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Showing posts from December, 2017

Is the yield spread telling us to be careful for 2018?

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2017 is closing. 2018 is believed to be not as good as 2017 for equities investing. We have also just witnessed the third rate hike in US. Equities valuation is commonly believed to be very high. I bet many of us would be very concern about major market adjustment. As we approach the new year, it's always good to take a look at some fundamental factors. The US Treasury yield spread is an important factor that worth our attention. I have downloaded the graph from StLouisFed.org to see if we can spot anything meaningful. The chart above contains 10 yr treasury mature rate (blue line) and 2 yr treasury mature rate (red line) and the spread (10yr minus 2 yr) between them (greed dotted line). Yield spread crossing below zero a few years before recessions Both 10yr (blue) and 2yr (red) yields have been in down trend since height in 1980s 2yr trend line seems a lot less volatile as it approached zero since 2013. 2yr trend line is now slowing crossing up while 10 yr yield tre

What is the Yield Curve telling about the equities market?

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2017 is coming to a close. It's been yet another good bull year for US equites. US has just announced their 3rd rate hike. The state of US and global economy is considered to be in a good state.  Tightening policy will likely to continue in 2018 at least for US. Many of us are seriously worrying  about high valuation of the equities market. Are we at the edge of the cliff of market crash? It's a good time to look at Yield Curve and compare it with key historical moment.

Small Good Deed!

A man was asked to paint a boat. He brought with him paint and brushes and began to paint the boat as the owner asked him. While painting, he noticed that there was a small hole in the hull, and quietly repaired it. When finished painting, he received his money and left. The next day, the owner of the boat came to the painter and presented him with a nice cheque, much higher than the payment for painting. The painter was surprised and said "You've already paid me for painting the boat sir!" "But this is not for the paint job. It's for having repaired the hole in the boat." "Ah! But it was such a small service... certainly it's not worth paying me such a high amount for something so insignificant." "My friend. Let me tell you what happened . When I asked you to paint the boat, I forgot to mention about the hole. When the boat dried, my kids took the boat and went on a fishing trip. They did not know that there was a hole. I wa

US Tax Cut Bill Approved

This is a big deal. The U.S. House of Representatives gave final approval on Wednesday to a sweeping, debt-financed tax bill in a midday vote. No double President Donald Trump to sign the bill into law as soon as possible. Reuter has a list of the key points in the new bill  here It is a great accomplishment to be achieved within 1 year in Republican in charge. It does seem that US has re-install one of the key growth engine for its economy. Usually I don't really focus that much on news, especially geopolitical news, for my investment consideration. This is, however, a strong positive factor for longer term investment for me because it is a structural element within the US economy.

A question on the role of Bitcoin in the financial system

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These days everybody is talking about bitcoin. While I am no expert in digital currency and economy. I do have to think hard as I believe bitcoin will ultimate impact tech stock in general. I am learning and asking question about bitcoin everyday as I read so many related news. This post is more like asking questions then trying to express any viewpoint. I am not so concern with blockchain as a technology which attempts to improve transparency and accuracy of transactions in general. Whether blockchain is the ultimate version of the necessary technology or just a transitional first step, it's good stuff. What I am more concern with is the rapidly appreciating phenomena of bitcoins or other cryptocurrency causing the opposite of what bitcoin is trying to achieve. Again, this is a question from a novice rather than a challenge to bitcoin. Bitcoin was inspired by the 2008 financial crisis to by pass financial institutions so to reinstall transparency in financial practice. It i

Bitcoin debut trading on CBOE and I have to be careful.

Bitcoin ($XBT) is now traded on CBOE on Sunday night. As of Monday morning, $XBT surged as much as 25% to $18,850 during their debut session triggering two temporary trading halts. CBOE has installed a trading halt rule of 10% anticipating volatility of the world most popular cryptocurrency. Trading volume has been thin. About 2,700 contracts for January changed hands. Considering, many brokers cast margin limitation and short selling limitation for this future contract, this trading volume does mean certain popularity and interests from the market. I do not trade or mine Bitcoin or other cryptocurrency. I have to say I don't know too much about it despite that I understand most of the technologies it deploys. However, evaluating Bitcoin is something of a mystery. This is not for me as an investment asset. Even if I trade Bitcoin or other cryptocurrencies, it's going to be very small amount. However, I am concern about its impact to the market should the price of the Bitcoi

Heaven on Earth - Amazing 360 Video Tech and Amazing Contents

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Saw this amazing video on Facebook. National Geographic has done an excellent job in leveraging technologies and applying them to their great contents. Media has been a tough industry as disruptive technologies taking over traditional pen-and-paper based media. However, it also means that those who can master the technologies can potentially be a more dominate player if they are able to accumulate more and more readers. In my personal opinion, if media company can manage to get the users to interact with each other, media company can be an alternative form of social media platform. Of course, no company can be master of all. How a company pick their focuses and leverage their strength varies from case to case. Anyway, let's take a break and enjoy this great video from National Geographic.

Mega Trend - Robots work while humans entertain each other

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This tiny tennis ball pickup robot is a reflection of a mega trend for investment: human entertaining each other for they don't much else to do.

Investment Moat - The Network of Users

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Many people say that the buy-and-hold strategy does not work in today's short life cycle business world. Yes, I agree that the world has advanced so much, largely driven by advancement and better use of technologies, to disrupt existing business model so old business get replaced more rapidly. However, I do not agree that buy-and-hold strategy does not work. All you need to do is to find the right company with long term growth prospect. Of course in real world, it's easier say than done. Most investors (myself included) failed to hold on to high quality stock for long term. There are all sorts of reasons why we are scared of stock price consolidation and get out prematurely but I like to conclude that in most cases, it's our lacking of faith or trust in current high valuation of the company. So the key question to us can be concluded in one word: "faith". We are, however, not talking about religious believe. Instead of "faith" in the management, I r

Google AutoML has created an AI Child beating other human designed AI systems

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As the stock market is still having a bitter taste of a tech sector sell off last week, a piece of tech news from Google has quietly gone into my mail box and gave me a boost in confident in the tech sector. Google announced that their AutoML (Automated Machine Learning) project started in May 2017 has now created an "AI Child" that can identify images better than human designed AI model. Google's researcher called this particular AI system NASNet. It was created to solve a task of recognising objects such as people, airplane, kites and so forth in a real-time video. The image above comparing human designed model and AutoML designed model. It seems that the AutoML's result is more complex and "sophisticated" on a high level glance on the size of the neural network nodes.

Science has proven stress impact our health span!

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There are things we can do to maintain our health span over time. This is what Nobel Prize winner Elizabeth Blackburn is telling us through her studies in DNA level. How we face challenges in life impact our health at the DNA and Chromosome level. Her studies show that there are things we can do to maintain our health.