Thursday, November 6, 2014

Article on China and two free books

* New article on China that may interest you.
http://seekingalpha.com/article/2644635-debunk-the-myths-on-china

It has many 'thanks' from the readers. It debunks many myths on China that you cannot find in most other articles.It also has a very brief way to evaluate ETFs with examples of several country ETFs recommended due to the rise of China.


* I visited China recently visiting the Chinese Yosemite and the Avatar Mountain that few foreigners go. They have over 150 photos total and several articles on China. If you do not have Kindle, you can load Kindle reader to your PC. If you have pictures that can be shared without restrictions of these two attractions, please send them to me at pow_tony@yahoo.com for the next edition.

Click the above links of the two books for free download on 

11/15/2014 (Saturday) or 11/22/2014 (Saturday).

Please distribute this link to your friends and/or post it in your Facebook. Your friends will thank you.

Monday, November 3, 2014

The Artr of Investing

Kindle version $10. Over 700 pages (normal book is about 250 pages).

Printed version. $25.

Printed concise version. $19.95.

Click here for detail or enter the following into your browser.




--------------------
Try out the Highlights and click on articles.



I write investment books. I recommend the following books for you or a good gift to family members, friends and recent college graduates. They are available from Amazon.com.
The Art of Investing
The Kindle version costs $10. It is about 700 pages (6*9 each) and covers most topics in investing. The printed version is $25 and $20 for the Concise Edition.
For more detailed description, click here or type the following in your browser.
Profitable investing depends on two factors:
1.       Market timing.
2.       Select stocks with good profit potentials.
They are demonstrated in my book as: 

   The power of market timing


http://2.bp.blogspot.com/-isQa3cirObQ/UktCgTnm-BI/AAAAAAAAAEU/Ov7AeWurE2o/s1600/Graph2.jpg

Detecting market plunges indicates the exit points and reentry points from 2000 to 9-2013 as follows.
Table: Vital Dates
Market Plunge
Peak
Bottom
Indicator
Exit
Indicator
Reenter
2000
08/28/00
09/20/02
10/01/00
06/01/03
2007
10/12/07
03/06/09
02/01/08
09/01/09



08/01/11
11/01/11

As of 04/2014, my chart (from Yahoo!Finance) still indicates to invest fully in the market. Run the simple chart once a month. When it indicates a potential market plunge is closer, run the chart once a week.

It is based on stock prices so it may not identify the peaks and bottoms precisely, but so far it has never failed to avoid big losses and ensure big gains by reentering the market. Hope it will give us enough time to act in the next market plunge as the last two did.

Unbelievable return with market timing
Calculate how much you made if you followed the above exit points and reenter points from 2000 to today. I bet you would make a good fortune. 
To test the effect of market timing, I calculated the return of S&P 500 with market timing and compare it to the return of S&P 500 without market timing from 1-2000 to 9-2013.
There are many assumptions to make the calculations easier. In general, dividends are not considered. Compounding is not considered in most cases. The return with market timing should be substantially better if we buy a contra ETF during exits and sell it during reentries.
I was shocked by the incredible return by using simple market timing and the chart tells us to exit and reenter the market only 3 times from 2000 to 2013.
Summary info:
S&P 500
1-2000 to 9-2013
With Market Timing
Without Market Timing
Better
500%

Gain
1,000
167
Gain %
68%
11%
Annualized gained
5%
1%
Days
4,959
4,959

Calculations:

S & P 500
With Market Timing
Without Market Timing
1-2000
1,4691
1,4691
Exit    10/01/00
1,0412
1,041
Enter 06/01/03
1,041
9644
Exit    02/01/08
1,4893
1,3794
Enter 09/01/09
1489
1,0205
Exit    08/01/11
1,888
1,293
Enter 11/01/11
1,888
1,251
          09/03/13
2,469
1.638



Gained
2,469 – 1,469=1,000
1,638-1,469=167
Gain %
1000/1469 = 68%
167/1469 = 11%
Annualized gained
68% * 365/4959=5%
11%*365/4959=1%
Better
(1,000-167)/167 = 500%




Portfolio with Market Timing:

1  Both start with S&P 500 of 1,469 on 1-3-2000.
2 10/01/00.
The market timing portfolio exits the market and remains same value of 1,041 until 6/1/00.
3                   02/01/08.
The market timing portfolio exits the market and remains same value of 1,489 until 9/1/09.

    1,489 is calculated as follows:
    1,041 * (1 + Rate) = 1,041 * (1 + 1,379-964)/964) = 1,489
    where S&P 500 is 964 on 6/1/00 and 1,379 on 2/1/08.

The other calculations are based on S&P 500 is 1,020 on 9/1/9, 1,293 on 8/1/11, 1,251 on 11/1/11 and 1,636 on 9/3/13.
Portfolio without Market Timing:
1 Both starts with S&P 500 of 1,469 on 1-3-2000. We could use the 9/3/13 S&P 500 value, but it will not account on some compounded interest consideration.

4 S&P 500 is 964 in 6/1/00 and 1,379 on 2/1/08.

5 02/01/08. The portfolio value is calculated to be 1,020 as follows:
    1,379 * (1 + Rate) = 1,379 * (1 + (1020-1379)/1379) = 1,020
    where S&P 500 is 1,379 on 2/1/08 and 1,020 on 9/1/09.
The other calculations are based on S&P 500 is 1,293 on 8/1/11, 1,251 on 11/1/11 and 1,636 on 9/3/13.

I cannot believe the shocking return with market timing. I checked my calculation and there was nothing wrong but do not hold me on this. Ignoring the compound rate of return should be minor. If you have time, send me your e-mail address to pow_tony@yahoo.com, so I can send you the spreadsheet to check out any error.

Even if I made a mistake somehow and got 100% instead of 500%, it still doubles the return without market timing! Ask any fund manager what it means to his or her fund performance and his / her career.

It will detect the next market plunges, but it may not give us ample of time to react as the last two did. It will not detect the precise bottoms and peaks as they depend on the stock price of an ETF representing the market. I have separate statistics on market peaks and bottoms but they have not been proven. The above may not work as effectively if there are too many followers. On the contrary it may work as it could be a self-fulfilling prophesy.

The stock prices of SPY are obtained from Yahoo!Finance. The entry and exit points are obtained from my simple chart from Yahoo!Finance described and they are subject to my interpretation.       

Beat S&P500 by 100%

I recommended 20 stocks in an article Amazing Return in Seeking Alpha, a web site for investors. If you bought them on the publish date and you would have beaten the S&P500 index by over 100% without considering dividends as demonstrated in my other article A Tale of Two Portfolios. One of the many techniques is my Pow P/E as illustrated in another article The Mysteries of P/E.
Say I made a mistake and it is only 10%. How many fund managers can beat the S&P500 index by 10%?

I write articles to promote my books at Seeking Alpha, a financial site. If the readers believe Seeking Alpha is set up as a charity and the writers do not promote themselves and/or their services, they believe in fairy tales. However, if the promotion asking you to spend $10 on this book that would potentially earn  you thousands or even ‘millions’ in return, it is a good promotion. We’re bombarded with promotions every day. A wise man would separate goods ones from bad ones. When we run a business or apply for jobs, we promote ourselves and/or our products.

With the proven records and great satisfaction from my readers but not selling many books, I am the worst salesman. I have most of my investing ideas in this book and you do not need to buy another book from me today. Treat each of the sections of this book as a small book that I did published separately.

This book could make you financially secured for the rest of your life. Gift it to a family member, a friend and/or a recent college graduate and it will keep on gifting.