Hong Kong Stock Market Analysis Video Oct 20th

This is a video produced by a friend of mine on Youtube on Hang Seng and various other markets including some stocks listed at HKSE. He will update his analysis video every weekend and Wednesday. So if you interesting in Stock market analysis especially Hang Seng Analysis, check it out!

Justice System 2.0

In justice system 2.0, i wanna talk about another part of our justice system, police force.

As we all know, society (you and me) give tremendous power to the police forces to implement justice. They got all kind of power including power to kill. They have the authority to involve in any criminal cases and power to hold and analyze all the evidence found. They have the power to forward the evidence to public prosecutor to continue with the trial.

We give all these powers to the police to maintain our safety. However, is our safety secured? does crime rate decrease? is our tax money well spent?

More importantly, are police doing their job according to rules and regulations?

Over the years, we have been informed with countless numbers of wrongfully convicted cases. It makes me wonder how polices determine their suspect and how they implement their investigation. It seems like they got it wrong so many times we lost confidence at them.

Recently i am pen-paling a death row inmates at San Quentin named William (Bill) Clark. Now i don't him and i can never be sure either he is guilty or not. However from the information and evidence of the case, it is very likely that he is wrongfully convicted and sentence to death primarily due to police misconduct.

Police is just a job / occupation. Police officials are human just like you and me. We have emotions such as anger and eager to win. If police officials choose the wrong suspect and determine to put the person behind bars simply because of anger or eager to prove their point. They got all the powers they need to manipulate, lie or create a virtual reality.

Another famous case of police misconduct is Ellen Reasonover case. Thankfully her case was overruled and she got her freedom now. The police department admitted they got it wrong and give Ellen 7.5 million for her 16 years in prison.

So, in reality, we give all the powers including license to kill (just like god) to a group of people just like us who work as police officials. They have the same emotional behavior like us, same IQ like us, same EQ like us and commit mistakes just like us yet we still trust them and continue to provide powers of god to them.

Something I wanna say about Justice System

First of all, stock markets around the world keep making new highs. Dow broke the critical resistance level of 10000, Russia and South America markets make you feel stupid if you didn't invest.

However, I keep my "short" call and i still think somewhere before the end of this year we gonna see collapse (and not correction) of markets around the world. USD is way too oversold short term or medium term and precious metal is way overbought. Expect USD to reverse and go at least to test 80 level and gold retrace to at least 950 level.

Today I wanna talk about justice system. I am doing a research on criminology economics and come across various argument about our justice system. I am sure everyone aware that justice system was created way back during the ancient Babylon which is called "code of Hammurabi". The objectives of justice system is simple: to protect the population from danger / threat.

When i am studying justice system and criminology, I start wondering about our justice system. Every country in the world now has its own justice system and law and all of them are pretty much the same.

However the more I learn about that, the more i doubt it. Basically the justice system exist today require only a very small amount of people to determine the safety of our society. Judge(s) or jury team is the determiner in justice system. That mean the safety of the whole population is depend on few persons (normally less than 10). Besides that, how much trust do you have for these Judges or Juries? How many time did we heard of wrong conviction?

If wrong conviction does happen, well we can only say sorry for the "suspect" for wrongly convict him/her and put him/her behind bars for n years.

So that mean not only the safety of the population is under the shoulders of the judges or juries, the fate and life of suspect is under their shoulders as well. Again, do you trust them and confidence they will not make any mistake?

We can see the heavy bias and inconsistent factors exist in our justice system. 2 criminals who did the same crime under same situation may and (normally will) not not get same sentences. I would like to ask those judges WHY? How do they decide the exact sentence? Do they always give same sentence for same crime under same situation?

If not, why should i trust you and put you in charge of my safety?

Just Abolish The Death Penalty

I wanna take the chance here to talk about something i seldom talk. Death Penalty.

More than one third of the country in this world still maintain Death Penalty as an option in their justice system. Personally i think this is sad and should be abolished.

Yes, Death Penalty is created to punish those which commit a very serious crime and yes, the methods used for death penalty are some of the most humane way to kill.

However, it's still killing!

Let me put it this way. A person (man or woman) kill some one. He/she is guilty for murder. If we punish him/her by killing the person, does it make us guilty for murder too?

You may say the justice system punish him/her, but in reality we as a person authorize the government to kill a person still make us a murderer.

Furthermore, i thought prison/ jail/ correctional center should be the place to correct people, not punish people. Justice system suppose putting people behind bars to correct the person and make the person "not dangerous" anymore.

So do you think we can correct people using punishment and punishment only? i doubt it.

Death Penalty also has a big problem. What if the person is innocent? He/she may not has the chance to prove it. Over the years we seen countless number of death penalty inmates executed before found innocent.

Besides that, most death row inmates are placed in a small cell, 24 hours a day, 7 days a week, decades before the execution of death penalty. So that mean not only the convicted person have to encounter death penalty punishment, but also mental punishment as well.

So the whole point of death penalty is not about correctional, but isolation. The convicted person is claimed by justice system as "too dangerous" to live among us and has to be isolated and put away for good.

Wait, i thought we got something for that situation. It's called the Life in prison without parole. Why Death Penalty and why not life without parole?

I can only see two benefits of life without parole vs Death Penalty. First, cost. An inmates cost around USD 100-30,000 per year depending on country.

Reason 2: fear. The whole point of Death Penalty to public is to inflict fear among us to stop serious crime.

Both reasons are bulls**t.

If we can spend USD 100 million or more to build a prison or jail, why can't we afford the small amount of death penalty inmates. Remember every year we only got around 100 new death penalty recipient. I mean if we can go to moon 40 years ago and only got few tons of moon rock for few hundreds billions dollar, what's the problem of supporting inmates?

Second point is absolutely useless. Over the years, murder cases have been increasing with high percentage. Other serious crimes' number are also fast on the rise. That mean although everyone does feel fear of death penalty, serious crimes still happen.

People who commit serious crimes never thought of the punishment simply because they think they gonna get away from it. They think they can escape from justice. So the death penalty sentence does nothing to stop crime.

No, i do not think murderers "good" people. I hate them as much as all of you. I just don't think the death sentence is suitable and humane way of stopping crime. It's just torture. It's murder as well.

So next time you see a death sentence inmates executed, you, your country and your country's justice system are the murderer!

Useless & Misleading Investing and Trading Cliche

As we expected, the very last leg up of stock market is happening now. I expect this should be the top for stock market in 2009. Take 100% of your profit and relax yourself.

Today i wanna talk about some useless and misleading cliche (saying/idea/expression) of investing and trading. I hear it all the time from investors and traders. We all think these cliches are true but it's absolutely garbage.

1. High Risk High Return.

This cliche is probably the most famous among amateur traders and investors. It is so widely used by everyone and everyone thinks it's the truth. It leads people to believe in order to achieve reasonable high return, you need to take unreasonable level of risk. Besides that, it also encourage people to take risk without understand risk and ability to manage risk. So many people will ignore the high risk of a financial asset thinking they will get higher profit by investing in high risk financial products.

Yes, I admit, it is easier to get higher profit by investing in high risk assets. However it does not mean we can't reduce the risk involved. By understanding and with ability to manage risk, we can significantly reduce risk of risky financial assets such as derivative, option or foreign currency exchange. In other word, although we are investing in risky assets, by managing it, we can make it into a medium risk investment but able to generate handsome profit with it. So now it will become, reasonable risk, high profit.

How to reduce and manage risk? I have wrote some article able predicting stock market movement and you can check it.

2. Buy Low, Sell High.

This is also a popular saying in investing. Everybody knows we need to buy low and sell at high price to get profit.

However not many people can tell what is low price and what is high price. Most amateur investors and traders use historical market price as a measurement of price level.

Example: Microsoft (MSFT) was traded at around 55 (peaked at 58.80 at 24 Dec 1999) during the dot-com bubble. After the bubble burst, MSFT dropped straight to around 40 level which is around 32% drop. Many amateur investors, using the cliche of buy low and sell high, think 40 is low based on previous market price. They bought it at 35-40 level and stuck with it ever since. Even at the peak of 2007, MSFT still did not make it back to that level.

So the correct cliche should be buy at some level, sell at higher level.

To determine what is the good entry exit level, never use historical or current market price as indicator. You should use the fundamental and technical analysis tools to help you.Check my previous blog article for it.

Another mistake that amateur investors and traders always make it only decide where to enter but rarely decide where to exit. They usually spend huge amount of time deciding the reasonable entry level but seldom put any effort in planning the exit strategy. They rarely think about the profit taking level, cut loss level, collecting level, all in level and so on. So they will easily panic when something unexpected happen and make silly mistake.

Remember this, exit level is much more important than entry level as exit level will determine either you make profit or loss. Even if you enter the market at perfect moment does not guarantee you a profit, rather exit the market at perfect moment usually guarantee handsome profit.

3. Buy The Rumors, Sell The News

This is another popular cliche that i disagree on. It encourage people to invest based on rumors without consider facts behind it. It mislead people to make silly investment without knowing much info behind it.

I admit sometime, in short term trading, you may get lucky by investing according to this cliche. However i consider that as gambling and not investing. Rumors mean something that is not confirm and has no definite answer.

In other word, invest or trade based on rumors is exactly like gambling. It has a 50% chance of being right and 50% chance of bust. So you are investing based on 50-50 chance of getting profit and there is no chance of managing risk involved. If that's not gambling, i don't know what is.

Another funny part of this cliche is why you need to sell at news? If we got a good news about something, why should we abandon it? We should buy more on it.

Example i own a HK listed company call Enviro Energy (8182, HK). Few months ago it announced that it found some new oil field in Mainland China. That's a positive news. Why should anybody sell the share of this company based on that good news?

4. Stock Always Goes Up.

This is one of the funniest cliche i think i will ever heard. Many people say stock always goes up. Is that true?

NO. Bullish market mainly based on rising inflation. Inflation will always lift the price of everything higher including financial assets. Besides stock, food and commodity price will goes up as well.

Inflation happen mainly based on money supply. Higher the rise in money supply, higher the rise in inflation. That mean more money in economy, higher the inflation will be.

So to sum it up, stock goes up because of rising money supply. Is money supply always rising?

NO. Some countries experience negative growth in money supply such as Japan. As a result, the Nikkei 225 index drop from 40,000 in 1990 to 10,000 now.

However, rising stock market does not necessary a good thing. Rapid rise in money supply may result in bubble and hyperinflation. Look at Zimbabwe. Zimbabwe stock market did rise more than 700% from 2003 to 2007, but their inflation rate rises by 13.2 billion percent a month. That mean Zimbabwe is experiencing 516 quintillion percent annual inflation (516, 000, 000, 000, 000, 000, 000, 000% a year)

So still think rising stock market caused by rising money supply is good? think again.

That's all for today. Next time I will introduce more silly investment cliche.

Obama = Worst US Presiden Ever?

Stock Market is heading lower! It may not happen today or tomorrow as it may still have a leg up but nevertheless, it will heading lower this coming Oct or Nov so brace yourself for a bad Christmas.

Anyway my focus today is not about the market but about President Obama. I am sure he is one of the most influential US president ever domestically or outside the USA. The world loved him last year and congratulated him for winning the presidential election. He promise "Change" and "Change that we can believe in." However what has he done so far compare to what he promised to do last year?

His biggest promises are improve the economy and US foreign policy. From the first sight look like he is doing quite well but if you look carefully, he is climbing the ladder of the worst US president of all time.

First of all let's talk about US foreign policy. Obama promised us before the election that he will bring back US troops, close Guantanamo and give Iraq and Afghanistan freedom. The world loved the idea and praised Obama for these promise.

However what did Obama do since winning the election?

Afghanistan was having their election, but the election is rigged and corrupted. Hamid Karzai won simply because of graft and force and not support from Afghan.

Iraq is going nowhere near democracy. There are more suicide bombing in Iraq in the past 12 months than the history of Iraq history.

Furthermore instead of bringing back US troops, Obama is actually adding more troops in that 2 countries. The total troops in Iraq alone is rising to 130,000 from 115,000. FYI, all other nation have withdrawn their troops except for USA. That's not all, USA has spent more than 2 trillion US dollar since invading Iraq in 2003. How about the condition of US troops in Iraq? Here are the fact:

U.S. Troop Casualties - 4,340 US troops; 98% male. 91% non-officers; 82% active duty, 11% National Guard; 74% Caucasian, 9% African-American, 11% Latino. 19% killed by non-hostile causes. 54% of US casualties were under 25 years old. 72% were from the US Army

Non-U.S. Troop Casualties - Total 316, with 179 from the UK

US Troops Wounded - 31,483, 20% of which are serious brain or spinal injuries (total excludes psychological injuries)

US Troops with Serious Mental Health Problems - 30% of US troops develop serious mental health problems within 3 to 4 months of returning home

US Military Helicopters Downed in Iraq - 71 total, at least 36 by enemy fire

All these may not caused by Obama but he is certainly responsible for some of it as he still refuse to bring back the troops.

Now, Guantanamo Bay. Why is this torture chamber still standing on earth. I am sure all of us have information about this place and we know this place is hell for those inmates. Why Obama still let the torture activities going? Like Top Gear Hosts like to say : "How hard can it be" to close the Guantanamo Bay. Just charge the inmates and bring them to justice if they did something wrong. What's the difference between USA and Myanmar when both countries lock and torture someone without bringing them to justice?


Second part of this article is economy. Obama did promise a lot last year and it was sweet. He said he will bring the US economy back to its feet. He also promised he will cut down the deficits. Unfortunately, everything goes wrong!

First he appointed Tim Geithner as US secretary of treasury. Then he expanded the Toxic Asset rescue plan (TARP) and add more fund to "borrow" to large corporations through "stimulus package". Then he reappointed Ben Bernanke as the chairman of Fed and lastly he introduced the health care plan which "force" every US citizen to buy insurance policy.

Now if you think any or all of these actions by President Obama is/are good, then you probably don't understand the truth behind it or you are a CEO or chairman of "wall street" large company.

Tim Geithner and Ben Bernanke are no doubt big spenders. Personally i think Geithner + Bernanke + Tarp + stimulus package + health care plan are absolutely good enough to bankrupt US. The scale of this collapse will be much bigger than 1970s, 1980s or dot-com. I even think it will be bigger than great depression.

So after all this, how Obama can reduce US deficits? by spending more money? does Obama understand what is deficit?

Decifit means spending / expenditure higher than income. So how can he generate enough income to cover the huge spending? Enough with reducing deficit, how can he generate income to maintain balance US budget. The only way is TAX. Yes you will see incredible rise of tax rate in US.

Even then I still don't think tax will be good enough to cover US debt. US dollar will crush and US economy will collapse. I can't think of anything that can save US economy except for a giant ball of money drop down from sky.

...... and Obama will stand tall in history as one of the worst US president ever.

Can We Really Eliminate Racism?

Precious Metal start reversing. Gold was traded below the support level of 1008. However Silver still hanging above its support level of 16.70-16.80. I think you should take 80% of the profit and let the rest on the table. It doesn't mean precious metal can't go higher but the risk is just getting bigger.

Stock Market is look more and more like it gonna crash. CNBC team said it's bullish time again and this is the clear sell signal for stocks. However, again, it doesn't mean market can't go higher before the crash. I just can't see stock market all over the world rallied more than 60% from March low simply out of nothing. What's the most significant good economic news from March? Recession is over by Bernanke!

Here i wanna take a chance to talk about racism. I know this is a sensitive and serious topic. Everyone wants to eliminate racism but can we really go that.

To be honest, i don't think so.

Last month, a devastating typhoon hit Taiwan and killed more than 600 people and it was a disaster. People of Hong Kong and China donated huge amount of money, health care products and daily items.

However where are help from western countries?

Yes i know red cross association was there at Taiwan to help and i also know many people from western hemisphere did donate but where are help from other government?

Few weeks after that, Turkey was hit but the largest flood in decades. Thousand and thousand of people have no shelter to live. Many people from Western Hemisphere donated but where are those Hong Kong and China people that donated for Taiwan?

My point is that deep in our heart, racism is always there. China and Hong Kong people will car more of Taiwan people. Their action prove the point. I was in Hong Kong at during the disaster at Turkey and I never heard anybody saying anything about donate or offer help to the Turkish. I believe the same situation happen in Western countries when Taiwan was hit by disaster.

So, "eliminate racism" may only become a catch phrase to promote unity. Until we truly care of each other regardless of colour of their skins, religious and race, "eliminate racism" will never ever happen.