Key takeaway
When fed funds rate go from 2.75%-3% be careful.
Action : take at least 30% profits at 2.75%, 3% get totally out of stocks
Target year to get out -2017
When fed funds rate reach 3.75%-4% Bubble burst.
In Year 2018, likely economy crash
In Year 2017 get fucking out of stock market.. since stock market will likely crash one year before economy crash
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show Nikkei example. . In 2013
3 phases of bull run
1. Speculative phase - rise from 8000 to 16000
2. Consolidation phase - 2013 when hit 16000..then consolidation to ard 12000
3. Super growth phase
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Now US market in super growth phase..
Refer previous crashes
1. Dot com bust
2. Asian financial crisis
3. Lehman - hyper inflated property
4. Oil crisis 1973 -hyper inflated oil
5. Black October 1987 -hyper inflated stock
6. Interest rate bubble 1982
Crash only come during inflation or hyperinflation..
So now will a bear market soon? No.. because now core inflation of US still 1.8%.
We are nowhere in hyper inflation..
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***Holy grail chart.. federal funds rate chart
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2 kinds of Interest rate chart
Short term interest rate
Long term interest rate
Key date -16 Sept. Yellen will determine short term interest rate
Fed Funds is thr short term interest rate
As of Sept 2015, Fed funds rate is ard 0.025%. It has been close to 6 years where the fed funds rate is near 0. Since Ben Bernanke is the chief
Long term interest rate is more on supply and demand market forces. The long term rate is ard 2.2%
Interest rate or fed funds rate tell thr bull and bear market of economy (not stock market)
Rising interest rate - good economy
Falling interest rate -bad economy
Height of interest rate tells the height of the economy
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Interest rate cycle got to do with spending habits!
Fed funds rate
2.5-3 times -Be careful
4 times - Bubble burst
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1958 - 1% rise to 4% then bear market
1960 - 1.5% rise to 6% then near market
1976 - 5% rise to near 20% then bear market..
Everytime if it reach near 4 times then some bubble will burst!
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Whether to know if phoney or real cash.. Ask..will this affect corporate performance of Macdonald?
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Daniel loh options
1. Stick to 1 month time
2. Put option price $ less than stock price $$
E.g. now stock price is $1.32.
I (sell) short a put option at $1.2 for $5k.
Why? - I guess the price will not drop to $1.2 in 1 month time
As long as price do not drop below $1.2, I will make all the $5k.. therefore my probability of winning is high
And loss.. if the price do not drop too much from $1.2 , say price drop to $1.1, my loss from put options will be less than that if I actually hold the stock
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EuroFX futures
Light Sweet Crude oil
Emini S&P
Golf
Coffee C
Natural Gas
Nikkei 225
Nasdaq
CBOE volatility (VIX)
30 year US T note
10 Year US T note
Soybean
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