Thursday, June 28, 2012

Richest countries by capita

US is richest. However, Norway is the richest for that size group (3 M) and some smaller oil countries like Brunei is richer.

Norway is rich due to the rich off-shore oil field and the fish export (second in the world after China but far, far #1 per capita wise). It is smart not to boast except in the Olympics to prevent jealousy and invasion.

Singapore is rich due to the port location and hard-working citizens (most are Chinese). When the hard-working folks land to a land of coconuts (i.e. resources), they are natural to be rich as indicated in my coconut theory.

Singapore has too many surveillance cameras so they do not need policeman. However, I saw several of them debating what to do with a car illegally parked that prevent our tour bus from making a turn. They did not want to upset a big shot by towing it away.

Make sure you flush the toilet as some one is watching you and sending you a ticket if you do not. When you're fat, you're forced to some physical camp.

I do not know the recent big constructions like casinos and theme park in Singapore will be profitable or not. With the tidy population, it has to depend on tourists to pay the investment back.


I've a good laugh while reading an old joke on life in 2009.

We have big changes in 3 years. This is the iGeneration with every one carrying an iPhone or an iPad (folks in lower society class carry imitators and/or that 'outdated' iPhones and iPads that are several months old).

My grand child of just over 1 year old has a good time in playing with the iPad and it would keep her busy for hours.

When my cousins gather for social/family events, they communicate with each other via their smart phones even they sit next to each other. When they do not text, they play games with their smart phones.

Even with one pair of eyes, they can play iPad, listen to iPod, text in iPhone and watch iTV at the same time.  Incredible and that's why the poor countries are leaving us further behind.

Kids will develop big fingers particularly the second one,  fast eyes with glasses,  and bent backs. They are fatter, smarter as a child, and lack of social skill. It is a double-edged sword.

Can't wait for the next three years.

Chinese Jokes on America

I was amused by the following satire. A white guy pointed and said to a Mexican family, "It's time to reclaim America from illegal immigrants!". The native Indian told him, "I'll help you pack."

My enhancement to the joke. The Chinese can stay. They have the same genes as the native Indians and Eskimos who must lose their way after too many Mai Tais and walked to America via the once-frozen Barring Strait. I have my genes to prove it.

A Time article showed a Chinese professor could read words inscribed on an artifact from a South American country. He said he was interested only in ancient Chinese language to avoid an international incident. Politically correct or scientifically ignorant?

When folks make fun of my poor writing, I would say that my English is better than his/her Chinese.

Here is the joke on how America got its name.

Wednesday, June 27, 2012

Misc. comments on investment

Summary of my recent comments at SeekingAlpha.

Some one told me one made a million in one bet (could be based on insider's info or a real gambler). I will not learn anything from him as it is just plain luck or sth. illegal, and in addition he has violated the first law of diversification in investing.

I am quite successful in last 3 years but I do not count on it. Actually it is an extraordinary  return in 2009 but I did not beat SPY in next two years (due to keeping too much cash but at least I got a good sleep). My success is in choosing the strategy and so my portfolio does not help you at all. We cannot judge whether s/he is successful by the return. You can make a 100% return in 1 minute in any roulette table and it would be annualized to millions %. It has to be risk adjusted.

My philosophy can be summed up in my blog (try stock section in the middle of it.). Hope it will help and welcome any feedback.

Banking is one of the sectors (drug, mines...) we cannot evaluate easily. In banking it is the quality of the loans.  

For some folks, the long term capital gain is 0 for tax bracket 15% or less. Next year or just 6 months away, it could be better way to dump it for tax reason alone to offset any capital gain. When every one dumps it and if I feel it is a bottom fish play, I may buy it.

The problem is you cannot know how bad their exposure to EU is and the quality of their existing mortgages. I'm no expert in this even I read many experts' opinions.  

At 75 and if you're nice to your beneficiaries, you should select the plan for appreciation.

When you pass to the next life (every one has to and do not argue with God), your cost basis will be stepped up/down to prices on the day you pass - ask your heirs to save the stock page for that day. So, you do not pay Federal tax on the gain. Unless there is last minute change, the dividend tax rate will be your income tax rate.  

The market is too crowded with high-end Apple and Samsung and many low-end players from Far East. MSFT does not want to start the flame with its OEMers as she is with tablets.


You only care about the dividend stock when it goes to zero or almost zero (at that time the company will not pay dividend or the yield is 99.99%. Joke of the day.

Look for sth more realistic and recent. From 5 years ago, BAC is $50 and now it is $8 approx. Can the total dividends for the last 5 years erase the total loss of the stock? If your answer is Yes, check your math. again and this time with a open mind. When BAC was paying 5% dividend in Dec., 2007, you as a dividend investor most likely did not want to sell it and got the big loss.



Monday, June 25, 2012

Microsoft's new tablet

The Good.
Microsoft should capture a sizable market for business users if they market the products right. They should provide Word Office, Internet compatible with IE and storage via Cloud. 
The built-in disk storage may not require Cloud for storage, but it drains the battery and takes long time to boot if it is from disk. Most of my investment software require IE and all of my investment spreadsheets are in Office.

I do not believe I'll use it during vacation but it will be a handy tool.

Migrating current business applications to the tablet is a good market like the laptops the doctors are carrying.

As long as it is not losing money, it would be a win esp. for the lazy management with no innovation for a long while. You cannot sit on the cash flow from Windows and Office forever. Wake up from your afternoon sleep and dream how to spend your bonuses in your fancy offices and do sth. even it will not be always safe.

The Bad.
It will not be replaced as a consumer product as iPad is years away and the growing apps should kill all your promises.

The two hardware versions seem very strange and complicated for Microsoft to support. Will the ARM version run Office?

My feeling.
When it is that late to have an article at SeekingAlpha and there is no much publicity as opposed to folks lining up for Apple's products, I believe it is a non-event for some mouse trap that is too little and too late. As a stock owner, I hope I'm wrong. 

Click here for Windows and jokes.


Some dividend investors still praised how great BAC (Bank of America) is. Their biases just cover their eyes.

For last five years starting from 2007, BAC has been falling from about $50 to about $8. The total dividends added will not offset the big loss. In Dec. 2007, BAC paid about 5% dividend at a price around $45. It should be loved by dividend investors back then.

Their argument is the total dividends from the IPO day and the depressed stock price could have doubled the return.

The argument has the following flaws.
1. It may not beat inflation. It should be adjusted for inflation.
2. If I bought Apple at its IPO, I could be thousands times richer than owning BAC. You just cannot draw a conclusion on a strategy from a specific stock but better from a group of stocks including Lehman Brothers.

When we evaluate a stock, we should skip some sectors like banking due to the quality of the mortgage that requires more expertise. Also, we should avoid our biases like loving blindly a strategy. Most strategies will fall eventually particularly when the strategy is over-used. Do you remember in buying internet stocks before 2000?

The cause of 2007 recession.

This recession is caused by the mortgage derivatives. Most of us do not have the expertise in this area and we cannot blame ourselves for missing this recession.

The bankers boosted the bonuses by signing bad loans not according to the regulations. It does not only hurt the bank, but the entire sector, and the entire global economy. The government should step it and have regulations to prevent it from happening again.

Sunday, June 24, 2012

Market today

Before using any strategy, you need to check the current market conditions. To me, it is a side way market, but it could head to another recession if the EU crisis gets worse.

For side way market, buy at dips and sell at ups. I've been practicing it now and so far so good.

If the market heads to another recession, all bets would be off. However, we do have a lot of quality bargains. Buy them and forget them until the market returns.

If calendar is your only guide, make sure you return to equities by Oct. 1, which is the best month statistically. Alternatively, move to equities from a certain % of your cash when the market dips a certain % - 'certain' is a personal adjustment according to your risk tolerance but 0 cash by Oct. 1. I do not stick to calendar 100% myself, but it seems to be a self-fulfilling prophesy.

The current market top has been predicted correctly. Here are the reasons and they could be useful in the future.

One blog could change your health and life

This blog would not guarantee you live to a 100 (actually not even living another day),  but it will improve it. These topics on health have been discussed in countless articles but we do not follow them in practice. We know some smokers and liquor addicts live over 100 years and some healthy souls live a short life. However, they are the exceptions but not the norm.

One paragraph that could change our life.
One cup of coffee is good for you from what I read. Decaf has no effect except mentally. Same for one glass of wine and plenty of water. Soda including diet drinks and smoking are bad. Fruits and veggies are good. Curry, ginger, garlic, tomato, kiwi are all good. Consistent and appropriate (according to  your age and physical conditions) exercise is good. Take the prescription drugs. Take life easy.  Simplify your life (by giving all of your money to me :)). Anything excessive is no good.

Should we trust our doctors? Click here for answer.

Thursday, June 21, 2012

Education by example

When you find out your store under charged you for $1, do you go back to pay them back?

I do not go back all the way to give back for 2 reasons: 1 The store has cheated me intentionally or unintentionally before, so it breaks even. 2. We also need to teach our children to conserve energy. :) My daughter did go back as she afford to be nice.

We should go back if we have children to set up a good example.

The problem with our education system is education should start at home. No matter how much money you throw into the system, it will not work if the students do not want to learn. With so many single-parent and teenage-mother families, I do not see a bright future.

It happens all the time that you have a convict and a doctor in the same class as indicated by this video.

Some of our discrimination and biases are passed to our children unknowingly. That will hurt them eventually. Be careful what we talk/do in front of children.

Education by example is most powerful and effective, but unfortunately it is the most neglected. It is time for the politicians resolve our problems NOT by throwing money only.

Wednesday, June 20, 2012

The evils of QE3

I just explained to my grand child that money did not fall from sky or grow in trees.

Every time we print money, it does the following:

1. An invisible tax to those who have as their purchasing power will be decreased.

2. Your children and grand children... will pay for it.

3. Selling a piece of our asset to foreigners.

The only winners are the politicians as they bought votes with the money from your pocket.

That's why the stock pickers are losing as they do not understand the problem of printing money at the max. That's also why this recovery takes forever. Printing money to the max. is not a solution but a problem.

Tuesday, June 19, 2012

Why I blog - article in progress

Contrary to what you're thinking, my primary reason of blogging is not because of the plenty of free time in my early retirement. English is not my native language and being an ITer I have not written much during my career. I have never taken courses in social science and investment besides the required in college. It has to be the fun of trying something different and I enjoy it so far.

I find a lot of newspaper and on-line articles particular on China look right but are totally wrong. I try to use common sense to argue against them.

As I'm not using my full name, I'm not blogging for promoting myself and I have nothing to sell you. You may feel offended sometimes as I blog honestly and I do not care about political correctness and popular opinions (I'm not running for a political job).

Click the highlighted to access the blog. Hence, this blog serves as a rough table of content of the better blogs I wrote for last several years.

My contributions.
* The reason of secular stock market. As indicated by many articles, we've secular market about 20 years interval. My contribution is the cause. It is most likely due to wars for secular bear markets (Vietnam and the two current wars) or lack of for secular bull markets. The next, new bull secular market could start in 2015.

* Coconut Theory on why some natives are lazy naturally. So far no one objects or they're too lazy to defend themselves.

* Global Aging Demographics. I blogged years ago that India's explosive population growth is no good for India and the world. However, even today the popular belief of a larger and younger population is better for India including an article by a professor in a prestigious college.

* How Hong Kong gets so wealthy? A Stanford professor in a syndicated article (it means it has been published in most newspapers that Sunday) told the world that the British rule could make a poor country prosperous using Hong Kong as an example. I argued it was totally wrong and the primary reason for Hong Kong's wealth is its closeness to China then and now.

* Debunking some of Buffett's preachings. I only blog if my views are different to popular beliefs/opinions as I do not want to waste the bandwidth and electronic ink not counting  wasting your time.  Actually most investing heroes are not doing good recently.

Defending China.
The politicians cannot fix our problems and use China as a convenient scapegoat. Many newspapers, TV stations... want to sell their stuffs by giving what you want to hear/see by twisting the facts.

As a Chinese American, I am naturally biased but I'll not let my dumb nationalism to cover my eyes or yours. There are Chinese bashers and US bashers who do not convince us as they're not using facts. They promote distrust, confrontation, ... that I try to avoid.

Tibet. This comment has over 350 'likes' in an Economist's article. I estimate there are  3,500 reads (using 1 'like'  to 10 readers) on this long comment. Initially I faced many resentment from folks esp. from Tibetans in other articles.

Human Right. This blog has ignited discussions and scored some points for China. This one and the last one change the image of China for some.

China is a victim instead of an aggressor for last 250 years. A MUST read for Brits and Japanese.

Economy: Currency,  Rare Earth, Quality. Space Station, Tariff,

Social topics:  Intelligence PropertyEnvironment, Africa, Hong Kong, Child Labor ,
                        India, Politics,

What China should do in next 5 years.

US and socially speaking.
A Nation of No Losers. Quite popular. You can laugh and cry at the same time.
Trade War with China.
Our trade with China
Conflict with China
Lessons from Wars.
US and Wars
Efficient charities.
How to solve the trade imbalance
Dear recent college graduates,
Socialism could lead to self-destruction.
Why the wealth gap widens
Is Social Security going to survive?

Should we blame all our ills on China.
Is China friend or foe?
Extremes of Two Nations

Fixing the economy.
Why China is so poor and US so rich.
Effective Health Care Delivery.
Education by example
God of Gods
Defining freedom
Political parties and the economy
Corruption, American style

Our problems, solutions and implementations
Efficient Charities

Stock Market.
Market Top. My crystal ball in April is quite right.
Market Timing II
Spotting big market plunges
Market timing on asset classes
Strategies for secular bull and bear markets

Recovery or W-shaped recession?
A prolonged recession

When stock is over-priced

Invest Responsibly.
The mysteries of P/E.
Sell shorts.
Covered calls.
Should you hold a stock forever.

Hedge Fund 101
2011, when stock pickers die

Advice for retirees.
Dividend stock problems.
Sectors you want to avoid.
Stop Loss.
Refining Dogs of Dow Strategy.
Looking for a multi bagger

Technical Analysis.
Modern Portfolio Theories.
Investment Psychology 101. 
Retirees, take notice.
The evils of QE
Housing recovery?
Identifying Earnings Season Overreaction Opportunities
Different strategies
Volatility and Momentum
Distorting indexes

Fun and Jokes.
Even if you do not agree everything I said, hope some jokes would give you a laugh. If you get offended, you should check in your closest clinic esp. the humor department. It is not easy to write jokes that are totally unoffensive.

A + B
My day as a farmer.  A real story to be told to my grand children.
Diets that always work. Offensive to fatsos.
No Nativity Scene. Offensive to politicians.
Politicians and prostitutes

How to save the airline industry. PG 17.
My stupid name is Boris.
Celebration of Olympic Bronze.
Lady missing a fight.
Playing lotteries.
Lady missing a flight

One paragraph could change your health and life
The best in life


The following are the best blogs from my other blog. It is a collection of good articles/jokes circulated to me.

The new student from India. Very funny!
Break the promise PG 17
The 11th husband PG 17.
 Living in 2009
 Funny Acronyms
 Dear Employees

Graduation pictures from China, USA,Japan PG17. Does not work all the time.
Gift for mom
Bishop goes to Hollywood
Sex for seniors
How Staten Island got its name
How 'America' got the name
Who actually is Jesus. 







The Yellow Flower Uprising.
Letter from a patriot





6 Great Foods 

50 health hints (in Chinese)




十穀米 - 10 grains

 吃蝦的時候喝橙汁等於自殺 - Shrimp & orange

 中風徵兆-- 請記住 "STR" 三个字


Amazing picture




(c) 2009-2012 TonyP4

Sunday, June 17, 2012

Identifying Earnings Season Overreaction Opportunities

AAII has some screens for stocks with pleasant earning surprises and bad earning surprises. The pleasant ones always beat the other ones in a year from the last time I checked.

My own experience. I enjoy the negative surprises better. If they do have a reason for come back, I invest esp. on those that have been beaten up badly by the big boys. Sometimes it takes a month and sometimes even a year for the stock to come back.

Missing expected earning by 1% and causing the stock to drop by 10% is a buy to me. Heading to bankruptcy is a different story though.

Friday, June 15, 2012

Stupidity has a cure!

The smart doctor asked his patient to try a new drug that could cure his stupidity. However, it is so powerful that it could kill him. He calmed his patient that his stupidity would be guarantee to be cured one way or another.

Retirees, take notice

When we retire or are being laid off, we have plenty of time. It is not good for doing nothing. However, the worst could happen to us: We invest on something we do not know and lose our entire saving. There are so many real-life examples.

Every one eats out and enjoys it. Some believe they can do a better job by opening a new restaurant. It is the human nature to be too optimistic even for the toughest business and those who surround him/her, do not want to throw cold water. Most fail miserably.

Investing in stocks is another popular one. Many take a course in day trading. If their system works that good, why they have to show it to you? When you want to invest in stocks, you should have many years of  investing experience and do not gamble with your money you cannot afford to lose. Unless you're a congress woman or man using insiders' info, you are swimming with the sharks.

One retiree lost all his money in the stock market which has changed to a big casino, and died because of worries. After several years, the market revived but not he.

One retired  headmaster worked as a principle in a brokerage firm. It was fame and fortune initially. He lost all his money when the firm executed his client's bets on futures in the firm's account in Hong Kong where there are less regulations for brokerage firms.

The retired and famous baseball player in Boston lost all his money from owning a video game company. He was a good baseball player, but not a business man and failure is almost a sure thing. For every successful story, there must be many failures that are not publicized as this one.

Click here for advice to a 70 year old.

In our case, no ambition is the best ambition.

Investing in something we do not understand will most likely cost us money, effort, frustration, and even our health.

Tuesday, June 12, 2012

The mysteries of P/E

P/E is the most misunderstood indicator. However, it could be the most useful one.

* Better definition.
P/E should be inverted as E/P and is termed as Earning Yield. Earning Yield is easy to compare and understand. It takes care of negative earnings for screening stocks and ranking. If you sort P/Es in ascending order, your order is wrong with negative earnings but right with E/P.

It is usually compared to 10-year treasury bill yield (or 20 or 30) or a CD rate. If the stock has 5% and your one-year CD is 1%, then it beats the CD by 4% in absolute number and actually many times better. However, the CD is virtually risk free and the future earning yield is an educated guess and it may not materialize.

* Many forms of E/P.
There are many ways to predict E/P:
- Based on last 12 months. Project it to future E/P.
- Based on analysts' educated guesses. Guesses may not materialize. From AAII screens, this one usually predicts better than the previous one that is based on last 12 months.
- Based on last month or quarter. Latest information could be better for prediction. However, they are not good for seasonal businesses like retail where most sales are done in Christmas season.

* Best E/P could not be the best.
Very high E/P could be sign of troubles ahead like lawsuit pending, fraud...  You can find companies E/P over 50% and it means two years' profits could equal to the entire cost of the company! I can tell you right away they smell fishy as there is no free lunch in life. However, from time to time, some bargains exist due to certain conditions or Wall Street is just wrong about the company. You need to find whether they are bargains or traps. When low E/P (sometimes even negative) but it is improving fast, it could mean big profit.

* E/P and PEG.
For value investing, E/P is usually used, the higher the better but not extraordinary high as described above. PEG measures the rate of the stock improving earning. For growth investing, PEG is usually used. Select one that favors the current market conditions whether it is value or growth. In a secular bull market, growth is usually better than value. Value (opposite to timing) is better in early recovery stage of the market cycle - the best result is selecting top stocks sorted by Value/Timing.  Value and Timing could be one metric classified by some investment newsletters/subscriptions.

* Fundamental metrics.
It is one of the metrics you should use but not exclusively. If the earning yield is high but the % of debt is too, then a good bargain may not be as good as it looks like.

Some other metrics may not be easily found in the financial statements like the intangible, insider buying, pension obligation, losing market share...

* P/E variations.
There are other P/E variations like Cape. Personally I like to compare its current P/E to the average P/E for last 5 years or compare it to the average of the companies in the same sector.

P/E is more reliable for a group of stocks like SPY instead of individual stock which has too many other metrics to deal with. 

Shiller P/E (from the web) is one way to track the current market valuation. It is controversial and its value is easily misinterpreted. Hence, use it as a reference only.

When you compare the earning yield of SPY and a ETF specifying in dividends, you need to add the respective dividends to ensure a fair comparison with total returns. 
* Garbage in, garbage out.
I do not trust in most financial statements of emerging countries esp. the smaller ones. 

* Summary.
Again, one metric should not dictate the reason to trade a stock. All metrics can be manipulated and give different prediction in different market conditions.

Is now the best time to buy stocks?

The best time to buy is when everyone including the shoe shine boys is selling. Some are real, easy bargains, so I use the term loots.

However, you need to hold your loots for a year or more to realize the potential profits as you're swimming against the tide.

It is from real experiences in 2003 and 2009. It worked before but it does not mean it will work for sure this time.

Investment advices from the Ivory Tower

Tim M. has been writing good articles at SeekingAlpha and is liked and adored by many. I'm not attacking him, but we have to ask:

Are we following investment advices from some one who can read, think and write without making a BUCK in the market?

How many folks at the Ivory Tower made a bundle in investing even some with Nobel prizes?  Not the most beautiful minds like Newton and Einstein.

Some even made you lose big money like the Nobel prize-winning economists running LTCF to bankruptcy. Irving Fisher, considered to be the father of MPT, had several big wins, drew a lot of followers and then lost all his and his followers' money. Even the richest investor Buffett did poorly in his company in trading stocks in last 5 years.

Mutually admiring society and biases could make you poorer. I enjoy Tim's articles but it does not mean I've to follow him. I follow those who made a bundle in real life. Also even those who lose a lot as they provide valuable lessons of not to do.

Monday, June 11, 2012

Conscience in Investing

We work hard, save up money and buy stocks. It serves two primary purposes: 1 Good return on our money, and 2. For our country (must be news to most). In reality, the stock market is being changed to a big casino.

The company needs our investing money to develop new products and hence hire employees. When the company makes money, it pays taxes. We would not have Apple paying taxes and hiring thousands of employees if we did not finance it via IPO.

This is the ideal purpose for investment. As an investor, we need to choose the company that produces the right products that will be good for the society.

You will find few companies that produce useful products only. We need to pick companies with less evil. Here are some evils.

1. Tobacco companies. Do you invest in products that kill one of your friends? Even if you do not smoke, the second-hand smoke (and even the third-hand smoke for unborn babies) still kills.

2. Offense companies. Why do we need a carrier generated by two nuclear generators? We already have weapons to destroy the entire world with a press of a button. Boeing is OK with a small division in offense. According to NRA, guns do not kill and it is the best way to control population growth. :(

They are legal products. Special interest groups control our politicians like puppets. That's why we're the only developed country without gun control even we have school shootout every year.

3. Casinos, wine, fast food, soda...
They are border line cases. They provide good services and products if you do not take it to the extreme. They only hurt you but not others (except from drunk drivers).

Money is not everything in life once we have the basics and we should invest wisely and responsibly in products that will not harm us. 

What's good if you made millions in a tobacco company that kills you via second-hand  smoke? How about the young kids killed every day by guns? Sad but happening every day.

Stop counting money with hands dripping in blood and eventually the blood would be yours.

Lies, sex and all-you-can-eat

I was waken up by my housemates that there was a farm job with a lot of beautiful Mexican girls while attending California State University at Fresno. I tried to look my best - silly me.

It was about picking oranges and there were some ladies with their primes passed long, long time ago. The crate was higher than I. After spending one tough, sweating morning, we filled up one crate and each of us got about a dollar which we spent in a Swedish eat-all-you-can joint. We piled up the bones of a thousand of chicken wings and we became a soda machine ourselves (due to drinking too much). 

Now I am really sorry for the restaurant owner and to the chicken without the wings. That is my first and last job as a laborer and the laborers gain my respect particularly the Mexican workers legal or illegal. I never have wasted a dollar since that day.

It is about lies, beautiful girls in our dreams, hard farm work, tough business to run a restaurant, the value of money... At least I have a good story to tell to my grand children and of course with the beautiful young ladies instead of the old ladies to make my story more interesting.