Good morning,
I had a morning breakfast coffee with an ex-colleague and it was really nice to chat after such a long time since we last talked about the future market. He believes that we will soon see a big dip in the market because of the huge US deficits and potential currency crisis. His suggestion is not to buy and hold stocks long term but to take profits when there are opportunities to do so.
Well, I shared his suggestion. I have mentioned many times in my blog that we will be seeing US markets trading within the broad range and we should buy at dip and sell at target. My concerns are not about US. My concern is about China. The whole world seems to believe that China will take the lead and key driver for economic recovery and till now it seems to be true. However, a research report I read believes that China has reached an impasse in terms of its dependency on capital spending to generate growth and Considering China’s role as a trailblazer and locomotive for the current global recovery efforts, any signs of a Chinese slowdown would have significant global consequences. Not only would it challenge the notion of emerging markets leading the world economy out of its slump, but it would also raise doubts over the sustainability and effectiveness of the various stimulus efforts under way in other countries.
There are three key reasons why they take this view:
China’s expansion cycle surpassing historical precedents: It is widely believed that China is still in an early development phase and therefore in a position to expand capital spending for years to come. However, both in its duration and intensity, China’s capital spending boom is now outstripping previous great transformation periods.
Policy actions not sustainable into 2010. This year’s burst in economic activity has been inflated by a front-loaded stimulus package and a surge in credit growth. Given China's exceptional and forced nature they believe growth rates in government-driven lending and capital spending will collapse in 2010.
Overcapacity and falling marginal returns on investment: Analysis of industrial capacity, urbanisation and infrastructure development shows that China’s industrialisation and structural modernisation are largely complete. Combine this with falling returns on investment, and it becomes obvious that China’s long-term investment needs are grossly overestimated.
If you are keen to receive the research paper, please drop me a note at fcheng@investshop.net.
In US last night, an aggressive selling effort in the final hour of trade took the stock market from a solid gain to a considerable loss. The downturn was broad based and left many of the major sectors to settle at session lows.
I took profit last night for PTEN and made some good money for this stock I bought 2 nights ago. The short trade made more than 20% returns over 2 days. So far so good for my KUTE trading strategy. With DJIA losing -0.92% with 63% declines and 34% advances, the stocks I chose with KUTE systems held on well. CAH was unchanged at $28.57, PTEN up 1.40% to close at $17.40, which I took profit at $18.05.OSG was down -2.7% to close at $42.58. It had reached a intra-day high of $44.07 and if the KUTE system was implemented well, profits should have been taken at around $43.90. EIX was down -0.18% at $33.08 and XTO down -1.34% at $45.08, from the day’s high at $46.48. Did I take profit for this stock near its day’s high? You bet.
Have a great day!
Francies Cheng
BBus MAppliedFinance
Ps…..using CFD, an investment of $1000 allows me to buy $10,000 worth of US shares. A 1% increase for the $10,000 is $100. The target returns I mentioned in KUTE system is on the actual capital traded, i.e. $1000. So a 10% target is $100 profit from the leveraged position of $10,000. I target returns on capital, not on full stock value.
I had a morning breakfast coffee with an ex-colleague and it was really nice to chat after such a long time since we last talked about the future market. He believes that we will soon see a big dip in the market because of the huge US deficits and potential currency crisis. His suggestion is not to buy and hold stocks long term but to take profits when there are opportunities to do so.
Well, I shared his suggestion. I have mentioned many times in my blog that we will be seeing US markets trading within the broad range and we should buy at dip and sell at target. My concerns are not about US. My concern is about China. The whole world seems to believe that China will take the lead and key driver for economic recovery and till now it seems to be true. However, a research report I read believes that China has reached an impasse in terms of its dependency on capital spending to generate growth and Considering China’s role as a trailblazer and locomotive for the current global recovery efforts, any signs of a Chinese slowdown would have significant global consequences. Not only would it challenge the notion of emerging markets leading the world economy out of its slump, but it would also raise doubts over the sustainability and effectiveness of the various stimulus efforts under way in other countries.
There are three key reasons why they take this view:
China’s expansion cycle surpassing historical precedents: It is widely believed that China is still in an early development phase and therefore in a position to expand capital spending for years to come. However, both in its duration and intensity, China’s capital spending boom is now outstripping previous great transformation periods.
Policy actions not sustainable into 2010. This year’s burst in economic activity has been inflated by a front-loaded stimulus package and a surge in credit growth. Given China's exceptional and forced nature they believe growth rates in government-driven lending and capital spending will collapse in 2010.
Overcapacity and falling marginal returns on investment: Analysis of industrial capacity, urbanisation and infrastructure development shows that China’s industrialisation and structural modernisation are largely complete. Combine this with falling returns on investment, and it becomes obvious that China’s long-term investment needs are grossly overestimated.
If you are keen to receive the research paper, please drop me a note at fcheng@investshop.net.
In US last night, an aggressive selling effort in the final hour of trade took the stock market from a solid gain to a considerable loss. The downturn was broad based and left many of the major sectors to settle at session lows.
I took profit last night for PTEN and made some good money for this stock I bought 2 nights ago. The short trade made more than 20% returns over 2 days. So far so good for my KUTE trading strategy. With DJIA losing -0.92% with 63% declines and 34% advances, the stocks I chose with KUTE systems held on well. CAH was unchanged at $28.57, PTEN up 1.40% to close at $17.40, which I took profit at $18.05.OSG was down -2.7% to close at $42.58. It had reached a intra-day high of $44.07 and if the KUTE system was implemented well, profits should have been taken at around $43.90. EIX was down -0.18% at $33.08 and XTO down -1.34% at $45.08, from the day’s high at $46.48. Did I take profit for this stock near its day’s high? You bet.
Have a great day!
Francies Cheng
BBus MAppliedFinance
Ps…..using CFD, an investment of $1000 allows me to buy $10,000 worth of US shares. A 1% increase for the $10,000 is $100. The target returns I mentioned in KUTE system is on the actual capital traded, i.e. $1000. So a 10% target is $100 profit from the leveraged position of $10,000. I target returns on capital, not on full stock value.
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