Friday, April 28, 2017


Deflation is worse than inflation for companies. When the company finds they have to sell the products at lower prices than expected, they have to cut down some products and lay off employees.

The government job should adjust inflation/deflation to some acceptable levels.

Under the table?

Trump must have some negotiations with China. How can you turn around 180 degrees that fast? Actually it is a good thing. Both countries need each other.

ALL countries manipulate their currencies. In addition, all countries subsidize their industries. It is just more political than economic.

In one hand, you want your own currency appreciate so you can spend less in importing goods from foreign countries.

However, it would be harder to sell (losing jobs too) your products to foreign countries. It is important for China as it is export-oriented (but changing to internal or consumer oriented). When most of your profits are obtained from foreign countries, your profits would be reduced after converting it back to the stronger USD.

A lender would benefit from receiving dividends and loans from a stronger USD like China.

The world is round, honey

My spouse complained I made the wrong turn. I replied eventually we would be right as the world is round. Time wise I was wrong but logic wise I was right.

China's GDP

I consider China to be a developed country. The growth rate of 6.9% is impressive. I predict to be 5% in the coming years. It is moving from an export-oriented to a consumer and service oriented economy. It will outsource its export to countries with lower labor cost and is no longer renting space to assemble products for foreign countries. The basic infrastructure has been finished. Both will reduce the GDP growth.

New drugs from China

I predict many new drugs will be made in China. It is too expensive to do drug research here. Alternatively we would set up drug research in foreign countries.

Becoming past glories?

US is still leading in education among many other fields. However, we're declining esp. in top research. For proofs, go to any top colleges and top tech companies, you can find most are foreign students. At one time MIT was nick named as Made In Taiwan, now more Chinese, Indians...

Education starts at home. When we have so many single-parent families and multi generations of teenage mothers, we do not have a future. We still have geniuses like Gates and Zuckerberg to lead the world in technology. However, if we're not careful, they will become past glories.

Poor Chinese product quality

It is part of the way to become a developed country. The next phase is quality control. Do you remember Japan build the most unreliable car and Korean too? Or, do you find any defect in the iPhones?

Joke of the day.
The miracle Chinese drug is guarantee to cure any disease. You may die because of your weak body and/or its strength. In either case, you're cured.

Currency, free trade, H-B1

Every country manipulates her currency. It is more political than economical.

The US has been promoting free trade for decades. Why not now? We should enforce all players play fairly such as no product dumping.

H-B1 and guest visas work. Without them, we cannot be competitive in many high tech sectors and some farms will not be harvested. However, we have to make changes such as bringing the rest of the family to the US to burden our welfare and entitle programs.

Strong USD

Strong USD affects adversely to trade - less competitive and reduce the profits of companies with large percent of income from foreign countries. USD is still strong and I do not share the view with GS or they know sth I do not know.

Important dates for China

2020. China will supposedly pass USA in GDP. It may not but reduce the gap due to changing from an export economy to a service/consumer economy. Even so, China would be 1/4 GDP per capita and hence 1/4 of our living standard (realistically higher).

2049, 100 years after forming People's Republic of China. China supposedly lead the world in many fields except culture (due to English) and military (tie with Russia and far distant from us).

"2025, Made In China " will be supposedly mean quality and innovation. Not easy to change a poor image. Do you remember the low quality of Japanese and Korean cars? It is stages of moving to a developed country: low cost labor, copy, higher tech, quality, innovation... All these countries have to pass thru even briefly for the US (for many reasons). The difference is the scale with 1.35 B citizens.


Hernandez committed suicide. It is hard to fall from the height. Similar to Jesse Livermore, our greatest trader. It is hard to face the deep fall. A sad story. It could be a bargain with the devil. He was so great due to ego, talent, hard work.. some could be the reason he ended his life.

A poem about life.

Investing and football.


With him Tom Brady could win the next big one easier. Now he is the number one draft pick in the heaven league.

Chatting with a friend

A electric car will be introduced to China under Buick instead of Chevrolet. Buick is better known as a prestigious brand in China. Yes, it is similar to Lincoln and Cadillac, which has lost its luster for a while. Brand name is very important to China and a social status booster. That's why Victoria Secrets can never be successful in China unless for specific professions and they change them to over-wears. :)
Yes, I'm naturally biased as I was born in Hong Kong. You need to compare China to China 30 years ago. Alternatively you can compare China to India. Even the Tier I cities in India cannot compete with Tier III cities in China in term of high rises, subways, education, living standard... Pollution, product quality, regulations... will come next to fix.

Every country and also every city have their challenges.

By my priority: Food, shelter, quality of life, freedom...

China and the environment

The best transportation is public transportation and bicycle that Scandinavian countries promote. With China's huge population density it is very effective.

After decades of restricted freedom, Chinese are liberated with cars for the freedom. Gas is priced low by the government.

Beijing is enhancing its subway system that has already made India looking like they're in the stone age. She has about 60% of high speed rail of the world from a country that could not build a reliable bicycle in the 50s.

Chinese is #1 or #2 in most renewable energies.


Venezuela is heading to disaster if not already. You can tell by seeing the long lines for almost every consumer staples and the huge exchange difference of USD in black markets. It will not be saved by anyone but the return of the price of oil.

The funny thing: The country supplied free oil to the poor in Mass. sponsored by Joe Kennedy who is a house representative today. I was tired of the frequent ads by Joe promoting his 'generosity of his time and Venezuela's dictator'. It is a case of Robin Hood in reverse.


I did change my last name to Kennedy and I did not get elected. Could be by yellow face betraying me.

When "Kennedy" is used as an adjective, it means dying early.

Not a joke but a question: Is it due to sth bad deed the old Kennedy did? Discounting assassinations, wars and plane crashes, they may return to the normal statistics.

Corpoate tax rate

When the corporate tax is too high compared to our competing counties, it should be lower. We also have to address those corporations registered (just a mail box or a shared office) in Caribbean island, Ireland.

Interest rate

The lower interest rate saves the stock market. There is no double-edge sword. There are many long-term problems:

1. While the rich benefit (stock market...), the poor are not. The retirees depending on fixed income suffer.

2. The next generation(s) suffer as they have to pay back our record national debt.

3. The long term economy will suffer as we will have to service our debts.

4. Suppose to have a super inflation (not now) as more money chasing the same commodity.

The Fed's job is to balance inflation / deflation and stimulating/controlling a overheated market by adjusting the interest rate regardless what the president wants. It is set up as an independent government agency with no boss. In reality it is not. The above 4 points are written down in my first sip of coffee.


The chief task of the Federal Reserve Bank beside printing, distributing money, fed fund is adjust the interest rate. A computer program can do the job nicely
Is the chairman/chairwoman a puppet of the president or vice versa?

Joke of the day

If I had stayed in the Federal Reserve Bank, we would not have today's mess.

The same as why the Celtics is losing.

Tax cut

Every politician wants to make us happy or insult our intelligence. With tax cuts, how do we finance the promised infrastructure projects including the Great Wall of America?

Not many Trump's plans passed today

I hope some plans will be passed since Trump belongs to the same party who controls the Congress.

If not, it is another example of "even your mother calls you ugly."

In theory, a two-party political system is good as they check each other. However, we're wasting time in arguing who is on top and it is a No if it is not initiated in our party.

Market timing

The market is fundamentally not sound but technically sound today.

I trust in technical more. We could stay in this overvalued stage for a long while as many stocks do. When the technical tells me to exit, I would rush to the door. I do not want to make the last buck.

When both the technical and fundamental tell you it is plunging, most likely it is plunging. Nobody can consistently time the market unless you have a time machine.

Trump let them drill offshore

With the low energy price and the high price of offshore drilling, it is not cost effective today, but it may when crude returns to the normal prices.

Who is our customer on our coal?

My friend said he is as his electricity is generated by coal. His electricity company is part of the problem. Even the electric cars may be environmentally unfriendly if the electricity is generated by coal.

The little kid in N.Korea

When China cuts the oil supply through the oil pipe, the spoiled kid would freeze his axx off and ride the bicycle.

He is like a wart in your behind. For minor irritation, you scratch it. When the wart gets too big, you have to surgically remove it.

Closing the office and shorting

All the dates on "shut down", "spend ceiling"... are fixed. You just short the market before these dates and close the shorts afterwards. In the end, you should make money. I would but not a lot that I need to back up my truck.

If you have time, back test the strategy and let us know the result.

Except for the parks and Washington DC's attractions, you do not feel any slowdown. Most government workers work half of the time anyway. We need a small and efficient government not empire builders.

Is my friend immoral for not paying taxes?

No. There are many shades of morality.

* Those who give taxes more than his share or charities to the poor. The Saints not counting the ones who try to buy a seat in heaven.

* Those common folks who pay taxes according to the law. The Avoiders. My friend.

* Those rich folks who intentionally avoid taxes. The AH (not standing for after hour trading). Trump and Buffett (ok as he donates all his money to the poor).

* Those who participate free loading without paying any tax. The parasites.

My friend is way up in the ladder of morality.

A rich couch potato

My good friend is a successful investor as a couch potato.

He is not very rich but has many, many times more than the average retiree who has about 100K. He concentrated his effort on his job and raising the children.

I do not know why professionals do not save over 100K. The house in Mass. is worth over 500K average. Folks must live in apartments and/or re-finance the mortgage so they have more funds to enjoy.

The  rise of Honeywell stock news today reminds me of him. The company gave him Honeywell stocks and he has over $20,000 in dividend every tear. He cannot sell them as it would cost him a lot in taxes. He would give them to his children (who do not need his money and are successful in their own careers) with the cost basis stepped up when he passes away some day.

Joke on policeman

After quitting my job and working in my investment, I pressed 911 my mistake due to "9" to get to the outside line, "1" for most calls these days and "1" by holding the key too long.

I had two police cruisers in my driveway in less than 2 minutes. The big policemen all had Dunk'in donuts in the cruisers and they must have nothing better to do in my quiet town.

What a frontier spirit!

From Orbitz, my reservation to Vegas was not confirmed. Spirit must have taken out the offer. It is some kind of bumping to me and I received nothing not even an apology from Orbitz or Spirit.

The next step is charging your use of the rest room. That's why they call themselves "Spirit" and "Frontier".

Remember today

Sadly I knew my classmate's son died at 37, an owner of his trading (not investing) company.

It really changed the mood and my prospect in life. Why we want to gain everything more when we leave this earth with nothing?

Monday, April 24, 2017

ETF Rotation for Couch Potatoes

This is my new book and it could be the last one for a long while. Initially it is my research for my own use. It does not take too much time to include the ideas in a book with many chapters copied from my other book "Sector Rotation 3rd Edition". This one is super easy to use.

There will not be any promotion. No experience is required but it requires less than an hour every month. Has been tested from 2003 to today. Most ETF rotation strategies do not work all the time and I have suggestions to change all these. Paper copy should be available by the end of this week.

Click here for more info.
or enter

Wednesday, April 19, 2017

Rotation of 4 ETFs

We can beat the market by rotating one ETF that represents the market such as SPY and cash (or short-term bond ETF) via market timing.

During market uptrend, rotate the following four ETFs could be more profitable. Be warned that short-term capital gain in taxable accounts is not treated as favorably as the long-term capital gain; check current tax laws.

The allocation percentages depend on individual risk tolerance. You can use indexed mutual funds. Compare their expenses and restrictions. Some mutual funds charge you if you withdraw within a specific period.

Select the best performer of last month (from Seeking Alpha, cnnFn, or the ETF/mutual fund site). I prefer 45 days instead of one month as they are not too volatile. Add sector ETFs to the four ETFs such as XLY, XLP, XLE, XLF, XLU, IYW, XHB, IYM, OIL and XLU to expand your selection.


Spartan Total Market
Spartan US

Stock Market
Total Bond
My choice

Suggest %

During Market plunge
After plunge

·         The above are suggestions only. If your broker offers similar ETFs, consider using them.
·         Check out any restrictions of the ETFs.
·         4 ETFs (one actually is a money market fund) are enough for most starters. They are diversified, low-cost and you do not need balancing except during market plunge (refer the chapter on Detecting Market Plunges).
·         The percentages are suggestion only. If you are less risk tolerance, allocate more on money market fund and/or bond ETF.
·         Have at least 10% allocated to the money market fund. When there is a mild market dip, move the money market fund to the US equity fund. Move it back to money market when there is a mild market upsurge. If you do not have time to check the market, allocate this 10% to the bond ETF.
·         When the market is risky, reduce stock equities (i.e. increase money market and bond allocations).
·         The symbols for Fidelity ETFs are FSTMX, FSGDX and FBIDX.
·         The symbols for Vanguard ETFs are VTSMX, VGTSX and VBMFX.
·         To boost performance, add GLD, the gold ETF.
·         Again, do not invest during market plunge as indicated by my market timing techniques.

If you are more advanced, use additional sector ETFs to rotate. Find out the current winners from many sources including Also buy long-term bond funds (such as 30-year Treasury) when the interest rate is 10% or more. I have covered the basics in sector rotation.

---------------This is from my new book Swing Trading  3rd Edition. Click here for more detail.