Musings about Life and Investments

This is a good video. It is likely  a pause or a profit taking time before it rises again. https://www.youtube.com/watch?v=_jdPadv8zDg&t=2s Last week, I wrote an email about selling the leaders, buying the laggards. Some of the stock markets, e.g. Chinese mainland A market index has hit the very lagging but important indicator. The monthly MACD has finally triggered the “Golden Cross”. At this stage, the bull rally is confirmed but there may be a pause of a few weeks to a month or two where those who bought in January / Feb take some profits. We may see a small pull back of 5 to 10%. But the bull rally should resume from here. It could be another 10 to 40% upside even if there is no rally. A recap of what we have done: 1.        January 2019, continued to buy into H2O Multibonds. It is up 15% year to date. 2.        March 2019, dollar cost average into UBS China A Opport...

So the rally started on 24 Dec 18. That was the point of maximum pessimism. The MSCI World has rallied 21% in slightly over 3 months! Many traders who returned from Christmas holidays could not believe their eyes. Many sat out this rally and did nothing, wishing it to come down so that they can buy again. I believe the rally occurred simply because the sellers were exhausted or finished what they had to sell. January rally was probably a short covering. The smart money began coming in from February onwards. The hedge funds probably piled on the long positions in March onwards. I turned positive from Feb 19 onwards and advised to dollar cost average. We are now approaching the top for MSCI World, last seen in Sep 18. Will it be the dreaded double top and then decline. My technical take is this: I can’t even see a small correction at this stage. The weekly chart is still bullish. There is a slightly over 50% chance that the Sep 18 high will be taken out. At this stag...

Life ain't fair. I got over that fact. But as a human being, I need to do my part in the universe to treat others fairly. How I conduct my life, is reflected in my philosophy in football. I think Video Refereeing or VAR should come asap to the English Premiership. The league is too rough, and the referees let physicality get in the way of skills. Lionel Messi would not have survived in EPL without major injuries. Weaker teams like Watford, Birmingham, will try to injure, maim skilful players in better teams. It's no wonder that Hazard and Pogba want to leave England for Spain. Good players just get injured too frequently in English football. They will never realise their potential. That's why VAR can reduce misbehaviours. World Cup 2018 was one of the best I've seen. I attribute a lot of the beautiful football to VAR. Mistakes may still be made with video assistance, but players know there is a higher chance that the referee can pick up a nasty foul, an elbow to the...

https://www.youtube.com/watch?v=cJQTw1waBlg&t=348s Don't panic after the yield curve inverts. 1. Stocks generally still rise 15% on average about 18 months after the yield curve inverts. 2. On average stocks only peak 24 months after the first sign of inversion. This means we could see the bull rally last until March 2021! With 15% appreciation! 3. The main "yield curve" to take note is the 10 - 2 years, not the 10 - 3 months. 4. Generally we won't see a recession until 13 to 34 months after the inversion. So we won't see a recession until Apr 2020 earliest, or Jan 2022! That's a long long way off! In summary, we will still see around 15% of capital appreciation, which is in line with my view that one bad year in 2018 will follow up with 2 good years. A recession is likely to happen around end 2020. Just remember this is probably the final leg.

The US yield curve has narrowed the most since Sep 2007. The S&P500 peaked in Nov 2007 and crashed over 50%. The 3 months is now lower than the 10 years for the first time in over 11 years. Please read the article below. https://www.cnbc.com/2019/03/21/a-key-recession-indicator-just-did-something-that-hasnt-happened-in-12-years.html The 2 years v 10 years hasn't inverted though. It is at its thinnest spread of 0.112% now. At any time it could invert. There is a lead time of 16 months before the next recession so I'm looking at a US recession in mid 2020. Stock rally could end by mid to late 2020. Also, the old adage to "sell in May and go away, don't come back to St Ledger's day" historically seems to apply every alternate year, we may not see a May sell down in 2019, but it may happen in 2020. So this stock market rally could be short lived. Hang on to your seatbelts and be nimble. I foresee a 10% correction very soon. Then a continuation...

This is the first time I'm saying on this blog. I observed that the credit markets, namely the high yield bond indices have turned positive. This means that there is a very high chance, around 70% that the stock markets have turned the corner! However, it is overstretched for stocks. The rally that is up around 20% from Christmas Eve has run into OVERBOUGHT. Therefore I will wait for a pull back before going in. The bond market is occupied by institutional and professional investors. Back in 2007, I saw the bond market fall first and in Dec 2008, it rose first. I was afraid of buying Las Vegas Sands shares in Dec 08 but decided to buy the bond instead because if I can buy the bond at 40ct to a dollar, I can be 90% sure that I can get 150% return in 3 years. If I buy a stock the company might dilute me with rights issues and placements, or convertible bonds. That's why when one is unsure of a company's survival, usually I will buy the bond first. Meanwhile you can watc...

Incredible rally that overstretched. Since this email, stock markets have stretched another 2.6% in terms of the MSCI World. Just sharing. I cannot be right all the time. I can be early, for example, I spoke about a Christmas Rally in Dec 2018. It did not occur until AFTER Christmas. That’s 3 weeks late. Similarly, the pullback has not happened as the MSCI World continued to inch upwards. Earnings growth in the US were above expectations, up 16% thereabouts, revenue up 7% YOY for the quarter. Not bad. There’s no slow down in corporate America and it seems trade war doesn’t affect them. In the west, consumption takes up 70% of GDP and they are not export dependent. But in Asia, we are the factories of the world. Export is our lifeblood and I think we will be hit. Chronology of how I viewed the markets Let me set the record straight. 1.         I was bullish on EM stocks since March 2016. Those of you who followed this call made ...