High Heeled Traders

China’s GDP came out today — and surprise surprise!¬† There’s no surprise ūüôā¬† I think we all know all-along that it will be a slower growth, manufacturing and investments are going to be lower.¬† The positives being highlighted is that there is growth in consumption (from retail sales) and services (and non-manufacturing).¬† There is also broad expectation that the Chinese government will continue to have stimulus measures to help the economy grow at the pace to still sustain the population.

So do I predict a move up from here?¬† Most are expecting that the Chinese and other ¬†governments will counter the slowing global growth with¬†more stimulus.¬† That’s always¬† happened before. So there’s definitely¬†room for a move up.

Incidentally, I was asked in another forum what timeframe do I choose for Options because they do expire. I said given this volatile market, I choose between 1-2 weeks.   To which, the fellow said I have to have mad predicting skills in such a short time frame to be profitable.

No, I don’t have mad predicting skills.¬† I just enter when the risk – reward is attractive (3X what I risk), set my stop, when I am right, I enjoy the profitable run as much as I can. If I am wrong, I just get out as ¬†quickly as it hits my stop¬†which makes investors¬†become profitable.

So there are times that I don’t enter the market when I think the risk is too big – rather than¬†thinking alone that I am right or¬† wrong.

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Money On The Move

January 18, 2016

It would seem that 2016 would come without warning that our investments are at risk. But actually there is. With much volatility happening last year, given the slowdown in China and US interest rate rising I have been warning about it in my blog and workshops. China slid into bear market territory and government money supporting the stockmarket to the tune of $500 Billion dollars went kaput. For those who have moved their money out of equities – where are they? In a bank account with the highest interest — which, coupled with lifestyle costs is still next to nothing. So yes, you can plan to get out of the stockmarket and park your cash and then put it back to work with investing strategies in the safest and highest-income paying stocks.

When do we get back in? I am asked — there are some ways I mentioned to my FB friends, like looking at the Resistance level, and check for retracement and that Resistance level is breached again, it is a signal for an upward climb. However, the current market is ruled more by sentiment than any kind of technical / fundamental basis. The fear is just strong right now (though it shouldn’t be because we’ve gotten fair warning before) and it is also spreading from market to market ie. from oil / mining industries to the creditors (financial companies) that have made their expansions possible. So, people tend to just move away from risk-taking.

But here’s the thing, money moves to where it is treated best. (Kind of like a relationship, will you stay if you are not happy? You move on!)¬† Where is it being treated the best right now?! The place where it can grow.

So I’ve pointed out in lots of places in this blog, principally, you can put cash in the bank, but how much do we get for it? Just look at Australia which has one of the highest paying interest rates among safest credit rated economies – the term deposit rate is at 1.5% per year. Who lives on 1.5% income a year ?¬† Retirees would have to dip / use their savings to support their expenses.¬† The other thing though with cash,¬† if you’re not in USD (the only country raising rates) your local currency will lose value and could increase your grocery / clothing costs if they are imported. (Which is the case with Australia, Canada, EU. many Asian and merging market countries).

The¬† stockmarket offers an alternative — what sectors / stocks pay the highest dividend, what we can’t live without (that will still enjoy robust sales), plus also those with cash hoards that they can deploy to lessen debt, or grow with new products or buy companies.¬†¬† For example there are 52 of these “Dividend-Aristocrats”¬†… some familiar names like Walmart pays 3.17 % or¬† AT & T¬† which pays 5.65%¬† and because they pay¬†these kinds of dividends, few would let them go and less prone to be sold-off – just lost less than¬†59 cents ¬†or .017%¬† when all this selling started whereas others¬†with no dividends paid ¬†like FB would lose¬† $8 or¬† 7.7%¬† ¬†¬†(Got the¬†idea?!) .¬†¬†¬† Do be careful as some high-dividend paying companies might have to cut their dividends if growth is slowing down which might be the case with some oil companies.

So I’d suggest, you stay cool and keep watching the market so you can put your cash to work.¬† I will be speaking at some events so stay tuned.

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Unbreakable China

January 8, 2016

Yesterday I said, the Chinese government would have to step in and support the stockmarket. Which it did today. And markets see-sawed some more but at the end it rallied to a close. So, is the crisis over? Maybe, it’s just a break? Hmmm,,, a lot of notable investors like George Soros and Mark Mobius have been saying this smells like a crisis and sure I would agree on some parts, but to say this will be a full-on crisis year, I don’t think so. The governments are not supposed to let that happen, or they risk getting thrown out, and China, is well, China. Let’s just say they still have lots of means to manage this “disturbance” as pointed out by Mohamed El-Arian in his article. They have money to spend for such rescues and they are working through policy fairly quickly.

So how’s the outlook next week – let’s go through a checklist.
stock market crash – done
currency market crash – done
oil market crash – done

They said there might still be after-shocks but after those “big events” already happened, and US corporate earnings rolling in, I think there’s a good chance we can have a rest from all the drama.

It seems like everything else, crisis and calm is made in China.

http://www.bloomberg.com/news/videos/2016-01-08/market-turmoil-a-reflection-of-confused-policies-darda

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All Those Bargains

January 7, 2016

China dropped 7% early in the day, which caused their market to close for a day. It’s a new thing they are trying this year. I believe tomorrow might repeat, we’ll see, if the government does not step in to rescue its stockmarket. Why didn’t they do so today I don’t know but maybe they are still deliberating and looking at all possible options. I mentioned sometime before that it’s a very expensive exercise to prop up the market but my guess is –from the government’s perspective it is even more expensive – politically – to let the market fall. I did read people are puzzled – why devalue the currency at the same time and shock the market? We do have to understand that Chinese economy is export-oriented which employs massive amount of people and their factories would make cheaper goods for buyers, could win back market share of manufactured goods (from the Euro area whose manufacturing is helped by cheaper Euro as I mentioned yesterday) – so that’s the more longer-lasting and desired effect for the economy.

Anyway, the trader’s way is to “follow the market”, and this downtrend may have a few more days to go ,,, or not! Yeah, one can’t be too sure predicting which way the market will go, it is very volatile. Anyway, I decided to do a covered call / bearish strategy last night on AAPL, when I saw that it had recovered from the early plunge, and then started to move down. After a while the market ran against me – the loss already at 2x my Initial Risk, but I was thinking with the long day ahead and selling pressure still strong, the stock is likely to decline again by lunchtime, which it did. There was that FOMC Minutes Release at the afternoon too, which invites a lot of volatility. So the day ended with the Covered Call being in profit just a little bit. I am projecting that with the time value expiring I can still buy it back cheaper today (and even cheaper with the China plunge sure to make stocks dive again at open).

I’ve been talking about bargain-hunting and I hope investors have exercised due care in their buying decisions. I haven’t bought anything to ride price recovery yet. I thought I’d wait until the corporate reporting has rolled in with good profits that will cheer up investors and lighten up the sentiment. I can see valuations which are really attractive — some already at single digits. Investors and the media will certainly talk about “oversold” conditions again in no time. So there is no hurry, you can keep looking for the best stock for you to invest in. You don’t pick up the first bargains you see in the shops don’t you — you go far and wide to inspect the merchandise. You do your research. If you think there isn’t a lot of competition for something you want, you can afford to wait some more as it could go cheaper. Like you can pick some of the high-dividend paying ones that will be growing also. Truth be told, the best bargains are those that nobody wants! Like when it feels utterly hopeless (another investing gem of Warren Buffett – be bold when others are fearful).

Since I mentioned my shoe-buying bargain-hunting yesterday, I tried again my super-bargain purchases – light pink pumps that I picked up at $9 and retails over $100, that I have only worn once so far — but I walked on it good — that a star is born! hahaha

http://www.bloomberg.com/news/articles/2016-01-07/it-s-all-bad-news-for-markets-buckling-under-china-fed-economy

http://www.bloomberg.com/news/articles/2016-01-07/china-markets-in-turmoil-as-weak-yuan-fixing-sparks-stock-tumble

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Remember Last Year?

January 6, 2016

China selloff killing your mood to invest?! Think of it as bargain-hunting. If you’ve already bought before the fall, relax. I think about my sale shopping. I’ve bought shoes for 50% off, then when 70% off came around, I was hoping I could have gotten that extra discount, but hey, I was still happy! Because I know I would still enjoy wearing those shoes and greatly beneficial to me. Bargains are still bargains. Why did you buy your stocks in the first place? Was it for growth? income? That’s why investing should be done with careful study.

In this blog and in my investing workshops, I talk about what stocks I think are best and shown resilience in these volatile markets. To put it simply — things that people can live without. And so far we haven’t gotten to that point of the world being destroyed by asteroid or some other kind of global scare. So people still need more than just food, sleep and shelter. And people being social creatures – we all still got to travel or communicate in various ways. So relax. It is the start of the new year, new quarter, and in a few days company earnings are going to be rolling in. We just had a holiday quarter so many companies are bound to bring good cheer to investors. Even this quarter stands to be better than last year *when we had harsh winter and now we are getting reports of a “warm” winter.

Remember last year? (It was just a few days ago…) This kind of selloff already happened before. The US economy still maintained solid jobs growth, GDP was still in-line with strong consumer spending, some EU economies registered stronger manufacturing (with the cheaper Euro they were able to capture more market share from the Chinese — so that bad factory data is not too bad overall!). Amid lack of growth, governments still maintained support (otherwise known as stimulus). This is the way of the world.

What I suggest we should be doing right now is to protect holdings / profit from downside where strategies are available to you, while looking out for a change to an upward trend, remember the market is “volatile” which means the current trend could reverse sooner than you think. Plus, there are always those defensive stocks that do well in this kind of market. There are profits in investments, you just have to know what to look for.

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I am relaxing with this video … enjoy!

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I was thinking it would be easy to write this one, just get last year’s Best Investment for 2015 and be done! I say that because I think 2015 and 2016 is going to carry the same themes – US interest rate rise and USD strength, China weakness, oil weakness. Those three certainly moved the markets and everything else just seem to be “ripples”. Yes the S & P 500 ended lower this year, and if you were the “long-term investor” just waking up to take a peek at your investment, you would say, what a sleepy year! But it was not… there were steady climbs, dramatic declines and some I believe, if you know the concept you are investing, like when to do your bargain-hunting, there are still pretty good profits to be made.

So how to invest this 2016 — I think like what I said prior to 2015, we should be prepared for the volatility. This year’s rate rise will be still “data-dependent” so we have that element of suspense in the air. As a starting point on where to invest — I do have good news for people who are happy to sit back not chasing spectacular returns but want to receive steady income : utilities were top performers for 2015 – which pays roughly 4.5% in dividends per year, that would definitely be ahead of inflation (OR income from bank interest on savings) which is still not desirable anywhere in the world.

Not to forget also – those sectors I mentioned that are great for bargain-hunting in my last post. You could get income stocks, growth stocks, rate-rise-happy stocks. Article here.

My personal investing experience was greatly helped last year with having the correct mental strategies. I mean, it’s hard not to be fearful when markets drop off, it is also hard not to be fearful when it’s time to pick up beaten down stocks (lest they continue to fall) and having kids to care for while having full-on house-hunting-renovation-relocation, the right mental strategy allowed me to take the necessary action when they were needed. Yes, it’s a skill to be mastered so I am excited to be able to share more about the mental strategies that are critical for investors. So my recommended investment for 2016 is importantly on investment on ourselves, how to strengthen mental skills that would keep us focused and profitable for 2016 and beyond! Watch out for my free webinars and upcoming events. See you all soon!

http://www.bloomberg.com/news/articles/2015-12-31/here-are-the-best-and-worst-performing-assets-of-2015

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Year-End Bargain-Hunting

December 30, 2015

We were having dinner with friends who came over at our house and I was also having a bout of bad colds so I was not able to get to the market open. It’s a good thing that I already planned this sort of holiday schedule last week, before Christmas. When many people are off for holidays or know before hand that there’s going to be some distractions. (Like Year-End Sales and all the food!) So there it was, my go-to strategy the Covered Call made me some nifty profits while I am having time off, time value is also expiring on the option . It’s a fantastic strategy, not too demanding on your time, gives you risk management because you profit when the stock goes down…best time to close it out (with a buy transactions) is when the stock price is recovering.

The day started off slow but as the day progressed stocks shook off its worries and headed for the heavens! This year-end rally started early and I am looking to 2 more days of continued move by bargain hunters in this unseasonably warm winter in the Northern Hemisphere. So if you are trying to get into some bargains now is the time! Next week is already New Year and you know how many people try and start off afresh that time of the year, for us my dear investors, we can jump ahead and get in now. Most investors were buying Energy stocks the last few days, which is understandable as oil is really at terrible lows, but not to rain on the oil party I think it’s temporary with the supply and demand picture looking much as it did for 2015 — maybe even worse with Iran supply coming into the world market.

Technology led the charge as yes, it’s all about the future with 2016 coming in. As of now, I am personally having mixed feelings. Like when we take pictures, the phone software already recognizes the people in the picture and can actually send it for you with one click. There is intelligent life on Earth, yes there is. How much more intelligent? Driverless cars, drone delivery, robots… are we all going to see these “in-store” in 2016? If you think there will be more and more buyers and users of these technology then now is a good time to buy and get in position. There’s AMZN using this drone delivery and their stock has also been on a tear due to the shopping-happy consumer. So it’s looking like the best bets for consumer products like Nike (which just became more affordable by the way!), and high-dividend paying Procter and Gamble, Unilever. Among really undervalued stocks I got my eyes on AAPL, JP Morgan, Citibank, Wells Fargo (these banks pay high dividends also) plus they stand to benefit with rising interest rates.

So enjoy the sales in the shops and stocks.

Happy bargain-hunting!

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Mistress of the Universe

December 22, 2015

Heard of “masters of the universe”? “The Masters of the Universe” is a phrase from that book referring to ambitious young men (there were no women) who, starting with the 1980s, began racking up millions every year ‚ÄĒ millions! ‚ÄĒ in performance bonuses at investment banks”
I don’t hear a lot about them anymore and though they might have just changed that to less grandiose label following the financial crisis, like fund manager or investment banker — the incomes and those performance bonuses are less than stellar too. (From a New York times article here) I’ve been reading 2016 is not promising to be a great year because of spillover issues from 2015,,, continued weakness in global economy. But then again, there is hope with the US economy showing strength – which we will know with GDP number coming out today!

Anyway, since the world has less of masters of the universe, how about we have more “Mistress of the Universe” – yeah I got to squeeze a post about it hehe. Great result for the Philippines winning Miss Universe 2015. Anyway, I think they are all fabulous. However, the one thing that investors could learn from her is that, this lady, persevered like no one ever did. Tried out three times for the national pageant, runner up the first time, didn’t place the second time and third time got the title. I must say I wasn’t really that interested in her so I couldn’t give details of her transformation. However from little of what I saw in the program (just watched Youtube videos) I can say that she has a regal presence and according to a judge, she came to win, shining in all the events, bringing her A game. Every investor got to do the same. We must be prepared for every investment or trade, be in the right frame of mind. Finally, we got to want to be successful. I remember many times before I would place a trade because of fear. Opening a trade fearing I’d lose more, or close a trade out of fear that profit will disappear. I can tell you that’s an incredible waste of capital and in no way is going to help you win. You want to be opening an investment because of a great opportunity. You want to be closing an investment because it has met your profit taking exit or well-defined rules to get out to save your capital in case you are wrong. So this coming year, it will be a volatile year most people say, yet we still need to be investing, remember bring your A game.

http://www.bloomberg.com/news/articles/2015-11-22/masters-of-universe-scared-of-china-risks-see-yuan-devaluation

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Master Yoda’s Market Wisdom

December 21, 2015

It’s the week before Christmas,,, Santa’s busy and I certainly hope he’ll drop by Wall Street — someone, people who make a lot of money – and manages to share and do acts of kindness — must make it to the Nice list there LOL
OK so last week the market falls after the Fed raised the rates was rattling — it was volatile as predicted (and frustrating in a way because we all know this rate rise is going to happen and yet people were reacting badly – like were they under a rock or something?) It just reinforces a lesson – the market will do whatever it wants to do, so must not get overconfident with our abilities to predict. As Master Yoda would say, “follow the market we must”

Anyway, what about this week? It’s going to be shortened week so I am tempted to just coast along with another covered call on my stock, but wait! Tomorrow, there’s the GDP report and there’s no economic report of note coming today. Futures are pointing higher so,,, follow the market.

http://www.bloombergview.com/articles/2015-12-21/nine-signposts-for-navigating-market-volatility

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It is definitely a crazy weak week! I’ve just had 3 weeks of steady busy-ness and not a good time to be on “hold mode” I was hedging (and rolling) here and there when time allows (like what time have I got lately! not much hahaha. Some small gains made but I can’t wait for the trend to settle down a bit hehehe Where is Santa Claus when you need him? ūüôā Anyway finally, we got that US interest rate rise out of the way, I am looking forward to the market settling in.

What’s the chance of that… hmmm, I would look at several places, first the US Dollar, I think we have had a good 2 years of fair warnings that it will be rising, starting from the “tapering”, you’d think that companies would use common sense and reduce borrowings in USD or hedge its strength, and the stock market has “priced in” this stronger dollar. Whatever charts are “saying” or how you interpret it. No matter how “undervalued” stocks can be – they can always be sold off as well. (Reasons – too many to mention! And there is no point to discussing it) It all boils down to this – the market will do whatever it wants to do, need to manage the risks with position sizing — all the time.
(For people who are not familiar with the concept watch out for my webinars) or google it a bit – check the one from Dr. Van Tharp – I’m also offering a webinar / workshop about it so stay tuned).

OK what’s the risk — from the Fed statement — the pace for interest rate hike is going to be gradual. The risk to a stronger dollar on the US economy and company earnings have been evident last year. Global growth continues to lag the US and the Fed can’t just go about raising rates while the other major economies are still on stimulus mode. That said, USD is projected to slow down its upward move. That will help the oil price which is causing a lot of pain and “spreading risk” around the markets. That will improve sentiment. (Keep watching the oil price though because new supply is coming in without stronger demand.)

That’s why I’ve said there are major moves happening this December and January… when the sentiment about the market improves as well as volatility settle down and there’s more earnings-related news to focus on in the New Year. Prepare to position… meantime… enjoy the holidays …

http://www.bloomberg.com/news/articles/2015-12-19/dollar-luster-dims-for-investors-managing-more-than-1-trillion

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