tag:blogger.com,1999:blog-74031609625245880742024-03-13T08:52:11.765-07:00Investment IdeasETF, Gold, Silver, Commodities, Emerging Markets, ...Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.comBlogger229125tag:blogger.com,1999:blog-7403160962524588074.post-45531520729342314002022-08-13T07:31:00.003-07:002022-08-13T07:32:47.166-07:00Money mules in 2022 - DTCC Inc and Xinjiwang Limited<p>We've been reporting on the <a href="https://etf-investment-ideas.blogspot.com/2020/05/people-behind-brookfield-investment.html" target="_blank">Brookfield investment scam</a> for a couple of years, and while the "company" website has now been taken taken down, the scammer are still on the loose, and now requesting further wire transfer from victims under the <br />Dunne and Walsh in Ireland or the Washington Fiduciary Trust Services in the US.</p><p>Those are obviously only fake companies and organizations, but they are trying to scam people through real accounts, the so-called money mules, in Hong Kong and the US.</p><p>The first company is Xinjiwang Limited registered in Hong Kong at the address:</p><p>23-38 Kwai Cheong Road,<br />New Territories,<br />Hong Kong</p><p>and using HSBC bank account number: 454385733838.</p><p>The second company is DTCC Inc registered in the US at the address:</p><p>570, Washington Blvd, Jersey City, NJ 07310</p><p>and using Bank of America account number 325128858097</p><p>This will hopefully help a few people. Stay safe are financial scammers are as active as ever.<br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9JTgQ-F9j4qfcNAOWbpeuo-7EeHkZ4e4RDedTHvzqEELmIUeRpmJvD6QPOFU-zr0haIiEhW8u5oN5k0jEP8phV9QSwzogi4_FOg3HNxxwRYYdHapyJu8Y5vDRqVmKD4ky7HWdF4URy0fKFbHQn9TwHzO5fegCLO_89OYOantvdDfiACHed8Pm2ZbI/s1422/DTCC-Inc-Scam.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="778" data-original-width="1422" height="350" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9JTgQ-F9j4qfcNAOWbpeuo-7EeHkZ4e4RDedTHvzqEELmIUeRpmJvD6QPOFU-zr0haIiEhW8u5oN5k0jEP8phV9QSwzogi4_FOg3HNxxwRYYdHapyJu8Y5vDRqVmKD4ky7HWdF4URy0fKFbHQn9TwHzO5fegCLO_89OYOantvdDfiACHed8Pm2ZbI/w640-h350/DTCC-Inc-Scam.png" width="640" /></a></div><br /><p><br /></p><p> </p><p><br /></p>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-78522113466390741422021-01-10T02:45:00.002-08:002021-01-10T02:46:27.683-08:00Trolling the investment scammers (video)<p>Last month, we wrote about a new financial investment scam involving <a href="https://etf-investment-ideas.blogspot.com/2020/12/fraud-alert-olympus-international-limited-fireeye-facebook.html">Olympus International Limited</a> in Hong Kong. This is a real company selling ceramic and stainless plate, but victim of corporate ID theft by a group of individual trying to scam investors through escrow agents (aka money mules) by discounted shares on the NASDAQ for FireEye (FEYE) before the announcement of a yet-to-be-made public contract with Facebook, and an expected return of at least 40% within three months.</p><p>You'll find out more about the scam details in the earlier post, but today, we'll share a photo montage from an audio call with one of the financial advisor, the escrow website is reveals, a Feng Shui "incantation" is performance (just because), and we ask a few questions to validate, or in this case, invalidate the company's claims, before sharing a copy of a passport that's truly a work of art....</p><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="315" src="https://www.youtube.com/embed/xl1Mi7ZLwyA" width="655" youtube-src-id="xl1Mi7ZLwyA"></iframe></div><br /><p><br /></p>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-85543061708584940792020-12-06T02:22:00.004-08:002020-12-06T02:31:29.534-08:00Fraud alert: Olympus International Limited's Facebook and FireEye (FEYE) scam<p>Scammers never seem to take a break with the latest fraud going through "financial advisors" claiming to work for a small Hong Kong based company called <b>Olympus International Limited</b>. They are using the same expats database as the <a href="https://etf-investment-ideas.blogspot.com/2020/05/people-behind-brookfield-investment.html" target="_blank">Brookfield Investment Funds Plc scam</a>, and call potential investors telling them about inside information about FireEye (FEYE) having signed a large contract from Facebook, yet to be publicly announced, and expect the stock to go up at a minimum of 40% in three months.</p><h2 style="text-align: left;">Getting a call from an investor survey company</h2><div style="text-align: left;">It all start the same way as the Brookfield scam, with a cold call from an investor survey company asking some details about you and your investor profile that takes about 5 minutes. Shortly later you'll received an email summarizing your answers from "clientform@www.dq-datamanager.com".</div><div style="text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-GoAKaus9tts/X8ye57p-jLI/AAAAAAAAb2s/NJfKv-_lXqAtmedBl6ipXCUhXDUiDvZ4wCLcBGAsYHQ/s792/jw-leads-verfieid-investor-survey-scam.jpg" style="margin-left: 1em; margin-right: 1em;"><img alt="JW LEADS VERIFIED" border="0" data-original-height="792" data-original-width="690" height="640" src="https://1.bp.blogspot.com/-GoAKaus9tts/X8ye57p-jLI/AAAAAAAAb2s/NJfKv-_lXqAtmedBl6ipXCUhXDUiDvZ4wCLcBGAsYHQ/w558-h640/jw-leads-verfieid-investor-survey-scam.jpg" width="558" /></a></div><br /><div style="text-align: left;">They ask about your job, experience in investing, budget to buy stocks, and whether you could be interested in opportunities if they present themselves.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><h2 style="text-align: left;">First Olympus International Limited Calls</h2><div style="text-align: left;">Then a couple of weeks later, you may received a call from an investment company in this case: Olympus international Limited based in Hong Kong.</div><div style="text-align: left;"> </div><div style="text-align: left;">The financial advisor may speak your native language or English, and they'll offer you short term investment opportunities with close to guaranteed returns. The offer we were made aware for FireEye, listed in the NASDAQ with the sticker FEYE, and claims of inside information about a contract having been signed with Facebook. They claim to be an institutional investment firm, but also work with individual when opportunities arise. They also explain they can purchase the stock as a cheaper price since they buy in large blocks, and ask you to confirm over the phone. <br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><p class="228bf8a64b8551e1MsoNormal" style="font-family: "calibri", "sans-serif"; font-size: 11pt; line-height: 105%; margin: 0in 0in 0.0001pt;"><span face="'gill sans mt' , 'sans-serif'">The call we were told about involved Ms. Olivia Martel, Senior Financial Advisor. That's likely a fake name. The website is https://olympusintltd.com/ and telephone: <span class="wmi-callto">+852 5803 7265. </span></span></p><p class="228bf8a64b8551e1MsoNormal" style="font-family: "calibri", "sans-serif"; font-size: 11pt; line-height: 105%; margin: 0in 0in 0.0001pt;"><span face="'gill sans mt' , 'sans-serif'"><span class="wmi-callto"> </span></span></p><h2 class="228bf8a64b8551e1MsoNormal" style="font-family: "calibri", "sans-serif"; font-size: 11pt; line-height: 105%; margin: 0in 0in 0.0001pt; text-align: left;"><span face="'gill sans mt' , 'sans-serif'"><span class="wmi-callto">Olympus International Limited is real... </span></span></h2><h2 class="228bf8a64b8551e1MsoNormal" style="font-family: "calibri", "sans-serif"; font-size: 11pt; line-height: 105%; margin: 0in 0in 0.0001pt; text-align: left;"><span face="'gill sans mt' , 'sans-serif'"><span class="wmi-callto"> </span></span></h2><h2 class="228bf8a64b8551e1MsoNormal" style="font-family: "calibri", "sans-serif"; font-size: 11pt; line-height: 105%; margin: 0in 0in 0.0001pt; text-align: left;"><span face="'gill sans mt' , 'sans-serif'"><span style="font-weight: normal;"><span class="wmi-callto"> Hong Kong keeps a company registry so it's easy to check if a company exists.</span></span></span></h2><h2 class="228bf8a64b8551e1MsoNormal" style="font-family: "calibri", "sans-serif"; font-size: 11pt; line-height: 105%; margin: 0in 0in 0.0001pt; text-align: left;"><span face="'gill sans mt' , 'sans-serif'"><span style="font-weight: normal;"><span class="wmi-callto"><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-d1H4A2tQYmk/X8yi_Q0XhgI/AAAAAAAAb24/xAILDByURXMCbvv8K12j5997Q_zYfBglQCLcBGAsYHQ/s894/Olympus-International-Limited-company-search.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="894" data-original-width="820" height="640" src="https://1.bp.blogspot.com/-d1H4A2tQYmk/X8yi_Q0XhgI/AAAAAAAAb24/xAILDByURXMCbvv8K12j5997Q_zYfBglQCLcBGAsYHQ/w588-h640/Olympus-International-Limited-company-search.jpg" width="588" /></a></div><br /> </span></span> </span></h2></div></div><div style="text-align: left;">The company was registered in 2003, so it's been doing business for over 17 years. The company registration number is 0846150 and matches the number used in the emails with seen from the scammers.</div><div style="text-align: left;"> </div><div style="text-align: left;"><h2 style="text-align: left;">But cracks can be found pretty quickly...</h2><div style="text-align: left;">This almost looks legit, but when we look at the website WHOIS data, it was only created in August 2020, that's a long time for a company to operate without a website. </div><div style="text-align: left;"> </div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-fJMT2-YFwKo/X8ykznnV8wI/AAAAAAAAb3E/rlHIDv5t9M81UBZR1E8WZlfjENV2crdoQCLcBGAsYHQ/s803/olympusintlltd.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="601" data-original-width="803" height="480" src="https://1.bp.blogspot.com/-fJMT2-YFwKo/X8ykznnV8wI/AAAAAAAAb3E/rlHIDv5t9M81UBZR1E8WZlfjENV2crdoQCLcBGAsYHQ/w640-h480/olympusintlltd.jpg" width="640" /></a></div><br /><div style="text-align: left;">They optimized their costs too by going with one of the cheapest domain registrar, and the free Let's Encrypt TLS certificate service. But at least everything is under a secure connection contrary to what's we've seen with Brookfield website...</div><div style="text-align: left;"><br /></div><div style="text-align: left;">If we look for Olympus International Limited Hong Kong on the web, we can find what types of products they offer: <a href="https://www.tradeeasy.com/supplier/292234/products" rel="nofollow">namely ceramic and stainless plates or other kitchen utensils</a>.</div><div style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-WgFhH5uujUE/X8ymJqRPQbI/AAAAAAAAb3Q/4bBwLpYUAFAGtmGJxN_ow7-GU-vHOOFCgCLcBGAsYHQ/s762/Olympus-international-limited-stainless-ceramics.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="762" height="450" src="https://1.bp.blogspot.com/-WgFhH5uujUE/X8ymJqRPQbI/AAAAAAAAb3Q/4bBwLpYUAFAGtmGJxN_ow7-GU-vHOOFCgCLcBGAsYHQ/w640-h450/Olympus-international-limited-stainless-ceramics.jpg" width="640" /></a></div><br /> But who am I to judge. Time are tough, and it's possible the company decided to change the direction of the business. But if you're going to offer financial services in Hong Kong you need to register with the Hong Kong Securities and Futures Commission (SFC) which again keeps a <a href="https://apps.sfc.hk/publicregWeb/searchByName?locale=en">database of registered companies</a>.</div><div style="text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-WR0o_U9ZTl8/X8ynNaiWviI/AAAAAAAAb3Y/x6SMzLSv8F8ZcHBsWKLi1uzPkVeGV-i4gCLcBGAsYHQ/s1461/olympus-sfc-registration.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="737" data-original-width="1461" height="322" src="https://1.bp.blogspot.com/-WR0o_U9ZTl8/X8ynNaiWviI/AAAAAAAAb3Y/x6SMzLSv8F8ZcHBsWKLi1uzPkVeGV-i4gCLcBGAsYHQ/w640-h322/olympus-sfc-registration.jpg" width="640" /></a></div><br /><div style="text-align: left;">The only registered company with "Olympus" in the name is "Olympus Partners Asia Limited". But I'm sure Ms. Olivia Martel would not have lie about her status to the face of her client.</div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-uZOWQsOcVa0/X8ynwDv--mI/AAAAAAAAb3g/zI6ZQqKvqqUa0zHZkYlBCEowwqfG0uGlgCLcBGAsYHQ/s1458/olivia-martel-financial-advisor.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="554" data-original-width="1458" height="244" src="https://1.bp.blogspot.com/-uZOWQsOcVa0/X8ynwDv--mI/AAAAAAAAb3g/zI6ZQqKvqqUa0zHZkYlBCEowwqfG0uGlgCLcBGAsYHQ/w640-h244/olivia-martel-financial-advisor.jpg" width="640" /></a></div><br /><div style="text-align: left;">No matched record for "Olivia Martel" or even just "<artel"? How is that possible? That's because it's a total scam, and a group of individuals likely using fake names are using the name and CR number of a real, completely unrelated company.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><h2 style="text-align: left;">Let's invest in FireEye/Facebook scam!<br /></h2><div style="text-align: left;">Most sane people who figured out this was a scam, would just block the number of ignore. So are we still interested? You bet! One Ms. Martel called back, our source said due-diligence was done, and he/she was ready to go ahead with the proposal start with a small $5,000 investment. Once the number of share was agreed upon, price (around $1 cheaper than live quote at the time), and it was explained payment would have to be made through an escrow company and was due within 3 working days. A call from an "SEC compliance officer" called Mr. Michael Winters soon followed double-checking the transaction details and requiring an audio signature by simply saying the full name. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The purchase was confirmed the following day, and the investor was given a receipt, an <a href="https://mega.nz/file/CgJV0aoA#Gils1dsbyyOsj_groAS0eMmV-ZezXI_pRsIXtR57jh8" rel="nofollow">account opening form</a>, and a W8 form for US taxes. </div><div style="text-align: left;"> </div><div style="text-align: left;"> </div><div style="text-align: left;"> <div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-TsmoGGJFu8E/X8yurmMl5DI/AAAAAAAAb3s/jl7xiNKm4n8e6wP40tjxf-b_t1kN3q1QgCLcBGAsYHQ/s1650/Olympus-Invoice.jpg" style="margin-left: 1em; margin-right: 1em;"><img alt="Olympus trade invoice" border="0" data-original-height="1650" data-original-width="1275" height="640" src="https://1.bp.blogspot.com/-TsmoGGJFu8E/X8yurmMl5DI/AAAAAAAAb3s/jl7xiNKm4n8e6wP40tjxf-b_t1kN3q1QgCLcBGAsYHQ/w494-h640/Olympus-Invoice.jpg" title="Invoice" width="494" /></a></div></div><div style="text-align: left;">The procedure is pretty similar to the one used by Brookfield Investment Funds Plc so far, but there's a twist as this time around a proof of address and copy of address is being asked first, before the payment details of the escrow company are provided. That's probably to avoid all those leaks that have happened on this website and others in the past. The escrow company (aka money mule) takes a central part in the scam so they only want to limit the distributions of the information to the minimum. Since our source did not use his/her real name, the use of a fake passport copy and proof of address, and filling a W8 form with falsified information would have been required. We did advise against it.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">If you've been scammed, or managed to obtain the money mule information, please let us know in the comments section. <br /></div></div></div>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com4tag:blogger.com,1999:blog-7403160962524588074.post-76975959869325724462020-08-23T05:39:00.005-07:002020-08-23T05:41:08.225-07:00GMO Forecast July 2020 - Emerging Value is the Only Game in Town<p> GMO published their latest 7-year forecast for July 2020, and most asset classes have dismissal expected returns over the next seven years from US large stocks to emerging stocks and large and small international stocks. Let's not even get started with bonds that are just as bad.</p><p>While we would consider gold, silver and other so-called real assets to be a potentially good long term investments at this point in time, those are not tracked by GMO, but we've noticed one exception in GMO chart: Emerging value.<br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-PeEaIFxCgPU/X0JD1LWW7nI/AAAAAAAAZ8g/DgU0kGfqujophy46kypcNuK044xMs6fAQCLcBGAsYHQ/s1035/GMO-Forecast-July-2019.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="505" data-original-width="1035" src="https://1.bp.blogspot.com/-PeEaIFxCgPU/X0JD1LWW7nI/AAAAAAAAZ8g/DgU0kGfqujophy46kypcNuK044xMs6fAQCLcBGAsYHQ/s640/GMO-Forecast-July-2019.jpg" width="640" /></a></div><p>9.2% yearly returns over seven would be an excellent investment in those days and age, but as we can see GMO separates emerging and emerging value, so we can't just buy any emerging stocks trackers.</p><p>But what's a value stock exactly? Here's <a href="https://www.investopedia.com/terms/v/valuestock.asp" target="_blank">Investopedia</a> definition:</p><blockquote><p>A value stock is a security trading at a lower price than what the
company’s performance may otherwise indicate. Investors in value stocks
attempt to capitalize on inefficiencies in the market, since the price
of the underlying equity may not match the company’s performance.
</p></blockquote><p>They are often opposed to Growth stocks, often referring to stocks in the Technology and Biotechnology sectors with very high P/E ratios.</p><p> Investopedia main takeaways:</p><div class="comp mntl-sc-block-callout-body mntl-text-block" id="mntl-sc-block-callout-body_1-0">
<ul><li>Common characteristics of value stocks include high dividend yield, low P/B ratio and/or a low P/E ratio.</li><li>A value stock typically has a bargain-price as investors see the company as unfavorable in the marketplace.</li><li>A value stock typically has an equity price lower than stock prices of companies in the same industry.</li></ul></div><p>So value stocks may be dividend stocks with low price-to-book and low price-earning ratio. This includes utilities, banks, consumer staples, and some commodities producers.</p><p>So our best bet would be to find value stocks in <a href="https://etf-investment-ideas.blogspot.com/2020/03/undervalued-markets-in-march-2020-top.html">undervalued emerging markets</a>, which last time we looked included Russia, China, Turkey, Hungary, and South Korea. With Russia, it's easy as most stocks are value stocks, and we could just add a Russia ETF to our portfolio such as MSCI Russia Capped Index (3027.HK) in Hong Kong and <span class="vk_bk">VANECK VECTORS/RUSSIA ETF (</span>RSX) in the US.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-lT4_88gtTR4/X0JJ_02G1VI/AAAAAAAAZ8w/rKHQxyzHmOYiCVqBlmMphl6JRTBqq5X3wCLcBGAsYHQ/s675/RSX-Russia-ETF.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="545" data-original-width="675" src="https://1.bp.blogspot.com/-lT4_88gtTR4/X0JJ_02G1VI/AAAAAAAAZ8w/rKHQxyzHmOYiCVqBlmMphl6JRTBqq5X3wCLcBGAsYHQ/s640/RSX-Russia-ETF.jpg" width="640" /></a></div><p>China is more complex since the stock indexes include highly priced technology company such as Tencent, Allibaba and Baidu. One such option is Value China ETF (3046.HK) whose top holdings include Chinese banks, real-estate companies and insurances.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-edic869wboM/X0JMadTdc-I/AAAAAAAAZ88/i2jaqeleqzwy0uHvfithDPF-3OGRAzAbwCLcBGAsYHQ/s756/3046.hk-China-Value-ETF-Holdings.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="267" data-original-width="756" src="https://1.bp.blogspot.com/-edic869wboM/X0JMadTdc-I/AAAAAAAAZ88/i2jaqeleqzwy0uHvfithDPF-3OGRAzAbwCLcBGAsYHQ/s640/3046.hk-China-Value-ETF-Holdings.png" width="640" /></a></div><p>All companies are listed in the Hong Kong stock market. Alternatively, there's also Value China A-Share ETF (3095 HK) with companies listed in China, and more of a Chinese consumers story with 35% Consumer Goods, 34% Financials.</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-EZ_GrtP--1Q/X0JdQs_9u0I/AAAAAAAAZ9I/DRxAwdFRlm0AuY0-g2Xe0aQtDqysx0mHQCLcBGAsYHQ/s671/3046.hk-Long-Term-Chart.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="534" data-original-width="671" src="https://1.bp.blogspot.com/-EZ_GrtP--1Q/X0JdQs_9u0I/AAAAAAAAZ9I/DRxAwdFRlm0AuY0-g2Xe0aQtDqysx0mHQCLcBGAsYHQ/s640/3046.hk-Long-Term-Chart.png" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"></td></tr></tbody></table><p>Note that while Google Finance shows there's no dividend paid out, you'd get ~2% dividend paid out yearly.</p><p>I had more of a struggle finding a China value stock in North America, and one of the closest would be <span>Horizons</span> China High Dividend Yield Index ETF (HCN.TO) listed in Canada.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-OSuzth2YET8/X0JejLgTimI/AAAAAAAAZ9U/D4EMJT98Nq8IquE5l-xAK24s_Zc79ErhwCLcBGAsYHQ/s668/HCN.TO.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="445" data-original-width="668" src="https://1.bp.blogspot.com/-OSuzth2YET8/X0JejLgTimI/AAAAAAAAZ9U/D4EMJT98Nq8IquE5l-xAK24s_Zc79ErhwCLcBGAsYHQ/s640/HCN.TO.png" width="640" /></a></div><p>The funds distributed dividends every quarter. The current is <span class="Trsdu(0.3s)" data-reactid="98">6.77% based on info from Yahoo Finance.</span></p><p><span class="Trsdu(0.3s)" data-reactid="98">I will not look into Turkey due to geopolitical risks at the moment, nor the smaller Hungary market, and complete this post by checking out South Korea. If you want to invest in South Korea, there's limited choice when it comes to South Korea ETF, and most people will not be able to purchase stocks on the KOSPI exchange.</span></p><p><span class="Trsdu(0.3s)" data-reactid="98">That means we'd have to accept getting some experience to technology stocks like Samsung Electronics (PE: 17.49, DY: 2.53%), Naver (PE: 64.40, DY: 0.12%), or SKHynix (PE:22.3, DY: 1.34%) through South Kora ETF such as </span><span class="Trsdu(0.3s)" data-reactid="98"><span class="vk_bk">iShares MSCI South Korea Index Fund (EWI)</span>. </span></p><p><span class="Trsdu(0.3s)" data-reactid="98"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-8nLozQe46b0/X0JiyAxDMnI/AAAAAAAAZ9g/hrF6Oto6a7EHWPd9e1s4fA7t4Hmv4eERwCLcBGAsYHQ/s680/EWY-South-Korea-ETF-Long-Term-Chart.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="524" data-original-width="680" src="https://1.bp.blogspot.com/-8nLozQe46b0/X0JiyAxDMnI/AAAAAAAAZ9g/hrF6Oto6a7EHWPd9e1s4fA7t4Hmv4eERwCLcBGAsYHQ/s640/EWY-South-Korea-ETF-Long-Term-Chart.png" width="640" /></a></div> <br /><p></p><p>In any case, I'm uncomfortable purchasing stocks in the September-October months due to the high-valuation in the US stock market, and a stock market sell off in the US, may lead to a rise in the US dollars, and a sharp drop in emerging stock markets. If it does happen, it will certainly be an interesting buying opportunity. <br /></p><br />Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-60012994254470666702020-07-19T02:46:00.002-07:002020-07-19T02:53:24.546-07:00Long Term Charts - Thai Stock Market (Thai SET) Update - July 2020 <div>
It's been a long time since I've not provided an update to long term charts of the Thai stock market. More <a href="https://etf-investment-ideas.blogspot.com/2015/01/long-term-charts-thai-stock-market-thai.html">exactly over 5 years</a>, because to be honest nothing much happened during those years, but we've got a bit more action this year, so it might be a good time to have another look.</div>
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<a href="https://1.bp.blogspot.com/-m-Zrxx6FXE0/XxQRzrjNSaI/AAAAAAAAZXY/JzwBfsuISAMtinNXgLcm5rfLIbmg2WO1gCLcBGAsYHQ/s804/Long-Term-Chart-Thai-SET-1976-July-2020.png" style="margin-left: 1em; margin-right: 1em;"><img alt="Long Term Chart Thai SET 1976 - 2020" border="0" data-original-height="422" data-original-width="804" height="336" src="https://1.bp.blogspot.com/-m-Zrxx6FXE0/XxQRzrjNSaI/AAAAAAAAZXY/JzwBfsuISAMtinNXgLcm5rfLIbmg2WO1gCLcBGAsYHQ/w640-h336/Long-Term-Chart-Thai-SET-1976-July-2020.png" width="640" /></a></div>
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The Thai stock market peaked at around 1,830 in February 2018, and it dropped to under 1,200 in March following the politician answers and lockdowns due to COVID-19. It's back to around 1,350 since them It was a sharp, but let's check more long term charts to find out more about valuations.</div>
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<a href="https://1.bp.blogspot.com/-VXhIu1bXmZw/XxQRz-3d13I/AAAAAAAAZXg/2z2B2fCdUpEB1QJVOLsJiu7LlG7eBpgjwCLcBGAsYHQ/s773/Thai-SET-Price-Earning-Ratio-1975-July-2020.png" style="margin-left: 1em; margin-right: 1em;"><img alt="Thai SET PER - 1976 - 2020" border="0" data-original-height="487" data-original-width="773" height="404" src="https://1.bp.blogspot.com/-VXhIu1bXmZw/XxQRz-3d13I/AAAAAAAAZXg/2z2B2fCdUpEB1QJVOLsJiu7LlG7eBpgjwCLcBGAsYHQ/w640-h404/Thai-SET-Price-Earning-Ratio-1975-July-2020.png" width="640" /></a></div>
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One metric is the price earning ratio, and never really went under 10 that historically is a buying opportunity. Getting to 5 or under would be a lifetime buying opportunity, but obviously it does not happen often. We should also expect earnings to drop significantly, and I'm not convinced they'll recoever that quickly so the PER should soon go higher, unless the average price of stocks in the Thai SET goes down as well.</div>
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<a href="https://1.bp.blogspot.com/-UTaVg6xVMVQ/XxQR0ltNVsI/AAAAAAAAZXk/XWiR6EKTLcgRDGlBva0bLuukNyu4v6BZQCLcBGAsYHQ/s852/Thai-SET-Price-to-Book-Value-1988-July-2020.png" style="margin-left: 1em; margin-right: 1em;"><img alt="Thai SET Price-to-Book Value - 1988 - 2020" border="0" data-original-height="540" data-original-width="852" height="406" src="https://1.bp.blogspot.com/-UTaVg6xVMVQ/XxQR0ltNVsI/AAAAAAAAZXk/XWiR6EKTLcgRDGlBva0bLuukNyu4v6BZQCLcBGAsYHQ/w640-h406/Thai-SET-Price-to-Book-Value-1988-July-2020.png" width="640" /></a></div>
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The price to book value ratio is fairly affordable, so that's one metric where the Thai SET looks fair valued or even slightly inexpensive.</div>
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<a href="https://1.bp.blogspot.com/-IQIzWAliPyM/XxQRzmr0YpI/AAAAAAAAZXc/MNmUTRrmNTQbqWEN_kL19Su5p8X7eatHwCLcBGAsYHQ/s844/Thai-SET-Dividend-Yield-1975-July-2020.png" style="margin-left: 1em; margin-right: 1em;"><img alt="Thai SET Dividend Yield - 1988 to 2020" border="0" data-original-height="484" data-original-width="844" height="368" src="https://1.bp.blogspot.com/-IQIzWAliPyM/XxQRzmr0YpI/AAAAAAAAZXc/MNmUTRrmNTQbqWEN_kL19Su5p8X7eatHwCLcBGAsYHQ/w640-h368/Thai-SET-Dividend-Yield-1975-July-2020.png" width="640" /></a></div>
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From the chart above, a dividend yield of just under 4% look attractive considering current interest rate on fixed deposits are under 1%. Buying large stocks for dividends might be a good way to be paid to wait with limited downside. That would remain true as long as dividends are not cut, and that's not guaranteed considering the environment we live in.</div>
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But no buying on my side for now, so I'll be patient, and since I expect the market to move again this year, I'll likely post an update in December.</div>
Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-7455479049368737452020-06-28T06:07:00.001-07:002020-06-28T06:14:44.213-07:00S&P 500 Analysis: Valuation, Sentiment and Technicals - June 2020<div>It's been a very long time since I have done an <a href="https://etf-investment-ideas.blogspot.com/2013/02/s-500-analysis-valuation-sentiment-and.html">S&P 500 analysis with valuation, sentiment and technical indicators</a> taken into account. So let's get an updated picture for June 2020.<br /></div><div><br /></div><div><h2 style="text-align: left;">S&P 500 Valuation</h2></div><div><br /></div><div>One way to look at value is to check out the CAPE 10 ratio (Cyclically Adjusted<br />Price Earnings Ratio over a 10-year period). It now stands at close to 30, and that's before "COVID-19" earnings are released.<br /></div><div><br /></div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-juPrjEkDH-M/Xu9kT3EzOBI/AAAAAAAAY2k/xgnlGLtKPRU8zv4UHC_YN2rzRjkaP0E7QCK4BGAsYHg/s1288/S%2526P-500-CAPE-10-June-2020.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="627" data-original-width="1288" height="312" src="https://1.bp.blogspot.com/-juPrjEkDH-M/Xu9kT3EzOBI/AAAAAAAAY2k/xgnlGLtKPRU8zv4UHC_YN2rzRjkaP0E7QCK4BGAsYHg/w640-h312/S%2526P-500-CAPE-10-June-2020.png" width="640" /></a></div></div><div><br /></div><div>That's historically very elevated and similar to the 1929 stock market bubble. Expect the number to shoot with earning announcements if the stock market does not correct first.</div><div><br /></div><div>Corporate earnings tend to revert to the mean over time.<br /></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-Pt-P1muH5Ks/Xu9mnShWYKI/AAAAAAAAY3A/Pz493G8CAHw5G8qTrf0XKvulvafLjcPbgCK4BGAsYHg/s664/S%2526P-500-Earnings-1870-2020.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="501" data-original-width="664" height="482" src="https://1.bp.blogspot.com/-Pt-P1muH5Ks/Xu9mnShWYKI/AAAAAAAAY3A/Pz493G8CAHw5G8qTrf0XKvulvafLjcPbgCK4BGAsYHg/w640-h482/S%2526P-500-Earnings-1870-2020.png" width="640" /></a></div><div><br /></div><div>It's a lagging indicator, as Q2 earnings have not been announced just yet. But the chart shows earnings were way above the historical trend before the crisis. July will be interested as earnings announcement will mean this number possibly goes negative.<br /></div><div><br /></div><div><h2 style="text-align: left;">AAII Sentiment</h2><div>The stock market is all about people's feelings, and AAII members are not buying the rally, as they have still 48.9% bearish.<br /></div></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-Z6m8Dhk7kUQ/XviJuTWXVII/AAAAAAAAY-Q/5pbwpPOiitYgX_pu06iMrn9aJuelhQcnACK4BGAsYHg/s679/AAII-Sentiment-Survey-June-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="AAII Sentiment Survey June 2020" border="0" data-original-height="586" data-original-width="679" height="552" src="https://1.bp.blogspot.com/-Z6m8Dhk7kUQ/XviJuTWXVII/AAAAAAAAY-Q/5pbwpPOiitYgX_pu06iMrn9aJuelhQcnACK4BGAsYHg/w640-h552/AAII-Sentiment-Survey-June-2020.png" title="AAII Sentiment Survey June 2020" width="640" /><br /></a></div><div class="separator" style="clear: both; text-align: left;">We can see the 8-week moving average bullishness chart is still very low.<br /><a href="https://1.bp.blogspot.com/-Z6m8Dhk7kUQ/XviJuTWXVII/AAAAAAAAY-Q/5pbwpPOiitYgX_pu06iMrn9aJuelhQcnACK4BGAsYHg/s679/AAII-Sentiment-Survey-June-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-UKlJM5Qp00A/XviMI5UzEcI/AAAAAAAAY-s/l4CDwwo4hAshoqPnSFeiZOW2wbbBEvafgCK4BGAsYHg/s1281/AAII-8-weeks-moving-average-June-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="AAII Sentiment Survey Chart June 2020" border="0" data-original-height="673" data-original-width="1281" height="336" src="https://1.bp.blogspot.com/-UKlJM5Qp00A/XviMI5UzEcI/AAAAAAAAY-s/l4CDwwo4hAshoqPnSFeiZOW2wbbBEvafgCK4BGAsYHg/w640-h336/AAII-8-weeks-moving-average-June-2020.png" title="AAII Sentiment Survey Chart June 2020" width="640" /></a></div><div><br /></div><div>The AAII sentiment survey used to be a contrarian indicator, but I'm not sure it's still the case. This would mean stocks have further gains, but in this case I suppose AAII investor believe the market will go down in the next six months, and did not really participate in the rally..<br /></div><div><br /></div><div><h2 style="text-align: left;">Technical Indicators</h2></div><div><br /></div><div>The RSI-14 (14-day relative strength index) can help us find out if a market is oversold or overbought.<br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-4pP5Nf8Ot_Q/XviM6WhR4SI/AAAAAAAAY_E/QnWk6HMyVC04A4ahllEzeSaadpFojgrzgCK4BGAsYHg/s1637/S%2526P-500-RSI-14.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="RSI-14 S&P 500 June 2020" border="0" data-original-height="821" data-original-width="1637" height="320" src="https://1.bp.blogspot.com/-4pP5Nf8Ot_Q/XviM6WhR4SI/AAAAAAAAY_E/QnWk6HMyVC04A4ahllEzeSaadpFojgrzgCK4BGAsYHg/w640-h320/S%2526P-500-RSI-14.png" title="RSI-14 S&P 500 June 2020" width="640" /></a></div><div><br /></div><div>The RSI-14 is now at 54 or close to neutral. This compares to close to 80 in January/February when markets were clearly overbought in the short term.<br /></div><div><br /></div><div>The NYA200R (percentage of stocks over their 200-day moving average) can be used to determine if only a few stocks participated in a rally.<br /></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-darWUt09iRQ/XviPDNXt76I/AAAAAAAAY_g/kZe0iQ5wDFUWqsB3ttfF0rnlycU3dCRogCK4BGAsYHg/s912/NYA200R-Weekly-Chart-June-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="NYA200R Weekly Chart June 2020" border="0" data-original-height="685" data-original-width="912" height="480" src="https://1.bp.blogspot.com/-darWUt09iRQ/XviPDNXt76I/AAAAAAAAY_g/kZe0iQ5wDFUWqsB3ttfF0rnlycU3dCRogCK4BGAsYHg/w640-h480/NYA200R-Weekly-Chart-June-2020.png" title="NYA200R Weekly Chart June 2020" width="640" /></a></div><div><br /></div><div><br /></div><div>The current chart shows only about 25% of stocks are above their 200-day moving average meaning the elevated S&P 500 stock market level may be due to some larger capitalization, while smaller stocks are still suffering, or not participating in the rally just as much.</div><div><br /></div><div><h2 style="text-align: left;">Conclusion</h2><div>Apart from the US stock market valuation metrics to which we could add the <a href="https://etf-investment-ideas.blogspot.com/2020/05/us-market-cap-to-gdp-forecast-230-in-q2.html">stock market to GDP ratio</a>, we are not really at extremes while looking at sentiment and technical indicators. So I would be very wary of going long, but at the same time the rally may not be over. Another important metrics for investors in 2020 will also be the <a href="https://etf-investment-ideas.blogspot.com/2020/06/most-important-chart-stock-market-investors-2020.html">Federal Reserve assets purchases</a>, but it's pretty hard to forecast what a small group of people will do, especially during a presidential election year.<br /></div></div><div><br /></div>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-71650621619388630552020-06-27T02:44:00.003-07:002020-06-27T05:56:10.872-07:00The Most Important Chart for Stock Market Investors in 2020<div>I'm so old I can remember from fundamentals and technical analysis were relevant, but this is 2020, and the most important for stock market investors may well be the chart representing the total assets of the federal reserve.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-gnGvyqGJTF4/XvcRFPIWf7I/AAAAAAAAY70/aHIJNPygt_I722k75hX5IGRguKP0VQgeACK4BGAsYHg/s747/chart-yotal-assets-of-the-federal-reserve.jpg" style="margin-left: 1em; margin-right: 1em;"><img alt="Federal Reserve Assets Chart" border="0" data-original-height="698" data-original-width="747" height="598" src="https://1.bp.blogspot.com/-gnGvyqGJTF4/XvcRFPIWf7I/AAAAAAAAY70/aHIJNPygt_I722k75hX5IGRguKP0VQgeACK4BGAsYHg/w640-h598/chart-yotal-assets-of-the-federal-reserve.jpg" title="Federal Reserve Assets Chart" width="640" /></a></div><div><br /></div><div>Back in September and October 2008, the federal reserve reacted promptly to the bankruptcy of Lehman Brothers, but it was not until March 2009 before the market bottomed out. Since the the balance sheet has gone up with QE 2, QE 3 and operating twist, and it's only when the Federal Reserve Bank started to tamper in 2018 that the stock market become much more volatile, and the FED had to reserve course. The response to COVID-19 sent the assets into the stratosphere, so let's see how it correlates to the S&P 500.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-AQFugCk20uQ/XvcS2obTaZI/AAAAAAAAY8Q/JfFgxixWxxwSvCwi-RprEfg8kNKVYJc7ACK4BGAsYHg/s738/FED-Assets-Chart-2020.png" style="margin-left: 1em; margin-right: 1em;"><img alt="FED reserves 2020" border="0" data-original-height="411" data-original-width="738" height="356" src="https://1.bp.blogspot.com/-AQFugCk20uQ/XvcS2obTaZI/AAAAAAAAY8Q/JfFgxixWxxwSvCwi-RprEfg8kNKVYJc7ACK4BGAsYHg/w640-h356/FED-Assets-Chart-2020.png" title="FED reserves 2020" width="640" /></a></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-GbHvM8IK5Gk/XvcTRfcjbHI/AAAAAAAAY8k/GpdTUSvgNkATu3YhJS_EbSV1pDPTOV4kQCK4BGAsYHg/s644/SP500-Chart-2020.png" style="margin-left: 1em; margin-right: 1em;"><img alt="S&P 500 2020 Chart" border="0" data-original-height="446" data-original-width="644" height="444" src="https://1.bp.blogspot.com/-GbHvM8IK5Gk/XvcTRfcjbHI/AAAAAAAAY8k/GpdTUSvgNkATu3YhJS_EbSV1pDPTOV4kQCK4BGAsYHg/w640-h444/SP500-Chart-2020.png" title="S&P 500 2020 Chart" width="640" /></a></div><div><br /></div><div>The FED assets purchase started the week of March 17th, soon after the stock market bottomed out on March 24th, and the S&P 500 went up as long as the FED was purchasing assets. Since then the FED has mostly stopped purchases, and as soon as they started to lower their assets, the S&P 500 followed through.</div><div><br /></div><div>That means the stock market is highly correlated to the FED's actions, and the rally we've seen since March 23rd may be entirely due to the FED. We should then closely follow the actions of the FED and other central banks for the future direction of the stock market. However, if they overdo it, there may eventually be a currency crisis of some sort. We live in interesting times.<br /></div><div><br /></div><div><br /></div>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-8823431137442482452020-06-21T03:15:00.001-07:002020-06-21T03:34:20.246-07:00Scammer Alert: Wells Capital Fund LLC<div class="_26QK4TVWQk0-Nvk9qzFwsy"><div>Here's another money mule related to <a href="https://etf-investment-ideas.blogspot.com/2020/05/people-behind-brookfield-investment.html">Brookfield Investment Funds Plc</a> company that scams people investing in non-existent shares such as pre-IPOs or "reverse liquidations": <b>Wells Capital Fund LLC</b>.<br /></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-t2kIkMzcmL4/Xu8s7LWJjCI/AAAAAAAAY1c/QOazFWBeFYsjVT5brnOH6nFFZZXAGPJCACK4BGAsYHg/s1186/Wells-Capital-Fund-LLC.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="Wells Capital Fund" border="0" data-original-height="596" data-original-width="1186" height="322" src="https://1.bp.blogspot.com/-t2kIkMzcmL4/Xu8s7LWJjCI/AAAAAAAAY1c/QOazFWBeFYsjVT5brnOH6nFFZZXAGPJCACK4BGAsYHg/w640-h322/Wells-Capital-Fund-LLC.jpg" width="640" /></a></div><div><br /></div><div><br /></div><div>Here are the bank details of the company:<br /></div><br /><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;"><div style="margin-left: 40px;">Account Name: WELLS CAPITAL FUND LLC</div><div style="margin-left: 40px;">Account Address:</div><div style="margin-left: 40px;">2375 East Camelback Rd.</div><div style="margin-left: 40px;">Suite 600 Phoenix,</div><div style="margin-left: 40px;">AZ 85016</div><div style="margin-left: 40px;">USA<br /></div><div style="margin-left: 40px;">Account Number: 15266430</div><div style="margin-left: 40px;">Bank Name: GREAT WESTERN BANK</div><div style="margin-left: 40px;">Bank Address:</div><div style="margin-left: 40px;">1721 N Arizona Ave.</div><div style="margin-left: 40px;">Suite 1 Chandler,</div><div style="margin-left: 40px;">AZ 85225</div><div style="margin-left: 40px;">USA<br /></div><div style="margin-left: 40px;">Swift Code: GTWBUS44XXX</div><div style="margin-left: 40px;"><br /></div>The website for the company is wellscf dot net with claims of being in business for many years:</div><blockquote><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;">For over 20 years Wells Capital Fund LLC has been securing transactions
and providing a protected payment process to allow our clients to work
more efficiently and secure.
</div></blockquote><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;">But as usual for this type of company, the website was just registered recently, namely in November 2019.</div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-G2AVm4PRe8A/Xu8v0CwmHkI/AAAAAAAAY14/23zPoQGia9MOIp1JTcO0rcxmJIH5OrTYwCK4BGAsYHg/s728/Wells-Capital-Fund-LLC-website.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="398" data-original-width="728" height="350" src="https://1.bp.blogspot.com/-G2AVm4PRe8A/Xu8v0CwmHkI/AAAAAAAAY14/23zPoQGia9MOIp1JTcO0rcxmJIH5OrTYwCK4BGAsYHg/w640-h350/Wells-Capital-Fund-LLC-website.png" width="640" /></a></div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;">They can't operate the company for too long, as one year is about the time it will take before it's closed and the scammers move on to another company.</div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;"><br /></div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;">If you have been victim of the fraud make sure to fill a police report against the company in the jurisdiction where the scam occurred. Note they usually only work with expats to make tracking phone calls that much more difficult and costly for the victim and law enforcement.<br /></div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;"><br /></div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;"><br /></div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;"><br /></div><div class="_26QK4TVWQk0-Nvk9qzFwsy" style="text-align: left;"><br /></div></div>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com2tag:blogger.com,1999:blog-7403160962524588074.post-50669232901753760072020-06-14T03:27:00.002-07:002020-06-21T03:34:10.801-07:00Investing using GMO 7-Year Market ForecastYou should always check multiple indicators before investing in a particular asset class or country, and one of those I like to follow is Jeremy Grantham's GMO 7-Year market forecast based on "return-to-the-mean" valuations.<br />
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The latest was published <a href="https://www.gmo.com/asia/research-library/gmo-7-year-asset-class-forecast-april-2020/?utm_medium=email&utm_source=episerver-campaign&utm_campaign=article-subscription-push&utm_content=GMO-7-Year-Asset-Class-Forecast&email=jaufranc%40hotmail.com&first_name=Jean-Luc&last_name=Aufranc" target="_blank">on April 30, 2020</a>.<br />
<div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-WvcVSbKN3Vw/XuXy7RgwaZI/AAAAAAAAYqg/eRsrC3j8NMMLWKwMnI2d9tjRgrnByW8pQCK4BGAsYHg/s906/GMO-7-Year-Asset-Class-Forecast-April-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="GMO 7-year Forecast April 2020" border="0" data-original-height="370" data-original-width="906" height="260" src="https://1.bp.blogspot.com/-WvcVSbKN3Vw/XuXy7RgwaZI/AAAAAAAAYqg/eRsrC3j8NMMLWKwMnI2d9tjRgrnByW8pQCK4BGAsYHg/w640-h260/GMO-7-Year-Asset-Class-Forecast-April-2020.png" width="640" /></a></div><div><br /></div>
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That means large U.S caps should return a real negative 3.6% per year over the next seven years with 2.2% US annual inflation. Or around negative 1.4% per year once inflation is taking into account, while emerging stocks should return 3.5% per year plus inflation (no assumption for non-US asset classes).</div><div><br /></div><div>So how well does not indicator actually work? It's clear it's not an exact timing tool, as it will likely be incorrect during a bull market, and become right once a bear market occurs. But let's check about past 7-year forecasts, namely:</div><div><br /></div><div><ol style="text-align: left;"><li><h3 class="post-title entry-title"><span style="font-weight: normal;"><a href="https://etf-investment-ideas.blogspot.com/2011/04/jeremy-grantham-gmo-28-annual-return.html">GMO 7-year forecast Q1 2011</a> with a -2.8% annual return forecast for small U.S caps.</span></h3></li><li><h3 class="post-title entry-title"><span style="font-weight: normal;"><a href="https://etf-investment-ideas.blogspot.com/2012/11/gmo-7-year-asset-class-forecasts.html">GMO 7-Year Asset Class Forecasts - October 2012</a> with a -0.3% annual return forecast for large U.S. caps.</span></h3></li></ol><div>I'm not sure which indices GMO is using exactly, but I'll go with the <span class="st">S&P SmallCap 600 Index (S&P 600)</span> and Dow Jones Industrial Average (DJI) respectively.</div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-vx4gvTODLho/XuX3sF4YVvI/AAAAAAAAYq8/CfQxwQ21xmYlBLhdF4yv6M9BN2VkyzunQCK4BGAsYHg/s676/SP600-US-Small-Cap-Index.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img alt="S&P 600" border="0" data-original-height="497" data-original-width="676" height="470" src="https://1.bp.blogspot.com/-vx4gvTODLho/XuX3sF4YVvI/AAAAAAAAYq8/CfQxwQ21xmYlBLhdF4yv6M9BN2VkyzunQCK4BGAsYHg/w640-h470/SP600-US-Small-Cap-Index.png" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Source: <a href="https://www.investing.com/indices/s-p-600-small-cap">Investing.com</a><br /></td></tr></tbody></table><div><br /></div><div>The S&P 600 was at 457.95 points on April 1, 2011. With a -2.8% real annual return, plus 2.2% inflation, the S&P 600 should have been at 439 points on April 1, 2018 with a return to the mean. But the actual level of the S&P 600 was about 947 points.It still did not happen two years later, but maybe latter the year, or next, as the <a href="https://etf-investment-ideas.blogspot.com/2020/03/overvalued-markets-march-2020-top-10.html">US market is very much overvalued</a>. <br /></div><div><br /></div><div></div><div>Let's switch to the Dow Jones now for October 1, 2012 and October 1, 2019.</div><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-D3Ch6Luo4V4/XuX5vZmBqBI/AAAAAAAAYrY/M9f4hISlfBQjV8QOoNRkOH6kWauv-rNOQCK4BGAsYHg/s687/Dow-Jones-2012-2019.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="Dow Jones 2012-2019" border="0" data-original-height="514" data-original-width="687" height="478" src="https://1.bp.blogspot.com/-D3Ch6Luo4V4/XuX5vZmBqBI/AAAAAAAAYrY/M9f4hISlfBQjV8QOoNRkOH6kWauv-rNOQCK4BGAsYHg/w640-h478/Dow-Jones-2012-2019.png" width="640" /></a></div><div><br /></div><div>The Dow Jones was at 13,096 points on the October 1, 2012. A -0.3% real annual return with 2.2% inflation would mean the index should have been at <br /></div><div>14,960 points on October 1, 2019 assuming a return to the mean. Actual Dow Jones level on October 1, 2019: 25,605 points. It did not work too well either for large caps, but I believe that's yet another indicator that US stocks are vastly overvalued. <a href="https://etf-investment-ideas.blogspot.com/2020/04/all-is-well-faang-stocks-hit-all-times.html">How long the craziness will last</a> is for anyone to guess. <br /></div></div><div><br /></div><div><br /></div>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-3821031299536813682020-05-31T01:06:00.001-07:002020-05-31T01:07:43.806-07:00The Case for Stocks Going Higher - Retail Investors are Still BearishAs we covered previously, there are plenty of metrics screaming the US stock market is in lalaland as one of the <a href="https://etf-investment-ideas.blogspot.com/2020/03/overvalued-markets-march-2020-top-10.html" target="_blank">most overvalued markets</a> (even before COVID-19), a <a href="https://etf-investment-ideas.blogspot.com/2020/04/all-is-well-faang-stocks-hit-all-times.html" target="_blank">complete disconnect between the economy and the stock market</a> with the <a href="https://etf-investment-ideas.blogspot.com/2020/05/us-market-cap-to-gdp-forecast-230-in-q2.html" target="_blank">Wilshire 5000 to GDP ratio - aka Buffet Indicator - expected to reach around 230%</a> by the end of July with the first Q2 GDP numbers.<br />
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When we asked whether the <a href="https://etf-investment-ideas.blogspot.com/2020/05/may-2020-is-bear-market-rally-over.html" target="_blank">stock market rally was over</a> on May 3rd, we noted the 1929 stock market rally took several months and our <a href="https://etf-investment-ideas.blogspot.com/2020/03/2020-great-depression-of-1929-all-over.html" target="_blank">1929 Redux simulation</a> would take to it to May/June. We also pointed out one metric suggested it may have more legs: the AAII sentiment survey, or the bullishness/bearishness of the retail investor. We did not look into it too much at the time, so let's do that today by first looking at a 1998 to 2015 chart of the AAII bullishness 8-week moving average data <a href="https://www.investing.com/analysis/aaii-sentiment-survey:-%E2%80%98running-of-the-bulls%E2%80%99-257407" target="_blank">courtesy of investing.com</a>.<br />
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<a href="https://1.bp.blogspot.com/-y9xl3ivPgHw/XtNfcNLnfiI/AAAAAAAAYVM/j19zF706SusJgcvYiJlV9tCTE4Yre_mdwCLcBGAsYHQ/s1600/AAII-Investor-Sentiment-Index-1998-2016.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://1.bp.blogspot.com/-y9xl3ivPgHw/XtNfcNLnfiI/AAAAAAAAYVM/j19zF706SusJgcvYiJlV9tCTE4Yre_mdwCLcBGAsYHQ/s640/AAII-Investor-Sentiment-Index-1998-2016.jpg" width="640" /></a></div>
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We can see every time the chart sharply drops below 25% it has been a buying opportunity. If you don't quite remember what the S&P 500 looks like for the period I have reproduced it below...<br />
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<a href="https://1.bp.blogspot.com/-ABAuvZ0Psf8/XtNg6Xp7NUI/AAAAAAAAYVY/0UVPEAiP_DIO6lfRwdMpLPhqBYi3yN01QCLcBGAsYHQ/s1600/S%2526P-500-1988-2016.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="715" data-original-width="1600" height="286" src="https://1.bp.blogspot.com/-ABAuvZ0Psf8/XtNg6Xp7NUI/AAAAAAAAYVY/0UVPEAiP_DIO6lfRwdMpLPhqBYi3yN01QCLcBGAsYHQ/s640/S%2526P-500-1988-2016.png" width="640" /></a></div>
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There were plenty of times when the ratio went under 30% between 1988 and 1994, and if you had purchased stock during that period you would have done well. Same thing for 2003 and 2009. In 2015, stocks may have looked overpriced, but the index was at around 2,000 points, and in May 31, 2020, the index is priced at around 3,000 or a 50% gain.<br />
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So what does the 8-week moving average of the AAII bullish sentiment index looks like today? <a href="https://ycharts.com/indicators/us_investor_sentiment_bullish_8_week_average" target="_blank">Ycharts provides a free 5-year chart</a> updating weekly for use to check.<br />
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<a href="https://1.bp.blogspot.com/-9QQElYT5yDU/XtNig1-FWLI/AAAAAAAAYVk/QHKqGBQBY00rnQaFOubNV8fkrPqJYWczgCLcBGAsYHQ/s1600/AAII-Investor-Sentiment-Index-8-week-moving-average-2015-2020.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="294" data-original-width="1057" height="178" src="https://1.bp.blogspot.com/-9QQElYT5yDU/XtNig1-FWLI/AAAAAAAAYVk/QHKqGBQBY00rnQaFOubNV8fkrPqJYWczgCLcBGAsYHQ/s640/AAII-Investor-Sentiment-Index-8-week-moving-average-2015-2020.jpg" width="640" /></a></div>
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At the time of the <a href="https://ycharts.com/indicators/us_investor_sentiment_bullish_8_week_average" target="_blank">2016 presidential election</a>, the index was at 25%, a buying opportunity based on this index. But at the time, I was personally really wary of buying US stocks considering the length of the bull market, and other metrics.<br />
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What about today? The index stands at 29.50%, so retail investors are fairly bearish although not extremely so. Almost everything else cries "sell!!!", but the AAII sentiment survey tells me to wait a little longer, or strangely enough there should even be a buying opportunity, but I'd like to give it a pass.<br />
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Also, remember that's a presidential election year in the US, so politicians in power won't be shy to spend money they don't have, as we've seen in recent months in order to keep the system going, and are greatly helped with the federal reserve with their unlimited buying power. Could they just throw enough money at the system to keep it going for 5 more months until the election? I don't know but would not rule out the possibility.<br />
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While AAII sentiment survey looks useful to spot buying opportunity, it does not seem to be a good timing indicator for selling stocks. In 2000, it works, but was completely useless for the 2007 peak, and would have made people sell their stocks later in 2004, and in 2011 with bull markets in their early stages.<br />
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<br />Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-46668173124598384032020-05-24T06:12:00.000-07:002020-05-24T06:18:38.609-07:00People behind Brookfield Investment Funds Plc and Kaloca Inc Investment Fraud<div class="separator" style="clear: both; text-align: center;">
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We first wrote about Brookfield Investment Funds Plc when covering <a href="https://etf-investment-ideas.blogspot.com/2020/02/financial-fraud-airbnb-and-virgin.html" target="_blank">AirBnB and Virgin Hyperloop One Pre-IPO scams</a>. This is a non-existent company that claims to be based in Ireland and the United Kingdom and receive payments through "money mules" that are recently incorporated financial companies such as Singapore based Vipco Holding Pte and <a href="https://etf-investment-ideas.blogspot.com/2020/04/fraudulent-company-warning-wellington.html" target="_blank">WELLINGTON YORK PARTNERS PTE. LTD.</a>, John Jennings law office in Germany, or Kaloca Inc in the US.<br />
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Somehow, the scammers are still free to operate but at least the Financial Conduct Authority in the UK and Ireland has finally written warnings about Brookfield Investment Funds Plc "<a href="https://www.fca.org.uk/news/warnings/brookfield-investment-funds-plc-clone-fca-authorised-schedule-5-firm" target="_blank">clone firm</a>" that mislead investors by claiming to be an already authorized firm.<br />
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<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-l-PnGnetDjM/XspwPoQ1TsI/AAAAAAAAXuM/pUg5EHtBwmshaKLE3wTK0yIr6HQSYGE0QCLcBGAsYHQ/s1600/Derek-Nguyen-Kaloca-Inc-CEO.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="450" data-original-width="450" height="320" src="https://1.bp.blogspot.com/-l-PnGnetDjM/XspwPoQ1TsI/AAAAAAAAXuM/pUg5EHtBwmshaKLE3wTK0yIr6HQSYGE0QCLcBGAsYHQ/s320/Derek-Nguyen-Kaloca-Inc-CEO.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Derek Nguyen - Kaloca Inc. CEO</td></tr>
</tbody></table>
But we have now received more information from a victim of Brookfield Investment Funds Plc scam, who paid to Kaloca Inc., and hired a private detective to look into the matter.<br />
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Amazingly Kaloca Inc. company has been registered by a recidivist, Mr. <a href="https://www.linkedin.com/in/derek-nguyen-96412b6/" target="_blank">Derek Nguyen</a>, who previously another scam company under the name Kaloca Holdings Inc. He is now <a href="https://www.zoominfo.com/p/Derek-Nguyen/7721969" target="_blank">CEO at Kaloca Inc</a>, and both companies point to the same, non-loading website kaloca dot com. <br />
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Based on investigative work, Brookfield scammers are mostly working out of Northern Virginia with Carl Bryce likely
being a scammer on the West Coast, and others are using fake names. Gregory Ellis, who is allegedly working with them, had been <a href="https://www.bangkokpost.com/print/365393/" target="_blank">arrested in Thailand in 2013</a>, then jailed by the DOJ,
but was eventually released from prison and went back to his old trade.<br />
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While the walls are closing in on the scammers, various authorities are involved, victims are often taken in a circular loop, where each agency point to the other one to solve the issue. We'll keep you posted if more information comes out. Feel free to contact us if you are a victim, as if more people come together there's a better change to recover the funds.Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com8tag:blogger.com,1999:blog-7403160962524588074.post-11957272301830720702020-05-17T04:03:00.000-07:002020-05-17T04:03:10.584-07:00US Market Cap to GDP Forecast: 230% in Q2 2020In our April 19 post entitled "<a href="https://etf-investment-ideas.blogspot.com/2020/04/all-is-well-faang-stocks-hit-all-times.html" target="_blank">All is Well! FAANG Stocks Hit All Times High as the Economy Collapses</a>", we noted incredible disparities between the economy and the market. One of the metrics we used was the US market cap to GDP, aka the Buffet Indicator, which gives a sense of the valuation of the overall stock market (Willshire 5000) against the economy as measured by the GDP.<br />
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It was around 130& at the time, a level considered to represent an overvalued stock market, with 80% being fair-valued. As the stock market continued recovering, and the GDP "only" <a href="https://www.bea.gov/news/2020/gross-domestic-product-1st-quarter-2020-advance-estimate" target="_blank">dropped by 4.8%</a> in Q1 2020 for a total of 21.54 trillion dollars annualized, the ratio became slightly worse, and today it is at <a href="https://www.longtermtrends.net/market-cap-to-gdp/" target="_blank">about </a><b><a href="https://www.longtermtrends.net/market-cap-to-gdp/" target="_blank">134%</a>.</b><br />
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<a href="https://1.bp.blogspot.com/-m3h78HCNkQ8/XsEOyFN6upI/AAAAAAAAXms/Q_NP3t8hsfoidOu-hYWai8qKEaNqku5sQCLcBGAsYHQ/s1600/Buffet-Indicator-May-17-2020.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="434" data-original-width="943" height="294" src="https://1.bp.blogspot.com/-m3h78HCNkQ8/XsEOyFN6upI/AAAAAAAAXms/Q_NP3t8hsfoidOu-hYWai8qKEaNqku5sQCLcBGAsYHQ/s640/Buffet-Indicator-May-17-2020.jpg" width="640" /></a></div>
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But once numbers for Q2 2020 come out, there will need to be adjustments. Either the stock market lowers to keep the ratio realistic, or it ignored the news, and the market cap to GDP goes to lalaland at levels never seen before... So what kind of scenario may happen? To find out we'll take the more recent <a href="https://www.frbatlanta.org/-/media/documents/cqer/researchcq/gdpnow/RealGDPTrackingSlides.pdf" target="_blank">Atlanta Fed GDPNow forecast</a> for Q2 2020.<br />
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<a href="https://1.bp.blogspot.com/-jI57bji5Du0/XsEPyiIe5uI/AAAAAAAAXm0/WgmJ1B30Ja4x-giLJcPtLcaMPcJ06b8mQCLcBGAsYHQ/s1600/GDPNow-Q2-2020-Forecast.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="328" data-original-width="428" height="306" src="https://1.bp.blogspot.com/-jI57bji5Du0/XsEPyiIe5uI/AAAAAAAAXm0/WgmJ1B30Ja4x-giLJcPtLcaMPcJ06b8mQCLcBGAsYHQ/s400/GDPNow-Q2-2020-Forecast.png" width="400" /></a></div>
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That would be a 42.8% drop (annualized). So If I understand correctly, we'd take the 21.54 trillion dollars mentioned in the introduction, and deduct 42.8% for it. Total: 12.32 trillion dollars or about the same amount of 2004 GDP.<br />
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<a href="https://1.bp.blogspot.com/-Fe4-luzTi5k/XsERAthztrI/AAAAAAAAXnI/2zT24gHEH8YLxlrZdRbwHcLCoHjfAG-OQCLcBGAsYHQ/s1600/US-GDP-1995-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="417" data-original-width="780" height="342" src="https://1.bp.blogspot.com/-Fe4-luzTi5k/XsERAthztrI/AAAAAAAAXnI/2zT24gHEH8YLxlrZdRbwHcLCoHjfAG-OQCLcBGAsYHQ/s640/US-GDP-1995-2020.png" width="640" /></a></div>
Now that looks really bad, but it should also be temporary with massive jumps in GDP in Q3 and Q4 2020. If we get back to 18+ trillion dollars that would be a ~50% GDP growth over two quarters. Still significantly lower than previously, but that should allow some politicians to boast about economic performance...<br />
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What would that do to the US market cap to GDP ratio, if stocks were to stay at the current levels? We already have the estimated GDP (12.32 trillion), so we need the Wilshire 5000 market cap that is 28.77 trillion (<a href="https://ycharts.com/indicators/wilshire_5000_index_market_cap" target="_blank">courtesy of Ycharts</a>).<br />
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That a cool ratio of 233% market cap to GDP... Let's represent this on a chart...<br />
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<a href="https://1.bp.blogspot.com/-odwWS-as4cU/XsEU1G-4L5I/AAAAAAAAXnU/KkOoWOKoizAXLtoAzL-0htbsb1Sm9NhWgCLcBGAsYHQ/s1600/Wilshire-5000-GDP-Ratio-Q2-2020-Forecast.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="532" data-original-width="994" height="342" src="https://1.bp.blogspot.com/-odwWS-as4cU/XsEU1G-4L5I/AAAAAAAAXnU/KkOoWOKoizAXLtoAzL-0htbsb1Sm9NhWgCLcBGAsYHQ/s640/Wilshire-5000-GDP-Ratio-Q2-2020-Forecast.png" width="640" /></a></div>
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Beautiful! Although it's temporary, as it will come down as GDP eventually increases significantly once economies reopen.<br />
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Let's look at scenario two, where stocks magically adjust to the new GDP number. That one may not be quite realistic because markets are supposed to adjust themselves to future outcomes, although the markets have not been very good at it. But anyway, a 134% ratio would mean the Wilshire 5000 would drop from 28.77 trillion to 16.50 trillion, or a 42.6% drop.<br />
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Since most people don't follow the Wilshire 500, let's apply the 42.6% drop to the S&P 500 index at <span><span><span class="IsqQVc NprOob XcVN5d">2,863.70 points on May 15. That would make it drop to 1,643 points.</span></span></span><br />
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<a href="https://1.bp.blogspot.com/-awpdVG96sVw/XsEXqZT81WI/AAAAAAAAXng/L9z00MsmNX4ArXaBYEik2cwKRjXx3UTvACLcBGAsYHQ/s1600/SP-500-Forecast-Q2-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="699" data-original-width="936" height="476" src="https://1.bp.blogspot.com/-awpdVG96sVw/XsEXqZT81WI/AAAAAAAAXng/L9z00MsmNX4ArXaBYEik2cwKRjXx3UTvACLcBGAsYHQ/s640/SP-500-Forecast-Q2-2020.png" width="640" /></a></div>
<br />
Q2 2020 GDP first official estimate is supposed to be released in July 2020, hence the strange shape of our chart. Note at 134% TCM to GDP, the stock market would be vastly overvalued if we ignore future GDP growth.<br />
<br />
But let's take a more realistic scenario that assumes the Federal Reserve does not completely go crazy with the money supply. We would get back to 18 trillion GDP, with a fairly valued stock market (and fairly pessimistic investor sentiment) at 80% of GDP. In this case, the Wilshire 5000 would have a market capitalization of 14.4 trillion dollars. That's even lower than our case above but spread over a longer period of time. Where would be the S&P 500 then, let's say in H1 2021? That's roughly a 50% drop, meaning the S&P 500 would be around 1,430 points, the Dow Jones under 12,000. I think you get the point, no chart needed...<br />
<br />
Happy investing, and good luck! <br />
<br />Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com1tag:blogger.com,1999:blog-7403160962524588074.post-664707737423957292020-05-03T03:10:00.000-07:002020-05-03T03:10:14.882-07:00May 2020 - Is the Bear Market Rally Over? When we discussed whether <a href="https://etf-investment-ideas.blogspot.com/2020/03/2020-great-depression-of-1929-all-over.html" target="_blank">2020 might be the Great Depression of 1929 All Over Again</a> on March 22, 2020, we applied the monthly Dow Jones chart variations of 1929 to the chart 2020 and noticed there may be a rebound soon.<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-veZb1hN1C6Q/XngtZRIj7RI/AAAAAAAAWZo/MuCpLUPe3hs5nXKCHoP8povlOxdfRusEwCPcBGAYYCw/s1600/DJIA-Forecast-2020-2022.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="452" data-original-width="812" height="356" src="https://1.bp.blogspot.com/-veZb1hN1C6Q/XngtZRIj7RI/AAAAAAAAWZo/MuCpLUPe3hs5nXKCHoP8povlOxdfRusEwCPcBGAYYCw/s640/DJIA-Forecast-2020-2022.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">2020 Redux of 1929 Dow Jones chart</td></tr>
</tbody></table>
<br />
and the market indeed started to rally almost immediately, then we thought we might get back to around 23,000 points by May/June, and plateau there for a while...<br />
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<a href="https://1.bp.blogspot.com/-9HMhLYSLCNg/Xq6LYK7csRI/AAAAAAAAXYE/n9C99phx1ZoteMrX1VMGJF-rZ0ID6BJ4gCLcBGAsYHQ/s1600/Dow-Jones-2020-Bear-Market-Rally.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="783" data-original-width="1600" height="312" src="https://1.bp.blogspot.com/-9HMhLYSLCNg/Xq6LYK7csRI/AAAAAAAAXYE/n9C99phx1ZoteMrX1VMGJF-rZ0ID6BJ4gCLcBGAsYHQ/s640/Dow-Jones-2020-Bear-Market-Rally.jpg" width="640" /></a></div>
<br />
We've gone beyond that level to almost 25,000 now as shown by the 3-month daily until May 1st. So it might be a good time checking out technicals again, as we all know <a href="https://etf-investment-ideas.blogspot.com/2020/04/all-is-well-faang-stocks-hit-all-times.html" target="_blank">fundamentals look horrible</a>.<br />
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<a href="https://1.bp.blogspot.com/-JVqnzGsoItA/Xq6MmCqL6wI/AAAAAAAAXYQ/f05KSe32-oklX9JN7NIOIw6fZPMViqhqgCLcBGAsYHQ/s1600/61.8-percent-Fibonacci-retracement-SP500-April-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="644" data-original-width="829" height="496" src="https://1.bp.blogspot.com/-JVqnzGsoItA/Xq6MmCqL6wI/AAAAAAAAXYQ/f05KSe32-oklX9JN7NIOIw6fZPMViqhqgCLcBGAsYHQ/s640/61.8-percent-Fibonacci-retracement-SP500-April-2020.png" width="640" /></a></div>
<br />
The red line above corresponds to the 61.8% Fibonacci retracement, a <a href="https://markets.businessinsider.com/news/stocks/sp500-crucial-threshold-could-sharp-losses-imminent-stocks-sell-may-2020-4-1029152270" target="_blank">bearish technical indicator</a> that could indicate the bear market rally may be over, and we may at least re-test the low.<br />
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<a href="https://1.bp.blogspot.com/-Ha3kZXAllk0/Xq6QpJYlXEI/AAAAAAAAXYc/lG70wFsLm7Y7ZuRg4AzvLRhtJ7_f7DNUgCLcBGAsYHQ/s1600/SP500-RSI-14.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="798" data-original-width="1600" height="318" src="https://1.bp.blogspot.com/-Ha3kZXAllk0/Xq6QpJYlXEI/AAAAAAAAXYc/lG70wFsLm7Y7ZuRg4AzvLRhtJ7_f7DNUgCLcBGAsYHQ/s640/SP500-RSI-14.png" width="640" /></a></div>
<br />
<br />
If we look at the 14-day relative strength index (RSI-14), we can see a top at 59.76 on April 29, not quite oversold just yet, but close to the level we were on February 18, 2020 top (RSI-14 = ~65).<br />
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<a href="https://1.bp.blogspot.com/-iwUncL16aa0/Xq6RdNedhgI/AAAAAAAAXYk/G9dc_NKd0Ug4T8-fc8G7FYGFRI6IK5BqQCLcBGAsYHQ/s1600/AAII-Sentiment-Survey-April-30-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="645" data-original-width="1064" height="386" src="https://1.bp.blogspot.com/-iwUncL16aa0/Xq6RdNedhgI/AAAAAAAAXYk/G9dc_NKd0Ug4T8-fc8G7FYGFRI6IK5BqQCLcBGAsYHQ/s640/AAII-Sentiment-Survey-April-30-2020.png" width="640" /></a></div>
<br />
Individual investors are not overly bullish and stay bearing on aggregate with a -13.43% bull-bear spread, which means this rally may last a bit longer.<br />
<br />
<br />
In "normal times", I'd have no problem shorting this market, but with Central bank involvement we simply don't know where's it's going. The BOJ (Bank of Japan) has been printing money for years, and it has not helped their market a bit, but if we turn our eyes on Venezuela, and the Caracas market, money printing does work... when it comes to boosting the stock market.<br />
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<a href="https://1.bp.blogspot.com/-3eaGCgWoPFc/Xq6Xbp2jKqI/AAAAAAAAXYw/lzEfmvO69iweSjKpovLvlqHqalx9nS3DgCLcBGAsYHQ/s1600/IBVC-Caracas-Stock-Market-2020-1-year.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="520" data-original-width="774" height="428" src="https://1.bp.blogspot.com/-3eaGCgWoPFc/Xq6Xbp2jKqI/AAAAAAAAXYw/lzEfmvO69iweSjKpovLvlqHqalx9nS3DgCLcBGAsYHQ/s640/IBVC-Caracas-Stock-Market-2020-1-year.png" width="640" /></a></div>
<br />
That's over ten times return on investment over one year, and 210.94% since the beginning of 2020 in local currency... But the Venezuelan Bolívar crashed compared to the US Dollar, and the country is suffering from hyperinflation, something that's highly unlikely in developed economies in the short term, but not completely impossible over the long term depending on central banks actions.<br />
<br />
We still favor "sell in May and go away" for the S&P 500, Dow Jones, and most markets around the world.<br />
<br />
<br />Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-50774425143956431802020-04-19T06:28:00.000-07:002020-04-19T06:34:13.395-07:00All is Well! FAANG Stocks Hit All Times High as the Economy CollapsesThe economy is in shamble with predictions of 20%+ drop in Q2 GDP and so far 22 million people filing for unemployment in the US in the last four weeks, but the market acts as if nothing happened with the NASDAQ positive for the year.<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-j7phZr6ZdGI/XpxGhyrusPI/AAAAAAAAXMo/lvtY8T1qgoYfwtJBJgD0kOcCf-Sww7HLwCLcBGAsYHQ/s1600/NASDAQ-2020-April-17.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="460" data-original-width="650" height="452" src="https://1.bp.blogspot.com/-j7phZr6ZdGI/XpxGhyrusPI/AAAAAAAAXMo/lvtY8T1qgoYfwtJBJgD0kOcCf-Sww7HLwCLcBGAsYHQ/s640/NASDAQ-2020-April-17.png" width="640" /></a></div>
A lot of it as to do with the various government stimulus, FED balance sheet going through the roof, as well as more demand from companies providing services for the many "work from home" (WFH) workers due to lockdowns.<br />
<br />
But if we look into the details it's not that pretty, as <a href="https://www.zerohedge.com/markets/nasdaq-100-surges-back-green-2020-small-caps-down-30" target="_blank">FAANG stocks </a>are responsible for most of the rise. In other words, it's not a broad market rally, and many NASDAQ stocks are still way down.<br />
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<a href="https://1.bp.blogspot.com/-neVlZDE8JJM/XpxJul7XLQI/AAAAAAAAXM0/pSWqTDc2a6wxgZ9qRF2HpZHsTcHJonDaACLcBGAsYHQ/s1600/FAANGS-Stocks-All-Time-High.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="485" data-original-width="976" height="318" src="https://1.bp.blogspot.com/-neVlZDE8JJM/XpxJul7XLQI/AAAAAAAAXM0/pSWqTDc2a6wxgZ9qRF2HpZHsTcHJonDaACLcBGAsYHQ/s640/FAANGS-Stocks-All-Time-High.png" width="640" /></a></div>
<br />
From a historical perspective, most bear markets will have a bear market rally, as shown from the S&P 500 chart below between 1998 and 2020. Source: <a href="http://northmantrader/" target="_blank">NorthmanTrader</a>.<br />
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<a href="https://1.bp.blogspot.com/-iVKFrAuHy-I/XpxKmYE0A-I/AAAAAAAAXM8/W7T7Q1-aKNw_sXbL9axHQYqQoDgvlMj8QCLcBGAsYHQ/s1600/Bear-Market-Rallies-1998-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="774" data-original-width="1600" height="308" src="https://1.bp.blogspot.com/-iVKFrAuHy-I/XpxKmYE0A-I/AAAAAAAAXM8/W7T7Q1-aKNw_sXbL9axHQYqQoDgvlMj8QCLcBGAsYHQ/s640/Bear-Market-Rallies-1998-2020.png" width="640" /></a></div>
<br />
You could always say "but Dark Horse, <a href="https://etf-investment-ideas.blogspot.com/2020/03/2020-great-depression-of-1929-all-over.html">2020 won't be like the great depression</a>, and instead, it's just like 1987, we had the "best economy ever" and it's all up from here after everybody goes back to work + FED put!". To that argument, I'd answer the market was not overextended in 1987 as shown by the <a href="https://www.longtermtrends.net/market-cap-to-gdp/" target="_blank">market cap to GDP ratio</a> aka "buffer indicator".
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<a href="https://2.bp.blogspot.com/-2HWzN27gEGQ/XpxMU3dxSiI/AAAAAAAAXNI/TuISguIsc4EKK7hjQTRDeiXXj3RN2upSACLcBGAsYHQ/s1600/Market-Cap-to-GDP-1987-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="588" data-original-width="1172" height="321" src="https://2.bp.blogspot.com/-2HWzN27gEGQ/XpxMU3dxSiI/AAAAAAAAXNI/TuISguIsc4EKK7hjQTRDeiXXj3RN2upSACLcBGAsYHQ/s640/Market-Cap-to-GDP-1987-2020.png" width="640" /></a></div>
Before the crash in 1987, the market cap to GDP was just 64%, and now it's around 130% before dismissal GDP numbers are announced meaning it should be above the previous record soon.<br />
<br />
I'm a big believer in mean reversion of things like market cap to GDP and PER ratio / CAPE ratio. We previously wrote how many <a href="https://etf-investment-ideas.blogspot.com/2020/03/overvalued-markets-march-2020-top-10.html" target="_blank">markets were overvalued</a> including the US markets, and GMO just released their quarterly update with <a href="https://www.gmo.com/asia/research-library/gmo-7-year-asset-class-forecast-1q-2020/" target="_blank">their expectations</a> of yearly returns for various markets over a 7-year period.<br />
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<a href="https://1.bp.blogspot.com/-54W9adbXPqY/XpxOPxn_tuI/AAAAAAAAXNU/lBd0s81gOfcSO42Z88ks_vVq7-Dx8FV-ACLcBGAsYHQ/s1600/GMO-7-year-forcast-q1-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="437" data-original-width="910" height="306" src="https://1.bp.blogspot.com/-54W9adbXPqY/XpxOPxn_tuI/AAAAAAAAXNU/lBd0s81gOfcSO42Z88ks_vVq7-Dx8FV-ACLcBGAsYHQ/s640/GMO-7-year-forcast-q1-2020.png" width="640" /></a></div>
<br />
That means large US stocks may lose around 1.5% a year over the next seven years, not a nice proposition especially when considering those numbers were after the correction in March 2020. Also note bonds don't look to be a good place to hide either, but emerging value stocks have some good prospects, and we previously mentioned that <a href="https://etf-investment-ideas.blogspot.com/2020/02/the-case-for-investing-in-chinese.html" target="_blank">Chinese commodity producers</a> may be a place to look for investment opportunities.<br />
<br />
I'd still stay very prudent here as there are many risks around. We are quite surprised people expect a vaccine by 12 to 18 months, as we would like to remind our readers that some virus-induced diseases don't have a vaccine, think AIDS or dengue fever. The latter is even scarier because you don't develop immunity, and instead, the risk of death is greater the second time, and even more the third time. There have been reports that released COVID-19 patients have <a href="https://www.reuters.com/article/us-health-coronavirus-southkorea-explain/explainer-why-are-some-south-koreans-who-recovered-from-the-coronavirus-testing-positive-again-idUSKCN21Y0UE" target="_blank">contracted the disease again</a>, so herd immunity is not even a given, but so far there's no indication that the second infection is nastier like for dengue fever.<br />
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Stay safe! We live in scary times for our health, finances, and freedom from governments. Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-55424013925990308592020-04-13T03:14:00.002-07:002020-05-24T06:45:03.663-07:00Fraudulent Company Warning: WELLINGTON YORK PARTNERS PTE. LTD.A coupled of months ago we wrote about <a href="https://etf-investment-ideas.blogspot.com/2020/02/financial-fraud-airbnb-and-virgin.html" target="_blank">AirBnB and Virgin Hyperloop One Pre-IPO fraud</a> where victims would receive cold calls from native English-speaking, apparently financially savvy "financial investors" proposing them to invest in pre-IPO offerings from popular companies that had yet to be listed in the stock market.<br />
<br />
They work for fake companies and instead ask victims to invest through escrow companies "for your safety". We previously mentioned Kaloca Inc (USA) and Vipco Holdings (Singapore) used by Van Gossum Consult, Brookfield Investment Funds Plc, and others, but we were informed about another company helping scammers: WELLINGTON YORK PARTNERS PTE. LTD<br />
.<br />
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<a href="https://1.bp.blogspot.com/-CWY2Gb6hC4Q/XpQ6LOED_AI/AAAAAAAAXEc/KzS5VxpNTmMWoWXNzw1gHJjH4i3IaYg7ACLcBGAsYHQ/s1600/Wellington-York-Partners-Fraud.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="365" data-original-width="750" height="310" src="https://1.bp.blogspot.com/-CWY2Gb6hC4Q/XpQ6LOED_AI/AAAAAAAAXEc/KzS5VxpNTmMWoWXNzw1gHJjH4i3IaYg7ACLcBGAsYHQ/s640/Wellington-York-Partners-Fraud.jpg" width="640" /></a></div>
<br />
<br />
Victims who contacted us receiving an invoice with the following details: <br />
<br />
<blockquote class="tr_bq">
WELLINGTON YORK PARTNERS PTE. LTD. <br />
68 Circular Rd.,<br />
Suite 02‐01,<br />
Singapore 049422<br />
Account Number: 348 903 0630<br />
Bank Name: UNITED OVERSEAS BANK LIMITED<br />
Bank Address: UOB Plaza<br />
80 Raffles Place,<br />
Singapore 048624<br />
Swift Code: UOVBSGSG</blockquote>
Make sure not to make any payment to this company, and if you've received an invoice you can contact the police, and/or the <a href="https://www.sgdi.gov.sg/ministries/mha/departments/spf/departments/cad" target="_blank">Commercial Affairs Department</a> in Singapore to report the company.<br />
<br />
The company has a website which we will not publicize here, but while they claim to operate since 1986, they only thought of registering the website in 2018...<br />
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<a href="https://1.bp.blogspot.com/-WOAEJpy85cU/XpQ6vh7AkII/AAAAAAAAXEk/YjizszNUCZMOBHV131hQnHcIA0oGOe1AACLcBGAsYHQ/s1600/wellingtonandyorkpartners.com-whois.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="324" data-original-width="600" height="344" src="https://1.bp.blogspot.com/-WOAEJpy85cU/XpQ6vh7AkII/AAAAAAAAXEk/YjizszNUCZMOBHV131hQnHcIA0oGOe1AACLcBGAsYHQ/s640/wellingtonandyorkpartners.com-whois.jpg" width="640" /></a></div>
<br />
Since the company is registered in Singapore, there's a searchable business registry, and we can see the company was only incorporated on <a href="https://www.sgpbusiness.com/company/Wellington-York-Partners-Pte-Ltd" target="_blank">the 7th of June 2019</a>.<br />
<br />Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com2tag:blogger.com,1999:blog-7403160962524588074.post-28067343660794430122020-04-01T01:10:00.002-07:002020-04-01T01:13:21.103-07:00Fraud Warning - COVID-19 Bank Scams<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-siVfeobvB0I/XoRNGH6Wx5I/AAAAAAAAWqU/C_NUBgS0TAYKHS46ZAt8QKblKnpgB_59gCLcBGAsYHQ/s1600/covid-19-bank-scam.webp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="612" height="320" src="https://1.bp.blogspot.com/-siVfeobvB0I/XoRNGH6Wx5I/AAAAAAAAWqU/C_NUBgS0TAYKHS46ZAt8QKblKnpgB_59gCLcBGAsYHQ/s320/covid-19-bank-scam.webp" width="272" /></a></div>
In February 2020, we wrote about one particular type of<a href="https://etf-investment-ideas.blogspot.com/2020/02/financial-fraud-airbnb-and-virgin.html" target="_blank"> financial fraud, namely pre-IPO offering for well-known companies like Virgin Hyperloop One and AirBnB</a>, where the scammer call victims offering investment opportunities.<br />
<br />
But just like politicians, scammers never let a crisis go to waster, and we've received information from Standard Chartered Bank so some are trying to exploit COVID-19 pandemic to prey on victims.<br />
<br />
Here's the email from the bank:<br />
<br />
<br />
<b>Protect your business from COVID-19 bank scams</b><br />
<br />
Criminals are exploiting the COVID-19 pandemic to target and scam bank clients. They are using social engineering techniques (Phishing and Vishing) to hack or spoof business email accounts to fool potential victims into making fraudulent payments or to gain access to online banking authentication credentials for financial gain.<br />
<br />
Please be extra vigilant and heed the following advice:<br />
<br />
<ul>
<li>Do not disclose your S2B credentials, VASCO OTP or account details to anyone, as this may compromise the security of your account.</li>
<li>If you receive any suspicious emails, do not click on links or attachments until you have validated the source. Please ensure that you access your bank account only through our official channels.</li>
<li>If you receive any suspicious text messages or phone calls, do not respond directly, please verify if the message or the caller is legitimate. </li>
<li>Validate any new bank account details directly with your suppliers / clients. If you notice unauthorised transactions appearing in your account, please report to us immediately. </li>
</ul>
Thank you for banking with us.Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-23582545019392439412020-03-29T02:15:00.001-07:002020-03-29T02:15:24.867-07:00How Long Will the COVID-19 Response Impact the Economy?COVID-19 pandemic and its public policy response have caused a massive drop in economic activity. It's a given that Q1 and Q2 GDP numbers will be negative worldwide, but what can we expect going forward?<br />
<br />
One way to look a the future is to check how China is doing to far since they were the first impacted and based on data coming from the government managed to contain SARS-CoV-2 virus by the end of February 2020.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-DX3-Nzy3Dk4/XoBOZzbRUtI/AAAAAAAAWgc/sRtcsZj90RwyxSiomfCaw40kVmnT65LbgCLcBGAsYHQ/s1600/COVID-19-Cases-in-China.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="744" data-original-width="1600" height="296" src="https://1.bp.blogspot.com/-DX3-Nzy3Dk4/XoBOZzbRUtI/AAAAAAAAWgc/sRtcsZj90RwyxSiomfCaw40kVmnT65LbgCLcBGAsYHQ/s640/COVID-19-Cases-in-China.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">COVID-19 Cases in China</td></tr>
</tbody></table>
This was achieved thanks to draconian lockdown measures, including locking persons suspected to be infected into their home. Shanghai stock market did drop by around 10 percent during Chinese New Year but quickly recovered, until it become clear COVID-19 would have a serious impact all around the world.<br />
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<a href="https://1.bp.blogspot.com/-irxrUJ_XSnQ/XoBO_2XqP7I/AAAAAAAAWgk/VCQlWwbKWq0p-EPFCXzWkGCdKK_3pWOqQCLcBGAsYHQ/s1600/Shanghai-Stock-Market-COVID-19.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="508" data-original-width="757" height="428" src="https://1.bp.blogspot.com/-irxrUJ_XSnQ/XoBO_2XqP7I/AAAAAAAAWgk/VCQlWwbKWq0p-EPFCXzWkGCdKK_3pWOqQCLcBGAsYHQ/s640/Shanghai-Stock-Market-COVID-19.png" width="640" /></a></div>
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The PMI dropped sharply in February to 35.70 points, but we still have to wait longer to know the extent of the rebound in March and April.<br />
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Many businesses have re-opened, and while Hubei province has recently re-opened its borders (March 28), <a href="https://www.scmp.com/news/china/society/article/3077393/coronavirus-police-public-clash-border-reopens-between-hubei-and" target="_blank">neighboring provinces are still wary</a> of letting people travel. We also have contact in China, that non-essential business (e.g. entertainment) will not re-open until the end of April, and that's in Liaoning far from the epicenter in Wuhan. So in China, it's quite possible the local economy returns to normal in May. It would have been 4 full months since the beginning of the spread of the disease. However, China's GDP will certainly be impacted by the drop of activity in the rest of the world that is around 1.5 months behind in terms of cases.<br />
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My best-case scenario where the virus is contained around the world as fast as it was in China is that activity returns to "normal", yet somewhat lower levels, in July 2020. That would mean a sharply higher quarter-on-quarter Q3 GDP (worldwide), but still fairly lower year-on-year.<br />
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This assumes somehow few businesses and consumers bankruptcies, not currency crisis following helicopter money from central banks, or any other major financial issues related to the COVID-19 shutdown. How likely is that I'm not so sure, but this was the <a href="https://finance.yahoo.com/news/u-economy-shrink-24-april-155126416.html" target="_blank">view of Goldman Sachs</a> around a week ago with a 24% GDP drop in Q2 in the US, followed by +10% in Q3, and +8% in Q4 with the full year down 3.8%.<br />
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<a href="https://1.bp.blogspot.com/-K4oaWWMrG0I/XoBTsUcf3xI/AAAAAAAAWg8/5x-228N5l_gxiDf874q692DQFCOTr6jcACLcBGAsYHQ/s1600/Goldman-Sachs-Q2-Q3-Q4-2020-GDP.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="441" data-original-width="626" height="448" src="https://1.bp.blogspot.com/-K4oaWWMrG0I/XoBTsUcf3xI/AAAAAAAAWg8/5x-228N5l_gxiDf874q692DQFCOTr6jcACLcBGAsYHQ/s640/Goldman-Sachs-Q2-Q3-Q4-2020-GDP.png" width="640" /></a></div>
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That would be a short recession, but considering how the <a href="https://etf-investment-ideas.blogspot.com/2020/03/overvalued-markets-march-2020-top-10.html" target="_blank">US stock market was extended in February 2020</a> (and still is), problems are likely to linger much longer in the US, and many other countries.<br />
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Viruses are also interesting creatures, and earlier this month, we tried to look at the <a href="https://etf-investment-ideas.blogspot.com/2020/03/what-did-us-stock-market-look-like.html" target="_blank">1918-1919 Spanish flu to understand the economic and market impact</a> of the novel Coronavirus, and we posted this chart representing the numbers of death per 100,000 in the UK at the time.<br />
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<a href="https://1.bp.blogspot.com/-rLE5VdTBDFk/XluyeEZyOfI/AAAAAAAAWFA/w8y4B3NcDacM5RB8t8VRQga87-zKy1tlQCPcBGAYYCw/s1600/Spanish-Flu-Deaths.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="308" data-original-width="600" height="328" src="https://1.bp.blogspot.com/-rLE5VdTBDFk/XluyeEZyOfI/AAAAAAAAWFA/w8y4B3NcDacM5RB8t8VRQga87-zKy1tlQCPcBGAYYCw/s640/Spanish-Flu-Deaths.png" width="640" /></a></div>
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Viruses come in waves. It started in June-July 1918, then dropped until around early October, before coming back with a vengeance until the end of December with a small retrieve in January, before the last wave topping in in March 1919 before ending at the end of May 1919.<br />
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If this pattern occurred again that would be mean on and off lockdowns over a 10+ month period in each country, meaning nearly 12 months of lower economic activity worldwide, and the greatest depression we've ever seen. I have no clear idea what the world would look like in that case but there would be a low economic activity, out of control money printing, resulting in inflation down the road especially if they keep giving money directly to citizens also called MMT (Modern Monetary Theory) leading to the <a href="https://finance.yahoo.com/news/coronavirus-hyperinflation-looms-buy-gold-124257282.html" target="_blank">inflationary depression touted by Peter Schiff</a>, at least in the US and the western world.<br />
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How will it exactly pan out? We just don't know, nor does anybody and only time will tell, but everybody should be aware of the risks and prepare at best as they can.Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-87014578572139432872020-03-22T20:35:00.001-07:002020-03-22T20:43:52.165-07:002020: The Great Depression of 1929 All Over Again?Following the governments' responses to the threat posed by COVID-19, stock markets around the world have collapsed rapidly and entered bear markets. How does the 3-week drop compare to historical events in 1929 and 1987? Here's how<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-cns6pNK87t4/Xngh85IcipI/AAAAAAAAWZM/vg_pqMaEN5sGXf7qG-vNoxUbM-fn8ufEgCLcBGAsYHQ/s1600/Bear-Market-1929-1987-2020.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="602" data-original-width="800" height="480" src="https://1.bp.blogspot.com/-cns6pNK87t4/Xngh85IcipI/AAAAAAAAWZM/vg_pqMaEN5sGXf7qG-vNoxUbM-fn8ufEgCLcBGAsYHQ/s640/Bear-Market-1929-1987-2020.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: <a href="https://www.zerohedge.com/markets/crash-2000-now-worse-great-depression" target="_blank">ZeroHedge</a></td><td class="tr-caption" style="text-align: center;"><br /></td></tr>
</tbody></table>
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As of March 20, the drop is faster and deeper than for the first 40 days of the crash of 1929, and faster, but not quite as bad (yet) that the crash of 1987. The October 1987 crash was a one-time event that did not affect the economy that much, but analysts expect some serious repercussions in the real economy with expectations of <a href="https://www.cnbc.com/2020/03/20/goldman-sees-an-unprecedented-stop-of-economic-activity-with-2nd-quarter-gdp-contracting-by-24percent.html">a 24% GDP contraction in the US</a> and <a href="https://nairametrics.com/2020/03/20/world-economy-to-shrink-by-12-in-q2-bank-of-america/">up to 12% worldwide</a> in Q2 2020,<br />
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That's worse than the great depression, so we may expect similar results, especially we also started with an overvalued stock market. There's one important difference though: the policy response is now much different with central banks and government throwing money around like there's no tomorrow. This will likely not prevent deflation in the short term, but a long period of deflation is unlikely. With that out of the way, let's have a look at the chart of the Dow Jones index during 1929 and 1932 courtesy of <a href="https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart" target="_blank">MacroTrends</a>.<br />
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<a href="https://1.bp.blogspot.com/-JtYPrHSU38Y/XnglPHxYU5I/AAAAAAAAWZY/_zx7ji1S9Qo4TopesRNJtjVXdeInk6xNQCLcBGAsYHQ/s1600/Crash-1929-1932-chart.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="543" data-original-width="865" height="400" src="https://1.bp.blogspot.com/-JtYPrHSU38Y/XnglPHxYU5I/AAAAAAAAWZY/_zx7ji1S9Qo4TopesRNJtjVXdeInk6xNQCLcBGAsYHQ/s640/Crash-1929-1932-chart.png" width="640" /></a></div>
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I've marked the tops and bottom with respectively green and red dots. Bear in mind, this is a monthly chart so the data represents the end of month value, not the absolute tops or bottoms. The Dow Jones topped at 5686.69 in August 1929 before falling to 3572.79 points in November 1929, or a 37% drop in 3 months. It was followed by a bear market rally that topped at 4379.05 in March 1930, a 22.5% increase. Then the market "slowly" collapsed to 814.82 over the course of 2 years a massive collapse of around 82%. If counted from the top of 1929, the stock market dropped by 85.6%.<br />
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While I don't believe the exact same scenario will happen, let's see how low the Dow Jones would have to fall to match the same pattern as in 1929.<br />
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The Dow Jones reached a top of 29,551.42 in February 2020. A 37% drop over three months would mean a Dow Jones valued at around 18,600 in May 2020. We are almost there though after a little over three weeks with <span class="Trsdu(0.3s) Fw(b) Fz(36px) Mb(-4px) D(ib)">19,173.98 points. So we may not have to wait that long for a dead cat bounce. With a percentage gain of 22.5% that would bring us to around 22,800 points in the next three to four months or May/June considering a rebound starting as early as March. Under our scenario, it may stay at this level for a while, and then for whatever reason (second wave of COVID-19?) collapse to depression levels by May/June 2022: That would be 4,104 points, even lower than </span><span class="Trsdu(0.3s) Fw(b) Fz(36px) Mb(-4px) D(ib)"><span class="ILfuVd"><span class="e24Kjd">the market low of 6,469.95 reached on March 6, 2009</span></span>. Put it that way it does not seem as impossible. Is it likely? Maybe not, as it would mean all that money created out of thin air would go in other assets than the stock market. Charles Nenner <a href="https://usawatchdog.com/we-are-heading-for-a-depression-charles-nenner/" target="_blank">has been forecasting</a> a market bottom at 5,000 points based on his work on cycles so it's not so far off.</span><br />
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<span class="Trsdu(0.3s) Fw(b) Fz(36px) Mb(-4px) D(ib)">So I've created a virtual chart of the Dow Jones with the data points above, and a slightly compressed schedule with the bottoming occurring in December 2021.</span><br />
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<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-veZb1hN1C6Q/XngtZRIj7RI/AAAAAAAAWZk/9eFQX5mixfMUD_mitTf63usKdE0-Us0LwCLcBGAsYHQ/s1600/DJIA-Forecast-2020-2022.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="452" data-original-width="812" height="356" src="https://1.bp.blogspot.com/-veZb1hN1C6Q/XngtZRIj7RI/AAAAAAAAWZk/9eFQX5mixfMUD_mitTf63usKdE0-Us0LwCLcBGAsYHQ/s640/DJIA-Forecast-2020-2022.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Dow Jones Simulation - Jan 2020 - Dec 2021</td></tr>
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<span class="Trsdu(0.3s) Fw(b) Fz(36px) Mb(-4px) D(ib)"><br /></span>
<span class="Trsdu(0.3s) Fw(b) Fz(36px) Mb(-4px) D(ib)"> It's not a prediction, just a simulation of what the next two years would look like if the Global Great Depression of 2020 had indeed started, and would take a path similar to the great depression of 1929. Hopefully, it's all wrong. Note that during market bottoms, the Gold price historically happens to match the Dow Jones price, so it would be at over $4,000 per ounce in our scenario.</span><br />
<span class="Trsdu(0.3s) Fw(b) Fz(36px) Mb(-4px) D(ib)"><br /></span>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-57464918873594554622020-03-15T03:02:00.001-07:002020-03-15T03:10:23.234-07:00Overvalued Markets (March 2020) - Top 10 CountriesLast week we wrote about the <a href="https://etf-investment-ideas.blogspot.com/2020/03/undervalued-markets-in-march-2020-top.html" target="_blank">top 10 undervalued stock markets</a> using data <a href="https://www.starcapital.de/en/research/stock-market-valuation/" target="_blank">from StarCapital AG</a>. Data is up-to-date as of February 28th, 2020, and markets went through interesting gyrations in the last two weeks, to say the least.<br />
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But let's go ahead anyway with a list of the top 10 overvalued markets based on metrics such as CAPE (Cost Adjusted Price Earning Ratio), average dividend yield, price-to-book ratio, and price-to-sales-ratio.<br />
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<a href="https://1.bp.blogspot.com/-NFN1tXY8S5g/XmR3vtGbUNI/AAAAAAAAWME/pMjjHYiSPdYLidZXQS84xxEJb2rcV4jQwCPcBGAYYCw/s1600/country-stock-market-valuation.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="710" data-original-width="1056" height="430" src="https://1.bp.blogspot.com/-NFN1tXY8S5g/XmR3vtGbUNI/AAAAAAAAWME/pMjjHYiSPdYLidZXQS84xxEJb2rcV4jQwCPcBGAYYCw/s640/country-stock-market-valuation.png" width="640" /></a></div>
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Here's the list of the top ten most undervalued markets as of March 2020.<br />
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<a href="https://1.bp.blogspot.com/-rg3afERL4iY/Xm36WkpS7SI/AAAAAAAAWUk/99Fatg-Thow2RhdZw7ycv5V8amyJMqPzACLcBGAsYHQ/s1600/overvalued-country-stock-market-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="362" data-original-width="983" height="234" src="https://1.bp.blogspot.com/-rg3afERL4iY/Xm36WkpS7SI/AAAAAAAAWUk/99Fatg-Thow2RhdZw7ycv5V8amyJMqPzACLcBGAsYHQ/s640/overvalued-country-stock-market-2020.png" width="640" /></a></div>
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Indonesia was the most expensive at the time, followed by the United States, India, New Zealand, Denmark, as well as Australia, Brazil, the Netherlands, Belgium, South Africa, and Switzerland. Most have experienced a sharp 20 to 30% drop in the last two weeks, Let's have a look at the 10-year charts of the largest markets, namely the United States, India, and Australia, using <a href="https://tradingeconomics.com/" target="_blank">Trading Economics</a> as the source.<br />
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<a href="https://1.bp.blogspot.com/-zBm3XEQRQIw/Xm3z41X66-I/AAAAAAAAWT0/HRzh28WYasIhIQ_Exol2pien9aZtPFlGwCLcBGAsYHQ/s1600/SP-500-10-Year-Chart.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="616" data-original-width="786" height="501" src="https://1.bp.blogspot.com/-zBm3XEQRQIw/Xm3z41X66-I/AAAAAAAAWT0/HRzh28WYasIhIQ_Exol2pien9aZtPFlGwCLcBGAsYHQ/s640/SP-500-10-Year-Chart.png" width="640" /></a></div>
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The S&P 500 has a CAPE of around 28 before the drop. It went down as low as 2,400 points this week but ended the week at 2,711 points. Even with the drop of around 20%, the CAPE is still well over 20 historically speaking is considering to be overvalued for the US market. To get into undervalued territories, we'd have to go with a CAPE of under 10 which means the S&P 500 under 1,000 points at current levels. Note earnings are likely to sharply drop in the next quarters due to the <a href="https://www.cnx-software.com/2020/01/31/coronavirus-impact-on-manufacturing-and-shipping-from-china/" target="_blank">reaction to the coronavirus outbreak</a>.<br />
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<a href="https://1.bp.blogspot.com/-bDk0HQGBX_Q/Xm33J3tPNVI/AAAAAAAAWUM/bP2gdx1rXo8tfQsSDGD_RFvrOSScqi-qACLcBGAsYHQ/s1600/US-Market-CAP-to-GDP.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="606" data-original-width="1163" height="332" src="https://1.bp.blogspot.com/-bDk0HQGBX_Q/Xm33J3tPNVI/AAAAAAAAWUM/bP2gdx1rXo8tfQsSDGD_RFvrOSScqi-qACLcBGAsYHQ/s640/US-Market-CAP-to-GDP.png" width="640" /></a></div>
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Another way to look at the long term valuation of the stock market is to check the valuation against the GDP. The Whilshire 5000 to GDP ratio (source: <a href="https://www.longtermtrends.net/market-cap-to-gdp/" target="_blank">longtermtrends</a>) is around 1.2 right now well above the historical average of ~0.8. If we ever went back to the ratio reached in 2009, the S&P 500 would be around 1,200 points.<br />
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<a href="https://1.bp.blogspot.com/-siENqNJI1pg/Xm31yMPnSGI/AAAAAAAAWUA/Ue-Vv4G5x0Ql4jdR8UTLGgcwi9OefNh_gCLcBGAsYHQ/s1600/India-SENSEX-2010-2020.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="528" data-original-width="771" height="438" src="https://1.bp.blogspot.com/-siENqNJI1pg/Xm31yMPnSGI/AAAAAAAAWUA/Ue-Vv4G5x0Ql4jdR8UTLGgcwi9OefNh_gCLcBGAsYHQ/s640/India-SENSEX-2010-2020.png" width="640" /></a></div>
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Moving to India's stock market with the 10-year chart of the SENSEX shows the recent drop in perspective with the market still doubling since the lows in 2012. If we look at the 2008 lows when the SENSEX was at around 9,000 it nearly quadrupled in 12 years. If earnings grow at that pace that's not an issue, but the rise was also due to an expansion to the price-earning ratio which led to the overvaluation of the market.</div>
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The<span class="title-indicator"> Australia S&P/ASX 200 stock market index</span><span class="title-notes hidden-sm hidden-md hidden-xs"></span> does not look as extended as the other two. The CAPE was 18.7 at the end of February, and the sharp drop have brought it down just under 15. We don't have historical information about the Australian CAPE, but it's clearly not in undervaluation territories. Another measure to look at is the PB (Price-to-Book) ratio which was at 2.0, and undervalued markets are often around or even under 1. </div>
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It normally takes one to two years for a bear market to bring valuations to fair value or undervalued, and Charles Nenner, a market cycles specialist, <a href="https://usawatchdog.com/we-are-heading-for-a-depression-charles-nenner/" target="_blank">expects markets to bottom out</a> at the end of 2021. Note that shorting stocks may be very risky due to the central bank involvement in markets (if they print enough, stocks will go higher no matter what), and purchasing bear ETFs often have very high associated costs. </div>
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Despite globalization, not all markets move in unison and some of the <a href="https://etf-investment-ideas.blogspot.com/2020/03/undervalued-markets-in-march-2020-top.html" target="_blank">undervalued markets</a> we pointed out last week start to have interesting valuation although it may pay to be patient. I'd see further weakness in Russia, Singapore, Austria, and South Korea as a potential buying opportunity once the situation with the Coronavirus become a little more clear.</div>
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Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-16788387477011827662020-03-07T23:40:00.000-08:002020-03-07T23:40:15.973-08:00Undervalued Markets in March 2020 - Top 10 CountriesValue and contrarian investors will always look for undervalued and unloved markets or stocks, and one tool I like to use to find out which market may be worth looking into is <a href="https://www.starcapital.de/en/research/stock-market-valuation/" target="_blank">Starcapital stock market valuation</a> that ranks different countries based on their CAPE (Cost Adjusted Price Earning Ratio), average dividend yield, price-to-book ratio, and price-to-sales-ratio. They also show RS26 (26-weeks relative strength) and RS52 ratio to show which markets were oversold or overbought in respectively the last 6 months and the last year.<br />
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This is what the map looks like on February 28, 2020 with countries in blue being undervalued, and the ones in red being overvalued using CAPE as reference.<br />
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<a href="https://1.bp.blogspot.com/-6TxuIVAj9hU/XmR4R7vnZnI/AAAAAAAAWMI/VUhZ5eNkIAM3i7s1-w3xyY73cBfFlHPRACLcBGAsYHQ/s1600/country-stock-market-valuation.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="710" data-original-width="1056" height="430" src="https://1.bp.blogspot.com/-6TxuIVAj9hU/XmR4R7vnZnI/AAAAAAAAWMI/VUhZ5eNkIAM3i7s1-w3xyY73cBfFlHPRACLcBGAsYHQ/s640/country-stock-market-valuation.png" width="640" /></a></div>
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Russia, Turkey, Poland, Oman looks to be quite undervalued using this metric, while the US, Ireland, Switzerland, New Zeland, and Finland are overvalued.<br />
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Here's the top ten list of the most undervalued markets as of March 2020.<br />
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That's Russia, China, Italy, Spain, Singapore, Turkey, Austria, South Korea, Portugal, and Hungary.<br />
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Starcapital does not use the CAPE as the only metric to rank to the country with average PC (Price-to-cashflow), PB (Price-to-book), and PS (Price-to-sales) ratios. To find out if the CAPE is undervalued, one needs to look at the long term ratio for each country, and the ratio can not be compared between countries because each stock market has different types of companies. For example, Russia will have a large share of companies related to the oil business which command a lower price-earning ratio. Sadly, the company does not provide its historical data, so I'll just trust its color scheme for that part.<br />
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If the price-to-book ratio is lower than one<span class="ILfuVd"><span class="e24Kjd">, that means the stock price is cheaper than the book value, and it's always a good metric to check you don't overpay for a stock or market. If the dividend yield is fairly high, that's often a sign, stocks are undervalued as well.</span></span><br />
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<span class="ILfuVd"><span class="e24Kjd">I view the relative strength index more as a timing tool, as it shows whether the stocks for a given country were sold or bought during the time period. Starcapital allows to filter results as well, and I often set PB to one or lower, and RS26 to a value under one (e.g. 0.94).</span></span><br />
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<span class="ILfuVd"><span class="e24Kjd">That leaves us with 5 countries: Russia, Singapore, Austria, South Korea, and Poland. The next step is to look at mid-term charts (e.g. 10 years) to see how stocks performed. I like to use <a href="https://tradingeconomics.com/" target="_blank">trading economics</a>.</span></span><br />
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The Russian stock market did very well in the last 6 years, and we did buy a Russian ETF (3027.HK) in 2014-2015, and sold in October/November 2019. It went up further since then, but a correction happened due to the Coronavirus panic. If the market corrects further it could be a nice entry point.<br />
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The Singapore stock market (STI) has been trading in the 2600-3500 range in the last ten years, so if it goes back to 2700 points it may be an interesting entry point. Looking at an even longer-term chart, we can see the market performed fairly well since 2002, but as a smaller country, it may suffer more in downturns.<br />
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Next up is the Austria stock market (ATX), which we can see went down for over 2 years.<br />
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Looking at the chart since 2001, we can see the ATX never covered in a big way from the GFC (Global Financial Crisis) in 2008.<br />
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It's almost 50% below its all-time high in 2017..., and if we look at the long term bottom trend we could go a line showing there may be opportunities right now. I still feel uneasy investing in Europe due to structural issues with the Euros though.<br />
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The 10-year chart of the KOSPI (South Korean stock market) shows the index did not return much over the last ten years, and long term bull markets are often born from a long bottoming process.<br />
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To balance that, the KOSPI did really well in the first decade of this century, quadrupling from 500 points to over 200 points in 2007, but 13 years later we are still at the same point. It's been a long wait for investors who are still getting a 2.3% dividend yield at this time.<br />
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Let's finish with the Polish stock market (WIG). The last two years have been brutal which should explain why it's now considered an undervalued stock market.<br />
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It seems to be at the bottom of the trends (using a line passing through 2012 and 2016 bottoms), but the 20-year chart shows again the great performance of emerging markets in the 2000's.<br />
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Yet the WIG is still well below its all-time high in 2017. All those five markets look interesting, in the short term are likely to be affected by<a href="https://www.cnx-software.com/2020/01/31/coronavirus-impact-on-manufacturing-and-shipping-from-china/" target="_blank"> the impact of the Coronavirus outbreak</a>, the policy decisions of central banks and government around the world, and potentially the health of the US stock market which looks to be extended at this time, but we'll look into the later in a subsequent post<br />
<br />Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-32637859561414276862020-03-01T05:12:00.002-08:002020-03-01T05:12:56.004-08:00What did the US Stock market look like during the Spanish Flu?Stock markets sold off heavily this week due to the fear of the impact of the Coronavirus pandemic on economies, as more and more people stay home, and supply chains are disrupted.<br />
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If we look at the S&P 500 over a 3-month period the drop is dramatic.<br />
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That's an 11.5% decline in just one week. Look at a chart over a longer period, puts the decline into context.<br />
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You can see the 5-year chart for the S&P 500 above. A sharp decline, but nothing too bad, and it could just be a correction. The coronavirus, and associated CODIV-19 disease, is still nothing like the Spanish Flu that infected 500 million people between <span class="st">January 1918 – December 1920 and killed 50 million or about 10% of patients. Hopefully, it won't get that bad, since the virus is highly infectious, there's a chance it gets out of control with millions infected, and the medical system unable to cope.</span><br />
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<span class="st">So I'd like to take us to the past to see how the market behaves during the Spanish flu. Market valuation matters over the long team, so let's check Shiller CAPE chart first.</span><br />
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<span class="st">WWI was still going in early 1918, and markets were already depressed with a CAPE of 6.64 in January 1918, which went all the way down to 4.78 in December 1920, the lowest ever. In the meantime, we are now at much more elevated levels with a CAPE of 30 equivalent to the one at the top of the roaring '20s. So if it does get out of control - which hopefully it won't - we should expect a much sharper drop.</span><br />
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<span class="st">I wanted to check the S&P 500 chart in 2018-2020, but since it <a href="https://www.investopedia.com/ask/answers/041015/what-history-sp-500.asp" target="_blank">was created in 1957</a>, we'll revert to the much older Dow Jones.</span><br />
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<span class="st">That's a drop from 1470.47 points to 956.72 points, or around a 35% drop. It's probably not purely related to the Spanish Flu, and one would have to look at the history of the time, notably, the end of WWI in November 2018 which may help the jump to 1600+ points before the sharp drop.</span><br />
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<span class="st">One way to check the effect of the Spanish Flu is to see if we have a chart of cases, especially in the US since after all, we are looking at the Dow Jones here. Most info is shown on <a href="https://en.wikipedia.org/wiki/Spanish_flu" target="_blank">Wikipedia</a>. The first chart is in the UK which shows three waves.</span><br />
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The worst happened in November 1918, and nothing is shown in 1920 at all, so there must have been few cases during that year. </div>
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<span class="st">The chart above also shows fatalities in big cities in the USA (New York), as well as in France, the UK, and Germany with all peaking in October-November 1918. If we look at the Dow Jones nothing much happened market-wise during that period, and an <a href="https://seekingalpha.com/article/133636-1918-spanish-flu-and-the-market" target="_blank">article on Seeking Alpha</a> and the related chart shows it clearly.</span><br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-U1EaUK41PgE/Xluz9fLjX6I/AAAAAAAAWFM/_KxARc93B6sNMltA6_4YLoMZvVogBU6_QCLcBGAsYHQ/s1600/1918-Spanish-Flu-Dow-Jones-Index.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="367" data-original-width="698" height="336" src="https://1.bp.blogspot.com/-U1EaUK41PgE/Xluz9fLjX6I/AAAAAAAAWFM/_KxARc93B6sNMltA6_4YLoMZvVogBU6_QCLcBGAsYHQ/s640/1918-Spanish-Flu-Dow-Jones-Index.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: Seeking Alpha</td><td class="tr-caption" style="text-align: center;"><br /></td></tr>
</tbody></table>
<span class="st">As we've seen above, markets were already very cheap at the time, and the market situation today is much different with several stock markets clearly overvalued around the world, and globalization was not a thing in 1918-1920.</span><br />
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<span class="st"><br /></span>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-68441825019719659672020-02-23T04:57:00.001-08:002020-02-23T05:12:31.359-08:00The Case for Investing in Chinese Commodity ProducersMany asset classes around the world are overvalued right now, but I recently <a href="https://www.youtube.com/watch?v=1mhQ9r5W-zY" target="_blank">watched a video</a> with Mike Maloney and Ronald-Peter
Stöferle (of Incrementum AG) with the latter showing a chart we may be back to 2000 valuations for commodities.<br />
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The chart above represents the ratio between the SPGSCITR commodity index (aka S&P GSCI) against the S&P 500. It just shows stocks are really expensive compared to commodities.<br />
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And if we look at the long term chart of the GSCI commodity index courtesy of <a href="https://tradingeconomics.com/commodity/gsci" target="_blank">trading economics,</a> commodities are indeed back to price not seen since the end of the 90's.<br />
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Great! Let's find a GSCI ETF tracker and we should get a nice return you may think. But not so fast, as you may remember <a href="https://etf-investment-ideas.blogspot.com/2011/02/investing-in-natural-gas.html" target="_blank">commodity ETFs are usually terrible investments</a> due to the contango effect. But let's double-check as in the US, there are two ETF's tracking GSCI: GSP and GSG.<br />
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<a href="https://1.bp.blogspot.com/-KHBB9wkRHYI/XlJrdvjhgzI/AAAAAAAAV6c/rhx2iaVsCwcaCLyF1vcZ0YlMEpzId68vACLcBGAsYHQ/s1600/GSCI-ETF-Trackers.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="541" data-original-width="1060" height="326" src="https://1.bp.blogspot.com/-KHBB9wkRHYI/XlJrdvjhgzI/AAAAAAAAV6c/rhx2iaVsCwcaCLyF1vcZ0YlMEpzId68vACLcBGAsYHQ/s640/GSCI-ETF-Trackers.jpg" width="640" /></a></div>
<br />
<br />
Those are down around 70% since May 2016. The GSCI index is also down since that time, but only about 60%, It's not that bad considering the ~15 years time frame.<br />
<br />
However, my brokers won't let me invest directly in ETF's in the US. So instead, I looked at mining stocks like BHP and Rio Tinto listed in the US.<br />
<br />
<br />
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<a href="https://1.bp.blogspot.com/-fNFRsaCjiwY/XlJuFAsQ6zI/AAAAAAAAV6o/gKFDnTYAH54fba6BLoALjIiZ13XbhOV4gCLcBGAsYHQ/s1600/Commodity-Stocks-Long-Term-Chart.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="839" data-original-width="1600" height="334" src="https://1.bp.blogspot.com/-fNFRsaCjiwY/XlJuFAsQ6zI/AAAAAAAAV6o/gKFDnTYAH54fba6BLoALjIiZ13XbhOV4gCLcBGAsYHQ/s640/Commodity-Stocks-Long-Term-Chart.png" width="640" /></a></div>
<br />
<br />
While both stocks are well below their peals in 2006 or 2011, they have recovered a lot since the bottom in early 2016.<br />
<br />
So I went looking for other opportunities in the Hong Kong stock market (Hang Seng). There aren't any <a href="https://en.wikipedia.org/wiki/List_of_Hong_Kong_exchange-traded_funds#Commodity_ETFs" target="_blank">commodity ETFs</a> anymore apart from Gold based ones. So we can look at the charts, earnings, dividends and P/E of some of the commodity producers. It's always more risky to selecting individual stocks, especially those depressed, as they may go bankrupt, so I personally prefer to focus on larger companies.<br />
<br />
<h3>
Petrochina 0857.HK</h3>
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<a href="https://1.bp.blogspot.com/-i8JLXQrMPWI/XlJwQ5QcusI/AAAAAAAAV60/MvL2S2kynQQ5HQOK0RYLC1mn3eUhl-tXACLcBGAsYHQ/s1600/Petrochina-Long-Term-Chart.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="847" data-original-width="1600" height="338" src="https://1.bp.blogspot.com/-i8JLXQrMPWI/XlJwQ5QcusI/AAAAAAAAV60/MvL2S2kynQQ5HQOK0RYLC1mn3eUhl-tXACLcBGAsYHQ/s640/Petrochina-Long-Term-Chart.jpg" width="640" /></a></div>
We are back to the year 2014 price. The company is still making profits (0.33 HKD EPS), and paid a 4.6% dividend last September. With a one trillion market capitalization, it's one of the biggest companies in the world. There may be more downside, but patient investors will be rewarded by the dividend and potentially higher price in a few years.<br />
<br />
<h3 class="D(ib) Fz(18px)" data-reactid="7">
Sinopec Shanghai Petrochemical Company Limited (0338.HK)</h3>
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<a href="https://1.bp.blogspot.com/-K3deHUrK0WU/XlJxXzTfEII/AAAAAAAAV68/d_d2Wer2EH8-sZrnxjXknke3thU9qZWGgCLcBGAsYHQ/s1600/Sinopec-Long-Term-Chart.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="838" data-original-width="1600" height="334" src="https://1.bp.blogspot.com/-K3deHUrK0WU/XlJxXzTfEII/AAAAAAAAV68/d_d2Wer2EH8-sZrnxjXknke3thU9qZWGgCLcBGAsYHQ/s640/Sinopec-Long-Term-Chart.jpg" width="640" /></a></div>
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<br /></div>
Sinopec is another large Chinese oil company back to 2014's prices. The dividend yield stands at 13.49% according to Yahoo (I suppose this will be revised down), and the company is still making a healthy 0.561 HKD profit per share. Market capitalization: 37.30 billion HKD.<br />
<br />
<h3 class="D(ib) Fz(18px)" data-reactid="7">
China Coal Energy Company Limited (1898.HK)</h3>
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<a href="https://1.bp.blogspot.com/-sRW_KdalOfI/XlJyPkAIqZI/AAAAAAAAV7E/1pbkzleqy74SO9Cs-iMAOeqpR-hgKHbXgCLcBGAsYHQ/s1600/China-coal-long-term-chart.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="824" data-original-width="1600" height="328" src="https://1.bp.blogspot.com/-sRW_KdalOfI/XlJyPkAIqZI/AAAAAAAAV7E/1pbkzleqy74SO9Cs-iMAOeqpR-hgKHbXgCLcBGAsYHQ/s640/China-coal-long-term-chart.jpg" width="640" /></a></div>
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<br /></div>
<br />
Still a large (57 billion HKD) profitable (<span class="Trsdu(0.3s) ">0.387 HKD per share</span>) company, but probably more risky if the Chinese government really decides to scale down on coal-powered power plants. The company also pays a 3.28% dividend. The share price is really depressed well under the IPO price in 2006.<br />
<br />
<h3 class="D(ib) Fz(18px)" data-reactid="7">
Sinofert Holdings Limited (0297.HK)</h3>
<div class="D(ib) Fz(18px)" data-reactid="7">
<a href="https://1.bp.blogspot.com/-Zwx1YmsphDs/XlJ0TxyzE6I/AAAAAAAAV7Q/b-0fAo-Z3CUpZhwwZKDf_TRaIudYHTyEQCLcBGAsYHQ/s1600/Sinofert-long-term-chart.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="824" data-original-width="1600" height="328" src="https://1.bp.blogspot.com/-Zwx1YmsphDs/XlJ0TxyzE6I/AAAAAAAAV7Q/b-0fAo-Z3CUpZhwwZKDf_TRaIudYHTyEQCLcBGAsYHQ/s640/Sinofert-long-term-chart.jpg" width="640" /></a> If you believe in the long term potential of agriculture, Sinofert looks promising. The company specializes in Potash which shot up in 2007/2008, and came down hard since then. The stock is really depressed at 0.80 HKD. But Sinofert is one of the largest fertilizer producers in China, is still making money (.075 HKD per share), and pays a dividend of 2.8%. The same could have been said in 2012 however, but the longer the undervaluation remains, the more the stock may gain when the market reassesses.</div>
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<br /></div>
<div class="D(ib) Fz(18px)" data-reactid="7">
All those companies also have a price-to-book and price-to-sales well below 1, and they are very unlikely to go bankrupt. In the worst-case scenario, the stock price goes nowhere, but you still get paid to wait thanks to the dividend.</div>
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Do you know of any other HK listed commodity stocks that are paying dividends, depressed, and profitable? Let us know in the comments.</div>
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Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-89277303390409678362020-02-16T04:40:00.001-08:002020-10-07T21:02:40.688-07:00Financial Fraud: AirBnB and Virgin Hyperloop One Pre-IPO ScamsYou may have read in the news that fairly large private companies like AirBnB and Virgin Hyperloop One may consider launching an IPO (<span class="ILfuVd"><span class="e24Kjd">Initial Public Offering</span></span>). Some scammers have decided to make a buck and launched several websites, opened companies across the world in 2019, and set up call centers.<br />
<br />
[<b>Update June 2, 2020</b>: The scammers have also diversified their stock offerings with scams now also involving:<br />
<br />
PRMW - Primo Water Corporation<br />
ZM - Zoom Video Communications, Inc.] <br />
<h2>
How Does that Work?</h2>
The scammers manage to get your phone number, name, and email address from sources that may include a website where you have expressed your interest.<br />
<br />
A person speaking perfect English and that sounds knowledgeable with financial matters then calls pitching the unique opportunity to invest in Virgin Hyperloop One IPO (actually Pre-IPO), for instance. Most people will be wary, but then they provide you with a credible company website, including registration numbers from the Bank of Ireland that seem to match, and some information about the IPO. They let you some time to think about it, and then come back the next day where they can complete the deal.<br />
<br />
You'll then receive an email with account opening documents, online account access, invoice for the amount you want to invest in, and of course, the W-8 form since the IPO takes place in the US. You'll talk to another employee/scammer to confirm your details. Note that we were told you'll never be asked your passport, a clear red flag.<br />
<br />
<br />
You'll notice the company where you're asked to pay the invoice to is different from the company promoting the pre-IPO, but they'll tell you it's safer to use a third-party as Escrow to confirm payment for both sides. It's also in a different country.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-ey6zZWK6rVY/XkkYpqh0fdI/AAAAAAAAVxI/H860I0Xj3wcChL0SFFI_ZjjIvwJhFrtbgCLcBGAsYHQ/s1600/Virgin-Hyperloop-IPO-Scam-Rreceipt.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1237" height="640" src="https://1.bp.blogspot.com/-ey6zZWK6rVY/XkkYpqh0fdI/AAAAAAAAVxI/H860I0Xj3wcChL0SFFI_ZjjIvwJhFrtbgCLcBGAsYHQ/s640/Virgin-Hyperloop-IPO-Scam-Rreceipt.jpg" width="492" /></a></div>
<br />
<br />
Once payment is received, you'll get an official receipt, and can log into your account, and your shares will be visible. They'll then call you from time to time, maybe once to twice a month to explain everything goes well, and the IPO should occur in Q1 or Q2 2020 as expected. One day, a call is different, as they'll pitch another stock with a unique opportunity of a positive liquidation scheduled to close in about 45 days. You'll buy some shares now, and in 45 days you more than double your investment. This is a unique opportunity, does not happen very often, and is basically risk-free.<br />
<br />
If you decide to invest again, and then be contacted from time to time to keep you updated, and when the time to sell has come, they'll call you to inform you there are some options to purchase for a fraction of the price, and you'll quadruple your initial investment. If you refuse, they'll come back a few days later, saying the sale is complete, and provide with an obviously fake NASDAQ receipt (PDF generated from Excel file) saying you need to purchase mandatory preferred shares to release the funds.<br />
<br />
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<a href="https://1.bp.blogspot.com/-UyCOuFnlQ10/XkkaWI_zrdI/AAAAAAAAVxU/jfOCqglZzpoz69mqvpPB_dItHICpbqyMgCLcBGAsYHQ/s1600/Fake-Nasdaq-Receipt.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1236" height="640" src="https://1.bp.blogspot.com/-UyCOuFnlQ10/XkkaWI_zrdI/AAAAAAAAVxU/jfOCqglZzpoz69mqvpPB_dItHICpbqyMgCLcBGAsYHQ/s640/Fake-Nasdaq-Receipt.jpg" width="494" /></a></div>
<br />
<h2>
Fake Companies/Websites/Names, Real Companies, and Bank Accounts </h2>
So who are those people? We don't exactly, but we do know they are using possibly fake companies, fake names with the phone scammers having some heavy turnaround, as well as real companies that opened last year and are used to funnel the money.<br />
<br />
"Fake" companies & websites used:<br />
<br />
<h3>
Van Gossum Consult (“VGC”) </h3>
<br />
Singapore: One Raffles Place, Tower 2, 1 Raffles Place #27-62 S048616
London: 110 Bishopsgate, London, EC2N 4AY
Hong Kong: International Finance Centre, 8 Finance Street, Central, Hong Kong <br />
<br />
<h3>
St Johns Asset Management (“SJAM”). </h3>
website: www.stjohnsasset.com<br />
<br />
<div class="moonlight-address1" itemprop="streetAddress">
Office#: 386-385-5915<br />
Address: 601 St. Johns Avenue<span class="moonlight-city" itemprop="addressLocality"> Palatka,</span> <span class="moonlight-region" itemprop="addressRegion">FL</span> <span class="moonlight-postalcode" itemprop="postalCode">32177, USA</span></div>
<br />
<h3>
Crest Security Contracts Ltd</h3>
The company was related to the two other companies listed above and has <a href="https://safeorscam.net/closure-of-crest-security-contracts/" target="_blank">now alledgedly closed due to a lawsuit</a>. <br />
<br />
<h3>
Brookfield Investment Funds Plc </h3>
website: brookfieldinvestmentfundsplc.net <br />
main email: accounts@brookfieldinvestmentfundsplc.net<br />
<br />
Office addresses:<br />
<br />
<div class="newsletter-widget">
<b><u>Exchange Tower</u></b><br />
1 Harbour Exchange Square,<br />
London, E14 9GE, UK
<br />
+44 207 660 1459</div>
<div class="newsletter-widget">
<br />
<b><u>The Exchange Building</u></b><br />
George's Dock,<br />
International Financial Services Centre,<br />
Dublin 1, D01 P2V6, Ireland
<br />
+353 1 691 7462</div>
<h3>
Others</h3>
You'll find <a href="https://www.scamwarners.com/forum/viewtopic.php?f=4&p=396823" target="_blank">many others companies related</a> to AirBnB pre-IPO scam. Luxstar Asset Management, based in Luxembourg, specifically asks payments to Kaloca Inc, for which we have more details below. <br />
<br />
We know of three companies and bank accounts used to transfer funds, but there may be more:<br />
<br />
Account Name: <b>VIPCO Holdings Pte.Ltd.</b><br />
Account address:<br />
11 Keng Cheow Street<br />
No. 02‐11 Riverside<br />
Piazza<br />
<b>
Singapore</b> 059608<br />
Account Number: 503 534 950 301<br />
Bank Name: OCBC Bank Singapore<br />
Bank address: <br />
65 Chulia St.,<br />
OCBC Centre,<br />
Singapore 049514<br />
Swift Code: OCBCSGSG<br />
<br />
Incorporated <a href="https://www.sgpbusiness.com/company/Vipco-Holdings-Pte-Ltd" target="_blank">in February 2019</a>. <br />
<br />
Account Name: <b>Law Office: John Jennings</b><br />
Account Address: 40213 Duesseldorf, <b>Germany</b><br />
Account Number: DE34 7001 0080 0097 3868 04<br />
Bank Name: Postbank<br />
Bank Address: Essen, Germany<br />
Swift Code: PBNKDEFF<br />
<br />
Very hard to find information about that one. It looks like an individual, instead of a law office. <br />
<br />
Account Name: <b>KALOCA INC.</b><br />
<br />
Account Address:<br />
2177 Buckingham Rd.,<br />
Suite 567,<br />
Richardson, TX 75081<br />
Account Number: 4880 7336 0881<br />
Bank Name: Bank of America<br />
Bank Address:<br />
100 N. Tryon St.<br />
Charlotte, NC 28255<br />
<b>USA</b><br />
Swift Code: BOFAUS3N<br />
ABA/Routing Number: 026009593<br />
<br />
<br />
The company was <a href="https://opencorporates.com/companies/us_tx/0803222965" target="_blank">incorporated in 2019</a>.<br />
<br />
Some of the (likely) fake names and positions of the scammers include:<br />
<br />
Mr. Jason Taylor, Investment Adviser <br />
Carl Bryce, Director of Finance <br />
Damian Williams, Director of Mergers & Acquisitions <br />
David Billington, Accounts Department<br />
Keith Armitage, President<br />
Greg Ellis, Account Services.<br />
<div>
</div>
<div>
Ian Simms, Senior Market Strategist<br />
<div>
</div>
<div>
David Scott, Finance Manager</div>
<div>
Daniel Parker, Investment Advisor<br />Melissa Keating, Accounts
</div>
</div>
<br />
Some of the phone numbers used to call victims: +35314126374, +35314124540, +44(0)1702623754, +442076601459, "private numbers", and local phones
numbers which all have called barring enabled meaning they can call you, but you can't call back<br />
<br />
<h2>
I've been scammed! What can I do?</h2>
First, stay calm, and if they call you again just pretend you are still interested, just in case the police need more information. You could also install call recording apps such <a href="https://play.google.com/store/apps/details?id=com.nll.acr&hl=en" target="_blank">ACR call record</a> provided it's legal in your home country.<br />
<br />
Then fill a report to your local police station. You could also fill a report to the authorities of the country where you transferred the funds.<br />
<br />
For VIPCO Holdings Pte. Ltd. in Singapore, you can fill a report online to the Singapore Police Force using <a href="https://www.police.gov.sg/I-Witness" target="_blank">their iWitness website</a>. Alternatively, you could call the Commercial Affairs Department directly: +65 6325 0000.<br />
<br />
For "Law Office:<b> </b>John Jennings" in Germany or other countries in Europe, you can follow the links from <a href="https://www.europol.europa.eu/report-a-crime/report-cybercrime-online" target="_blank">Europol website</a>.<br />
<br />
For KALACO Inc. in the US, you could <a href="https://www.fbi.gov/contact-us" target="_blank">contact the FBI</a> in one of their offices in the US or overseas.<br />
<br />
You could also contact a lawyer, but this would likely only work if the amount is really significant. Working on international cybercrime is a complex and slow process with the involvement of the authorities of multiple counties, certified translations, bank records, lots of documents and so on.<br />
<br />
SafeorScam website also <a href="https://safeorscam.net/brookfield-investment-funds-plc/" target="_blank">reported on such scams</a>, and they offer services to help to recover the funds. However, we never worked with the company, and can't vouch for them, just make sure not to throw good money after bad.<br />
<br />
To be honest, the chance of recovering funds is slim, as the money probably left the country where the money was transferred and spent on third parties. But it still worth a try, and the people responsible for the scam must be held accountable and spend a few years in jail. This will also prevent more victims.Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com2tag:blogger.com,1999:blog-7403160962524588074.post-26810250818858979692015-01-21T04:15:00.004-08:002015-01-21T04:15:52.048-08:00 Long Term Charts Thai Stock Market (Thai SET) Update - January 2015This article is the bi-annual update of the long term charts of the SET Index, price
earning ratio and price to book value posted on <a href="http://www.cnx-translation.com/forum/viewtopic.php?f=2&t=14807&p=26085#p26085" target="_blank">CNX Translation Forums<span id="goog_1809052283"></span><span id="goog_1809052284"></span></a>.<br />
<br />
In the last six months, the SET index went down sharply, and came back to exactly where it was at 1537. <br /><br /><img alt="Image" src="http://www.cnx-translation.com/images/thai-stock-market/thai-set-1975-january-2015.jpg" /><br /><br />The
PER is stable at 17.81, again almost exactly the same as in July,
meaning the Thai stock market still looks expensive on an historical
basis.<br /><img alt="Image" src="http://www.cnx-translation.com/images/thai-stock-market/thai-set-price-earning-ratio-1975-january-2015.jpg" /><br /><br />Price to book value has not changed much either at 2.13 (vs 2.15 in July).<br /><img alt="Image" src="http://www.cnx-translation.com/images/thai-stock-market/thai-set-price-to-book-value-1988-january-2015.jpg" /><br /><br />There's
been volatily in the last six months, but we are now basically back
where we were six months ago in all metrics. The dividend yield has come
down slightly at around 2.94% against 3.02% in July, but so are fixed
deposit rates. which is still much better than the 2% that you get with a
36-month fixed deposit in Bangkok Bank. What worries me are the recent
massive moves in currencies such as the ruble, and especially the swiss
franc, as well as commodities which does not bode well for the world
economy, and over-extended stock markets in many places around the
world.<br /><br />Next update should be in July 2015. Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0tag:blogger.com,1999:blog-7403160962524588074.post-86204325691804889782014-02-25T01:16:00.002-08:002014-02-25T01:16:58.738-08:00Global Oil Market Forecasting: Oil Companies Cut on Capex due to Low Oil PriceEye opening presentation about oil market forecasts. In the last few years, oil companies spent an increasing amount of money for exploration and discovery, but as the price of oil is more or less stable, their operation starts to become less profitable, so they have started to reduce spending, and sell assets in order to be able to pay dividends. Most companies need crude oil at $100 or over in order to be profitable, with Petrobas needing $150 per barrel.<br />
<br />
<br />
Source: <a href="http://energypolicy.columbia.edu/events-calendar/global-oil-market-forecasting-main-approaches-key-drivers">http://energypolicy.columbia.edu/events-calendar/global-oil-market-forecasting-main-approaches-key-drivers</a><br />
<br />
Nice summary @ <a href="http://ourfiniteworld.com/2014/02/25/beginning-of-the-end-oil-companies-cut-back-on-spending/">http://ourfiniteworld.com/2014/02/25/beginning-of-the-end-oil-companies-cut-back-on-spending/</a>Dark Horsehttp://www.blogger.com/profile/06694211609976133194noreply@blogger.com0