Friday, January 1, 2021

Canary warning?

 

When I was working on my new book “Best stocks to buy for 2021” on Dec. 10, 2020, I found something really strange. I have never rejected so many stocks that have Fidelity’s Equity Summary Score higher than 9. I rejected them as there were a lot of dumping from the insiders. Insiders know their companies better than most of us. Is it the canary telling us the market is over-valued?

 

Initially the following stocks have been screened by my value screens. Buy any one of the following stocks, only if you have good reason(s).

 

Symbol

Fidelity

Score

Insider Purchase

BCC

9.9

-24%

GPI

10.0

-17%

HEAR

10.0

-75%

HIBB

9.4

-30%

HVT

9.5

-37%

HZO

9.5

-27%

 

 

 

 

How can HEAR score a perfect 10 while the Insiders’ Transaction is -75% (I treated -2% is normal). The analysts must be wrong this time, or they believe the market will continuously make new heights. Will update the performance results later to see who is wrong.

Nanjing massacre

 

During WW2 and inspired by its ambitious and wicked emperor, Japanese turned themselves into animals to conquer its neighbors. Shameful terms are 'The Greater East Asia Co-Prosperity Sphere' and 'Comfort Women'.

 

Imagine captured young women are forced to be sex slaves for their army. When they seized Hong Kong, the Japanese raped all the females including the patients, nurses and even the dead in a primary hospital. What kind of monster did the Japanese military become? Is it worse than the German crimes of WW2? At least they did not rape openly.

There was a contest in which two Japanese generals competed over how many Chinese heads could be chopped off with their swords. After beheading over a hundred, one competitor said that it was not fair as his blade was dull. They continued the utter madness by restarting the competition all over again! Was there any conscience?

 
These soldiers are war criminals. They killed innocent people by tossing babies, looting and raping. They killed anyone taking pictures. Many of these criminals are being paid respect by high officials in the 'shrines'. It is as disguising as paying homage to Hitler. These war criminals should be tracked down and executed, the same as the German war criminals.

 

Instead, they bragged about how they raped young girls as described by these soldiers without remorse in the documentary Nanjing, which you can rent from Netflix. Another teenager 'wanted' to be raped to save her grandpa. These war criminals should be tracked down and prosecuted similar to what the Jews are doing to the WW2 war criminals instead of their bragging openly.

 
I suggest that one of the atomic bombs should have been dropped on the Imperial Palace in Kyoto and the other one on the 'shrine' instead of killing innocent citizens at Hiroshima and Nagasaki. Even this punishment would be too small for such crimes. The Tsunami must be formed by the tears of the victims crying for justice into a killer wave. It is Karma at work. I feel sorry for the current generation who has to suffer and who has nothing to do with WW2.

 

The ignorant Japanese mayor said Nanjing Massacre never happened. Japanese, young and old, please use Wikipedia and search for 'Nanjing Massacre' or read the late Iris Chang's book which the documentary firm was based on. The government stopped the translation of Chang’s book.

 

Recently the young major of Osaka said that the comfort women were necessary. How about capture all the women in Osaka and let them be raped by the U.S. soldiers and tell the world it is necessary. I hope he does not represent this generation of youth. He should lose his job after this announcement in a civilized society.


We should not spread hatred especially from one generation to another. However, if we do not learn from history, most likely we will repeat history. I wrote this blog hoping to give a voice to the millions of victims who never have a voice.

 

My recent thoughts

Even the Japanese officials do not acknowledge that Nanjing massacre exits. I do not think this generation of Japanese have the ability to commit similar crime. It reminds me of the German lady who did not want our tourist tour to visit the concentration camp. She and her counterparts in Japan should not be punished for the crime committed by their parents and grandparents.

 

Do you blame the Chinese not buying Japanese products when all the other family members were killed or raped by these criminals? That may be one reason that Japan does not allow easy immigration from other countries even they have an aging problem.

 

Do you still blame China for building up her military?  They learn the bitter lessons from Opium Wars, semi colonization and WW2.

 

Unlike the Jews, Chinese and Koreans have not prosecuted those who committed the war crimes. They will repeat history if they do not learn from history especially when they can get away without punishment. The recent Tsunami could be formed by the fears of the victims. If so, God has the answer already. As one reader agreed with me, ‘forgive’ is the most powerful word in our dictionary. I will forgive them, and move on – but never FORGET. 

 

 

There is another massacre in Beijing by the “8-nation alliance” (should be 9 including Australia).  Many males were murdered (no matter they were boxer rebels, (patriots), or not), women were raped and properties were looted (found in many museums in the west today).

 

You forced China to trade. When you had nothing better to trade, you pushed opium that killed millions of Chinese. When they resisted your invasion, you united with your allies and used advanced weapons to kill, rape and loot. What kind of civilization you had? What kind of religion you preached? Many other countries had been treated like this? You still call yourselves good guys! Where is justice? Where is Karma? Only history and God can answer.

An unconvenient truth

 

 

There are many we have to learn after this trade war and pandemic in the beginning of 2021.

 

Economy

 

·         Our national debt is about 27 trillion (as of Oct., 2020) and the pandemic adds another 3.5 trillion recently. Our children and grandchildren have to pay for it. Today most national debts are bought by the government by printing money. In the long term, it is bad for the economy.

·         Contrary to economic theories, the market is up, and it is due to the ample supply of money and the same supply of assets. The travel sector is down and will be down for a long while. It is a bubble to me.

·         The wealth gap is widened. The rich is getting richer. The poor is getting poorer with higher unemployment. Some cities have 1/3 of the restaurants closed down. Many small business owners go bankrupt.

·        We never learn to save 3 months for emergencies.

 

The student becomes the teacher

 

·         We do not want to learn from China on how they recover so fast, but play the blame game. Trump lost his reelection due to poor handling of the pandemic.

·         China never wants and does not have the knowledge / resources to lead the world. Many countries receive aids for this pandemic from China even many are richer than China per capita wise.

·         Our dumb nationalism does not allow us to evaluate China’s vaccines.

·         China treated lives first and economy second, and we did the opposite. As a result, China recovered faster than us, and economy comes back.

·         We have to change our culture to accept and learn from other countries. We need to control our so-called ‘personal freedom’. Many still do not want to wear masks. The government should enforce laws earlier especially for public health.

 

Links

National debts. https://www.youtube.com/watch?v=WeBF35NPksY

Pandemic and the west. https://www.youtube.com/watch?v=zirfmySwC8k

 

Why the market fluctuates

 

            Why the market fluctuates

 

The following chart uses SPY (simulating the market) with SMA-350 for the year of 2020 using Fidelity’s charting function. It will be used to demonstrate how SMA-350 worked for 2020; the dates may be several days off. This article is written on 1/1/2021.

 

 

Market Timing

 

SMA-350 (Simple Moving Average for the last 350 sessions), described in one of my books, worked fine in 2020. It told us to exit the market on about 3/11/2020 and return on about the beginning of June. There were two false signals (on about 4/28 and 5/8) that told you to exit but return to the market shortly.

 

The other indicators are RSI(14) and P/E. Fidelity’s chart uses 80 for overbought and 30 for under-bought for RSI(14). The market has been over-priced for a long while. In this case, technical analysis (SMA-350 I used in my example) works better than fundamental (P/E as one of the metrics); It has been sold for the entire 2020.

 

Why there is a big drop in late March and why it comes back

 

The trigger is the pandemic.

 

The market came back for many reasons:

·         We understood the pandemic better.

·         A lot of money in the sideline.

·         The government supplies more money by printing it excessively.

·         The government lowers the interest rate (almost to zero).

 

2021 prediction

 

It is quite hard to predict the market. Here are my thoughts. The market is not rational (fundamentally speaking).

 

For:

 

·         The government keeps on excessively supplying money.

·         With easy credit, the rising housing market leads to many profitable sectors such as furniture.

·         Due to easy credit and recovering, many companies buy back their own stocks.

·         Low margin interest rate usually boosts the stock market.

·         If the vaccines can control this pandemic, many sectors will recover. As I demonstrated before, we have to wait one more year for some sectors such as airlines, restaurants and cruise lines.

·         Trade war with China could be reduced under Biden.

 

Against:                                                                                                

·         The pandemic has not been stopped.

·         Unemployment is breaking previous record.

·         Small businesses continue to go bankrupt.

·         Complete decoupling with China.

·         The government tools do not work anymore such as lowering interest rate.

·         Super inflation is due to ample supply of money chasing a fixed amount of assets (stocks for example). The status of the USD as a reserve currency would also be shaken.

 

As in any market, there are two camps opposite to each other. Need to watch the market like a hawk and take actions accordingly (talk to your financial advisor first). I expect the plunge would cause the market to lose about 40% if it happens.