Market is moving too fast and I am too busy recently. I didn't get chance to update my view when the market is at my first target of 1330.
SPX is approaching my original target around 1290 neighborhood. I expect more battle at 1300. I refine my plan to chase the market if 1300 is confirmed to be a short term bottom, but not to hold the falling knife.
When I say confirmed, I am thinking of a rebound to 1320-1325 area then back down to sub 1300 to make either a double bottom or a higher low.
Friday, May 18, 2012
Monday, May 7, 2012
Sell in May and walk away
The "Sell in May" strategy worked with a high success rate. I guess it works this year as well. Equity futures drop HUGE tonight, and now below the "Benanke-hint".
As expected.
The market need to "persuade" him to print more money. What really bothers me is still the correlation among products. Here are the latest reading of the over night futures market.
SPX 1342, check;
USD 80.1, check;
EURO 1.298 smile;
oil 95, wow;
gold 1638, what???
Enough said. No change in strategy. No change in plan. Good luck to all.
As expected.
The market need to "persuade" him to print more money. What really bothers me is still the correlation among products. Here are the latest reading of the over night futures market.
SPX 1342, check;
USD 80.1, check;
EURO 1.298 smile;
oil 95, wow;
gold 1638, what???
Enough said. No change in strategy. No change in plan. Good luck to all.
Sunday, April 22, 2012
Love the Earth, our mothership
Our planet, our home is being neglected. This Earth Day it's time to mobilize the planet from the ground up to send a message that the Earth won't wait!
Here are some pictures shot by Andre Kuipers, space station astronaut, from ISS. Check how beautiful it is. Hope it will be as beautiful many many years later.
http://www.telegraph.co.uk/technology/picture-galleries/9202815/Andre-Kuipers-space-station-astronaut-sends-pictures-to-Earth-via-Twitter.html?frame=2192333
Here are some pictures shot by Andre Kuipers, space station astronaut, from ISS. Check how beautiful it is. Hope it will be as beautiful many many years later.
http://www.telegraph.co.uk/technology/picture-galleries/9202815/Andre-Kuipers-space-station-astronaut-sends-pictures-to-Earth-via-Twitter.html?frame=2192333
Friday, April 13, 2012
Economy is yelling at Stock Market
I am getting a little bit lazy lately. Really I don't have much to say. The day before yesterday, Gary Shilling made a very good interview with Bloomberg TV. He said this is a liquidity driven market. The market's only focus is FED's sugar cane but not real growth. Yes you hear me right, the market is in sugar high. Fundamental is important, and it is not too great, but it is largely ignored. Economy is yelling to the stock market, don't be too fast.
With liq, it will go up; if takes away it will go down. For the days market went up, you can always find news / hint / rumor saying the FED is implying QE3. For the days market went down, it's driven by the real economy data. What the market is fear of? No real earning growth. The earning growth for SP500 corporations in Q1 is 0%, and less than 2% in Q2. The stock market is running on a double digit rally. On those major financial TV channels, you will hear "experts" saying stocks are cheap because we have very low P/E ratio. The current TTM P/E is 15-16 which is pretty low, but how sustainable it is, how organic it is. We know in extreme, P/E ratio is always lagging and always flipping even faster than stock price. Doug Short wrote:
And Doug also provided a snapshot of where we at. It is very self-explanatory. Is it cheap? NO.
I am not in the class of desperate bears. I still think US economy is recovering. I still believe FED will deliver QE3 or in lieu. They are going to make decision when the current operation twist ends in June. The market, led by GS will ask for it. It will be bumpy next couple months. I still seek to buy low. Below is my road map I posted couple days ago. ES 1385-1390 area is about 50% to 61.8% of the current down leg. I will watch it to see if the current drop is just a bigger correction or it is trend change.
My plan is too add 50% of equity exposure when SPX at 1330 area, and add another half at 1290 (the 2 beams on chart).
Add: forgot to update my portfolio. Still no change as of 3/31/2012.
Bond, Gold, Equity, REIT, USD, Emerging market all risk on. I am still overriding the equity signal and put the money in USD.
Add: A video to share, title
Buy gold, short the Euro and be prepared for the big equities sell off
With liq, it will go up; if takes away it will go down. For the days market went up, you can always find news / hint / rumor saying the FED is implying QE3. For the days market went down, it's driven by the real economy data. What the market is fear of? No real earning growth. The earning growth for SP500 corporations in Q1 is 0%, and less than 2% in Q2. The stock market is running on a double digit rally. On those major financial TV channels, you will hear "experts" saying stocks are cheap because we have very low P/E ratio. The current TTM P/E is 15-16 which is pretty low, but how sustainable it is, how organic it is. We know in extreme, P/E ratio is always lagging and always flipping even faster than stock price. Doug Short wrote:
Legendary economist and value investor Benjamin Graham noticed the same bizarre P/E behavior during the Roaring Twenties and subsequent market crash. Graham collaborated with David Dodd to devise a more accurate way to calculate the market's value, which they discussed in their 1934 classic book, Security Analysis. They attributed the illogical P/E ratios to temporary and sometimes extreme fluctuations in the business cycle. Their solution was to divide the price by a multi-year average of earnings and suggested 5, 7 or 10-years. In recent years, Yale professor Robert Shiller, the author of Irrational Exuberance, has reintroduced the concept to a wider audience of investors and has selected the 10-year average of "real" (inflation-adjusted) earnings as the denominator. As the accompanying chart illustrates, this ratio closely tracks the real (inflation-adjusted) price of the S&P Composite. The historic average is 16.4. Shiller refers to this ratio as the Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE, or the more precise P/E10, which is my preferred abbreviation.
And Doug also provided a snapshot of where we at. It is very self-explanatory. Is it cheap? NO.
I am not in the class of desperate bears. I still think US economy is recovering. I still believe FED will deliver QE3 or in lieu. They are going to make decision when the current operation twist ends in June. The market, led by GS will ask for it. It will be bumpy next couple months. I still seek to buy low. Below is my road map I posted couple days ago. ES 1385-1390 area is about 50% to 61.8% of the current down leg. I will watch it to see if the current drop is just a bigger correction or it is trend change.
My plan is too add 50% of equity exposure when SPX at 1330 area, and add another half at 1290 (the 2 beams on chart).
Add: forgot to update my portfolio. Still no change as of 3/31/2012.
Bond, Gold, Equity, REIT, USD, Emerging market all risk on. I am still overriding the equity signal and put the money in USD.
Add: A video to share, title
Buy gold, short the Euro and be prepared for the big equities sell off
Wednesday, March 7, 2012
Still bullish on GOLD
Save money for college tuition? Ben Bernanke said his son, who is in medical school in New York, is likely to rack up $400,000 of student loan debt in the process of getting his degree. In the same meeting, Ron Paul also shot a silver bullet to the vampire. Ben said you can have silver but it's just not US currency.
The chart below explains how to save for college tuition. Ben should know that before sending his son to school.
We are not in Gold or precious metal standard. That's true. Ben keeps on lying about inflation (per Ron Paul). That one needs your own judgement. The chart says save tuition in Gold anyway.
Here is some more reading on Supply Demand and others from Morgan Stanley via Zero Hedge.
I have to admit I am a fan of CNBC's Maria Bartiromo. When I was watching her, I found this. It is a must for all serious and prudent investor. Jim Grant is the editor of Grant's Interest Rate Observer.
The chart below explains how to save for college tuition. Ben should know that before sending his son to school.
We are not in Gold or precious metal standard. That's true. Ben keeps on lying about inflation (per Ron Paul). That one needs your own judgement. The chart says save tuition in Gold anyway.
Here is some more reading on Supply Demand and others from Morgan Stanley via Zero Hedge.
Stay Long Gold
Jim says the FED is manipulating the market to achieve desirable macro outcome. The FED is dulling the market sensors of risk in the entire marketplace, by pressing the interest rate. The FED should learn the lesson from 1920-21 depression. (and don't forget 1929 and 1930s right after.) Then comes the classic conversation:
Maria Bartiromo: "What are the alternatives?"
Jim Grant: "Capitalism is an alternative for what we have now. I highly recommend it."
Maria: "We all do."
Grant: "No we don't."
Maria: "The Federal Reserve may not."
Grant: "We ought to be discussing an intelligent move to a sound currency by which i mean a currency that is based on a standard and not at the whim and the discretion of a bunch of mandarins sitting around Washington D.C."
Tuesday, March 6, 2012
Marc Faber on CNBC
Monday 3/5, Marc was on CNBC discussing how an investor should allocate his or her portfolio in the face of a stock market correction he thinks is coming in the short term. After today's crazy market drop, we now have a better understanding.
He also said, "I think investors misunderstand what is risk , I think it is highly risky to have all your money in cash, if I did not have anything today , I will invest right away little bit in equities little bit into properties and little bit into gold and accumulate every month."
He perfectly explained it. In this market, we need to own something. There is risk owning 100% cash or T-products. Refer to LMP series for my approach.
He also said, "I think investors misunderstand what is risk , I think it is highly risky to have all your money in cash, if I did not have anything today , I will invest right away little bit in equities little bit into properties and little bit into gold and accumulate every month."
He perfectly explained it. In this market, we need to own something. There is risk owning 100% cash or T-products. Refer to LMP series for my approach.
Monday, March 5, 2012
Low Maintenance Portfolio - Mar 2012
There are lots of things happening on me recently. I am couple days late this month. No big change in view. No big deal, I think.
For the new month, I have everything on buy side.
In summary, my holdings are (at initial weight when first invested):
20% Emerging Market (DEM)
20% Gold (GLD)
20% Real Estate (VNQ)
20% Bond (LTPZ)
20% USD (UUP)
In the first 2 months, my return is 3.5% as of 3/1/2012. The benchmark data are below:
Forward looking:
Everything on buy signal is a bad sign. In a normal market, US Dollar and US Treasury products have negative correlation with US Equities. We are not seeing that. Dow is at a psychological point of 13,000. Keep on trying and keep on being rejected. We will see a resolution soon. As I mentioned couple times, this is not a market that I can comfortably holding longs. I will stay away from US equity until I feel comfortable.
There is some problem with Gold last week. FED said no further QE on 2/29. We saw a huge intraday drop of 90 bucks (over 5%)! After the drop, now GLD is getting closer to the MA, but still with good cushion. I am still bullish on Gold, but I will follow system. If the support at GLD 162 breaks, I will exit and move to DBC which also turned bullish.
For the new month, I have everything on buy side.
The 5 IVY portfolio components are
- SP 500 (Risk ON) (override)
- MSCI EAFE (The Most Famous International Index) (Risk ON)
- U.S. 10-Year Government Bonds (Risk ON) / USD (Risk ON)
- NAREIT (U.S. Real Estate Index) (Risk ON)
- SP GSCI (Goldman Sachs Commodity Index) (Risk ON)/ GLD (Risk ON)
In summary, my holdings are (at initial weight when first invested):
20% Emerging Market (DEM)
20% Gold (GLD)
20% Real Estate (VNQ)
20% Bond (LTPZ)
20% USD (UUP)
In the first 2 months, my return is 3.5% as of 3/1/2012. The benchmark data are below:
| 12/30/2011 | 3/1/2012 | |||
| TLT / (Bond) | 121.25 | 116.22 | -4% | |
| SPY / (Equity) | 125.5 | 136.75 | 9% | |
| Percentage | ||||
| BOND | 100.00% | 60.00% | 40.00% | 0.00% |
| EQUITY | 0.00% | 40.00% | 60.00% | 100.00% |
| 100.00% | 100.00% | 100.00% | 100.00% | |
| Return | ||||
| BOND | -4.15% | -2.49% | -1.66% | 0.00% |
| EQUITY | 0.00% | 3.59% | 5.38% | 8.96% |
| -4.15% | 1.10% | 3.72% | 8.96% |
Forward looking:
Everything on buy signal is a bad sign. In a normal market, US Dollar and US Treasury products have negative correlation with US Equities. We are not seeing that. Dow is at a psychological point of 13,000. Keep on trying and keep on being rejected. We will see a resolution soon. As I mentioned couple times, this is not a market that I can comfortably holding longs. I will stay away from US equity until I feel comfortable.
There is some problem with Gold last week. FED said no further QE on 2/29. We saw a huge intraday drop of 90 bucks (over 5%)! After the drop, now GLD is getting closer to the MA, but still with good cushion. I am still bullish on Gold, but I will follow system. If the support at GLD 162 breaks, I will exit and move to DBC which also turned bullish.
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