Personal Finance (13): A Confession of a Public Fund Manager In China

Good day,

Attached, ---8<  Cut and Paste >8---- , is the last portion of an article by a public fund manager in China confessing why he can never beat he "super wealth transfer machine"(stock market system) and decided to quit his job.  And, after all, in his 10 years of career as fund manager, he already made more than 10million RMB as a salary despite losing money for his clients...  

The full article, in Chinese, can be read from the link attached:

---------------------------------------Cut and Paste---------------------------------------------
一个公募基金经理的忏悔书
我无法对抗这个制度、我彻底投降、我准备辞职，我对我管理的基金的投资者表示深深的忏悔!我真的无能为力在这个市场中帮助你们赚钱！
　　中国XX基金管理公司 XXX基金经理
　　（恕我在此不公布老东家的名字，毕竟服务多年，领取了千万元的薪水！）
--------------------------------End of Cut and Pate ---------------------------------------------
http://bbs.hexun.com/stock/post_5_5961685_1_d.html

Any way, here is a very very brief summary with the KEY FACTOR of why he can't win:

"The author, 10 years fund manager in China, described that the stock market is a wealth transfer machine.... Due to the fact that the fund managers, by Law and software system, must keep at least 60% of the money in the market. Even if the fund manager want to get out of the stock and keep cash when the market is clearly in down trend or even crashing, the software would not allow them to sell...."

Here are some points of ponder:

* FACT
Now, the above chart showng the China Shanghai and ShenZhen 300 index (SSE300).  There is clearly more down trend than up trend for the past 5 over years.  And, if one were not only can't short the market, but also must spend at least 60% of the fund to purchase stocks at any point of the time.  As a Public Fund Manager, how can they make money as the calculated probability seriously against them?

Anyway, this is  the rules and regultion for fund managers world-wide.  Imagine IF there is no such rule, what would happen, if most fund managers try to find exits for cash?


* OPPORTUNITY
Now, what would you do IF you are a fund manager under such rule?
The manager would at least want to beat the overall market index by selling the worse sectors/stocks and get a ride on the better sectors/stocks.

So, in order to sell 10% worth of weak stocks in his portfolio, the fund manager MUST FIRST purchase at least 10% of the equal value of stronger stocks before the software system allow him to sell the weak one.

This would result in lot of money rushing into relatively handful of sectors/stocks and result in sharp rally!

For Example:  Some Internet/Games companies are the current percieved "safe harbour" and the money is rushing in at this point of time:(QIHU,DATE,GAME,YY)

..the above are just a few, can include the famous BIDU (but the up side is may not be that great as high price stock generally move slower... but safer).


*CONCLUSION:
It is better off spend your resources (time and money) to learn and DIY.  The chances is very much higher. 

AND, off course... don't do this:  Dash into the market without going throuh a proper stock market training, withot going through adequate paper practice, and without a reliable trading system.  It is like the message from the following cartoon I found in facebook. :-)

Thank you for your time, and

Bless You
KH Tang


NOTE: THIS ARTICLE IS MERELY FOR AWARENESS ONLY!

Personal Finance (11): Financial Self-Defense - A Critical Personal Skill to Live in This Modern World Economy

Let's go through some financial facts:

* On Governments' Investment:
 

Few weeks ago, I was wondering what is going on with the "World Islands" that build by Dubai as there is no news about it...  And found that these islands are sinking back to the sea!

 

Then, I wanted to figure out what was the development cost...  And found from the Wikipedia that: "The World's overall development costs were estimated at US$14billion in 2005".

 

Oh!  That's lot of money gone into the sea.

 

Then, I figure out that Government of Singapore Investment Corp. had lost USD41.6billion, or Three "World Islands", in US Market alone, during the 2008 financial crisis according to WSJ: http://online.wsj.com/article/SB125418236117447877.html

* On Personal Insurance and Investment Scheme:

Now let's look in to the price chart one of the global insurance company: AIG
(Yahoo Chart)

I AM curious how AIG is going to pay back all their clients long term life insurance and investment scheme, in long run, as the baby boomers are starting to collect their matured contracts now...


        

Others Ponzi Schemes: Such as Geneva Gold, The Gold Guarantee (TGG), etc...
 

Hundred of Investors at Hong Lim Park on The Gold Guarantee Scam (06 Mar 2013)

* On Taxes

Government can change rule for all kind of tax:  Example:  
(Here is the link )

 

*
*On Inflation:

The value of money(cash) is contine to be depreciated over time due to inflation.

 

 Source: - http://www.tradingeconomics.com/singapore/inflation-cpi
A very good source to check on many financial data from Money Supply, GDP, Debt, etc of various country worldwide.

Here is an Extreme case of Inflation...

This is what you can get for 100 billion zimbabwe dollars.

As many countries are increase their money supply today, and some call it as the age of "Currency War".  If thre is a war, there will be losers, and lot of time, there is no meaningful winner in the war as all public suffer.

 

 

*On Currency War:


A short interview with James Rickards - The author of the Book:
Currency Wars - The Making of the Next Global Crisis

 

 

 

 

 

*The Point of Finanical Self Defense is: DIY

The era of working hard in one job, save enough income to entrust a good fund manager to grow the money for retirement was over since the year 2000 tech bubble.  And, if someone has not started to educate him/herself to learn about managing his own investment account, please think again. 

 

Of course, Rome was not built in one day.  The road to learn/practise about investment involve risk of money and time committment. 

 

As Mark Twain said "Focus on the future, because that's where you going to spend the rest of your life."  So, if it is something very important and must be learned, start to read relevant books, start to attend seminars, including start to loose certain amount of money and gain experience...  While one still have the luxurious of time and money to do so.    See... A plane that take off from the same run way, just need to turn its direction a few degrees will alter its course by hundreds of miles...

 

 

 

"But trading and investing is like any other pursuit

—the longer you stay at it the more technique

you acquire, and anybody who thinks he

knows of a shortcut that will not

involve “sweat of the brow”

is sadly mistaken."

- Richard D. Wyckoff

 

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Self Development Idea (15): The Template for Your Journey

Recently, I have come across a very interesting book with profound insight – “The Hero with a Thousand Faces” – released in 1949, by Joseph Campbell.

Since then, it became the "Bible" of movie script writers.  And, the stages of the hero's journey outlined in the book had influenced a number flimmakers...  Such as George Lucas's Star Wars, Disney's The Lion King, etc...
 






The.
There are many articles on the internet wrote about the details on each step on the template, and I found an excellent short video clip in Youtube that illustrate the points clearly:
Here is the link if you cannot see it below: -> LINK

Now, I AM curious... 
Is there any metaphor that we can learn something from this?

Of course.  Since the Hollywood script writers can use it so successfully over and over, again and again to create movies that can resonate with the audience, meaning that there is something within the viewers even the viewers themselves may not consciously aware of it...

See, I believe that the Author, Joseph Campbell did not write this book to with the intention to inspire filmmakers or story writers.  He wrote this to inspire all his readers and gave them many examples of how Hero in the past had acheive their success and what stages (challenges) they had been through. 

There is a Chinese saying, "人生如戏 戏如人生"  - "A Life is just like a Movie, a Movie is just like a Life."   So true! 
Then, isn't it a good idea to use the template to recognize what stage are we in the journey of life right now, and then continue to write the scripts for our own magnificent journey?

 

 

Life is without meaning.  You bring the

meaning to it.  The meaning of life

is whatever you ascribe it to be. 

Being alive is the meaning.

- Joseph Campbell

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Personal Finance (10): The Biggest Leaking Hole in the Personal Financial Bucket

Imagine that every one has a personal financial bucket as a preparation for their retirement. And, they would go out to work as hard as the bee in order to fill them up.  But, what happen in reality is that there is a Big Leaking Hole at the bottom of their bucket that most might not be aware of or did not take it seriously yet…

For this, I AM refering to the Global Public Debt, and here is the link:

http://www.economist.com/content/global_debt_clock

Now, there are few projects that can be done with these data.

Example one: What's the Growth Rate of the Global Public Debt?

Here are some other Inconvenient Questions for individual who has the interest to Ponder and Find out:

* What is the Public Growth Rate of your own country? (One can take down the data on the right hand corner year by year to workout the chart.)

* On the right column of the Global Public Debt Clock, there is a item "Public Debt vs GDP" by country.  What does it mean when it is approaching 100% or some even go over the 100% mark?
Think in terms of a public company, what would happen if it keep lossing money year over year?

* On the "Public Debt per Person"...  That is the Leaking Hole in individual financial bucket...  Even you don't spend it, it is the load you have to carry, which include newly born babies and 90 years old senior citizens.  Why is it continue to grow, and some even with exponetial rate?

* With the current debt rate, there are already so much trouble with the economy.  What would the economy outlook with a higher debt rate future (as predicted by the trend of the chart.)?  Would there be more financial crisis such as the fiscal cliff event?

Of course,  as the exact data would not be easily available to the public, these data are good for reference and benchmark purposes,

One may be FEAR to find out the answer by himself...
And, when one facing  FEAR, he has two choices:
1. Forget Everything And Run.
2. Face Evidence And Rise!

(YouTube Link)
This 59 second video explains the concept & situation clearly!

“The world is not a problem; the problem

is your unawareness”

-Bhagwan Shree Rajneesh

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Self Development Idea (14) - There are Pattern of Cycles in Life

A week ago, I attended a Trading Seminar on CFD (a kind of leveraged derivative product).  And, I was surprised to notice something interesting, there is some kind of a pattern, that worth the while to write it down.

Just like the products in the market, everything that lives has a pattern of cycle in their life, and it goes through the phases of birth, growth, fruitage, and decline.

Isn't it true that when a baby is born, he will have to go through some patterns that designed for him.

Such as go through the kindergarten, primary school, secondary school, college and university, then start to work, .... , retire and then die.

So, back to the subject that I want to write about, and here is the "Pattern" that I noticed in the seminar:

It was held in a big lecture theatre.  There are three columns of seats and each column has about 30 rows of seats.  Though it was not full-house, I figured out that there was about 350 participants.  I paid attention on the age of the participants in the recess time.  I can divide them into three age group of participants.

1) The age group of 30-45 (25%) 

2) The age group of 45-55 (50%)

3) The age group of 55-60 (25%)

And, when the seminar start, the speaker asked: "How many of you are the first time to attend such seminar?"  I saw about 50% of the people in the room put up their hands.

Do you noticed that most of the people, at least in this place, wait until they are retired or about to retire, then they start to learn about the stock market.

It was quite a "happy" seminar, because the speaker flipped through a couple of historical charts and showed the audience that how money can be easily made with some very simple strategies.  Also, with the leverage, a few ten of thousands dollars is all you need to make more than the averaged pay worker in the country.  

A few rounds of applause had gone round the theatre when the speakers shown some strategies to handle the historical charts and emphasis that it can be easily done with very little training - where to buy and when to sell.

Since, the speaker had mentioned that no one can take any audio recording nor video, or he will sue the person...

Then... I saw many hard working participants taking tons of notes while the speaker delivering the presentation.

And, me too...  make my own note after the seminar.  Just a few words with a picture, and it is attached below.

Well, this is NOT to make joke of the beginner participants for believing that there is easy money out there for them to pick,  for I'd been there, done that ten over years ago...   RATHER, the intention is to alert all to take time to know about this stuffs... 

 

Personally, I view this as a failure of the public education system (worldwide) that there is no syllabus in educating students on the area of personal finance and stock market in their early stage of life.

 

 

See.  If we can know some kind of challenges (pattern of cycles) that we will have to face years down the road.  Wouldn't it be good to spend time in learning more about it and be prepared first before we need to handle it face-to-face?   As sooner or later, most likely one will come to a point where he need to handle his personal finance as saving in the banks is not getting any yield, and fund managers are not reliable nowadays.

 

"Most people tip-toe through life, hoping

they’ll make it safely to death."

– Bob Proctor

 

 

-----------------------Add on 13 Dec 12----------------------

 

This is a typical chart from advertisement. 

Unfortunately, they do not supply with a time machine to take full advantage of it.

 

 

 

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Games that People Play(3):- Strategical Horse Racing by SunBin

Case 1:  Happened before 320BC:

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孙膑赛马:

战国时候，齐国大将田忌很喜欢赛马。他每次和齐威王赛马，都要押上重金赌输赢。他们把各自的马分为上、中、下三等。比赛时，上等马对上等马，中等马对中等马，下等马对下等马。由于齐威王每个等级的马都比田忌的强，每次赛马，田忌都以失败而告终。

一次，田忌又比输了，正闷闷不乐地离开赛场，他的朋友孙膑对他说：“从刚才比赛的情形看，齐威王的马比你的快不了多少，下次比赛，你只管下重金和他赌输赢，我有办法让你取胜。”田忌疑惑地看看孙膑：“你是说给我换几匹好马吗？”孙膑摇头说：“不是。”田忌知道孙膑足智多谋，看着他胸有成竹的样子，没再多问。

等到比赛那天，孙膑向田忌面授机宜说：“第一场，用你的下等马去同他的上等马周旋；第二场，用你的上等马去对付他的中等马；第三场，你用中等马对付他的下等马。”结果，第一场比赛田忌输了，第二、三场比赛赢了，最终以2：1获胜。这下，齐威王目瞪口呆，只好眼睁睁地看着田忌得意地拿走了自己的千金。

-------------------------------------------------8<----------------------------------------------

Brief Translation:

Strategical Horse Racing by SunBin:

SunBin(孙膑; died 316 BC), grandson of SunTzu(孙子) who is famous for his "Art of War", was a military advisor who lived during the Warring States Period of China history.

During that time, there was a military general of Qi State(齐国) - TianJi (田忌).  TianJi often invited to have horse racing competitions by his king - King Wei (齐威王).  Everytime, they both put heavy bet on the competition.  The competition consisted of 3 races.  So, they used their first class horses for the first race, second class horses for the second race, and third class horses for the third race.   Because King Wei had faster horses in all the three categories than TianJi had,   TianJi had always lost.

Once, SunBin was a guest of the Tianji and invited to attend the race.  Again, Tianji lost all the three races again and felt very upset.  SunBin spoke to Tianji:"I noticed that the horses that King Wei has in each category is not much faster than yours.  Next time, you can smiply put heavier bet, and I have a strategy for you to win the competition."

Wait until the next race, SunBin asked TianJi to use his 3rd class horse to race with KingWei 1st class horse in the first round.  TianJi's horse lost by far distance in the first round.  In the second round, SunBin used TianJi 1st class horse to win KingWei 2nd class horse.  And, in the final round, SunBin used TianJi 2nd class horse to win KingWei 3rd class horse.  KingWei was shocked to see the result and TianJi won BIG TIME during that race.

Case 2: Happening Now:

Pictures from Smart Money Magazine.

It was an old conspiracy that USA would keep most of their crude oil reserve untounched while promote gas-guzzler vehicles to use up other countries crude oil first....  Then, when it come to a time that other countries oil reserve is about to finish, they would anounce they just discover that they have many new oil fields at home...

Now, lets look that this month issue, August 2012, Smart Money magazine feature story: The Return of Fossil Fuels.  The headline says:

 "Enormous new oil and gas discoveries under American soil are having a game-changing impact on the entire economy - affecting everything from what we're putting in our portfolios to what we're parking in our driveways.  How to play the new energy boom."

So, is this news just a coincident?  Or, just another strategical game practised from The Art of War?

May be the above queations are not important.  What important is the implication?

So, US has surplus in their food supply, water supply, energy supply and strongest military advantage...  Why should they care about debt?   Therefore, print money and be happy.

.


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Questions From The Future.

IMAGINE that if you were to invite by aliens to have a tour in to the galaxy and return to earth a 100 years later... Or, reincarnated onto earth plane few generations later.... 

What will the earth look like when you return?

Or If you have a choice,

What would you like to see?

The following diagram illustrates how material wealth is produced.  We can either grow it on earth or mine it from earth and process it. 

Gold Mining:

Satellite Photos on Amazon Deforestation:->

Photo on year 2000:

Photo on year 2009:

Dilemma for modern Economy:
Apparently, the modern society MAINLY measure wealth by counting how much toys can a person accumulate.  The more and faster it progress, the harder the earth will be squeezed.   And, Easter Island is just an example.

.
Here is a relevant video by Professor Albert Bartlett :
"The Greatest Challenge" humanity is facing




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“To reverse the effects of civilization would destroy the dreams of a lot of people. There's no way around it. We can talk all we want about sustainability, but there's a sense in which it doesn't matter that these people's dreams are based on, embedded in, intertwined with, and formed by an inherently destructive economic and social system. Their dreams are still their dreams. What right do I -- or does anyone else -- have to destroy them.

At the same time, what right do they have to destroy the world?”

“We cannot hope to create a sustainable culture with any but sustainable souls.” 

― Derrick Jensen, Endgame, Vol. 1: The Problem of Civilization

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Relevant picture added on 7 Dec 2012 found in facebook -"Knowledge of Today"

“Only when the last tree has died and the last river been poisoned and the last fish been caught will we realize we cannot eat money.” ~Cree Indian Proverb








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Project Freedom (7): The Galaxy Chart

Good day,

This article is a continuation of the previous entry of the blog...

----------8<    (Cut and paste from Wikipediaon Dow Theory     >8------------
The Dow Theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation. 
------------------------------------------- 8<--------------------------------------------

As one can see from the above statement that the idea of Sector Rotation had been officially around for at least a century,  but, if one were to flip through the whole library of Technical Analysis books in the library, he may not find more than 3% of the books mention about it(been there, done that).  And, even if one can find such topic in the book, most of them merely touching the surface by introducing that there is such thing around.
Personally, I think that the traditional way of analyzing the price chart is hard to VISUALIZE how these rotation take place.   Here is to introduce a tool that could facilitate the user to visualize and understand how the Rotational of the stocks/sectors are taking place in the market.    Thanks for the exponential grow of personal computer's speed over the years and these CPU intensive tasks can be handled with ease nowadays. :-)

(1)  Transformation of Traditional Chart into a X-Y Cartesian Plane.
Figure 1: Transformation of Traditional Chart into a X-Y Cartesian Plane.

Figure 1 shows how a normal chart can be transformed into The Galaxy Chart in showing the Relative Momentum and Trend of multiple stocks.   Though the human eyes can ONLY see the 2-dimensional chart, it is up to the programmers' IMAGINATION to incorporate N-dimensional information into it.  For instance, add a filter to get rid of those stocks that are moving side way.


(2) Understanding the meaning of The Galaxy Chart

Figure 2.  The Galaxy Chart


 
Figure 2 shows a typical Galaxy Chart.   Every stock is represented with a comet-like diagram with multiple dots in its tail.  The POSITION of the biggest dot in the comet represent the last bar's RELATIVE STRENGTH  of the momentum and trend with respect to others stock in a same watch list.  The length of the comet tail can be set by the user, and each additional dot appears on the tail mean an additional look-back period.  Therefore, the DIRECTION and LENGTH between the dots show the change of strength in Momentum and Trend dynamically over time.   So, it provides more information than a normal static list of stock scan from explorer as it shows the dynamic trail.


Figure 3. Zooming-in to the Upper Right Corner where both Momentum and Trend are both Postive.


















Figure 4. Statiscal and Probability wise...

.
Figure 4 is to illustrate how to focus on the fastest moving stocks visually.  Note that there is a criss- cross with grid lines in the center of the chart, which represent the (0,0) origin position of the X-Y co-ordinate.  The upper half of the chart represent the +ve momentum and lower half of the chart represent -ve momentum.  While the right hand side of the chart represent the +ve trend, and the left hand side represent the -ve trend.

Therefore, the top right corner of the chart can only be populated with stocks that are both +ve in momentum and trend.  The further away from the center are the faster the runner, and they are not range-bound.  While the bottom left corner is just exactly opposite.  (Note that the distribution chart in the figure is for illustration purpose ONLY, it does not mean that the stocks in the market have normal distribution in +/- profits over time.)


Video 1.  Play back of Rotational Movement


The above video shows the SPY and its 9 sector ETFs on how Rotation in the sectors take place over time. 

(3) Set up
Figure 5. An example on dual monitors intra-day set up

This is user preference... 

It can be in various time frame.  Start from Intra-day to Monthly.

(4) Caution!

Although any programmer with graphic programming experience can build up this platform within a week or so...

And: 

(a) Knowing to use the right alogrithms to feed in the X-Y co-ordinate is the key. GIGO(garbage in garbage out)!

(b) The sector rotation concept is simply another form of Trend Trading.  Therefore, it inherited a drawback from the Trend Trading Methodology.  That is the deep drawndown during the change of trend, where the fastest stocks could fall the fastest and weakest stock rebound the fastest.   Therefore, a very STRONG filtering technology MUST be built-in to the system to prevent such thing to happen during such period -> take the profits or cut losses quick.  Such as Vibration Energy Filter or any equivalent... Then it can be considered as a complete system.

(5) Conclusion

The last few articles are shared not because the author/programmer, I AM, do not understand nor under estimate their value and shared them accidentally.  Rather, they are shared because I strongly believe that when these concepts is fan out openly...  it may be duplicated to a certain degree that could help the general public to equip themselves with a better understanding and tools to handle the market.

Just to side track with a small story that happened in my kid's science class not long ago...

The teacher in the class asked the students that "What If Thomas Edison did not invent the light bulb?"  Then looking for the standard answer: "Oh!  We are still having to light the candle at night!"

"NO! NO! NO!" I told her... 

"If Thomas Edison did not invent the light bulb.  Someone else would have invented it just slightly later.  Or, if someone else did not invented the light bulb, daddy - me could have invented the light bulb.  And, if I don't invented the light bulb, you may have the chance to invent the light bulb yourself!"   Then I had to add, "Now you know the real answer, BUT, in the school test or exam, you MUST use your teacher's answer."

The morale of telling this story is that...  If one don't share it, someone else down the road would share it anyway. 

Happy reading.

KH Tang

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Project Freedom (4): Understanding of the States of Market Trend and Rotational Trading Concept

Attached are a few charts aim to demonstrate the importance of understanding the State of Market Trend and the Rotational Trading Concept which could help one to handle his personal finance.

POINT I: Understanding of the States of Market Trend.

Fig 1.  ^STI Daily Chart (2 years)  (Click on the chart to Zoom in)

The above chart show a daily chart for ^STI from Apr 2010 to Apr 2012.  This particular period is selected to show that money put in the market (so call buy and hold investment) can ended up with zero percent return over years.

In the price chart, there are algorithms built-in to draw the trendlines (also act as dynamic support and resistance lines).  When the bar change color, it signal a possibility of change in trend. 

In the lowest pane, it is an indicator desgined specifically to measure the Vibrational Energy of the stock:

If the Energy is High and moving upwards, it signals a state of UPTREND MARKET.

If the Energy is High and moving downwards, it signals a state of DOWNTREND MARKET.

If the Energy is Low, it signal a state of SIDE WAY MARKET.

It also display the number of bars in the respective state of trend and its percentage over the period.  For example:

Over the two years period, when breakdown into percentage...
The UPTREND is      : 31.39%;
The DOWNTEND is : 18.05%;
The SIDE WAY is     : 50.56%.

Fig.2 ^STI Daily Chart (1997 Jan - 2012 Apr)

So, one may think that two years of data could be too short to make the point.  How about longer period of data? 

So, with the longer term of data, it show that the result is similar with the previous finding. And, lead to some basic understanding of the market trends structure...

Conclusions from Point I:
1) The Speed of UPTREND is SLOWER and DOWNTREND is FASTER.
2) BUY AND HOLD strategy is NOT WORKING in todays market.
3) One must be able to ride on the Trend in order to make profits from the market.

POINT II: Understanding of the Sector Rotational Trading Concept.

As the previous point illustrate that money put in one market/Stock/Fund are really productive about 30% of the time in UPTREND, 20% in DOWNTREND, and wasting time 50% of the time.
So, if one were to only LONG the market, does that mean 70% of the time he must wait???
Not true if he understand the concept of Sector Rational Trading.


Fig 3. State of Trends in S&P500(SPY)
and its 9 sectors(XLB,XLE,XLF,XLI,XLK,XLP,XLV,XLU,XLY) (Apr 2010 to Apr 2012)

See... 
The money in the market are of fix amount.  When the stock market is moving up strongly, people would pull money out of bond market and put into stocks and cause bond market to fall, and vice versa.  Similarly, the professionals would not put their funds in equal distribution into all sectors, they would pull the money out from the weak sectors to put them into the strong sectors.  And the sectors Relative Strength would keep changing over time.  In the picture, you can see the TREND is Out Of Phase from one another.

With the same token, one can then zoom into the individual stocks, in the strongest sector, to ride on the trend with the few strongest stocks

By the way, you may be interested to zoom into the chart and see the respective percentage of trends in various sectors.


Conclusions from Piont II:
1)  It illustrates a VERY IMPORTANT POINT that is IN CONTRADICTION with one of the popluar myth in the investment industry -->  That is DIVERSIFICATION the money into many sectors in equal portions as to reduce RISK.  As sectors trend pretty much follows the market (after all they are the components that create the market).

2)  In order to maximize the profit from the market and reduce risk.  One must always rotate money into the strongest few sectors when there is a trend.

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I found a picture on the web and it is Very True. 

There are certain risks in life one can simply choose to avoid it, such as if one don't know how to swim and he choose not to go near the sea... He may miss some fun for that but find more fun somewhere else.

On the other hand, there are some risks one cannot avoid, such as financial crisis... Then, the only logical answer in dealing with it is to master it.  And,

if it is necessary...  Then, it doesn't matter how much time it may take.
Whether it may require 3 years, 6 years, 10 years or more,

something learnt is something gained. 

Time is ticking anyway regardless whatever nice phrases one may come out with. Such as:
"Only IF I have the time..."

With the current state of economy, which is full of potential for turbulences such as:
* Debts in certain countries in EuroZone building up,
* Energy Crisis due to Peak Oil,
* Over Population on earth,
* Aging of the Babyboomer in USA (in fact it is a worldwide problem, and more serious would be in China for its one child policy), and
* Increase in trend on Unethical issues exposed from corporation executives (worldwide)... etc.
I cautious myself not to be negative, but logically, it can only predict more financial crisis in local and global scale to continue happen in the near future...

So.  It is my simple idea that when more people willing to learn about it, then it would make market manipulation task more difficult for the minority and BALANCE IT.  Let's make it so! :-)

Bless You

KH Tang


A more throughout explaination on Sector Roation -> Back to Basics & The Galaxy Chart.

Personal Finance (9): Would Japan give us the next Surprise?!

Well,  just to forward a successful currency trader friend’s opinion(social service) from Australia, as I believe there are values inside for sharing ...
-------------------------------------------------------8<----------------------------------------------------
From: brijon

Sent: Sunday, March 11, 2012 3:29 AM
To: xxx

Subject: japan

brijon 5: GDAY

brijon 5: japans economy is the next finacial buble ready to go into meltdown

brijon 5: this is the next major shock comming to the worlds economic meltdown

brijon 5: a far bigger crises that is being hidden under the table

brijon 5: imports far exceed japans exports  now

brijon 5: energy imports oil is massive

brijon 5: there gdp is now one of the worst in the world

brijon 5: on 26th march all neucler plants are beuing shut down

brijon 5: so we are being like always are being kept in the dark about the real problems unfolding on the world economy

brijon 5:   

brijon 5: the carry trade is already in reverse as japans money flow  is now reversed for the carry trade

brijon 5: so the real disaster  for finacial markets is starting to unfold

brijon 5: as japan goes into finacial meltdown so all the world wil feel this massive effect on there economys

brijon 5: my opinion only

-------------------------------------------------------8<----------------------------------------------------

It might be a good starting point to do your own research/verification on the points mentioned in the mail, and access the current situation yourself.   Or, wait for the public media to give the “Surprise” after the insiders fully positioned themselves. Such as the previous man-made financial crisis.

Such as google for the news:

http://mdn.mainichi.jp/mdnnews/news/20120310p2g00m0dm021000c.html 

Of course, most of the people might think that this in not relevant or unimportant to their personal financial matter... 
Think again!
The world has been coming up with many man-made economy SURPRISES, one after another, in the last decade.  And some surprises wiped up saving and investment in "reliable" banks!

Euro Zone Trouble, US Debt (See US Real Time Debt Clock <-) & Japan energy problems are ready to have chain-reaction to bring down world economy (just another big Ponzi Scheme anyway) when something is ignited.

Attached is the DEBT vs GDP ratio and Many in the top list already running into trouble.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

Another Source:

http://wallstcheatsheet.com/stocks/the-10-most-indebted-governments-in-the-world.html/

This is NOT crying wolf, as the wolf is already outside the door. Just a matter of timing.

Yes.  It is not that easy to find a Inspirational/Positive Quote to end this blog entry...

Anyway, though it is NOT a solution for all, and NOT even a solution for the majority...

Learn to Re-Balance Personal Asset timely in critical time could help to

minimize perosnal financial impact if not profits from it.