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Showing posts from February, 2020

RIsk Management: Jumping Off a Cliff with a Bungee Chord

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As mentioned before, we may enter a second leg of the sell down of equities. Psychologically, the first leg catches most investors by surprise. It happened too fast for them to sell. Value investors, those who missed the rally will then buy on the support lines, usually 150 and 200 days moving averages. The more people look at the averages, the more the support will hold. It usually pushes the index up to the mid point of the correction, before sellers come back again, pushing down to the last low. Thereafter, value investors will usually come in again at the 150 or 200 days moving averages to buy. What happens next depends on a mixture of fundamentals, valuations, and liquidity. It depends on whether economic growth is going to be positive, valuations are not expensive and whether enough money is on the sidelines to push the demand / supply dynamics in the bulls’ favor. I must say of the three factors, liquidity is the biggest factor. There is a high probability that the...

Here’s how to tell a bear market is coming

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https://www.cnbc.com/2020/02/22/heres-how-to-tell-a-bear-market-is-coming.html This is an interesting article. I'm not sure how useful it is. But the best technique in my opinion is still to look at charts. It is not that I don't respect fundamentals and valuations. I use fundamental valuation techniques to decide what stock to buy, what funds to buy or sell. But I use technicals to time my entry and exit. Here are the excerpts that may prove useful.  "The list of 19 signals ranges from fundamental to sentiment-related indicators and uses data tracking back more than 50 years. Currently 63% of the bear market signposts have been triggered, up from 47% in January. Since 1968, when 80% of the indicators are triggered, a bear market occurred, meaning stocks fell 20% from their most recent highs." "Here’s a full list of the bear market indicators from Bank of America: Federal Reserve raising interest rates  Tightening credit conditions  Minimu...

Valentine's Day Special: Franklin US Opportunities v SPY ETF, Quantedge v H2O Multibonds

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Firstly, a Happy Valentine’s Day to all who are single or with someone they love. It bring memories of this movie in 2010 featuring Anne Hathaway, Taylor Swift, Julia Roberts, Asthon Kutcher, Bradley Cooper, Jennifer Garner… https://www.google.com/search?q=valentine%27s+day+2010+cast&rlz=1C1GCEB_enSG865SG867&oq=valentine%27s+day+2010+cast&aqs=chrome..69i57j0l3.5007j1j4&sourceid=chrome&ie=UTF-8 https://www.youtube.com/watch?v=1K45RdE2qlk Let’s move on to busting myths: 1.         Quantedge Global Fund vs H2O Multibonds. Quantedge is still one of the best hedge funds in the world. From Sep 2014 to 31 Dec 19, they achieved 74.2%, averaging 11.1% per year. However, H2O Multibonds achieved more than double of Quantedge, achieving 162%. Annual return 20.1%. While Quantedge had spectacular returns, it has a lock up of 3 years I think. While H2O is daily dealing. Quantedge had one key weakness, it has treme...

Correction Might Be Over

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Just some quick commentaries from me. I actually think there may “no second leg” to this correction. I’ve got some data and some charts that I track that shows that this rally is likely to resume. This is the MSCI World ETF. It is a weekly chart with an MACD overlay to track if the trend is up. You will notice the 150 week moving average is rising, the 20 week is > 40 weeks > 50 weeks moving averages. Just some quick commentaries from me. I actually think there may “no second leg” to this correction. I’ve got some data and some charts that I track that shows that this rally is likely to resume. On a separate note, I know these are general information. I will have a separate email and whatsapp for clients who have met the minimum AUM on actionable items.  J This is the MSCI World ETF. It is a weekly chart with an MACD overlay to track if the trend is up. You will notice the 150 week moving average is rising, the 20 week is > 40 weeks > 50 weeks movin...

Coronavirus Tapering Off?

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We could yet see another leg down for most western stock markets…. For Asia, especially China, the selling is overdone. Often times, the pandemic whatever pent-up demand will be released to compensate for the loss of production and consumption during the “quarantine period”. The stock markets usually love  disasters…. Pray for all to be healthy and condolences for those who perished. https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6 Bottom right corner of the chart below shows that the infection rate has tapered off. 99% of the deaths are from China. Outside of China, which I presume you can trust the data, the death rate is 0.7%, which almost the same as a common flu. The virus appears the most deadly in the epicenter of Hubei. Even outside of Hubei, e.g. Guangdong, Shanghai etc the death rate is less than 10. Recovery rate to death rate has risen above 3x from 1.5x since I started tracking this 2 weeks ago. ...

Second Leg of Sell Down Has Started

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This is not financial advice. This is a sharing of what I intend to do or have done. Different people will have different risk appetite and preferences so whatever I do may not be suitable for you. I sold off some equities and risky assets at an almost perfect timing. I started taking profit two weeks ago.  that was around 13 January 2020. I started taking profits with Hong Kong stocks, Meituan, China Medical Systems, BABA, Tencent. Then I moved on to US stocks, like UnitedHealth, Amazon, Alphabet etc. I also took profit from my China funds first, followed by global equity funds. I added inverse ETFs to my portfolio starting with Emerging Markets like EDZ, China like YANG US Equities. I followed up later with Europe and US inverse ETFs like EPV US, SPXS US. Look at the Emerging Market ETF chart. It led the fall. I was right. The peak was on 13th Jan. It is now below the 150 days moving average. A fall has two legs usually. The first fall that caught many by surprise, a recovery...