Tuesday, August 30, 2016

Investing by calendar



The following predictions are based on historical data. You may have slightly different findings depending on when you start and when you end the test.

You can load the historical data of SPY via Yahoo!Finance and check out how close or different from my predictions. They are my predictions based on historical data. Use it as a reference only.
 
·         Presidential cycle.
Usually the market performs worse in the first two years after the election than the next two. During the 3rd year the president has to make the economy look rosy in order to buy votes. Statistically it is the best year for the market and is followed by a good year (the election year). The government may stimulate the economy, the stock market and employment by printing more money, lowering interest rate and lowering taxes.

Democratic presidents have better market performance statistically than Republican presidents. It is not too logical as Republicans are more pro-business traditionally.

·         Olympics.
It has been proven that the host country has a better chance that its stock market appreciates the year after. It could be due to the exposure from the Olympics and / or the huge expenses in preparing the Olympics.

The last two Olympics follow this pattern as of 12/23/2013:

Olympics Country / Year
ETF
Period
Return
United Kingdom / 2012
EWU
Jan.  3,  2013 - Dec. 23,2013
11%
China / 2008
FXI
Jan. 3, 2009 - Dec. 31,  2009
43%

Greece could be an exception. It is too small a country to host this world-class event and it has wasted too many resources by building too many white elephants that the country can never justify. Brazil depends on its export of natural resources to China, so I do not count on its Olympics effect.

Winning a lot of Olympic medals has no indication for the stock markets. Both the Russian Empire and E. German were winners but disappeared in their original forms afterwards.

·         Seasonal.
Best profitable period is: Nov. 1 to April 30 next year. It is similar to the saying 'Sell in May and Go away'. It did not work since 2009 as it was Early Recovery in the market cycle.

The market does not always happen as predicted. However, when more folks follow, it becomes a self-fulfilling prophecy. I prefer “Sell on April 15 and come back on Oct. 15” to act before the herd. The more practical strategy is to start selling in April 1 and become more aggressive (selling at closer to the market prices) when it is close to May 1. For the last five years, I do not find this prediction reliable.

The explanation of the ‘summer doldrums’ could be the investors cash their stocks for vacations and college tuitions in the fall. Buying quality companies at the dips could be profitable.   

·         The worst month: September.
The next worst month is October. However, if there is no serious market crash during October (and this month has more than its shares of crashes), it could be the best month to buy stocks.

·         The best month for the bull: November.
However, several market bottoms occurred in October and November. The next strong month is December.

·         Best 30 days: Dec. 15 to Jan. 15, next year.
It was correct for the period of 2012-2013.

·         Window dressing.
Institution investors sell their losers and buy winners around Nov. 1. From my rough estimate and on the average, the winners have a 2% percentage point better than the market and the losers have 1% worse than the market.

Recommend to evaluate the top 10 winners from last 10 months or YTD in Oct. 15 and sell them at 3% gain or two months later.

Recommend to buy in Dec. and sell them 3 months later. Include the stocks with more than 30% loss for the last 11 months or YTD, sort them by Earning Yield in descending order and evaluate the top 10 stocks.

In both cases, do not buy foreign stocks and stocks with return of capital. Ignore stocks not in the three major exchanges, with low volumes and stock prices less than $2. Do not buy in losing years such as 2007 and 2008. I have my tests with my own assumptions and I use tools not available to all.

It is a guideline only. Do not buy any stocks during market plunges. Current events should be considered first such as a potential war and the hiking of interest rate.

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This is one chapter of my book "Complete the Art of Investing". If it helps you, envision how 835 pages (Kindle version) would help you. It could be the best $10 you ever spend.

The above is an abstract from my book "Complete the Art of Investing" which is available from Amazon.


I challenged to have the best-performed article in Seeking Alpha history, an investing site, for recommending 5 or more stocks in one year after the publish date. The concepts for that article are discussed in this book.
 

Monday, August 22, 2016

A little history

List of Chinese inventions. Has been too many years ago. In 0 AD, Chinese and Romans were the greatest. Last 300 years Chinese were not too innovative. Hope it will change.

https://en.wikipedia.org/wiki/List_of_Chinese_inventions

Friday, August 19, 2016

On today's financial news

* Only 3 companies have LTE 4GL for network. Ericsson is one. It is hard to compete with Chinese based on the cheap labor, educated citizens and huge internal market. If the US lifts the ban against Chinese routers (similar to ZTE), Cisco will have a hard time to compete with Huawei.
* CXW is the victim how government policy changes. I had it a while ago. It was a few of my multi bagger. Sold it and it still rocketed. Now as Newton said, what goes up must come down.

* All the countries have to go thru the 'copy' stage on her road to a developed country. Japan, S. Korea... were. Eventually they have to protect IP in order to stay ahead - I believe China is moving to this stage.
Even the US were briefly in the colonial days. That's why Dickens was furious on us. BTW, we had not paid Hilter for using their technology. The US has several advantages: lots of natural resources, staying isolated from the WW2 (good timing too), welcoming immigrants...

No, government cannot compete with private companies

With the high expenses and poor management by the government, prisons should be outsourced. NASA has been outsourced, so why not prisons?

Poor Lochte

Lochte was born in the wrong time and wrong place. Without Phelps he could make top money in endorsements. Now, they are all gone for making a simple lie on a very minor situation. He is NOT a role model anymore! That's what happened when the family (most likely) did not give him a decent education on honesty and be careful on drinks and drugs. I'm glad my friend's son Nathan was not in the stupid party. It will not be the last time as we're in a permissive culture. All the politicians think they can cheat us all the time and they should learn it from Lochte.

Wednesday, August 17, 2016

On Cisco's layoff

We no longer compete in many sectors. High tech is the one that we should hold on. Hope Cisco is not the tip of an iceberg.

- Too many regulations to protect our workers.
- We're the victims of our own success as everyone demands higher salary.
- Our welfare is too generous. With all the entitlements, US is BANKRUPTed if it is a company and we would sell our assets.
- We will be left behind if we protect our environment and the lab 'mice'.
- All those 'left no one behind' our empty shout by ignorant leaders. We no longer have NASA and our astronauts have to learn Russian (Chinese in 10 years).
- Our debts will be paid back in generations and it will lessen our competitive edge.Just to0 many to list.

We have to redo our political system and balance the budget as outlined in my blog.
http://tinyurl.com/hua...

On today's financial news


Tony Pow , Contributor
A lot of news on China.
* I own the Hong Kong Shanghai Bank - one of top global banks. It may move its headquarter again. British unemployment rate will rocket in coming years.
* Brazil depends on the oil price and China is the largest importer. The theory of better education and wealthier the country does not work for Brazil for a long while (Philippines is the opposite example).
* SZ-HK link does not mean a lot. It would reduce the price differences of companies listed in these two exchanges. SZ is the Silicon of the East and the factory for high-tech company for the world. If you have invented a high tech product, most likely you want to assemble there - most components such as batteries, cables...are available next street beside cheaper labor and the huge internal market.
Deng had his good insight to transform it from a fishing village about 30 or so years ago. You could have make a fortune if you invest every stock in the exchange despite many total losers. The housing is also skyrocketed literally.
* Macau's casinos should be better after the opening of the bridges connecting mainland China and Hong Kong - it is one of the most important global projects. The Chinese government demonstrates regulations could kill a sector - most whalers are not showing up in the sea in Macau.
* AH teaches us many lessons in investing. Will update my book on this.