TOL @ Feb 02, 2020Panic.jpg
Can You Feel The Fear?As mentioned last week, if you want to panic, you should panic early.
Now that the markets have dropped, what's the point of panicking now? You wont be able to sell your shares at a good price and it's probably too early to buy because "cheap can become much cheaper" later.
And the price of Inverse ETFs and Puts have already risen. If you buy them now, you can be easily whipsawed as there's so much Cash waiting on the sidelines to buy.
The "Plunge Protection Team" (PPT) and the Central Banksters are also probably plotting to whack the shorts.
Anyway, I have been shorting the markets this week, using Inverse ETFs in the US and HK, as well as Bear Put Warrants in HK.
I have taken some profits as I dont want to be whipsawed. However, intuitively, I think that the markets could still be weak for a few more weeks.
I also do not want to go against the new money flowing into the markets, from the new month of February.
So where do we go from here?
All eyes will be on the Chinese markets tomorrow. My guess is that they will first let the market fall. Thereafter, they would probably announce some stimulus eg. RRR cut etc. The National Team would probably be also supporting the market over the next few weeks.
As for the N. Coronavirus, everyone is waiting for Feb 8, the end of the 14 days incubation period. However, I think that April or May, is probably more realistic, to see whether it's under control. .
Everyone now is also scrambling to come out with a vaccine. My understanding is that it normally takes 3 months to test a vaccine on animals. And if it works on the animals, they were then test it on humans for at least a year, before declaring it safe for humans. If the vaccine is not properly tested on humans and then given to the general population, there could be complications later.
So even if they can short-cut the process, it would still take many months to have a vaccine. In the meantime, I will continue to short the market whenever I see any technical rebound
I have also been reviewing my notes on epidemics and you can find my notes here:-
viewtopic.php?f=25&t=5657&start=110To put things in perspective:-
1. In the US, every year, around 10,000 people die during flu season
2. In 2009, H1N1 killed about 150,000 to 500,000 people worldwide (big variation in the numbers)
3. In 2003, SARS killed about 800 people and took 6 months to control it
4. In 1918, the Spanish Flu killed 50m people out of the world's population of 500m
In the meantime, I need to remind myself to stagger my buying and not to buy too early. I made that mistake in 2008 and the markets continue to slide for a year after I have bought.
At the same time, I need to also remind myself to be not too gloomy:-
1. They did managed to control SARS within 6 months
2. You have a higher probability of getting Dengue in Singapore (15,000 cases last year) or die in a car accident in Malaysia (3rd highest globally) then to catch this N.Coronavirus, at this point in time
Perhaps it's in difficult times like this, that the boys would be separated from the men. I know of so many people who have a high exposure to Equities ( some 100% on margin) while I was slowly paring my exposure to Equities. They were laughing at me. Let's see who will have the last laugh.
Finally, you probably have seen those videos where there's a very long line up for masks, as if the world is going to end. If everyone is wearing a mask, it's probably safe for me to go around without a mask.
Weekly Risk Management Progress Report:-1. To Monitor NET Exposure To Equities (Long Less Shorts):- Safe (8% from 11% last week from 17% two weeks ago, of Liquid Assets)
Goal: 5% exposure to Equities before the next crash / recession (2021?); Maximum 20%;
2. To Diversify From Asian Equities: Progress (about 80%):
Goal: To reduce percentage of Asian Equities to around 50%
3. To Buy Inverse ETFs and Puts before the Crash - Progress
a. Bought 7322 (Inverse S&P 1x) listed in HK
b. Bought 7331 (Inverse Nasdaq 1x) listed in HK
c. Traded 7500 (Inverse Hang Seng 2x) listed in HK
d. Bought SQQQ (Inverse 3x Nasdaq)
e. Traded LABD (Inverse 3x Biotech)
f. Traded TZA (Inverse 3x Russell)
g. Traded SOXS (Inverse Semiconductors)
Goal: To have a sizable short position going into the next crash / recession
4. To Increase "USD/HKD/Gold" - No progress. (Around 26%).
Goal: To be in the safe havens before next recession; (HKD may be repegged)
5. To Reduce Number Of Counters: Worse (16 from 14 last week)
Goal: To focus on about 16 counters from 4 countries, with heavier weightings
6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Asian Based Equities
b. Heavy exposure to Inverse ETFs
Goal: To diversify across various Sectors, Countries and Currencies
Market Risk Indicators 1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 7 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 7 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia; Iran;
Total: 52 out of 70 (74%); (Safe: 60%; Danger: 85%)
Commodities: Mixed (Data from Commodities Live on Feb 1 @ 9.00 AM)
1. WTI Oil - Lower. US$51.62 from US$54.20 last week from US$58.78 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
viewtopic.php?f=33&t=9249&p=231235#p2312352. Gold - Higher. US$1589 from US$1571 from US$1557;
Support: $1240; $1150; $1050; Resistance: $1575; $1775; $1830;
viewtopic.php?f=33&t=8845&p=231236#p2312363. Copper - Lower; US$2.51 from US$2.68 from US$2.85;
viewtopic.php?f=33&t=5598&p=231237#p2312374. I'm no longer monitoring Palladium, Cobalt, Uranium, Silver, Platinum and Zinc on a weekly basis
Equities - Risk-Off (Data as of Saturday every week)
1. US Equities - Lower. 3226 from 3295 last week from 3330 two weeks ago;
a. Support: 2750; 2320; Resistance: PE 21;
b. Bought SQQQ (Inverse3x Nasdaq)
b. Traded TZA (Inverse Russell 3x)
c. Traded LABD (Inverse 3x)
d. Traded SOXS (Inverse Semiconductors 3x)
viewtopic.php?f=11&t=7643&start=2002. HK Equities - Lower. 26313 from 27950 from 29056;
a. Support: 25500, 24500, 23500; 22000;
b. Resistance: 29000; 31600;
c. Traded 7500 (Inverse Hang Seng 2x)
d. Bought 7322 (Inverse S&P 500 1x)
e. Bought 7331 (Inverse Nasdaq 1x)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Flat; 2977 from 2977 from 3076;
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210 4. Spore Equities - Lower; 3154 from 3240 from 3281;
a. Resistance 3850
b. No Trade
viewtopic.php?f=10&t=6828&start=b1105. Japan Equities - Lower. 23205 from 23827 from 24041;
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade
viewtopic.php?f=10&t=7138&start=2006. Malaysian Equities; Lower; 1531 from 1573 from 1596;
a. No Trade
viewtopic.php?f=10&t=6292&start=30Currencies - Risk-Off (Data from XE.com on Jan 31 @ 8.30PM)
1. USD to JPY - JPY Stronger; 108.96 from 109.56 last week from 110.16 two weeks ago;
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=1802. SGD to MYR - SGD Weaker; 3.0012 from 3.0091 from 3.0073;
viewtopic.php?f=32&t=136&start=1103. AUD to USD - AUD Weaker; 0.6701 from 0.6842 from 0.6874;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=1304. AUD to SGD - AUD Weaker; 0.9150 from 0.9243 from 0.9270;
a. The range is 0.98 (2016) to 1.36 (2012)
5. AUD to MYR - AUD Weaker; 2.7462 from 2.7812 from 2.7882;
a. The range is 2.20 (2008) to 3.41 (2017)
6. EUR to USD - EUR Stronger. 1.1047 from 1.1038 from 1.1086;
viewtopic.php?f=32&t=5523&start=1007. USD to HKD - HKD Stronger. 7.7674 from 7.7730 from 7.7681;
a. USD Peg band: 7.75 to 7.85
b. Will HK be removing the peg to the USD?
viewtopic.php?f=32&t=3529&start=408. USD to MYR:- MYR Weaker. 4.0982 from 4.0644 from 4.0553;
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9 9. USD to SGD:- SGD Weaker; 1.3654 from 1.3509 from 1.3485;
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country where a catatrophe can wipe them out; But Singapore has been managing it's finances well.
viewtopic.php?f=32&t=136&start=10010. USD to CNY:- CNY Stronger; 6.9364 from 6.9387 from 6.8597;
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=9011. GBP to USD:- GBP Stronger; 1.3124 from 1.3096 from 1.3016;
a. Brexit
viewtopic.php?f=32&t=333&start=8012. GBP to MYR:- GBP Stronger; 5.3775 from 5.3235 from 5.2779;
13. Dollar Index - USD Weaker; 97.78 from 97.84 from 97.61;
viewtopic.php?f=32&t=7616&start=60Properties:-
1. China Properties:-
viewtopic.php?f=10&t=8150&start=1402. HK Properties:-
viewtopic.php?f=10&t=7785&start=1503. Singapore Properties:-
viewtopic.php?f=10&t=7750&start=2104. Malaysian Properties:-
viewtopic.php?f=10&t=4220&start=200OthersMarket Sentiment - Fear Of Missing Out (FOMO)?
viewtopic.php?f=16&t=9099&start=90Headwinds:-
viewtopic.php?f=16&t=8930&p=231225#p231225Tailwinds:-
viewtopic.php?f=16&t=8940&p=231226#p231226Warning Signs:-
viewtopic.php?f=16&t=9909&p=231227#p231227Risk Management:-
viewtopic.php?f=16&t=7547&p=231228#p231228Yield on 10 Year US Treasuries - Lower; 1.56% from 1.73% last week from 1.82% two weeks ago
Yield on 2 Year Treasuries - Lower; 1.39% from 1.52% from 1.56%;
Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: Two more 25 bps cut by end 2020?
viewtopic.php?f=16&t=7319&p=221670#p221670JNK (SPDR Barclays High Yield Bond ETF) - Lower: 109.55 from 109.73 from 110.17;
HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 87.89 from 88.06 from 88.35;
Baltic Dry Index - Lower; 498 from 576 from 754; Low 290; High 2330 (2013)
The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"