Eric Parnell wrote an article that there are three recessions in one secular bear market. It seems coincident to my theory on the time frame of the coming secular bull market I predict.
Does it happen due to coincidence or any theory behind it?
My theory on secular market is the war and lack of war. The following years are off by several as I do not remember the exact years.
Secular Bear Market.
1. 1960-1980. Vietnam War.
2. 2000-present. The two middle east wars.
The secular bull market in 1980-2000 is due to lack of war.
I hope our current wars will be ended completely in 3 years so I look at the starting of the next secular bull market at that time.
Most recent presidents (with exception of Bush) are not stupid enough to start another war if they understand the bad effects of the wars like employment.
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Exception.
WW2 actually benefited US as most of its competitors were destroyed by the war and the war stayed out of its own country. US also welcomed the foreign skill workers/scientists mainly from Europe. The influx of the best of the world is just unbelievable.
US did not have to pay royalties to many inventions such as the atomic bomb.
This is the only major exception but with a good reason.
Friday, May 25, 2012
Is US real estate over-priced?
Yes, according to the average wage of its citizens. We used to use the 2 and 1/2 rule. If you're making 100K a year, you're supposed to afford a house costing 250K. You need a couple making 200K total to afford a 500K house. Our current financial problem is due to greed and folks not sticking with this basic rule.
No for some foreigners. Hong Kong folks are paying 1 million for a 700 square feet apartment (prices vary depending on location). If we can attract these foreigners to buy by offering them residency, they will invest.
We lost the opportunity in 1997 when HK was handed over to China. Vancouver took advantage of it, and its real estate price was increased 100% in several short years and the price is still strong today.
Now, the opportunity is on China's rich who want to escape from pollutions, quality food, prosecutions from corruption, opportunities of their children... We have to screen the right folks who will contribute to our country.
Housing recovery?
I expect the housing recovery will be at least 3 years away. Before this time, all are mirages. However, the investors' best return for builders will be one year before the full recovery.
If we have a w-shaped recessions and/or Japan's lost decades, it will take longer than 3 years. The builders will be profitable if they can manage their resources and projects on smaller houses and more elderly housing for the aging population.
One of the major forces that triggers the housing boom is the college graduates. When they have children, it is time to buy a house. It does not look good as most are under-employed or unemployed with large college loans.
If we have a w-shaped recessions and/or Japan's lost decades, it will take longer than 3 years. The builders will be profitable if they can manage their resources and projects on smaller houses and more elderly housing for the aging population.
One of the major forces that triggers the housing boom is the college graduates. When they have children, it is time to buy a house. It does not look good as most are under-employed or unemployed with large college loans.
Wednesday, May 23, 2012
When the global population ages
With respect, I've different views on the global demographics as follows.
* India will suffer from the population explosion. They will eat up all the limited resources and they will run out of water in n years which is subject to China's water policy. There are too many problems that cannot be resolved easily. I do not see a bright future for India. They classify themselves literate if they can write their name in any language compared to about 8 years of education beyond kindergarten in China. So statistics are just being manipulated.
The brain drain is alarming as most privileged/educated do not want to wait for their infrastructure to be fixed.
Just compare the sub way system and no. of highrises in India and any Tier 3 city in China. The top India just has sub way recently and Hong Kong is far over-developed.
* China still has plenty of cheap labor. Cheap labor will be minor but education will be as they need to move to the next level of industrialization with higher values of products.
China has its own problems and plenty of them but demographics is not the major one to be concerned. Well, gender imbalance is one of them but there is why our Playboy magazine could be a good export. :)
Comparing India and China.
http://bit.ly/ybAnoW
* Russia and Brazil still thrive on commodities and oil as long as global economy grows.
* US 10 years later should look like Japan today as most developed countries will have the populations shrink to below 0 growth. However, US's black and Hispanics have a higher fertile rate and have larger immigrates than the world combined. US has its different problems/advantages as below.
- Welcome immigrants (opposite to Japan). Most qualified Indians are welcome and so are Chinese (who come for economical reasons, escaping from pollutions, corruption prosecutions...).
- Today's minorities (black and Hispanics) will become the majority. If you look at the high school graduation rate, social welfare recipient %, prisoner %..., we do not have a bright future. These are facts and it would be offensive to you if you're black or Hispanic.
- When we have jobs for every one, the larger population is an advantage. Not today that we have college graduates begging for any jobs and our social welfare are being depleted. We should have a boom in housing but it will not happen until most of us have a good job.
- The brightest future for us is the agriculture and the demand from many countries grows by leaps and bounds.
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(c) TonyP4 2012. Written in 5/23/12. Last updated in 5/23/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
* India will suffer from the population explosion. They will eat up all the limited resources and they will run out of water in n years which is subject to China's water policy. There are too many problems that cannot be resolved easily. I do not see a bright future for India. They classify themselves literate if they can write their name in any language compared to about 8 years of education beyond kindergarten in China. So statistics are just being manipulated.
The brain drain is alarming as most privileged/educated do not want to wait for their infrastructure to be fixed.
Just compare the sub way system and no. of highrises in India and any Tier 3 city in China. The top India just has sub way recently and Hong Kong is far over-developed.
* China still has plenty of cheap labor. Cheap labor will be minor but education will be as they need to move to the next level of industrialization with higher values of products.
China has its own problems and plenty of them but demographics is not the major one to be concerned. Well, gender imbalance is one of them but there is why our Playboy magazine could be a good export. :)
Comparing India and China.
http://bit.ly/ybAnoW
* Russia and Brazil still thrive on commodities and oil as long as global economy grows.
* US 10 years later should look like Japan today as most developed countries will have the populations shrink to below 0 growth. However, US's black and Hispanics have a higher fertile rate and have larger immigrates than the world combined. US has its different problems/advantages as below.
- Welcome immigrants (opposite to Japan). Most qualified Indians are welcome and so are Chinese (who come for economical reasons, escaping from pollutions, corruption prosecutions...).
- Today's minorities (black and Hispanics) will become the majority. If you look at the high school graduation rate, social welfare recipient %, prisoner %..., we do not have a bright future. These are facts and it would be offensive to you if you're black or Hispanic.
- When we have jobs for every one, the larger population is an advantage. Not today that we have college graduates begging for any jobs and our social welfare are being depleted. We should have a boom in housing but it will not happen until most of us have a good job.
- The brightest future for us is the agriculture and the demand from many countries grows by leaps and bounds.
-------
(c) TonyP4 2012. Written in 5/23/12. Last updated in 5/23/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Spoting big market plunges
There are several ways to check the market turning from peak to bottom losing more than 40%. So, you may need different strategy for different market conditions. Here are some of my thoughts.
1. Market Cycle: Bottom, Recovery, Peak and Bottom again. When you're at the peak, watch out with stops and be conservative.
When every one is buying recklessly, making money and proclaiming they're geniuses, this is the hint. Another hint is: It happens about 3 years from the last bottom - very rough estimate and it is safer to say from 2 to 7 years.
Double recession (or W-shaped) seldom happens, but today there is a good chance when the government intervenes too much with bailout money.
2. Use 50 week moving average like SPY or a total market ETF. If it is below, time to get out. You will still lose some, but you will lose less by getting out earlier than most. Technical Analysis is based on past data.
3. Trigger. The internet bubble is easy to spot, but not the last one on derivatives, Usually the particular sector of industries is over-priced. Those easy money will turn to big losses.
4. Newton's gravity law. In general, the market has to take a breather. When you do not see the normal two or three corrections in a year in a rising market, watch out for the bigger correction that will come unexpectedly.
When the market is moving from bottom to recovery, the profit is the largest and using bottom fishing strategies pay the best. Momentum pays from recovery to peak... My point is: Use the right strategy for the current market conditions.
It is a prediction and hope we've more rights than wrongs. The market acts just like a lady and not a rational one. If it is easy to predict, all of us are sipping some fancy drinks in some fancy islands served by some fancy ladies and there are no poor folks. Right?
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(c) TonyP4 2012. Written in 5/23/12. Last updated in 5/23/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
1. Market Cycle: Bottom, Recovery, Peak and Bottom again. When you're at the peak, watch out with stops and be conservative.
When every one is buying recklessly, making money and proclaiming they're geniuses, this is the hint. Another hint is: It happens about 3 years from the last bottom - very rough estimate and it is safer to say from 2 to 7 years.
Double recession (or W-shaped) seldom happens, but today there is a good chance when the government intervenes too much with bailout money.
2. Use 50 week moving average like SPY or a total market ETF. If it is below, time to get out. You will still lose some, but you will lose less by getting out earlier than most. Technical Analysis is based on past data.
3. Trigger. The internet bubble is easy to spot, but not the last one on derivatives, Usually the particular sector of industries is over-priced. Those easy money will turn to big losses.
4. Newton's gravity law. In general, the market has to take a breather. When you do not see the normal two or three corrections in a year in a rising market, watch out for the bigger correction that will come unexpectedly.
When the market is moving from bottom to recovery, the profit is the largest and using bottom fishing strategies pay the best. Momentum pays from recovery to peak... My point is: Use the right strategy for the current market conditions.
It is a prediction and hope we've more rights than wrongs. The market acts just like a lady and not a rational one. If it is easy to predict, all of us are sipping some fancy drinks in some fancy islands served by some fancy ladies and there are no poor folks. Right?
-------
(c) TonyP4 2012. Written in 5/23/12. Last updated in 5/23/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Monday, May 21, 2012
Buy now?
Buy low and sell high always works.
The problem is how to define low and high. Here is how I define and could be very different from yours.
For low. Judging from the economic conditions, I put the worst bottom at 50% down (for recession) and 10% down (for correction) from our recent peak. If you believe you're 50% right in each scenario, start buy the good stocks at 10% less and some stocks at 50% less from their peak prices in equal amounts of your cash that you should have accumulated if you saw the correction was coming in late April.
Over-simplified for discussion. I have more orders at 15% off than 50% off as the chance of going to 50% is quite slim. At that time I would borrow money to buy stocks.
Again, market timing is not a science. The market could return to the peak tomorrow and I would lose all the buying opportunities and it could go to 75% down - then I would still lose a lot if I bought stocks at 50% discount.
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(c) TonyP4 2012. Written in 5/21/12. Last updated in 5/21/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
The problem is how to define low and high. Here is how I define and could be very different from yours.
For low. Judging from the economic conditions, I put the worst bottom at 50% down (for recession) and 10% down (for correction) from our recent peak. If you believe you're 50% right in each scenario, start buy the good stocks at 10% less and some stocks at 50% less from their peak prices in equal amounts of your cash that you should have accumulated if you saw the correction was coming in late April.
Over-simplified for discussion. I have more orders at 15% off than 50% off as the chance of going to 50% is quite slim. At that time I would borrow money to buy stocks.
Again, market timing is not a science. The market could return to the peak tomorrow and I would lose all the buying opportunities and it could go to 75% down - then I would still lose a lot if I bought stocks at 50% discount.
-------
(c) TonyP4 2012. Written in 5/21/12. Last updated in 5/21/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Wednesday, May 16, 2012
Cisco and Huawei
Did Huawei steal Cisco's technology?
Do they pass info. to the Chinese government on sensitive data?
They're all unfounded accusations to fight competition. If the secrets can be stolen that easily, we'll have many companies like Huawei and Chinese should not buy products from Cisco for the same fear.
Cisco is riding on the economy. Hence we expect its stocks will fluctuate with today's range and will take off after 2 or 3 years when the global economy will recover. It will compete with Huawei as their research and manufacture costs are far lower than the US. Huawei's prices are very competitive and will capture market shares outside US. The margin of the industry will still maintain favorable.
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(c) TonyP4 2012. Written in 5/16/12. Last updated in 5/16/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Do they pass info. to the Chinese government on sensitive data?
They're all unfounded accusations to fight competition. If the secrets can be stolen that easily, we'll have many companies like Huawei and Chinese should not buy products from Cisco for the same fear.
Cisco is riding on the economy. Hence we expect its stocks will fluctuate with today's range and will take off after 2 or 3 years when the global economy will recover. It will compete with Huawei as their research and manufacture costs are far lower than the US. Huawei's prices are very competitive and will capture market shares outside US. The margin of the industry will still maintain favorable.
-------
(c) TonyP4 2012. Written in 5/16/12. Last updated in 5/16/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
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