Market and the oil price

I have 10 signals (or 12 from my memory) for a market crash. Oil price is one of them but I have to modify. The chance of a crash is: Oil price below $30 or oil price above $120.

When it is below $30, the oil-export companies have to sell the securities to compensate for the lost income.

Broker

I converted my IRA to Roth. This broker did not report it to IRS. I reported it myself as my conscience did not allow me to cheat (even I'm no church-goer). This broker is for wealthy clients (not competing for retail investors). They asked me whether I bought the stock because of their research (if it does, they charge more I guess). They do have connections, so you can buy IPO stocks and sell at the end of the day. It makes money most of the time. Why I used their service? My in-law was the financial planner there.

Another broker (commission free with a good size deposit) I find they have more times I do not get the stock when it falls below my ask price and vice versa for the sell. My regular broker always gives me better trades. It seems I'm penny smart and pound foolish. I'm moving my account to my regular broker. Do you folks have this problem?

The state of the US

What happens to this country? First it was Steve Harvey and now it is the best picture mix-up in front of the world audience.They should at least hire a high-school graduate or it is the problem of our high-school system.

Moonlight will not be a blockbuster as the rest of the world does not care much about our problem. It is similar to a movie on American football.

Entertainers' job is to entertain, not making political statement to offend half of the country that has already been divided.Why no statement on Tibet today? They do not want to be blacklisted by China which is going to be the #1 in movie revenue.

One belt, one road

This initiative could be the most important one for China and its neighbors. It excludes our participation in some extent; GE and some other companies still make great profits. It is a long blog. There are 5 hours of YouTube videos on this project and several links.

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Chinese is building two modern silk roads, one by land and one by sea. It has been participated by more than 60 countries. It is a $3 trillion infrastructure campaign funded mostly by China. The idea is from President Xi. There are multiple purposes:

·         Improve transportation of products and mineral resources between China and Europe.

·         Enrich the wealth and living standards of the countries between the routes especially the developing countries. Hence it provides better market for Chinese products.

·         China’s Yuan would be used as the reserve currency instead of USD.

·         Improve China’s political influences in these countries.

·         China needs their energy supply, trade and road to Europe.

·         Most infrastructure products are financed by China and built with Chinese management and technologies.

·         It could reduce some conflicts. Philippines received billions on the loan and has downplayed the islet conflict with China. The chance of Chinese military interference is reduced to me.

Many developing countries will be benefited by financing their projects via Asian Infrastructure Investment Bank (AIIB), which is mainly funded by China. China may supply most of their services such as building factories or improving ports. However, China will not see their profits from the investments in the short term. Some loans will be partly donated to friendly allies.

US is not participating in this campaign. We will not benefit from these agreements and we will lose our influences to the developing countries. However, some big projects require advanced technologies and they will be supplied by US corporations.

As in most projects, China will face problems and challenges. Thailand and Indonesia are modifying their original railroad projects. The project is easily accepted in developing countries but not in developed countries such as EU. China is having its own economic problems. Some projects may not pay back and China would end up losing money. China has to settle the islet disputes in South and SE China Sea. The natural resource prices are lower than 3 years ago.

It is better to invest in profitable infrastructure projects than selling destructive weapons. Many finished projects such as the major railway in Africa do not benefit China so far.

Links

Ethiopia Rail, Pakistan, review, Central Asia

Trade: China’s export,   

Youtube: One Belt, One Road: Episode 2, 3, 4, 5, 6, 1 (poor screen quality)

More outsorcing

When the prison is run more effectively by a company, why we not outsource all government functions to outside companies? NASA is partially done.

Trump is moving backward

* Coal.
* Protectionism and reduce globalization.
* Undo trade agreements.
* Insource products we are not competitive due to our high living standard.
* Flex the military might.
* Nuclear weapons.
* Unwelcome immigrants.
* Take out ObamaCare - good if we can replace it with a better one.

I do not say all are bad. Some need to be modified and some may work. Check them out in a year.

When the old guys gone

China's changes in leaders  in the financial sectors are welcome. These old guys have not been trained properly compared to the newer generation. Their performances are mixed at best. The product dumping is bad and met with justified sanction. Some foreign investment is worse than just buying SPY. Some are good with a clause of technology transfer.

They have two major challenges:

1. Trump's protectionism. China is outsourcing to lower-wage countries. China is trying to appreciate their currency. Trump uses the wrong arguments against China. The right one is taking out the obstacles of our products to China.

2. One Belt One Road. There are challenges and problems. China is investing billions to help the neighbors to be wealthy, so China can sell their products and uses its excess capacity. Some projects may have few returns.

On $1 McCoffee

It is all about marketing. $1 coffee will not help for the profit. They try to sell you other stuffs. The coffee quality goes downhill after the switch.

I go there because my grand children drag me there for the Happy Meal (Unhappy Meal for me).

I have a dream

Government management at all levels are not efficiently run. If we cut down half of the employees and force them to work full 7 1/2 hours, we will not see any delay in the services.

Why I know? I used to be an officer at Federal Reserve bank.

Illegal dreamers

I feel sorry for the "dreamers". There should be no dreamers if they do not allow them in that easy. It has been a problem for decades.

Just check out what other developed countries do with their illegals. Also, check out how Mexicans do to the illegals. You will be surprised.

On Hong Kong's x-governor guilty on corruption

So far, all democratic countries/cities in Asia except Japan are corrupt.

Until recently, S. Korea and Hong Kong were not but they are now. Their citizens are better educated and the press is freer. So, the two recent cases are not the typical as in Philippines and the defunct S. Vietnam.

The contribution of British colonial government in Hong Kong is suppressing corruption (from police to start) by setting an independent agency - China, take notes.

It is less "corrupt" in non-democratic countries. With communism, every one makes the same, and hence there is no extra money to pay bribes.

Corruption = Man w power + Man w money

For example, the local state government officials give the job for a new tunnel to a favored company. In return, they get money under the table.

We do have corruptions, termed as American style. Too many to list here. How do you think the Presidents' children get their jobs or the x-government employees after they are laid off due to changing political party? They are the returns of favors. Under Hong Kong's law, all these US folks would go to jail.

My new PC

About $350(after discounts) for a HP laptop with 17" screen. A quality bargain! The old one still works fine except generating too much heat now. I do not subscribe to Office, about $100 per year. I use about 300 G for my current lap top. This one has 1T, overloaded to me. It is faster due to a faster processor and/or software. Will not use emails on this one for security.

Will look for Google's Word that is supposed to be free. Turbo Tax is a money maker and you have to buy a new one every year.

PC has become a commodity. For most folks, there is no need to upgrade for the speed and new features.

Summary for investing from this experience:

Down: HP.

Neutral: Microsoft.

Up: The maker of Turbo Tax.

Tramp or Trump

Trump wants to be a dictator but is being trapped in a democratic system.

When the clown was slapped on his cheeks (all four), he is still smiling. Trump is the most entertaining president.

Nuclear: Japan, US, China

Environment causes nuclear go down the drain as evidenced by Toshiba. Similar to coal. China has no choice not to use the bountiful of coal and many nuclear generators are being on-line.

It is quite a easy business decision by calculating the cost for a fixed amount of energy. Depending on the source in the internet, nuclear is about 4 times (2 times operational) more expensive than oil. If it is true, it does not take a nuclear Ph.D. to find it out and a ten-year old child to make the decision.

Japan's nuclear problem is not to take the old generators out of service and not to handle the used rods.

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 FYI

Energy cost

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

China

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

The State of the United Sttes

Click here


I'm politically neutral. Both parties should be blamed.

I do not think Americans prosecute Christians.

Few values

This morning I tried to find momentum stocks (those I sell within a month). None worthy. The market could be fully valued now. Trump Rally is still on.

On Boeing potential strike

The workers at Boeing have enjoyed the better wages in S. Carolina (that's the reason they moved there). Hence, why should they strike?

When the unions want to 'protect' the workers, the company will lose competitive edge and eventually the workers will be hurt. Have they learned from the auto industry?

Why wars in Middle East?

From the Bible, Israel will be surrounded by enemies attacking her. Why we risk the words of the Bible?

Israel can protect herself due to high tech such as jet fighters that are critical in desert.

Most of us do not or care to understand their conflicts. We have plenty of conflicts at home that require our attention. 

We can balance our budget by not sending soldiers to the wars in Middle East, not mentioning human suffering.

Reply to the last post

This is how a successful business is run though it is morally wrong to some. How can a pizza parlor compete with one that cheats?

The line is thin between "tax avoidance" and "tax invasion". When I had a business, I spent the whole week in preparing tax return with all the receipts. It is unproductive. Actually I can save the entire week by using estimates. For a small fish, IRS will not waste their $1 audit to get 10 cents from me.

Many companies make the employees part-time so they do not have to pay the benefits. These employees have to find two or more jobs and waste the commute time between jobs. Thanks to ObamaCare that just has opposite effect.

It is similar in welfare cheats. I believe the new immigrant (not refugees) is supposed to be supported by their sponsor for 5 years. In reality, many collect welfare before then. The immigration office and the welfare office do not share information. I believe even some illegals collect benefits. California contributes about 12% GDP but takes up 1/3 of all Federal welfare expenses.

We had a case that an illegal sued and won against a business not paying min. wages. It violates supply and demand. If there is a better job, he should have taken it. It makes the business out-of-business and the lawyer richer. Who's right?

A typical small business owner

"To all liberals who think is right to steal my money to give to others: I run 3 businesses. I have no plans to hire or expand. Why? First socialized heath care. Too expensive. I'll make sure everyone is a contractor and resposible for their own. Secondly, taxes. At 40% forget it I'll make sure I don't make a profit. Thirdly, the onerous requirements to get rid of people. Make em contractors. Diversity requirements, sorry I'm not hiring a woman in my logging operation....

I could go on.... Best way to protect your money: Don't invest in the liberal economy...."

Coke

From my view, KO has started its decline when the consumers are more health conscious. It will be further down when interest rate is raised more than 1% (one year away to me). When it comes to a forward P/E of 15 or so, then it is a buy. Hence, if you followed Buffett recently, you're not doing well with KO.

Pepsi is doing well with the bottle of water and I bet KO will follow soon.

Conflict of interest

It is the reverse of conflict of interest. Even with this, the Trump family will make a fortune with the influence. Do not cry for Ivanka yet.

Foreingers are dumping Treasuries

Many foreign countries are dumping US Treasuries, esp. China.

We want them to buy them. If they do not, we would expect higher interest rate. Higher interest rate means depression in housing market and that would spread to many sectors. It also means the possible switching of dividend stocks to other stocks. The Fed most likely is keeping interest rate to 1% or less hike this year. So nothing is really happening now.

China bought our Treasuries and became #1 (demoted to #2 now) to keep our economy going so our consumers can buy their products.

They do not want to kill the goose that lays the golden eggs. However, the goose is getting older with fewer meat and it could be the time to kill it before all meats are gone.

With about 3 trillion reserve, China is placing their money in One Belt, One Road infrastructure projects starting with neighboring countries via AIIB. It will benefit them and China in the very long term. When these countries are richer, they will buy Chinese consumer products and China can outsource some manufacturing to the low-wage countries. Investing is always better than consuming. 

Football and Investing

There are some similarities in football and investing with a few exceptions. Being a Pats fan, I was motivated by the impossible and greatest comeback of the Patriots in Super Bowl LI to write this article. Hence I use Brady/Belichick as an example as often as possible.

Belichick

He is the greatest chess player. In most of his talks after a win, he always shows he is the ‘loser’ in his monotone voice. He moves his facial muscles to a minimum. Politely speaking, he is boring. Do you want a boring coach who gives results? I sincerely like his boredom. I prefer him over the well-presentable x-CEO of Pennies or the best-seller written by a Ph.D. telling us to exit the market in 2009 (I am not 100% sure as I do not have his original edition).

Belichick and Brady’s philosophy

It is quite simple and most are applicable to investing and actually to most we do in life.

·         * The coaches and players have to love football. 

·        * Work hard.

·         * Evaluate all possibilities and prepare for them. Study the matchups.

In investing, select the stocks that have the highest appreciation potential at acceptable risk in the current market conditions. To illustrate, select high-dividend stocks when interest rate is low or defensive stocks in risky markets.

·     * Understand the opposing coaches will work on your last hero; use the last hero as a decoy if possible.

·         * Eat humble pies; do not motivate your opponent team.

·         * Concentrate on your next game (next stock to trade in investing).

·     * Multiple skills. If you say you play one position only, you do not fit into their system. Investing requires multi disciplines from evaluating, psychology to simple computer skills.

·         * Draft the best players at reasonable prices. Brady is a sixth round pick. In investing, buy low and sell high.

·         * The Pats never spend a lot on one or two players. In investing, we do not put all eggs in one basket.

·      m* Trade the player who does not fit in with the team. In investing, trade stocks to improve the portfolio.

·       * Prefer players with potentials, not what they have accomplished. It is similar to trading value stocks.

·     * A successful person does not depend on luck although luck has something to do with this Super Bowl win to me. From the last two SB wins, I believe God is a fan of Pats.

·     * Take advantage of the misfits and their bad decisions. In the last quarter, Falcons could win easily by running with the ball. In the second half Falcons' defense had to be tired and one-on-one coverage would be ineffective. In investing, it is the contrary investing to institution investors but ensure they are really making errors.

·         * Never give up. When you had 25 points to make up against a worthy opponent, do not give up.

It is a little exception in investing: Sometimes we have to give up bad stocks due to our original bad evaluations or the fundamentals change.

·         * Brady and most successful quarterbacks throw the ball to the open receiver consistently, not always to the star receiver. In investing, it is called diversification.

·        * Adjust your strategy. Being a Monday quarterback, I would like the Pats to adjust the strategy in the start of the second quarter.

In investing, no strategy is evergreen and no metric such as P/E always works. Only use the ones that work recently – adaptive investing in my term.

* Football is a team work. Everyone in the team contributes. No one including Brady cannot be replaced. Hightower and White (a reserve) contributed a lot for the amazing comeback. In investing, do not depend on your own research only but check out other researches from reliable sources. 

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The above will be included in my book "Complete the Art of Investing" which is available from Amazon.com.
The Kindle has 850 pages (6*9) for $9.99. It could be the best $10 you ever spend. Paperback (650 pages plus articles accessible from the web) is also available.

If the above two pages can help you in investing, envision how 850 pages can help you.

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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.

Today's news

* Trump is a business man. He uses the most important threat on China ("The One-China policy") for trade concessions. He knows we cannot afford another war even a trade war. China will take out the obstacles to our products. You pay far, far more for a US product in China compared to a similar product produced locally.

* The Wall will cost more than $21B. Why? Have you seen any major US projects on time and within budget?

* On supreme court appointee. If your mother says you're ugly, you're really ugly.

* Apple's challenges are coming. Watches is not important compared to total sales. First is the proposed 40% (or even 35%) tariff. Second is some Chinese phones. Huawei (unknown to the US) has many advantages besides prices. Ericsson and Huawei are the frontiers on 5G network - many times faster than 4G and about 5 years away.

On today's news

* Should some of the executives making the decision be fired at Wells Fargo?

* Stopping the health care insurance company mergers is good to reduce the chance of monopoly even I have CI.

* Bitcoins is bad and unsecured. It encourages money laundering.

* Trump broke the ice with Xi. They may waltz together but never sleep in the same bed.
We need to take out the obstacles for our products to China and protect our high-end products where China is gaining.China cannot say no now, but it can in a decade or two.

http://bit.ly/2iwePet

Lessons never learned

They do not give you a medal for maintaining the highway, bridges, ... We do not set up regulations before an accident. Hopefully China can learn from our mistakes, but obviously they do not.

Comparing US and China

I wrote an article on What China should do now. It includes regulations (food, building, security, corruption...), pollution control...

You cannot compare China to US, but China today to China 30 years (20, or 10) ago.The US is prosperous due to her competitors in Europe suffered after the WW2, small population, high natural resources per capita, welcoming immigrants...

300 years ago, China was bankrupted and semi colonized, WW2, Mao's mis governance...

A large population is Not good

India is a capitalist and democratic system. In the last 30 years, it is not doing good and it is many times more corrupt than China. You need an educated citizens to vote to make decisions. We've been good. However, with 50% of adult not working and 40% not paying Federal income tax, many voters vote for themselves.

One-child policy is great at that time. India will pass or has passed China in population and percentage of young workers. The natural resource (including farm land) per capita will decrease in India and it is more a problem.

China is changing to a two-child policy as the country can afford now than before. Minorities do not follow these policies.To conclude, no policy is evergreen and no political system is good for all countries.

Monday QB

How can you lose 25 points in 1 Q and a few minutes? It does not take a space Ph.D. to figure it out. God must be a faithful fan of the Pats. Just do not throw the ball, dummy! It must be a case study in Harvard business school. LOL.


Same as the Seakhawks had 3 chances (not counting available time restriction) to win the SB 49 at one yard line. The dummy threw the ball and was intercepted. Another business case material!


The book How to lose the Super Bowl for dummies must be popular. If we do not learn from history, we will repeat history. :)

On today's financial news

* Indians had a tough time on their own currency besides many financial problems they have to deal with. I saw many reports written by Indians comparing India and China, but few the other way round. Chinese want to compare their country to the US. In the last 5 years, Indians are catching up slowly and China is filling the gap with the US (but still a long way to go).

* We stop many acquisitions from China even for bankrupting companies. EU takes advantage of it. 3 T reserve can solve a lot of problems. China made several mistakes in acquisitions/investments of foreign companies.

* Trump is creating many jobs. Does globalization work or not? Inside the TV (or car) assembled in Mexico, there are many parts made in Asia.

We are the victim of our own success: A higher living standard means higher wages, more protection to our workers, regulations, environmental protection,,, that make us less competitive.