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Archive for the ‘Philip Financial Insights’ Category

The Spark of Next Financial Tsunami

Back in early 2005-2007, people around the world have turned their focus on where the next world powerhouse economy will be- CHINA. Indeed, today everything that we use or wear is almost certain to be made in the world’s factory- CHINA.

While it was China growth back in 2007-2008 that helped to propel the world’s economy when the credit crisis in US erupted, today’s news read China stocks fall on fears of deepening…BEIJING – A sharp drop in exports and industrial growth last month has fuelled fears that China’s economic slump is deepening, raising pressure…

Dear Friends,

What if I will to tell you that CHINA may be the spark for the Big Crisis that we have all been expecting from the US and Europe? What I’m going to write may sound highly controversial but don’t just take my word for it.. Do your sum and make your own judgement.

What if you know that China has closed more than 2,087 factories in 2011? What if you know that China’s unemployment rate is a staggering 22%? What if you know that China’s real estate’s bubble has burst?

What impact do you think the world economy will be going through when the so called World’s economic powerhouse is going into a recession of worse, a repeat of what the US had went through in 2008?

With its current rate of high inflation and a slowing economy, unless something is done quickly to fix its economy, China may well be the spark of the next biggest crisis in history by bringing down the already battered US and Europe’s economy.

Do not rush into buying real estate or stocks now. Hold at least 50% cash in your portfolio.
You will be glad that you did when the whole crisis unfold in the next 6 months or less.

Stay liquid, hold minimum stocks and be prepared.

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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The Financial Tsumani Wave That You Cannot Ignore

As we approach the end quarter of the year and the news keep painting that the economies are getting better, I think I have better sent you a reminder that that the economy is not going to be alight.

As mentioned in my previous email to you, the US national debt already grossly exceeds $15.0 trillion. But the truth don’t just stop there. On top of that, the US is also sitting on almost $85 Trillion in unfunded liabilities in other matters like Medicaid, Social Security and etc.

Do you know what that means when we say that US debt is nearly $100 trillion? Think again..

US is technically bankrupt if it is running like a company today.. ( I have stressed this many times)

The fact that US national debt ceiling has been raised at least 10 times and twice in 2008 and 2009, how many times more do you think it can further be raised?

The coming Financial Tsunami will come soon with a massive selloff of US treasury bonds by foreign investors, further downgrade of US credit rating and another similar run on worldwide markets that would eventually start a severe crisis maybe worse than 2008. This may happen as near as in the next 2-3 months

With that, Europe crisis will worsen, China growth further depressed and a worldwide depression may be in the picture.

Well, you may think that I’m being too pessimistic, and you might think that it’s impossible that US will let this happen. Maybe.. But I’m definitely not pessimistic.. in fact I’m optimistic as there are great opportunities if you know what to do when this thing happens…

Maybe it won’t happen, but I believe the market will still fall even if the debt ceiling is raisied again with further downgrade of US credit rating.. Think Again.. But what if the debt ceiling is not going to be raised as more than 70% of the American object to it?

Stay liquid, hold minimum stocks and be prepared.

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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The Second Episode of Financial Tsunami 2012- Spain Cry

History always repeat itself. While it is almost unbelievable that there was a repeated accident of a Lexus and another Taxi on the same stretch of road where the horrible Ferrari accident happened in Singapore just a week ago, human nature always seems to let go at its nerve to think that history won’t repeat itself again.

If you are going to think that the coming financial crisis is going to be as foreseeable as the 2008 financial crisis and it’s going to be a V shape recovery, think again. Europe is only the first stop where the first deck of cards to unfold  pertaining to the Financial Tsunami 2012, US will be next, followed by Asia, then the whole world.

As mentioned in my earlier post, “Greece has technically already defaulted on its debt, with Spain and Italy not far behind.”  Indeed, the shout of financial headline today is now all about Spain. Forget about Greece for the moment, as Spain’s economy is 7-8 times bigger than Greece. If Spain is in need of financial aids, that will be 7-8 times more from the Euro zone and it will be more draining.. Italy will be next.

Spain is now seeing a collapse of its property market, and that had cause tremendous financial burdens on the Spanish banks. Remember how mortgage back securities in the US collapsed when the US property market crashed in 2008, it is now happening in Spain, in similar scenario.

With the rising interest rate on Spanish bonds, and nobody buying it at the moment, Spain cannot afford to continue to pay such higher interest rates, and so the Spanish banks are facing tremendous pressure to seek financial aids from euro zone countries, or face foreclosure due to illiquidity. It is to be noted that Spain’s total 17 states have in total more than 30 billion Euros in debt and this will again cause interest rates in Spain to rise further.

The first deck of cards leading to the Financial Tsunami already started to unfold from Greece, to Spain, and Italy will be next. When the first deck of cards have fully unfolded with the Euro collapsing after euro zone have used up all its bullets, US will be the next deck of cards to start unfolding…

This is going to be a long draining process where false hopes of market recovery will always be highlighted. The truth is-US is not recovering and there is no economic growth in US to support Euro financial problems. When the second deck of cards start to unfold in the US, QE3 will be introduce and that may be the final straw that US will have before US dollar starts to collapse just like the Euro. China and India are slowing and the whole world economy is at the tip of the downhill  long cycle.

On a side note, central banks around the world are scooping up gold including China. If you still do not have at least 10% of your investment portfolio in gold or gold related instruments as recommended in my previous post, I strongly urge you to seriously consider looking into that right now. Do not procrastinate.

History always repeat itself. This will be most painful for most people, but to those who are prepared, it may be the most rewarding time of their lives to make the most fortunes out of one’s lifetime. I hope you are one of them.

Have a great 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

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The First Episode of Financial Tsunami 2012- Greece Default

While the main talk of the town is about the recent Ferrari crash in Singapore which took 2 innocent lives, the main talk of the financial market is about the worsen Europe crisis which caused the stock markets across Asia to plunge to their lowest levels in four months as of 18 May 2012.

Despite a great start to the year, May is proving to be a bad month for stock markets. STI has dropped about 220 points since the beginning of May, and that’s more close to 7% sell-off from the 3000 level. Perhaps the saying of “Sell in May and walk away” is right in 2012. I hope you have heeded my advice in my previous article -” The Next Financial Tsunami 2012-2018″ and has loaded off some of your stock holdings. In my personal opinion, this is only the beginning of the Financial Tsunami that I have been talking about. You need to understand that being prudent is important for success in stock investment. Too greedy and you will see your capital sink.

As mentioned in my previous article, “Greece has technically already defaulted on its debt, with Spain and Italy not far behind.”  Since 1945, the elections in Greece have been won to and forth between two parties and in very predictable patterns. However, with the unemployment level in Greece at a record high of close to 22% in February and young unemployment rate at unbearable rate of close to 55%, the Greece elections held in May witnessed the end of this 60 year political cycle as the parties that support the European Union (EU) and its financial measures only managed to gather 34% of the votes.

The end to this political  election pattern in Greece has since sparked off concern that  if there is a total change in government and its political policy, the EU may not grant anymore bailout fund to Greece and it will officially be in default and will risk having to leave the EU. The real issue and concern is that if Greece really defaults on its debt, some German or  French banks are going to lose lots of money including the credit default derivatives linked directly or indirectly to it. Euro has fallen below US1.30 for the first time and if the June 17 election proves to be fatal for Greece to default on its debt and leave EU, we can expect to see it below even US1.20.

I read some reports in the US media that investors are running for the “safety of the US dollar” and that has caused further correction of the Gold price to US$1530 ( Since US$ are traded inversely related to Gold). Personally, I do not buy that idea if you have read my previous discussion why US$ will depreciate further. Gold price has since been lifted  to US$1590 just during the last few days. As I mentioned in my previous articles, “US as a leading economy and empire, is history”. With its endless mass money printing policy in place, the next currency to correct and fall will be the US currency. Personally, I have bought more gold and gold related investments when gold price corrected recently and I urge you to do so and at least have 10% of your investment portfolio in gold or gold related instruments.

What’s next?

Markets all around the world will be more volatile and be prepare for a roller coaster ride as more news from Europe are revealed in the next few weeks to months.  Some of my friends are asking me when will be a good time to enter the market, and honestly I do not know…

However, the VIX, a popular measure of the implied volatility of the S&P 500 index options, often referred as the Fear index or the Fear gauge has already climbed to 25 just a few days. During the last Financial Crisis in 2008, this index was as high as 60 -80. If there is any indicator to enter the market, this may be a good indicator when to buy in the market as the famous Warren Buffet  once said something similar as “Be greedy when people are most fearful”.

With all being said, this financial tsunami may be more painful and may last longer than the previous one if it comes. So be sure to prepare to have your investment hold longer if you decide to invest ultimately. In the last financial crisis in 2008, we were glad that we have 2 enormous growing economies to be there to support the whole world- China and India. However, if you have followed the markets, these two economies have also slowed down considerably since then. So if this bigger financial crisis is to erupt, who will be there this time to support the world’s growth?

In Singapore, if this financial crisis is to erupt, be prepare for another year of recession as Singapore will definitely be affected by it. I read with disbelief from property guru report today that “Prices not only held up but actually increased slightly at the very top end of the Singapore market in Q1 2012,” even after the 10 percent additional buyer’s stamp duty (ABSD) imposed in December 2011, according to Asia Pacific Research Director at Knight Frank. This may be true in the first quarter, but my thought is that the scenario will be totally and completely opposite in the next few quarters if the financial crisis is to occur in the next few months.

Where there is crisis, there is also huge opportunities. Stay tune and be prepare and we will be fine.

I hope you enjoy today’s discussion. If you like my articles, do spread it to your friends in social media platform like facebook by clicking the facebook button below and share the information with them.

Thank you and talk 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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Part 2-The Next Financial Tsunami-2012-2018

In response to my previous article – The next Financial Meltdown And How You Can Prepare For It, Some of you have enquired about how to go about buying Gold as part of investment portfolio.

If you are keen to invest in Gold, ( which I strongly urge you to have 10% of your investment portfolio to be in Gold), you can do so at UOB. If you want to buy physical gold, you can do so at their UOB main branch at Raffles Place. Alternatively, you can open a gold deposit account at any UOB branch.

If you have a higher risk appetite, you may want to consider Gold mining stocks. When gold price goes up ( It will in coming years), Gold mining stock will increase many times in value as stock prices are valued in P/E ratio ( Price /Earnings Ratio) and their prices will have multiple increase in effect as well when gold mining profits edged up with gold price.

However, there is a higher risk associated with buying gold mining stocks and if you cannot stand fluctuations in your profit and loss in short term, do not enter into this. Just buy gold will do.

CNMC is the only Gold mining stock listed in STI ( Straits Time Index) and at its current price of $0.42, it looks attractive to me as its close to its IPO price of $0.40 last year. You can find out more about the company at their website below…

=>  www.cnmc.com.sg/

Gold price had corrected a bit since last year and this share is currently undervalued at this price. I presume that the price will hit $0.50-$0.55 when Gold price go up to its previous high of $1900/ounce by year end. (Disclaimer: This is my personal opinion and do not constitute any buying recommendation- Any investment is your own decision and you need to do your own research before you buy into any stock)

You may consider Gold ETF if you are just keen to invest in a fund. More details are outlined in my previous blog article on Gold.

Today, Bloomberg just release news that China’s gold imports from Hong Kong surged more than sixfold in first Quarter 2012. My take is that China is scooping up Gold to back up its currency when the US and Euro crisis erupt. Should we take some precaution by buying into gold today?

Hope the discussion benefits you. Have a great day

Regards,

Philip Chua,
ChFC CFPcm FChFP
IARFC AMC B.BUS (Hons)
Trained Options & Certified Forex Trader

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The Next Financial Tsunami-2012-2018

If you have remembered 2008-2009, that may be the worst financial year we have ever faced since Singapore became independent in 1965. With the credit crisis in US then unveiling its dark closet, the Dow Jones Industrial fell approximately 54% from its high of 14,164 in October 2007 to finally hit bottom on March 9 at 6,440. The truth is – the Final Impact of that tsunami is yet to hit us and it’s on its way now.

Now in 2012, major economies like the US and Europe are slowing. Retail sales in US and Europe are running at their lowest pace in five months, and US and Europe corporations ended 2011 with their slowest profit growth in two years. 2011 was the worst year for new home sales in the US since 1963 and housing prices are set to fall again in 2012. Yet, people are lured back to the stock market, thinking that things will be fine and controlled as portrayed in the main media. When this final wave of tsunami come, even Singapore may have to retest its Straits Times Index low of 1513 in Mar 2009.

Backdrop of US

With the US budget deficit at US$ 1.3 trillion, the official US national debt exceeds US$15 trillion. President Obama just got approval to increase the US debt to US$16.4 trillion in 2012. With all these in mind, the US unofficial national debt could be close to US$100 Trillion if we take into account unfunded liabilities and entitlements in US. If US is running like a corporation today, it is already technically Bankrupt. US as a leading economy and empire, is history.

Backdrop of Europe

When Greece announced to the world that they are in trouble of defaulting their national debt, the euro zone leaders said that they would bail out Greece in 27 October 2011. However, by 20 February 2012, the Euro zone finance ministers agreed to a second bailout for Greece. Greece has technically already defaulted on its debt, with Spain and Italy not far behind. Having said that, Germany is the only real foundation of the European economy. Will Germany get tired of bailing out its poorer and mismanaged European counter-party one day and each country just go back to its own currency? If that happens, Euro will die and so do the weaker European countries like Greece, Spain Italy and Portugal.

Current Scenario

Have you heard of the Great Depression? If not, quoting from Wikipedia, “The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s. It was the longest, most widespread, and deepest depression of the 20th century.” Why am I mentioning about the Great Depression? Do you know that there is a great similarity between the years 1934-1937 and 2009-2011?

Let us re-examine these two scenarios

The stock market crash in 2008 is similar to the crash in 1929 crash which eventually led to the great depression. After the crash in 1929, there is a bear market rally that started in 1934 which lasted until 1937 and it took the Dow Jones from a level of 90 to 185, a positive gain of 106%. The Dow Jones then collapsed and did not recover till seven years later, 1944. If you look at this past trend, isn’t the bear market rally from 2009-2011 similar to that of the bear rally back in 1934-1937? I hope I’m wrong but if I’m right, we are heading into some serious financial tsunami that will ultimately bring the current US stock index below March 2009 low (6,440). If this happens, Singapore may also retest its STI low of 1,513 occurred on March 2009.

Gold Investment

With losing faith in currencies and stocks, the only way for gold is to move up. The correction within the year should not be taken as a bear, rather than as a correction. Looking at the situation today, I expect the gold price to hit 3,200 before the gold rally is over in approximately 3-5 years time. It is to be noted that for 11 years, the price of gold has closed each year higher in price than it started the year. I have previously written an article on gold investment back in 2009 and if you will like to have a look, the link is below. ( Or you can read in my post below  at  my same blog)

Making-a-Marvelous-Gold-Investment-Decision?

My two cents worth of advice

1. Ensure that you have enough liquidity to ride out this coming rough financial tsunami which may last several long years from 2012-2018.
2. Ensure that you have minimum financial liability moving forwards by not borrowing unnecessarily.
3. Ensure that you have enough insurance coverage to pay off hefty hospital and medical bills when jobs and income are tighten during this period.
4. Ensure that you stay out of stock market and exit now for any gain that you have made currently. Do not be greedy. However, there are a few categories of stocks that you can hold and make money when the tsunami come..Put on your thinking hat…I shall reveal one in part 6 below.
5. Ensure that if you hold on to any investment portfolio, they are continuously rebalanced with at least 50% Bonds in Asia.
6. Ensure that you diversify your investment by buying into gold or gold mining companies as gold price continues to rise.
7. Ensure that you dispose any US$ or Euro as they will continue to depreciate in value as outline in my discussion above.

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2017-10-17 15:20
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