US's $20 per hour cannot compete with $2 per hour (no matter it is from China, India, or Vietnam).
You cannot live with $2 per hour in US. It is better to live on welfare with food stamp, housing subsidies, free health care... when your income is low or 0.
The solutions are:
1. Abandon industries that use low-wage labor and/or outsource manufacturing jobs like Apple is doing. There is no quality problem of Apple products being outsourced to China, so it really depends on one to outsource.
2. Beg China and other countries to loan us more money with states as collateral (by now no one is stupid enough to use USD for future repayment) starting with all non-Democratic states first (according to Obama) and DC will be the last to sell. Just a joke. :)
Selling AK with Sarah to Russia for oil is no brainer. It is just like killing two birds with one stone.
Selling Hawaii is just genius like selling something you do not have as Hawaii is pretty much owned by Japanese already.
If we sold NYC to China, we would make a huge, huge capital gain. It is even more sweet if you recall we bought (cheated is a better word) it from native Indians for peanuts. The Indians/Eskimos were Chinese crossing the frozen strait due to losing their direction after too many drinks. I have my genes to prove my theory. So, it is selling to the original owner for a huge gain. :)
3. Close all trades with all foreign countries and enjoy the $50 toaster!
We can stimulate our farming like planting sugar cane in Alaska, but the chicken feet would be thrown to ocean instead of shipping them to China for cash. Don't laugh. It is smarter than building a bridge to no where or Obama getting his Nobel prize for doing nothing.
You can laugh, cry, or do both, but do not argue the above with me - it is just a satire.
Saturday, December 3, 2011
Friday, December 2, 2011
Different styles in investing
There are two major styles to evaluate stocks: fundamental and technical analysis (TA).
The debate of TA and fundamental could be endless. I believe TA is good for short term and fundamental is good from longer term (> 3 months) - from one who makes good return for using fundamental.
When the insiders see some new products or unexpected earnings, they buy and tell their families to buy. The TAers notice the rise in stock price and buy. The last one to buy may end up losing money as the insiders would unload when the stock price is over-valued.
Try the following to see whether fundamental is better and share your conclusion.
1. Include all stocks that are below the 200 day ma - opposite to what a TAer would do.
2. The expected P/Es have to be lower than 15.
3. Exclude financial like banks and insurance, miners and bio drugs.
4. Buy these stocks less than 5% market prices - TAers give us the benefit.
Check the result in 6 months and 12 months.
A 200 ma is one every one uses even most fundamentalists know how to use it if they want. It is a good indicator for general market but not the best one for individual stock. There are many sophisticated tech. indicators.
The best ones in TA and the best ones in fundamental always make money in either market. However, fundamental is easier to master and many have make money than TA.
----
Fundamental can be divided into the following.
Value. I use it most. Esp. good for early recovery.
Dividend growth.
Momentum. Best in Up of the market cycle. Be careful of market crashes.
Day trade. In a nutshell on my definition of day trading, you want to get into the wagon when pension, mutual fund managers are buying and sell them at the end of the day. You can identify them from the increases of volumes. It is part of momentum.
Most likely you will make a lot of small profits every day. Watch out for losing a big one that could wipe out all the previous profits and sometimes even more. I enjoy the daily result esp. the good ones.
I just started day trading and so far so good. I do not use any charts.
-------
(c) TonyP4 2012. Written in 12/02/11. Last updated in 12/02/11.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
The debate of TA and fundamental could be endless. I believe TA is good for short term and fundamental is good from longer term (> 3 months) - from one who makes good return for using fundamental.
When the insiders see some new products or unexpected earnings, they buy and tell their families to buy. The TAers notice the rise in stock price and buy. The last one to buy may end up losing money as the insiders would unload when the stock price is over-valued.
Try the following to see whether fundamental is better and share your conclusion.
1. Include all stocks that are below the 200 day ma - opposite to what a TAer would do.
2. The expected P/Es have to be lower than 15.
3. Exclude financial like banks and insurance, miners and bio drugs.
4. Buy these stocks less than 5% market prices - TAers give us the benefit.
Check the result in 6 months and 12 months.
A 200 ma is one every one uses even most fundamentalists know how to use it if they want. It is a good indicator for general market but not the best one for individual stock. There are many sophisticated tech. indicators.
The best ones in TA and the best ones in fundamental always make money in either market. However, fundamental is easier to master and many have make money than TA.
----
Fundamental can be divided into the following.
Value. I use it most. Esp. good for early recovery.
Dividend growth.
Momentum. Best in Up of the market cycle. Be careful of market crashes.
Day trade. In a nutshell on my definition of day trading, you want to get into the wagon when pension, mutual fund managers are buying and sell them at the end of the day. You can identify them from the increases of volumes. It is part of momentum.
Most likely you will make a lot of small profits every day. Watch out for losing a big one that could wipe out all the previous profits and sometimes even more. I enjoy the daily result esp. the good ones.
I just started day trading and so far so good. I do not use any charts.
-------
(c) TonyP4 2012. Written in 12/02/11. Last updated in 12/02/11.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Covered calls
For basic description from Wikipedia, click here.
Covered calls do have its disadvantages like higher commission rate, forcing you to sell at higher tax rate for short-term capital gain, and you need to buy them back when they increase in prices beyond your strike price or lose its potential to appreciate more. Using another put costs could allow you not to lose any gain beyond the strike price. However I prefer to use my time for something more productive and insurance is not cheap. One's opinion.
My recent bad experience. I sold Netflix covered call with the strike price about 2% higher and 3% premium (from my memory) but the price shot up 12% higher in one day, so I'm potentially losing 7% profit.
It is like collecting rents from your apartment you bought. The difference is that the renter has an option to buy the apartment at a preset time and price.
Normally I prefer to sell covered options for stocks for 100 to 600 shares (i.e. 1 to 6 contracts) for the longest time (about 2-3 months). Some smaller stocks do not have a market and some stocks are not optionable. Usually high tech stocks have higher premiums to be collected. The right stocks can generate 25% or more in a year in addition to the fluctuations of the stock prices.
In general, if I feel the market will be down for the period, I use covered calls esp. for stocks over 1 year holding (unless I have short term loss to offset short term gain) or in retirement accounts. Watch out for any tax changes that may affect your total return.
Covered calls do have its disadvantages like higher commission rate, forcing you to sell at higher tax rate for short-term capital gain, and you need to buy them back when they increase in prices beyond your strike price or lose its potential to appreciate more. Using another put costs could allow you not to lose any gain beyond the strike price. However I prefer to use my time for something more productive and insurance is not cheap. One's opinion.
My recent bad experience. I sold Netflix covered call with the strike price about 2% higher and 3% premium (from my memory) but the price shot up 12% higher in one day, so I'm potentially losing 7% profit.
It is like collecting rents from your apartment you bought. The difference is that the renter has an option to buy the apartment at a preset time and price.
Normally I prefer to sell covered options for stocks for 100 to 600 shares (i.e. 1 to 6 contracts) for the longest time (about 2-3 months). Some smaller stocks do not have a market and some stocks are not optionable. Usually high tech stocks have higher premiums to be collected. The right stocks can generate 25% or more in a year in addition to the fluctuations of the stock prices.
In general, if I feel the market will be down for the period, I use covered calls esp. for stocks over 1 year holding (unless I have short term loss to offset short term gain) or in retirement accounts. Watch out for any tax changes that may affect your total return.
When Dow doubles
Dow will double before the end of this decade if most of the following materialize.
* End the two wars and not to start another one for any reason other than protecting our trade/interest. We cannot afford to be the world policeman fighting for our idealism. Let others fight for their own freedom.
* Sleep with China to avoid any trade war and take the risk of pulling out their trillion debts. No slaves would talk back to their master unless he does not know he is one.
* Buy more printers to print money. It would lead to super high inflation (so 30K can only buy 15K goods). In this case, Dow doubles but not in real purchasing power.
* Cut down entitlements and force those able, long-term welfare recipients to work on jobs taken by illegal aliens now.
* No more bailout.
No one including the government is too big to fail. Cut the government size to half. It will be no reduction in service as most government workers work 20 hours a week. Sell Alaska with Sarah (not as a bonus) to Russia, sell Hawaii to Japan, file Chapter 11 for most states...:)
* Give incentives to businesses to invest here such as low tax rates, no ObamaCare, no complicated regulations/laws, low legal claims... We cannot compete if our wage is so high. We need to bring our living standard to how much we earn, and not to how much we can borrow.
They will not materialize as the politicians cannot buy votes with most measures and nobody wants to bite the bullet.
* End the two wars and not to start another one for any reason other than protecting our trade/interest. We cannot afford to be the world policeman fighting for our idealism. Let others fight for their own freedom.
* Sleep with China to avoid any trade war and take the risk of pulling out their trillion debts. No slaves would talk back to their master unless he does not know he is one.
* Buy more printers to print money. It would lead to super high inflation (so 30K can only buy 15K goods). In this case, Dow doubles but not in real purchasing power.
* Cut down entitlements and force those able, long-term welfare recipients to work on jobs taken by illegal aliens now.
* No more bailout.
No one including the government is too big to fail. Cut the government size to half. It will be no reduction in service as most government workers work 20 hours a week. Sell Alaska with Sarah (not as a bonus) to Russia, sell Hawaii to Japan, file Chapter 11 for most states...:)
* Give incentives to businesses to invest here such as low tax rates, no ObamaCare, no complicated regulations/laws, low legal claims... We cannot compete if our wage is so high. We need to bring our living standard to how much we earn, and not to how much we can borrow.
They will not materialize as the politicians cannot buy votes with most measures and nobody wants to bite the bullet.
Fool of all fools aks Herd Theory
When the herd makes money, they think they're genius. The last one to leave the herd will be the fool of all fools like the last holders of Lehman Brothers, AIG, Stern...
The real genius is the one who makes money on the way up but leaves before the bubble bursts. Even a genius cannot predict the peak and the bottom but I'll call him/her a genius if s/he is right better than 80%.
It is our nature and bias to ignore others' ideas. We cannot be wrong, but usually we are.
We try to cover the entire sky by placing our hand between our eyes and the sky, so it is covered but every one else can see the sky. It is a rough translation from a Chinese proverb.
Now dividend growth stocks have the highest premium in last 30 years. It is a mild bubble when we've many retired or retiring folks seeking for income.
Same for internet bubble in 2000.
-------
(c) TonyP4 2012. Written in 12/02/11. Last updated in 12/02/11.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
The real genius is the one who makes money on the way up but leaves before the bubble bursts. Even a genius cannot predict the peak and the bottom but I'll call him/her a genius if s/he is right better than 80%.
It is our nature and bias to ignore others' ideas. We cannot be wrong, but usually we are.
We try to cover the entire sky by placing our hand between our eyes and the sky, so it is covered but every one else can see the sky. It is a rough translation from a Chinese proverb.
Now dividend growth stocks have the highest premium in last 30 years. It is a mild bubble when we've many retired or retiring folks seeking for income.
Same for internet bubble in 2000.
-------
(c) TonyP4 2012. Written in 12/02/11. Last updated in 12/02/11.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Thursday, December 1, 2011
India vs China
In the 50s, India was ahead of China. For the last 30 years, China is decades ahead of India and the next 30 years will not look good for India.
Most favorable articles on India are written by Indians with their dumb nationalism and few have been written by Chinese which likely like to compare itself with US. Tier I cities in India cannot compete with Tier III cities in China in subway, airport, train, high rises, electricity, corruption, intelligent property enforcement, protectionism, quality… The last four must be a surprise to the westerners, but they are true. The list is endless.
Indians are happier, and it could be due to less internal competition. From my contact in US, Indians here are as smart as the Chinese.
Most Indians want to stay in US without waiting for the improvement in their native country while Chinese have a lot of ‘sea turtles’ swimming back to the mother land. India is grossly mis governed.
Why there are so little FDI to India compared to China? You have to ask how long it takes to open a business in India and how many bribes you have to pay.
I do not see a lot of Chinese settling down in India, but Indians could be the second among all Asian countries settling down in Hong Kong after the housekeepers from Philippine.
Count how many high rises in Hong Kong and how many in the largest city in India. Count how many articles in WSJ on China and India. Count how many top 100 computers, literacy rate (compare apple to apple for 10 years of education)... The list again is endless.
From my contact, Indians and Chinese in US have the same intellectual level. Actually Indians are doing better here in US due to mastering English better and better educated (with H1 visas). The problem with India is mis governance, similar to Mao's reign in China.
India cannot catch up with China in the next 10 years. It is better for the world that India would catch up with the rest of the world and it is my hope and wish they do. However, the reality looks too bleak for India. You need to understand the problems of your country before you can fix it.
===
Ted
Click for more on this topic.
Most favorable articles on India are written by Indians with their dumb nationalism and few have been written by Chinese which likely like to compare itself with US. Tier I cities in India cannot compete with Tier III cities in China in subway, airport, train, high rises, electricity, corruption, intelligent property enforcement, protectionism, quality… The last four must be a surprise to the westerners, but they are true. The list is endless.
Indians are happier, and it could be due to less internal competition. From my contact in US, Indians here are as smart as the Chinese.
Most Indians want to stay in US without waiting for the improvement in their native country while Chinese have a lot of ‘sea turtles’ swimming back to the mother land. India is grossly mis governed.
Why there are so little FDI to India compared to China? You have to ask how long it takes to open a business in India and how many bribes you have to pay.
I do not see a lot of Chinese settling down in India, but Indians could be the second among all Asian countries settling down in Hong Kong after the housekeepers from Philippine.
Count how many high rises in Hong Kong and how many in the largest city in India. Count how many articles in WSJ on China and India. Count how many top 100 computers, literacy rate (compare apple to apple for 10 years of education)... The list again is endless.
From my contact, Indians and Chinese in US have the same intellectual level. Actually Indians are doing better here in US due to mastering English better and better educated (with H1 visas). The problem with India is mis governance, similar to Mao's reign in China.
India cannot catch up with China in the next 10 years. It is better for the world that India would catch up with the rest of the world and it is my hope and wish they do. However, the reality looks too bleak for India. You need to understand the problems of your country before you can fix it.
===
Ted
Click for more on this topic.
Political systems and the economy
Economy is controlled by political systems at least to some extent. Use China as an example.
Communism is good in principle to solve the class problem. However, it makes folks lazy and managers not taking risk - your extra effort is not rewarded.
Socialism is just in between the communism and capitalism. Laziness is encouraged and leaders are taking easy steps by buying votes. It happens in Greece, Italy and gradually in USA. The current ratios of debt over GNP in most PIIGS do not allow them to compete.
Does democracy lead to socialism?
Mao was a great revolutionist, and he is respected esp. in China.
Do you remember the Peter's Principle? When a successful manager is promoted to another position s/he has no experience and/or is not qualified for, s/he usually screws up big times. Mao is the poster boy of this principle when he was promoted from a revolutionist to a governor.
The last 30 year success in China is due to: 1. US played China hand against Russia and 2. Deng's reform with the economic special zone which is so simple but so genius. So the political system is as good as how it is administered and some luck helps a lot. Another example is how democracy is mis governed in India. Hence, we cannot conclude democracy is always good. I believe democracy needs a educated and developed country to make it useful.
As Deng said, we have to let some to make money and the 1% capitalists are the ones. We need them to invest so they can hire more folks. Hope the world economy would not go to another recession. The rising market yesterday and most likely today (if most market timers use the 200 day moving average as a guideline) does not mean anything as EU's problems have not been resolved.
Communism is good in principle to solve the class problem. However, it makes folks lazy and managers not taking risk - your extra effort is not rewarded.
Socialism is just in between the communism and capitalism. Laziness is encouraged and leaders are taking easy steps by buying votes. It happens in Greece, Italy and gradually in USA. The current ratios of debt over GNP in most PIIGS do not allow them to compete.
Does democracy lead to socialism?
Mao was a great revolutionist, and he is respected esp. in China.
Do you remember the Peter's Principle? When a successful manager is promoted to another position s/he has no experience and/or is not qualified for, s/he usually screws up big times. Mao is the poster boy of this principle when he was promoted from a revolutionist to a governor.
The last 30 year success in China is due to: 1. US played China hand against Russia and 2. Deng's reform with the economic special zone which is so simple but so genius. So the political system is as good as how it is administered and some luck helps a lot. Another example is how democracy is mis governed in India. Hence, we cannot conclude democracy is always good. I believe democracy needs a educated and developed country to make it useful.
As Deng said, we have to let some to make money and the 1% capitalists are the ones. We need them to invest so they can hire more folks. Hope the world economy would not go to another recession. The rising market yesterday and most likely today (if most market timers use the 200 day moving average as a guideline) does not mean anything as EU's problems have not been resolved.
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