hold/sell these stocks.

Learn from Dr Tee free stock investment courses to position for giant stocks of various global multi-billionaires.

Filed Under: Uncategorized Tagged: Robert Kuok, shangri-la hotel

Malaysia Political Cycle Investing

Posted on May 10, 2018 Written by Dr Tee (Ein55)

I stay till over 3am tonight (9 May 2018) so far, observing an important historical milestone in my home country, Malaysia: a dramatic change of federal government, from BN to PH. PH will also control 7 state governments (Perak is still uncertain).

Chinese believes in 60 years of cycle duration (5 x 12 = 60, 一甲子), it is about 60 years of BN ruling Malaysia since independence in 1957. 《三国演义》：“话说天下大势，分久必合，合久必分。From the wisdom of thousand years of Chinese history, we learn that when there is common interest, various groups could become friends, but one day, they will split due to internal conflicts again. It will take a long time before the next cycle to split begins, if the new PH government could use this historical opportunities to strengthen the foundation, it could continue to rule Malaysia for several decades.

How’s the impact on Malaysia future economy, stock investment, forex, etc? Short term market reaction so far is a weaker Ringgit vs USD because this is a major change in Malaysia. PH has announced 2 days of public holidays on May 10 and 11, not sure if Bursa stock market will follow the soon-to-be government to rest for 2 days. If yes, there could be some turbulence.

We don’t have to speculate which Malaysia stocks will rise or fall down. Instead, let the trading or investing opportunities come to us. Let the share prices stabilize for a few days after absorbing the market news. It is never too late to grab on investing opportunities in Malaysia.

In a longer term, if Malaysia is under a more efficient government, the economy and stock market will have higher growth potential but it will take at least 1 decade to see the results. PH is still an alliance of different parties, sometimes compromised decision may not be the best but as long as it is fair and transparent, the country could move in a positive uptrend direction again.

Optimism is also crucial for a political system. BN lost in this political tsunami, partly due to past few years of oil & gas crisis and weak ringgit, local people has been at low optimism in life, especially with the rising cost of living (eg. GST). PH may not be lucky as well because currently is Level 4 (global) high optimism, even if Malaysia stock is at moderate optimism, based on a 5 years political cycle for 1 term of government, it is not easy to achieve uptrend in stock market to show the results 5 years later. It is the same situation for Trump in US, who may try to sustain the high optimism US stock market till at least year 2020 as a report card to seek for his second term as US president.

There is no regret to witness a political cycle of a country. Sincerely hope Malaysia will become a better country, being a closer partner with Singapore. Learn about future stock investment opportunities in Malaysia, Singapore and the rest of the world with from Dr Tee free investment courses.

Filed Under: Macroeconomy, Market Cycle Investing, Personal Analysis, Uncategorized Tagged: malaysia election, Malaysia Political Cycle

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