Politics and Investing

You may ask why politics is discussed in this investing book. Politics has been proven to affect the market. For example, the market had reacted to the different stages of Quantitative Easing whose dates had been preset. The following is a more recent example.

I predicted 2015 would be a year with small profit and insisted on so even during the fierce correction in August. Why I was so sure? Very seldom the market is down in a year before an election year including 2007. The last occurrence was 1939, the year when WW2 started. Investing is a multi-discipline venture including statistics and politics. It may not always happen, but the probability is high for these years.

How to profit

2015 was a sideward market. The market reacted to good news and bad news. The strategy for sideways market is: Buy at temporary downs and sell at temporary peaks. Define ‘temporary’ according to your risk tolerance.

For the ‘temporary market down’, personally I used 5% down from the last market peak. To me the ‘temporary market peak’ is 10% up from the last market down. The percentages can apply to the percentage changes in the stocks in your watch list. In another words, I buy the stock when the market is 5% down from the last peak and sell it when it gains 10% or the market gains 10%. Be reminded that this strategy is opposite to market plunges, where you should exit the market totally - again depending on your risk tolerance.

The following are my purchases on 08/26/2015. I should have bought more stocks and one day earlier if I were not blinded by fears (a human nature) during this correction. Here is my proof for my purchase orders as I was asked to. The four stocks were described as value stocks in a SA article and I did a simple evaluation.  As of 12/31/2015, I sold all the four stocks except Gilead Sciences.  The annualized returns are more impressive such as GNW’s 10% gain in one day.

Stocks	Buy Price	Buy Date	Return	Sold date
Apple (AAPL)	107.20	08/26/15	12%	10/19/15
Gilead Sciences (GILD)	105.94	08/26/15	-4%
General Motors (GM)	27.69	08/26/15	12%	09/17/15
Genwealth Financial (GNW)	4.54	08/26/15	10%	08/27/15

There were similar examples in 2013 and 2014.

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 The above is from my book "Complete the Art of Investing". Click here or search it from Amazon.com.

Misunderstanding China

As of 2018, many folks are still misunderstanding China as evidenced by the comments I read in Seeking Alpha, a financial web site. Many must be living in caves for the last 5 years. Most still think China is backward, stealing our jobs by selling low-cost products and stealing intelligent properties. It may be true 10 years ago, but most are not any more.

First, there are many countries having lower wages than China and most are not successful in competing against China. You need infrastructure and many skills beside wages. Secondly, China is moving to higher-value products.

China paves the road for the future generations by investing heavily in infrastructure and researches. The living standard has been raised but not comparatively to the profits they gain from the global trades.

Most developed countries except the resource-rich countries have to go through copying (and sometimes stealing) and low-cost, low-quality products such as Japan and S. Korea. China’s exception is the scale and the speed (over 9% for over 10 years).

We’re doing just the opposite. Partly it is due to our political system. The voters have to buy votes. If they cannot see the short-term results, they will not invest. Secondly we have to protect our workers and we would not be competitive globally even we are still leading in many sectors.

Here are three Chinese achievements from the bottom to the top from many (Ali Pay, stealth fighters, sub way system, space exploration, AI... Google “China achievements 2018”.

High-speed rail. It has more than 50% of the total high-speed rail in the world even they started late. Public transportation is usually not profitable based on income alone but some routes are. It makes sense in China primarily due to the dense population.

Super computer. As of 11/2017, China has the top two super computers and the total in the number of the top 500 super computers is higher than us. US bans the importing of high-performance processors to China. The top super computer comprises of processors developed in China with efficient energy. Intel lost $1 billion order.

AI is the race war between China and US.

4G network. China is among the three countries that build 4G network and is now working on 5G. US is not one of them.



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The above is from my book "Can China Say No?". Click here for more info in Amazon.com.