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Archive for June, 2009

The Power of Option And How You Can Use it To Make A 100% Gain In Your Investment Portfolio

Hi,

It is good to be here with you again. As promised, I will touch on Option today and how you can leverage on Option to make a gain of 100% or more in your portfolio.

If you are not familiar with Options, kindly go through the video below before proceeding further…

Alright, now that you have the basic understanding of Option, let’s talk about Call Option today.

In my previous blog, I have made a personal recomendation to buy a few ETF.

Lets use OIH ETF as an example in our discussion here. The price of OIH is currently around $100. If you want to buy 1,000 shares of the OIH ETF, you will need to fork out a lump sum of $100,000. With the help of Call Options, you can actually control the same amount of 1,000 OIH ETF shares for only around $17,000 by buying 10 contracts of Jan 10 Call Strke @95 ( Jan 10 Call Strke@ 95 ~ offer price around$17.00)

So suppose if the price of OIH ETF is $130 by the end of December 2009, the price of the Jan 10 Call Strike is in the money and should be worth at least $35 ( Intrinsic Value). The profit by selling the Jan 10 Call Strike @ 95 will be $18,000! ( $35-$17=$18 x 1000) A more than 100% Gain!

The Beauty of Leverage

Here’s another way of looking at it: When I buy an option, I am using
leverage.

Use this analogy:

If I buy a house for $300,000.00, and I put down 10%, and mortgaged 90%,then I have only invested $30,000.00.

If the house goes up in value by 20%, then the house would be valued at $360,000.00 right? So if I sell the house, that’s a $60,000.00 profit.

Although the house went up in value by 20% (from $300k to $360k,) since I only put up $30k, I actually made 100% on my money ($60k profit on my $30k.)

I hope you see the beauty of Using Options as a leverage tool in your investment portfolio.

However, the downside of using Option is that you may lose all your capital if the share go towards the opposite direction. In the above example, if the price of OIH is $95 or below at option expiration in Jan 2010, the value of the 2010 call Strike@$95 is almost nil and you will lose your capital.

As a rule of thumb; below are 07 Important Fundamental Rules that I follow when I buy call Options.

1)Always buy when there are at least 03 technical indicators on the mother share (OIH) that are showing signals to buy ( RSI oversold, MACD inching up,Double bottom chart etc)

2) Always buy 6 months and above time horizon options

3) Always buy deep in the money options ( so that Instrinic Value is 100%; Time Value is zero)

4)Always Buy when the implied volatity is less than the historical volatility ( So that Option is not over-priced).

5) Do not hold the call options till expiry. Time decay is the most in the last 03 months of an option. I will usually close off my position 03 months before the options expiry.

6) Never use more than 10% of your investment capital to buy options. In fact, most of the times, I prefer to sell options than to buy it so that time decay is on my side.

7) Last but not least, Aways have an Exit Plan: You must set the price for yourself to take profit and cut loss when you open a new option position.

Well, if you follow all the above simple rules, then you can use options safely to increase your gain in your investment portfolio.

I hope you have gain some insight into today discussion. Thank you for your time spent and do have a great day ahead!

Sincere Appreciation,

Philip Chua, ChFC CFP FChFP
IARFC AMC B.BUS (Hons)

Mobile: +65-9748-4828

http://www.philipchua.com/

Twitter me @ phichua

How You Can Benefit From Investing In ETF

Welcome to the world of ETF Investment.

If you are new to ETF, it’s probably time you look into this as part of your investment portfolio. So, what is an ETF?

An ETF is an Index Fund that is listed on a stock exchange and trades intraday (you can buy and sell it anytime of the day just like a stock). ETF can therefore describe as a Mutual Fund trading like a stock.

Although there are some very important differences between them, it’s easy to understand ETFs if you think of them like mutual funds.

But unlike mutual funds, which try to beat indexes like the S&P 500 each year, ETFs try to follow them.

For example, if the S&P 500 trades 10 percent higher, the ETF that follows it will also trade 10 percent higher. If the S&P 500 index trades 12 percent lower, the ETF that follows it will also decline by 12 percent.

In case you are not aware of what Mutual Fund is, let me define it for you as well. A Mutual Fund (also known as Unit Trust in Asia) is an investment vehicle that pools money from many individual investors. A professional fund manager then invests and manages these funds into a broad diversification of stocks, bonds and other securities.

The main problem with Mutual Fund or Unit Trust is that they tend to have high management fees and are very restricted in the way you can buy or sell them. With the explosion of ETF over the last few years, I have personally decided not to bother with investing in Mutual Funds (Unit Trusts) anymore, except for some investment linked policies that I currently have partly for protection purpose.

Why did I propose that you should look into ETF as part of your investment portfolio in today context? As ETF is relatively new as compared to Mutual Funds, that also means that there is currently few investors with the necessary skill and knowledge investing in it, thus providing a vast opportunity for early investors in this investment arena.

Imagine that you are one of those early investors who have invested and profited from the rise of China or the boom of Mutual funds in their early stage? You could be reaping a great return in your investment portfolio right now…

This will help put things in perspective: Back in the early 1970s, there were approximately 270 mutual funds in existence, with total assets of around $48 billion.

By 2006, the total number of mutual funds was approaching 7,000 … with total invested assets of more than $9.2 TRILLION!

Imagine you knew all the ins and outs of mutual fund trading back in 1970, and were able to ride that trend for the past 30+ years.

Do you see that in ETF? I hope you do…

Ok, if I have interest you, let us talk about ETF now…

Who Issues ETFs?

Do you want to find a comprehensive list of ETF’s currently in the market?

A fairly comprehensive list is actually at Yahoo! Finance. If you go there, you’ll find a section on ETFs under the “Investing” tab. Drill down using the left-hand menu until you get to “View ETFs.” It’s not necessarily 100% current, but again, it’s the best resource in the internet right now.

For the most detailed information on ETFs you’ll want to go to the websites of the issuers of those ETFs. There you’ll find a lot more information that will help you identify ETFs that you’re comfortable buying.

Some of the major issuers include:

Barclays – iShares

State Street Global Investors – SPDRs (Spiders) and streetTRACKS

Merril Lynch – HOLDRSs

Rydex Financial – Rydex ETFs

Vanguard Group – Vanguard ETFs (formerly known as VIPERs)

ProFunds – Inverse and leveraged ProShares ETFs

Some of the common ETFs:

Standard & Poors Depository Receipts, Series 1 ( SPDR): ( Ticker Symbol: SPY) A word about Ticker Symbols- Every stock ETF or Mutual Fund of Index has a ticker symbol assigned to it. For example, the ticker symbol for “Citigroup” is C and the ticker symbol for “S&P Depository Receipts ( SPDR)” is SPY. Whenever you wish to trade a security, you have to type in the ticker symbol.


The SPDR (also known as SPIDER) is an ETF that tracks the performance of the S&P 500 Index. They are listed on the American Stock Exchange (AMX) and you can buy and sell them like the shares of any other company.

The DIAMONDS Trust, Series 1( Ticker Symbol: DIA) aims to track the performance of the Dow Jones Industrial Index. They are listed on the American Stock Exchange (AMX) and it can be easily be bought or sold like the shares of any other company.

Back in Singapore my country, if you want to grow your money at the same rate of the Straits Times Index, which measures the Singapore Stock market, then you can buy the STI ETF. You can buy a minimum of 1000 shares through any local broker. The STI ETFs are priced approximately 1/1000th of the STI Index. So if STI is at 2100, the STI ETF will be priced at $2.10/share. The wonderful thing about ETFS is that it also pays you cash Dividends of 3%-4% a year on top of the appreciation of the ETF’s share value.

Some Personal Recommendations:

If you have excess liquidity in cash after setting aside 3-6 months emergency cash and have an investment horizon of 3-5 years, you may like to invest some of your spare cash in the STI ETF. I have been recommending buying of STI ETF since it fell to 1600 level. Despite the fact that there may be some pullback of STI Index back to the 1900-2000 level, you may like to accumulate the STI ETF upon any weakness or pullback in this particular STI ETF. With the upcoming 02 Integrated Resorts that would be opened for business by end of this year and next year, Singapore with a strong government and political stability is poising for a strong economic recovery in the next 3-5 years.

Another ETF you may like to look into is the Oil Service Sector (SYM: OIH). From my previous blog on how US economy is evolving with inflation likely to creep in the near future, it can be deduced easily the direction of oil prices in the future and hence this particular ETF. Do your sum and take advantage of this trend.

Next, you may also like to look into the Metals & Mining ETF (SYM: XME). The price is currently around $35 and this was the price back in 2006! Investment Guru Jim Roger had placed a lot of emphasis in commodities and I believe there must be a reason for him to do that. Sometimes, it pays just to follow the Guru after you have done your homework.

Summary

In summary, ETF is a great investment tool that you should not be missing out at this point of time where market is bruised after the credit crunch and is in trend for a recovery in the next few years. The beauty of ETFs is that they let you allocate money in the way an institution does, that is, on a sector by sector basis. This used to be the Big Boy’s Game, but with ETF, small investor like us can afford to join in the game now. As I always said, this crisis is once in a lifetime for you to make big tremendous gain in your investment portfolio, do not miss the boat this time. Remember to accumulate on any weakness and stay invested in the next few years.

In my next blog, I will share on how you can utilise OPTIONS to multiply the returns on your ETF investment by 100%! Stay tuned and talk to you soon.

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Sincere Appreciation,

Philip Chua, ChFC CFP FChFP
IARFC AMC B.BUS (Hons)

Mobile: +65-9748-4828

http://www.philipchua.com/

Twitter me @ phichua

P.S. I have existing Position in the ETF mentioned. My Recommendation is personal and it is your own responsibility to do your research and decision. Investment in ETF is not without risk and is not guaranteed.

Should I Invest In GOLD?

Investing In Gold?

I have a lot of friends and clients asking me recently about whether they should put their money into gold. Before I address that question, let’s talk about GOLD. For millennia, gold has been a barometer of financial health and the ultimate store of value. It has long been considered the ultimate safe haven investment when all else fails especially after this credit crisis and global recession.

So now that gold has made a second big swing – shooting from $600 an ounce to $900 an ounce after punching through the $1,000 plateau last year – is the “yellow metal” still a prudent investment, or is it an investment that has already been played out?

Before the above question can be answered, let’s look at “GOLD 101”; the supply and demand of gold which in turn determines its price. Talking about gold price, here is the interesting fact about gold price

Gold price is

$252.80 on 20 July 1999

$255.95 on 2 April 2001 (Where the Bull Run Started)

$1,011.25 on 17 March 2008 (Peak of the Run)

$692.50 on 24 October 2008 (Price Hit By Credit Crisis)

$930.00 on 31 Jan 2009

$881.00 as I’m writing this article…

If you have noticed the sharp fall in gold price within a short span of 6 months from the peak in March 2008 to the valley in October 2008, it is obvious that the huge fall in price was a result of the credit crunch as investor cash out of gold amidst the fall in all other asset classes.

If we look at gold as compared to other commodities, I would consider it safer as it moves independently. Gold is the only commodity with positive gain as compared to other commodities in 2008.

There are a lot of factors affecting the demand and supply of gold. Some examples will be that of the value of US dollar, political risks, inflation, new gold discoveries etc. Honestly, there is no one single factor that can determine the demand and supply of gold in totality.

According to World Gold Council,

Demand of gold from 2003-2007 are broken down as follows:

Jewellery- 68% (2008 is 59%)

Industry Usage- 13% (2008 is 11%)

Investment- 19% (2008 is 30%)

The Supply of gold from 2003- 2007 is as follows:

Recycled Gold- 25%

Mine Production- 60%

Net Central Bank Sale- 15%

It is to be noted that the net central bank sale on the supply side has been rather constant after the incident in 1999 where the bank of UK sold 400 tonnes of gold which causes the plunge in gold price in that same year. Since then, to prevent such drastic plunge in gold price, most central banks have an agreement signed not to sell more than 400 tonnes of gold at one time. The current agreement by all central bank is not to sell more than 500 tonnes of gold into the market with the exception of the central bank of UK. Currently, all European central bank has 60% reserve in gold, except UK only 40% after the great sale in 1999 which it must have regretted for many years to come…

Talking about the jewellery demand side of gold, there is no doubt that India is the highest, followed by US (But it has went down in recent years) and then China ( China demand for jewellery has doubled in last 5 years)

Demand of gold for industry usage has been rather consistent over the years, although it is expected to dip a bit amidst this global recession.

What is worth an attention is the spike in demand of gold from the investment side. 30% of total demand for gold in 2008 as compared to only about 19% in previous years. I believe this figure will continue to rise in year 2009.

Switching our focus into the supply factors, there will always be people selling gold when price starts to increase. Recycled gold percentage as a supply will tends to go up as price of gold increases.

The good news is that Mine production for gold has been going down and this accounts for 60% supply of gold in the whole world. There is no new discovery for the past years as price of gold then is low and gold mining is expensive. The bad news about this supply factor is that as price of gold accelerates further, there is greater motivation for businessman to start mining for gold again and hence increases the supply of gold as new mines are being discovered.

Net central bank sale of gold had been rather consistent for the past few years with US holding currently around $252 Billion worth of Gold Reserve

This brings us back to the big question: “Should I invest in gold ?”

With the above analysis, it is obvious that price of gold will go up as investment demand for it increases in 2009. The counter effect on gold price will then comes from the increase in recycled gold and new mining ventures following up.

With US Dollar likely to depreciate in the long run as mentioned in my second Blog and inflation creeping higher in the future, Gold may be a good hedge against US dollar.

Therefore, gold is a necessary component of almost any portfolio. The problem is that the iShares SPDR Gold Trust ETF already has accumulated more gold than the rich countries of Switzerland or China. That means any move from the masses of investors to leave the metal will have a huge downward effect on it.

But, knowing this important technical risk, I would still be ready to invest if gold pulls back to the $800 an ounce level. From there, I’d keep building a prudent position not exceeding 10% of my portfolio, as we should see a price spike once inflation starts showing up in 12 months to 18 months. As inflation spikes up, be prepared to let go the gold at prices beyond the $1,000 marks.

I hope you enjoy this discussion.

Talk to you again and do have a fantastic week ahead!

Sincere Appreciation,

Philip Chua, ChFC CFP FChFP
IARFC AMC B.BUS (Hons)

Mobile: +65-9748-4828

http://www.philipchua.com/

Twitter me @ phichua

Talk About Recent “Bear Rally”

Since the past few weeks, a lot of “experts” has been calling the recent rally a “Bear Rally” that don’t have volume and won’t last long…

The question is: “Are they Correct?” Perhaps they are right but the main reason that they are making this statement may not hold water after all. The main reason that most “experts” are citing is : The rally over the last six weeks simply lacks the buying volume we need to see for the effort to be a new bull market.
Let’s look at some comments below from Pacific Shores Investments, LLC
_____________________________________________________________________________________

Reality Check

Charts don’t lie – the bullish volume since early March hasn’t been nearly as weak as these forecasters have said it’s been (even if Monday’s selling volume was really strong).

In all fairness, it’s not been ‘through-the-roof’ volume. But, it’s been persistent – the market has rallied on worse.

The nearby charts of the NASDAQ and the Dow (with volume data) tell the story. Green volume bars are bullish, while red volume bars are bearish. Though neither index gets points for consistency, it’s not like there’s been no bullish volume. In fact, the green bars started to get quite tall last week.

You can also see the volume over the last six weeks – during the rally – was no greater or worse than the selling volume we witnessed in February.

Oh, and if you’re eyeing the middle to latter part of two weeks ago as a potential lull in bullish volume, remember, the market was closed on Good Friday. Plus, the Thursday before that holiday was effectively a half-day since many traders started the long weekend a little early. That wasn’t a decline in buying volume… it was a decline in any activity.

So, the question we ask is simple – what do these pundits mean when they say the buying volume has been too light for the market to be at the beginning of a new bull market? It’s been far stronger than they act as if it’s been.

Our posed question in this forum is rhetorical, but if we get a chance to ask the same question (and to demand specifics) we will. We encourage you to do the same. Until then, keep these charts in mind the next time you hear these guys make their case…. have they actually looked at the data?

Just for the sake of argument though, let’s compare the last six weeks to the beginning of prior bull markets.

Why? Basically, the same folks are telling us this big move off of March’s lows isn’t like the beginning of other recoveries. This time, we’re lacking the volume (surprise, surprise) that we’ve seen with previous rebounds. Therefore, they feel, this can only be a bear market bounce.

Our question – again – is as simple one…. what prior rebounds are they talking about?

Yes, there’s got to be some volume to kick-start a new bull market, but if you think we saw some miraculous volume with the bull markets that began in early 2003, or in early 91, or in late 87, or in 1985, think again. The last time we saw significantly measurable ‘accumulation’ at the onset of a bull market was in 1987, and even that instance wasn’t terribly decisive. If anything, the last six weeks look very much like the beginning of prior bull markets.

Bottom line?

We’re not saying these gurus are wrong; we’re just saying their arguments and opinions are without foundation even though they may believe they are. Respectfully, we ask them to get specific. Otherwise, we can only assume the trend in place is the one that will persist.

Just some food for thought regarding media commentators. It doesn’t take substance or reason to put on a good show.
_____________________________________________________________________________

And let’s look at some technical analysis from DMG & Partners Charts & Comments…
________________________________________________________________________________

Our contrarian call that most market indices would encounter a pullback during the previous week did not materialise. On the local front, the Straits Times Index (FSSTI Index) extended its charge on high volume to eventually chalk up a 3.7% weekly gain. Given these developments, we now believe that the index is still riding on a Wave 1 which is expected to translate into further upside.

Retracements to be regarded as healthy pullbacks. While the 14-day RSI is approaching overbought territory, we believe that any profit-taking seen in the index should be seen as healthy pullbacks. As with the previous three instances (once in Mar 09, twice in Apr 09) when the RSI was close to or at the overbought mark, the STI did give back some ground although the ensuing rally had more than made up for it – the STI had appreciated more than 300 points since the end of
Feb 09.

Initial but weak resistance at the 1,959 level would first serve to cap any additional upside, although we do expect this barrier to be broken. Following which, the momentum is expected to drive the STI up to around the 2,000 mark where stronger resistance at the 1,991 – 2,037 range is located. On the other hand, any retracements seen within the STI should be limited to the 1,836 – 1,848 range which a technical gap resides.

Continues to rally. Our earlier forecast that Wave 5 may have ended when the Shanghai Composite Index (SHCOMP Index) hit the 2,456 mark during early Apr 09 was on the wrong track as a runaway gap manifested last week to propel the index to another week of gains. Presently, we believe that Wave 5 may still be play and therefore we are expecting further upside to occur for the index.

Longer-term trend is also bullish. With the 14-day RSI remaining below the 70 level, the index does not appear to be overbought. Additionally, we also note that the index had produced a clear break above all its longer-term moving averages (50, 100 and 200) – this suggests a rather bullish trend as the last instance when a break above its 200-day moving average had taken place in Dec 05, the ensuing rally saw the index appreciate by more than 3,500 points before breaking back below the 200-day MA.

The 2,625 level may be viable. After having more than fulfilled the 100% extension move of Wave 1, we believe that the next price target for the current Wave 5 would be the 100% extension of Wave 3 at 2,625 [ derived from 1.0 * (2,402 – 1,814) + 2,037 ]. Coupled with the daily high seen on 11 Aug 08, we therefore indentify resistance at the 2,601 – 2,625 region. Meanwhile, support at the 2,444 – 2,464 range is expected to deter any potential pullbacks.

Switching our views. We had previously mentioned that we would be adopting a short-term bearish stance on the Dow Jones Industrial Average (INDU Index) until the 100-day moving average is broken above. Now that price action has produced such a phenomenon during 16 Apr 09, we believe that the index may be poised to extend its gains despite the spectacular rally it had experienced off its Mar 09 lows.

However, a short-term breather may be at hand. The MACD chart is showing some signs of flattening out. While this may indicate that the index may be entering a consolidation period which might see some of its gains being tapered off, note that its moving averages are still firmly above the centreline – this indicates that the underlying trend remains bullish. Furthermore, the lower bollinger band is also turning up sharply, reflecting support levels are being elevated up higher progressively.

Wave Count suggests a target around 9,000. The current Wave 1 should still be at play – we peg resistance at the 8,996 – 9,015 area, courtesy of the 38.2% fibonacci retracement of Wave C at 9,015 [ derived from 0.382 * (13,136 –,6,469) + 6,469 ] which roughly coincides with a certain daily high seen during early Jan 09. Should the index enter a consolidation period, however, any probable short-term downside would find initial support at the 7,750 – 7,798 range while further support is also available at the 7,540 level.

Similar to the DJIA, the S&P 500 (SPX Index) has also produced a clear break above the 100-day moving average –we therefore also believe that its gains could be extended. As with the chart of the DJIA, the bollinger bands within the S&P Index are also turning up while the MACD technical indicator is also emitting signs of flattening out, although it nevertheless remains above the centreline. In summary, we believe that the S&P Index could therefore similarly consolidate before making a substantial push further.

Currently also in a Wave 1 that has yet to run its full course, a probable price target for the S&P Index would be the 961 mark [ derived from 0.382 * (1,440 – 666) + 666 ]. As a series of daily highs also reside at the 951 level, we therefore identify resistance at the 951 – 961 area. Support levels, meanwhile, are seen at the 828 – 831 and 814 levelsrespectively.

Primary Wave Count was incorrect. Ironically, our alternate Wave Count for the Hang Seng Index (HSI Index) turned out to be the correct one. We had previously wrote that a break above the 15,147 – 15,258 area would see price action fully retrace Wace 5 of C at the 15,763 mark – this scenario would also indicate that Wave 1 was still up and running.During last week, the HSI had actually cleared both these levels to eke out a 700-point weekly gain.

Momentum remains positive. Wave 1 appears to be still up and running, implying that additional upside may be forthcoming. Furthermore, the 14-day ADX has also trended up, indicating that the current (bullish) trend is
strengthening. We therefore would be altering our previous bearish view and are now forecasting the HSI to ascend further.

Key levels to note. We see resistance at the 17,090 – 17,141 region as depicted by the confluence of the 38.2% fibonacci retracement of Wave C [ derived from 0.382 * (26,387 – 11,344) + 11,344 ] and the trend high recorded during 14 Oct 08. Support levels have been outlined by the two respective technical gaps, residing at the 14,987 – 15,140 and 13,788 – 13,953 areas.
_____________________________________________________________________________________

Dear Friends,

Well, it pays to be optimistic as what goes down may eventually comes up after all.

If you are a investor like Warren Buffet, the Ups and Downs of the market should not bother you too much as your investment horizon should be long enough to ride out all these noises in the market. Just ensure your portfolio is fundamentally sound with good companies in it.

But if you are a trader, be careful of what the “expert” says and comments; “experts” are also human and human mistake is rather common nowadays.

Ok, let’s be optimistic and start investing in the long run whenever there is opportunity with any downside correction. Like many have commented, this is a one in a century crisis; I reckon this is also one in a century opportunity to make huge gain in the market over the next few years.

Stay Cheerful and be optimistic, we may indeed see a recovery by end of 2009. Even if we did not, stay invested in the long run and do not be too worried about the Ups and downs. The Truth is : Market Will Recover…

Talk to you again,

Sincere Appreciation,

Philip Chua, ChFC CFP FChFP
IARFC AMC B.BUS (Hons)

Mobile: +65-9748-4828

http://www.philipchua.com/

Twitter Me @phichua

Is 2009 Better Off Than 2008?

2008 is the beginning of nightmare for most people…

2009 may be the worst of the decade ever remembered…

For the entire crisis events that people can remembered, from the oil crisis in 1986 to the Asian Currency Crisis in 1998… the credit crisis may be the one that most people would want to forget about it the most…

In Singapore, some people worried about what happened..

Some people wondered what happened..

Some don’t even know it’s happening!

For a detailed of what the credit crisis is all about, the closest video that I can find that best illustrate how this credit crisis came about is this…

All that is seen, it has shown that this Crisis did not occur overnight, but through many years accumulation of Wall Street Greed… Can It be over by 2009?

Optimistically, many people hope so…

Realistically, if recovery starts in 2010, that is already a blessing.

The stock market is always an indication of the economy as it is forward looking. Many people are relieved at the recent rally for the past month and some even has called for the worst is over…

Personally, I really hope so, but looking at the fundamental of the US economy and the ripple effects of the Credit Crisis, I do hope the recent market rally is not a bear rally as some investment analyst has called for.

US is in deep trouble after this credit crisis…

The debt of the United States federal government is huge. As of April this year, it stood at around US$11 trillion (S$17 trillion). And since 2007, it has been growing faster than nominal gross domestic product (GDP). The result is a slow but steady rise in the debt-to-GDP ratio.

“Public” – including foreign central banks – currently holds about US$6.5 trillion of the debt, and 45 per cent of this amount (US$3 trillion) is owed to foreigners (mostly the central banks of Japan and China). The remainder of the debt is owned by US federal agencies, such as the Social Security Administration.

These estimates do not include the cost of this credit crisis, which will add at least US$1.8 trillion to the tally. According to the US Congressional Budget Office, these costs will raise the public debt-to-GDP ratio to 50 per cent by the end of this year.

Therefore, long term outlook of the US economy is not looking bright.. Given the rising debt-to-GDP ratio, prospective lenders to the US will conclude that the US dollar will need to fall in value over the long term. That will make them reluctant to accumulate US dollar-denominated government bonds.

It may even encourage them to reduce their existing holdings US assets. But unwinding their exposure quickly could be self-defeating as a huge unwinding will significantly reduce the value of the US dollar and hence the value of their existing holdings…

Judgment day may come in another 10- 30 years or so… when similar crisis happen again… this time imagine the US is unable to increase expenditure further by printing more money like what it is doing now due to a high level of debt..

All that is said, the world economy is not dependent on US only. Hopefully through globalization in the next few decades, China is able to take on the role of a spender; one that depend more on their own domestic consumption and investment growth rather than that of the current export growth strategy.

While riding through the Ups and Downs in 2009, make sure that you have set aside enough liquidity/ savings ( 3-6 months recommended) to last you through 2009 for its going to be bumpy.

I’m looking forward to 2010 now… and hoping that the current market rally will persist… Got to be optimistic, right?

Talk to you again. :)

Sincere Appreciation,

Philip Chua, ChFC CFP FChFP
IARFC AMC B.BUS (Hons)

Mobile: +65-9748-4828

http://www.philipchua.com/

Twitter Me @phichua

Welcome To My Business Blog

Dear friends,

Thank you for visiting my new Blog. My previous blog at http://philipchua28.blogspot.com/ will no longer be updated and please bookmark this Blog Page for my future blog entries…. Managed to extract all previous Blog entries into this new Blog.. Kindly note that my First 05 Blogs dated 22 June are extracted from my previous Blog. Thanks…

By the way, I have recently built a Wealth Mastery Membership Site to help people to improve their financial intelligence and to achieve Financial Independence upon retirement. If you wish to be enlisted in this membership program, kindly click on the “Magic Button” on my Personal Page and I will bring you there! Thank You!

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I have been asked many times to start my blog.. Here it is.

First, I will like to share a coaching experience with my mentor, Mr Dave Chong many years ago when I first started out as an insurance agent with AIA.

It was 1998, where Asia was facing one of its worst crisis- Asian Currency Crisis. During those times, there were also lots of retrenchment going on and many people were badly affected by the crisis as it is now happening again in today environment.

During one of the coaching lesson, he handed me the following words in a laminated paper and asked me to carry with me as long as I can till the message is entrenched deeply into my subconscious mind.

“I BECOME WHAT I THINK MOST OF THE TIMES”

I’m glad I did and that helped me not just to survive the Asian Crisis then, but I excelled in my insurance business indirectly as a result of that. To know more about this great and wonderful mentor of mine, check out his website at www.davechong.com.

Since then, I never looked back and upgrade myself continuously to become a full fledge professional financial consultant. I will always thank him for the difference that he had made in my life…

The level of Wealth that we have achieved in our life is truly a reflection of our inner thoughts and our belief system. We cannot achieve what we do not perceive in the inner thought.

Most people started out their first career with great ambitions and aspirations to succeed big, but most people also ended up achieving lesser of what they can achieve, due to limited belief system, negative peer influence and lower motivation factors as life journey proceeds.

My Mentor used to tell me:”In life, don’t just find friends, but find a great mentor as well”

If you want to achieve great result in what you are currently doing, go find yourself a great mentor whom had already succeeded in that arena and ask him to coach you. In life, we either learn from our own mistakes or we learn from other people’s mistake.

Success is a journey, not a destination.

Find passion in what you are doing, and most likely, you will find success.

The difference between a successful person and others is not a lack of knowledge, but rather a lack of will.

~ Vince Lombardi

Once, I have a colleague who once told me that she does not need any motivation… Guess what was in my mind when I heard that?

To me, she is somebody who has great potential to achieve big in her career, but due to low motivation factor, she is just getting by today.

Always ensure that you read a motivation book or listen to an audio series to keep your own motivation high so that your will to achieve your dream and goal is always there. You can go to my web site www.philipchua.com and subscribe to the 30 days Inspirational and Motivational quotes. Those are some of my favourite subconscious powerful messages that had been with me for many years…

Most importantly, before you can find Wealth, master the skill in your own financial planning.

A lot of people are concerned about retrenchment nowadays… Are you?

Do you know what can be worse than retrenchment?

It is when you are being retrenched, and yet you are faced with a huge medical bill and realised that the company medical program that used to cover you and your family is no longer there when you need it most.

In my life of business, I have witnessed many individual life time savings wiped out just by one major illness, and that can be a great burden not just for that individual, but also for the family as well.

Do not let yourself fall into such a situation. Always ensure that your financial plan in term of Wealth Protection is adequate and up to date at all times. Do consult your financial consultant if necessary.

Ok, that ends my first Blog…

I will talk to you again

Sincere Appreciation,

Philip Chua, ChFC CFP FChFP
IARFC AMC B.BUS (Hons)

Mobile: +65-9748-4828

http://www.philipchua.com/

Twitter Me @phichua

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