pattern honeycomb bee pollen

Beesy !!

Sometimes, there are moments in life where you just feel that so many things are going on at the same time.

This is happening to me right now.

First of all, I’m working full-time in the IT sector , specifically in the cybersecurity domain. Recently i have decided to look for greener pastures. It was not an easy decision as i had been working for close to 5 years in my company. but when the ship is sinking and the captain had left, you really need to look for a lifeboat too . Think you know what i mean.

Second , I’m also moving house ! Yes , in the same period as changing my job. What a coincidence ! I’m upgrading from my current house which is called a HDB (Housing Development Board) flat to a condominium . These are common housing terminologies in Singapore ( Yes I’m staying in Singapore – the little red dot of the world )

Third, i also needed to look for a nursery for my second daughter as well which is in a location suitable for daily drop-off and pickup. This also required a fair bit of time to scout and survey before we decided on a suitable school.

Three major events in my life overlapping with each other in the same few months. Really really beesy these few months and hence i had no choice but to pull myself back a bit from my blog.

Nevertheless, i still managed to squeeze a teeny bit of time and wrote my blog updates albeit less frequently. Hope to go back to my normal frequency and output probably by 4th quarter of 2021.

What about you – my readers ? Have you also ever went through similar convergence of major life events and how did you manage to go through it ? Do post your comments below !

Inflation and Deflation Forces coexisting ?!

I notice something strange is occurring silently in the background without much fanfare.

The Fed may have already started tapering of bond purchases since Q1 2021. What do i mean ?

Below is the M2 graph as of 1st August 2021. The M2 graph denotes the level of money supply in the US economy.

The higher the M2, the higher the supply and in turn, inflationary forces kick in.

The lower the M2, the lower the supply and hence deflationary forces kick in.

What this means is that the Federal Reserve had been slowly reducing the bond purchase programme (Quantitative Easing) from Q1 2021.

During times of deflation, goods and assets decrease in value, meaning that cash and other liquid assets become more valuable. The very nature of deflation discourages investment in the stock market, and decreased demand for stocks can have a negative effect on the value of stocks.

When deflation is a threat, investors go defensive by favoring bonds. High-quality bonds tend to fare better than stocks during periods of deflation, which bodes well for the popularity of government-issued debt and AAA-rated corporate bonds.

On the equity side, companies that produce consumer goods that people must buy no matter what (think toilet paper, food, drugs) tend to hold up better than other companies. These are often referred to as defensive stocks. Dividend-paying stocks are another consideration in the equity space.

Wait But there’s also inflation?

The effects of COVID-19 are what truly caused inflation to rear its head. The closing of retail and global travel resulted in the cutting off of supply chains which in turn increases the price of goods and assets (e.g. the lack of lumber is causing housing prices to increase due to lack of supply )

In the current climate, it seems that both deflationary and inflationary forces are in play right now . The inflationary forces are due to the lingering effects of the many variants of COVID-19 (e.g. the Delta Variant)

Planning for Both Inflation and Deflation

Sometimes it’s hard to tell whether inflation or deflation is the bigger threat. When you can’t tell what to do, plan for both. A diversified portfolio that includes investments that thrive during inflationary periods and investments that flourish during deflationary periods can provide a measure of protection, regardless of what happens in the economy.

Diversification is the key when you don’t have the desire to attempt to properly time the inflation/deflation cycle. Blue-chip companies tend to have the strength to weather deflation and also pay dividends, which helps when inflation rises to the point where valuations stagnate.

Diversifying abroad is another strategy, as emerging markets are often exporters of in-demand commodities (a hedge against inflation) and not perfectly linked with the domestic economy (protection against deflation). However it is also unfortunate and coincidental that China chose to implement its regulatory cleansing during this period. This may result in the portfolio needing to seek other pastures other than China for overseas diversification.


To summarize, the market correction news and fears that you may have seen in MSM (Main Stream Media) recently may have already started when the deflationary forces kicked in !

US Debt Default Update – Risk On ! #debt #default

We are now at 31st July 2021.

It is official. The Democrats and Republicans have opted for Option 1

The first option would be to tuck a debt ceiling hike into the massive reconciliation bill Democrats plan to pass later this year. However the risks are high that USA’s credit rating will be undermined , raising interest rates.

Do reference my post regarding the 3 options that the US Government had for approaching the US Debt Default potential crisis here

This is effectively kicking the can down the road.

The Treasury will take action to prevent default on 2nd August . One of the actions will be to stop the sale of bonds.

The default will be reached either in September or October. I’m not confident that the government can wait until November.

What does this entail moving forward for retail investors like you or me ?

1) High Interest Fears

Well, it starts with bonds. If the treasury stops the sale of bonds on 2nd August, the 10 year US Dollar yield will go up in August.

Growth/bubble stocks may experienced heavy volatility leading up to September/October.

2) Financial Market Uncertainty

Should the House and Senate encounter obstacles in deciding on the borrowing limit action, this will create financial market uncertainty in August after their recess. Mr. Market hates uncertainty. Therefore investors may flock to gold and other safe haven assets leading up to September/October.

The worse thing is this debt limit risk dovetails with the bond asset tapering.

Q3 2021 will be Risk On!

For those who are already on the sidelines, i would suggest to continue as there may be a market correction in the coming months.

For those who are already invested, i would suggest

  1. To invest in good companies with consistent earnings, positive operation income,
  2. Low PEG, low PE Ratio.
  3. Stay away from Chinese stocks due to regulation risk. If you must, trade Chinese stocks with stop loss, do not invest in them
  4. Buy into gold, gold-related ETFs, gold mining companies. Already gold is rising.

What are Bubble Stocks ? – Part 2 #bubble #stocks $APA

Previously i talked about what are bubble stocks.

We use either PE Ratio OR PEG Ratio to value whether a stock is a bubble or not

The important thing to note is that the above ratios are only applicable for companies which have earnings.

There are also companies which are growth stocks and yet do not have earnings – meaning they are operating at a loss.

For such companies , we use another ratio to value them. We call this ratio the PS Ratio – Price to Sales Ratio.

The price-to-sales ratio (Price/Sales or P/S) is calculated by taking a company’s market capitalization (the number of outstanding shares multiplied by the share price) and divide it by the company’s total sales or revenue over the past 12 months. The lower the P/S ratio, the more attractive the investment.

PS Ratio = Market Cap / Total Revenue OR Sales

The market generally accepts that a PS Ratio of 1 is the generic benchmark of a fairly priced growth stock which do not have earnings.

There are also companies which are in the mature phase of their business cycle and are having negative earnings. Do we apply PS Ratio to these companies ? The answer is obviously No !

Comparing Stocks in Oil and Gas Industry

Above is the PE Ratio Comparison of the Energy Sector . Look at most stocks in the Oil and Gas Industry. Many of them are operating at a loss (e.g. OXY) OR overvalued (e.g. APA) although they are mature companies !
Above are the same companies showing their PS Ratio. Would you want to buy APA or OXY ?

PS Ratio alone is not enough

The P/S ratio doesn’t take into account whether the company makes any earnings or whether it will ever make earnings. Comparing companies in different industries can prove difficult as well. For example, companies that make video games will have different capabilities when it comes to turning sales into profits when compared to, say, grocery retailers. In addition, P/S ratios do not account for debt loads or the status of a company’s balance sheet.

There are also disruptive companies which do not have peers.

A very good example is Palantir $PLTR. For such stocks, their revenue and operating income will need to justify the PS Ratio eventually if it is too high ( > 1)

We should only use PS Ratio as one of the criteria to value a growth stock without earnings.

Other criteria to consider are the competitive moat, the management team, the confidence of institutional investors, the debt of the company , the macroeconomic climate ( interest rate) etc…

Refer to my post on Part 1 of What are Bubble Stocks ?

The Market Influencer

Yesterday i witness the power one man can wield over the most unpredictable force in the global economy. Yes i am referring to the one and only market influencer who can singlehandedly quell the notoriously unpredictable and uncontrollable Mister Market – The Federal Reserve Chairman.

Just picture this . Before his speech,

  1. The US 10 year yield was on a bullish trend.
  2. VIX was on a bullish trend.
  3. The three major US Indices were turning bearish

Yet with a single speech of his,

  1. the US 10 year yield went bearish
  2. VIX turn bearish
  3. The three major US Indices turned bullish

what power he wields !

What exactly are the functions of the Federal Reserve?

The Federal Reserve has four main functions:

  • Manage inflation: This is the Fed’s most visible function. As part of this function, the Fed also promotes maximum employment and ensures interest rates remain moderate over time.
  • Supervise the banking system: The Fed supervises and regulates the nation’s largest banks and enacts laws to protect consumers.
  • Maintain the stability of the financial system: It maintains the stability of the financial markets and constrains potential crises.
  • Provide banking services: The Fed provides services to other banks, the U.S. government, and foreign banks.

To summarize:

  • The Federal Reserve is the central bank of the United States.
  • The Fed manages inflation, regulates the national banking system, stabilizes financial markets, protects consumers, and more.
  • Although the Fed board members are appointed by Congress, it is designed to function independently of political influence.
  • The Fed plays a significant role in financial concerns that affect the lives of all Americans.

The Federal Reserve was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System.

One could argue that the US wields an advantage by having the Federal Reserve. However with great power comes great responsibility. The process to elect a member into the FOMC board therefore should be handled with great care.

The seven-member board of governors is a large federal agency that functions in business oversight by examining national banks. It is charged with the overseeing of the 12 District Reserve Banks and setting national monetary policy. It also supervises and regulates the U.S. banking system in general. Governors are appointed by the President of the United States and confirmed by the Senate for staggered 14-year terms. One term begins every two years, on February 1 of even-numbered years, and members serving a full term cannot be re-nominated for a second term. Upon the expiration of their terms of office, members of the Board shall continue to serve until their successors are appointed and have qualified. The law provides for the removal of a member of the board by the president “for cause”. The board is required to make an annual report of operations to the Speaker of the U.S. House of Representatives.

The chair and vice chair of the board of governors are appointed by the president from among the sitting governors. They both serve a four-year term and they can be re-nominated as many times as the president chooses, until their terms on the board of governors expire.

Below are the current members of the FOMC. I do wonder whether there should be a check and balance on the proportion of governors elected by each political party . The proportion should always be equal . What do you think?

GovernorPartyTerm startTerm expires
Jay Powell
RepublicanFebruary 5, 2018 (as Chair)February 5, 2022 (as Chair)
Richard Clarida
(Vice Chair)
RepublicanSeptember 17, 2018 (as Vice Chair)September 17, 2022 (as Vice Chair)
Randy Quarles
(Vice Chair for Supervision)
RepublicanOctober 13, 2017 (as Vice Chair for Supervision)October 13, 2021 (as Vice Chair for Supervision)
Lael BrainardDemocraticJune 16, 2014January 31, 2026
Miki BowmanRepublicanNovember 26, 2018
February 1, 2020 (reappointment)
January 31, 2034
Chris WallerRepublicanDecember 18, 2020January 31, 2030
VacantJanuary 31, 2024

Why invest in Stocks?

10 reasons why you want to invest

You are an absolute novice to the world of investing. But you do know the top 10 reasons WHY you want to invest

  • Grow your money.
  • Save for retirement.
  • Earn higher returns.
  • Reach financial goals.
  • Build on pre-tax dollars.
  • Qualify for employer-matching programs.
  • Start and expand a business.
  • Support others.
  • Reduce taxable income
  • Be part of a new venture

There are many ways to invest . You could invest in

  • Stocks.
  • Bonds.
  • Mutual Funds and ETFs.
  • Bank Products.
  • Options.
  • Annuities.
  • Retirement.
  • Saving for Education

7 reasons why you want to invest in Stocks

The stock market has created an enormous amount of wealth over the years. On average, the S&P 500 – which consists of 500 of the largest U.S. publicly traded companies – has returned 8% to 12% per year. At that rate, only $10,000 invested in the stock market 50 years ago would have grown into more than $380,000 today.

However, be aware that the stock market doesn’t go up every year. The S&P 500 falls three out of every 10 years. Some of those drops can feel quite brutal, and that level of volatility is not for everyone. But if you can manage your fear, stocks have the potential of earning significantly higher returns than other investment options over the long term.

There are many benefits to investing in stocks. Seven reasons are:

  • The potential to earn higher returns than alternatives like bank CDs, gold, and government bonds.
  • The ability to protect your wealth from inflation, as the returns often significantly outpace the rate of inflation.
  • The ability to earn regular passive income from dividends.
  • The ability to own a tiny slice of a company whose products or services you love.
  • The ease of buying and selling, which makes stocks a more liquid investment compared to other options like real estate.
  • The ability to diversify a portfolio across many different industries.
  • The ability to start small. Thanks to $0 commissions and the ability to buy fractional shares with many online brokers, investors can begin purchasing stocks with a little bit of money.

Is there any reason not to invest in stocks?

Stocks are not without their drawbacks – the biggest of which is volatility. On average, the stock market declines 10% from its high roughly every 11 months, 20% about every four years, and more than 30% at least once a decade. Investing in stocks isn’t for everyone. Consider these valid reasons not to buy stocks:

  • You can’t stomach the thought of a more-than-10% decline in your investment.
  • You need the money within the next three to five years for a down payment on a house or other large planned purchase.

Beyond volatility-related concerns, there are other reasons to avoid stocks:

  • You have a lot of high-interest-rate debt like credit card debt. Paying off this debt can often yield higher returns than buying stocks.
  • You don’t have an adequate emergency fund. Having enough cash on hand to cover an emergency expense can prevent you from needing to borrow money on a credit card.
  • You don’t have the time or desire to research stocks to buy.

While there are some valid reasons not to buy stocks, the upside potential outweighs the risk for most people. Therefore, it’s almost always a good idea to invest in stocks, even when the market is at an all-time high. Studies have shown that what’s more important than timing the market is an investor’s time in the market. Holding out for the right time to buy stocks can be costly, because a large portion of gains come from a small number of days.

Meanwhile, stocks tend to recover from corrections – declines of more than 10% – in a matter of months. Thus, the longer an investor is in the market, the lower the probability of losing money.

Equally important to time in the market is picking the right stocks to buy. A minority of stocks account for the majority of the market’s overall return. That’s why it’s better to buy stock in a great company as soon as you can than to wait around for a better price that might never come. 

At the end of the day, the worst thing to do is To Do Nothing.

Sell Off ?! #DJIA #SPX #bubble #stocks

And so it has begun selling off for most of the value and cyclical stocks. In fact the selling off already started close to

4th July weekend starting with real estate and utilities stocks.

I tend to think this is due to profit taking after all three major indices hit ATH (All time highs) several days in a row. However the current sell off is not uniform across all three major indices. Notice that NASDAQ is still bullish compared to DJIA and S&P 500.

Now is the time to ready your war-chest and monitor the value stocks that you have been keeping an eye on 🙂

As for me, i have my eyes on ONE particular value stock only . I will reveal it when the time is right 🙂

Refer to my post here regarding rebalancing and preparing your war chest earlier

My first major milestone and … starting a podcast ??

1. First 10 Followers

I consider it my first major milestone when 10 people start following my blog.
Big shout out to my followers (11 of you so far). Thank you for following my blog!

Kudos to those who have read (and liked) my blog consistently too

2. Starting a podcast

I am also thinking of starting a podcast. It has been resonating with me for some time now.

Now why in the world would i start one , you wonder ? Well , below are some reasons

  1. To have fun – this is the most powerful reason for me 🙂
  2. To educate through bantering
  3. As a side hustle
  4. Not comfortable with YouTube exposure.

What will my podcast be about?”

  1. Capture the journey of collaborative fund investing.

2. Also provide monthly market movements/food for thought/stock analysis/portfolio spotlight/High Impact events episodes.

3. Introduce more of Asia Stocks (e.g. HKEX/SGX stocks) to my audience. I feel there is a lack of exposure to stocks in these regions.

What do you wish to hear in the upcoming podcast ? Submit your comments !