* Japan has almost no interest rate for a long while. If you borrow 1 M from them at almost 0% and invest in a country's debt for 8%, you think you win. However, you need to consider the currency conversion loss when converting back to USD, inflation, risk and taxes.
* High yield bond is good when you buy the bond yielding 8% or so and the interest rate falls from 8% to 1% as in 2008. 2007 is a bad year for high yield bonds. However, in 2008, some high yield bonds made over 50% return. 2007 was a tough year as most were afraid that it was the end of the world. So educated guess and timing is everything.
* Today the interest rate is almost too low to invest in bonds to me. Even the king of bonds made wrong judgement.
Conventional wisdom tells you to balance your portfolio with a combination of bonds and stocks in proportional to the risk tolerance. I prefer the reward/risk ratio.
* Now, cash could be a very good alternative to avoid the risky market and poor bond prospect. You may lose due to taxes and inflation, but you're buying insurance and move back to stocks or bonds when the reward/risk is high.
* The government bond price could collapse when its issuing country is printing and depreciating its currency.
A bond at 30% yield may not be good if the company/country has a 99% probability to default the bond.
-------
(c) TonyP4 2012. Written in 4/30/12. Last updated in 4/30/12.
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.
Monday, April 30, 2012
Sunday, April 29, 2012
Conflict with China
US is creating another conflict with China by helping the blind dissident. The territory disputes with Japan, Philippine, SE Asia... will be another big conflict backed up by US. Selling arms to Taiwan and the fleet surrounding China is not a friendly gesture.
Many small conflicts will lead to a big one and wars eventually. I will be very, very sad when my adopted country and my native country go to war like your parents throwing stuffs at each other. I hope it will not happen in my life time.
The market could lose 50% back to the last support level when China withdraws its US debts. Folks will have even harder times to find jobs. The poor will suffer with less money from the government and from private donations. In a sentence, wars are not good for everyone on earth except politicians to re-direct of their inability to fix our problems.
Many small conflicts will lead to a big one and wars eventually. I will be very, very sad when my adopted country and my native country go to war like your parents throwing stuffs at each other. I hope it will not happen in my life time.
The market could lose 50% back to the last support level when China withdraws its US debts. Folks will have even harder times to find jobs. The poor will suffer with less money from the government and from private donations. In a sentence, wars are not good for everyone on earth except politicians to re-direct of their inability to fix our problems.
Saturday, April 28, 2012
Market newsletters/subscriptions/systems
When you've accumulated a certain wealth and you want to handle your own investment, invest your money and time in systems that help your investment. It comes in several forms like newsletters, subscriptions, and databases for searching stocks.
Go to any investment seminar. Most are free and supposedly to be educational. There is no free lunch and their agenda is to sell you 'expensive' products. Some are good and worth every penny, but not all are.
You need to determine your need, your time available for investment, your investment dollar and what kind of a investor you're. There are systems for day traders, swing trader, long-term investor... or a combination. If you choose the wrong one, you would waste your money and your time, not to mention the loss in investment.
Some systems require you spend a lot of time and they could be the best system when you can master it. No free lunch again applies.
Do not trust what they boast about the performances that they can cheat as I described in my blog. If they know their system works perfectly, they will not share it with you.
Without mentioning specific subscriptions, click here for my experience.
-------
(c) TonyP4 2012. Written in 4/28/12. Last updated in 4/28/12.
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.
Go to any investment seminar. Most are free and supposedly to be educational. There is no free lunch and their agenda is to sell you 'expensive' products. Some are good and worth every penny, but not all are.
You need to determine your need, your time available for investment, your investment dollar and what kind of a investor you're. There are systems for day traders, swing trader, long-term investor... or a combination. If you choose the wrong one, you would waste your money and your time, not to mention the loss in investment.
Some systems require you spend a lot of time and they could be the best system when you can master it. No free lunch again applies.
Do not trust what they boast about the performances that they can cheat as I described in my blog. If they know their system works perfectly, they will not share it with you.
Without mentioning specific subscriptions, click here for my experience.
-------
(c) TonyP4 2012. Written in 4/28/12. Last updated in 4/28/12.
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.
Market: a 3-step dance
Market can move up or down. Usually it dances side way when switching from one to the other. When it moves down, it moves in a faster speed.
Market movement can be predicted by moving average (30 days moving average is one). When it moves above the average line, most likely it moves up. It is a prediction and many other factors should be considered.
Take advantage of the side way movements by buying at little dips and selling at little peaks which are defined as the support and resistance.
You can take advantage of market timing by not holding a stock forever by buying and selling the same stock or an ETF. I believe 'buy-and-hold' is dead since 2000. I cannot find too many articles praise this strategy with data after 2000.
Market timing is not a perfect science but educated guesses. However, the more educated you're, the better your chance of success in the long run.
There are secular market about 20 years, a market cycle about 5 years, and 2 market dips. In a secular market like 1980-2000 (approx.), every one can be a market genius and buy-and-hold works as the tide is with you.
It provides opportunities to buy at the two or three temporary market dips every year and sell at the same number of temporary market peaks.
The market cycle is divided into bottom, early recovery, recovery and peak. Do not buy at bottom, make most money in early recovery, switch to momentum strategy in recovery and be careful in peak (with stop orders). You could lose more than 40% from peak to bottom in a year.
Use the strategy according to the market movement and stage of the market cycle.
Market movement can be predicted by moving average (30 days moving average is one). When it moves above the average line, most likely it moves up. It is a prediction and many other factors should be considered.
Take advantage of the side way movements by buying at little dips and selling at little peaks which are defined as the support and resistance.
You can take advantage of market timing by not holding a stock forever by buying and selling the same stock or an ETF. I believe 'buy-and-hold' is dead since 2000. I cannot find too many articles praise this strategy with data after 2000.
Market timing is not a perfect science but educated guesses. However, the more educated you're, the better your chance of success in the long run.
There are secular market about 20 years, a market cycle about 5 years, and 2 market dips. In a secular market like 1980-2000 (approx.), every one can be a market genius and buy-and-hold works as the tide is with you.
It provides opportunities to buy at the two or three temporary market dips every year and sell at the same number of temporary market peaks.
The market cycle is divided into bottom, early recovery, recovery and peak. Do not buy at bottom, make most money in early recovery, switch to momentum strategy in recovery and be careful in peak (with stop orders). You could lose more than 40% from peak to bottom in a year.
Use the strategy according to the market movement and stage of the market cycle.
Thursday, April 26, 2012
Bread for China
Again,
China will make an impact if not already done so in food companies. The 1.35 B Chinese
have not suffered from starvation as they had 30 or so years ago. Thanks
to industrialization and urbanization to generate cash to buy food from foreign countries.
China is still very poor in farmland per capita. Their effort in improving food production is vast, but still a drop in the bucket for such a large population and shrinking farm land. The foreign countries that benefit/will benefit are Argentina, US, Russia, Australia and many SE countries.
India will compete with the global food supermarket when they're wealthier. However, it lacks China for decades and their population has not been controlled effectively.
Buy ADM and BG for long-term play.
Click here for the article.
China is still very poor in farmland per capita. Their effort in improving food production is vast, but still a drop in the bucket for such a large population and shrinking farm land. The foreign countries that benefit/will benefit are Argentina, US, Russia, Australia and many SE countries.
India will compete with the global food supermarket when they're wealthier. However, it lacks China for decades and their population has not been controlled effectively.
Buy ADM and BG for long-term play.
Click here for the article.
Wednesday, April 25, 2012
Should you hold on a stock forever?
There are many examples that you should hold on some stocks like APPL... Interestingly there are many examples to do the opposite like AIG, Lehman Brothers...
My point is you cannot execute any strategy based on exceptions. You really need to design a good test plan and execute it before you draw a conclude. The test plan depends on a historical database that takes survival bias (the bankrupt, the merged, the spun off...) into consideration. Otherwise, your test is not correct and make you lose money if you execute it.
I do not have such a test plan as I cannot find a good historical database. Why I trade is: 1. To improve my portfolio for better (supposedly to be) potential of total return and 2. Market Timing (not a sure thing).
I do have some sold stocks making another 100% or losing another 50% if I have hold them for n more months. I track the performance of sold stocks and I conclude they break even factoring in opportunity to buy another stock.
Never fall in love with a stock. Never be afraid to buy back a sold stock if there is potential for good return.
----
There are exceptions.
When your stock appreciates many, many times and you're close to your life expectant age, hold it and the cost basis will step up when you die.
Rotation of portfolio for diversification. Your ma told you not to put all eggs in one basket.
Sell when you're sure we're heading to a big plunge. You can always buy back the sold stock at supposedly better price.
You need money...
-------
(c) TonyP4 2012. Written in 4/25/12. Last updated in 4/25/12.
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.
My point is you cannot execute any strategy based on exceptions. You really need to design a good test plan and execute it before you draw a conclude. The test plan depends on a historical database that takes survival bias (the bankrupt, the merged, the spun off...) into consideration. Otherwise, your test is not correct and make you lose money if you execute it.
I do not have such a test plan as I cannot find a good historical database. Why I trade is: 1. To improve my portfolio for better (supposedly to be) potential of total return and 2. Market Timing (not a sure thing).
I do have some sold stocks making another 100% or losing another 50% if I have hold them for n more months. I track the performance of sold stocks and I conclude they break even factoring in opportunity to buy another stock.
Never fall in love with a stock. Never be afraid to buy back a sold stock if there is potential for good return.
----
There are exceptions.
When your stock appreciates many, many times and you're close to your life expectant age, hold it and the cost basis will step up when you die.
Rotation of portfolio for diversification. Your ma told you not to put all eggs in one basket.
Sell when you're sure we're heading to a big plunge. You can always buy back the sold stock at supposedly better price.
You need money...
-------
(c) TonyP4 2012. Written in 4/25/12. Last updated in 4/25/12.
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.
Tuesday, April 24, 2012
When to sell a stock
My reasons to sell a stock.
1. Met my targets/objectives.
It could be n% return or x% after a year for taxable accounts.
2. The company fundamentals changed for the worse.
3. The market is predicted to be at peak.
4. Realize I made mistake in a stock due to bad analysis, unexpected frauds/lawsuits, and/or bad data.
We need to sell before we have cash to buy. Trading takes advantage of market timing and improves the quality of our portfolio for better appreciation potential.
-------
(c) TonyP4 2012. Written in 4/25/12. Last updated in 4/25/12.
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.
1. Met my targets/objectives.
It could be n% return or x% after a year for taxable accounts.
2. The company fundamentals changed for the worse.
3. The market is predicted to be at peak.
4. Realize I made mistake in a stock due to bad analysis, unexpected frauds/lawsuits, and/or bad data.
We need to sell before we have cash to buy. Trading takes advantage of market timing and improves the quality of our portfolio for better appreciation potential.
-------
(c) TonyP4 2012. Written in 4/25/12. Last updated in 4/25/12.
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.
Subscribe to:
Posts (Atom)