My 30% Gain from Netflix

This week I have sold my position of 15 Netflix shares that I bought last week.

Over this 1 week period, I have made a 30% return on capital.

This bet of mine was made because of a historical price trend on Netflix's share price.

I bought my shares last week at $324 and sold them this week at $422.

The shares could go higher but I felt that it was good enough to make 30% in a week so I sold it.

But the main idea is the strategy used because of this investment bet.

Below is the 1-year price trend for Netflix


What is interesting is the past 5 years' historical price movement from January to February.

2014 Jan-Feb


 2013 Jan-Feb


2012 Jan-Feb


2011 Jan-Feb



2010 Jan-Feb


We can see from the 5-year historical (2014, 2013, 2012, 2011,2010) performance that for the period of January to February, Netflix faces a 100% probability of having a minimum 10% increase in share price.

This year adds to it as the 6th consecutive year this trend is accurate - it is actually more than 6, but showing data going beyond 5 years in this article is not my main point.

While there is a tendency for the price to continue rising until mid-Feb or March, I sold my position because it was added on leverage for this one-time gain.

The price trend is only 1 of the 2 reasons I invested in Netflix.

The other is that its price had hit a 1 year low, showing support at around $310-$320 area (look at the first chart).

It is based on these 2 reasons, I invested in Netflix last week for a short 1-time gain.

I believe there are many more companies with such potential/trends.

One of them I believe is Amazon.com - the E-Commerce Gaint.

I will be posting about Amazon.com's trend next week if this strategy is one that works or one that I was just lucky.

Stay Tune~!

PS: The strategy for this investment was derived from the book below.
Although the full strategy is not from this book but based on my understanding of the original strategies, the fundamental idea is similar.
We buy on low prices or undervalued fundamentals compared to the past, such as near-bottomed prices and historical trends.

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Love Low Oil Prices

Oil prices have hit near 5 year low; trading at or more than 50% below their peak several months back.
There have been many articles and reports stating that low prices are here to stay, and that a huge rebound is not expected within the next several years.
Although the retail figures published yesterday was disappointing, dropping 0.9% in December, it is not the key figure we should be overly concerned with.
Instead, more emphasis should be placed on the inflation index coming out today!

Markets should be based on fundamentals - the underlying economy.
However, since the beginning of the century, the markets have been dictated mostly by Central Banks' policies and their monetary stance.
The markets have been flooded with easy money from Quantitative Easing (QE) and record low interest rates.
These 2 reasons have result in an ever-growing asset prices in addition to the recovery of the global economy.

Central Banks fear nothing more than recession and deflation, although I would say they put more emphasis on the latter.
Low oil prices creates deflationary pressures.
Central Banks hate deflation, thus they would use all tools necessary and available to counter it.
Central Banks only have 2 tools: Print Money or Lower Interest.

We can expect 2 things to happen if today's inflation reports is lower than analyst estimate
1) QE4 to counter potential deflationary pressures.
2) Interest rates to remain at current levels or lower until end of this year.

As long as the economy grows (>0%), I would say that the above 2 possible actions by Central Banks will allow for the stock markets to hit a new high.
Thus, we need to love low oil prices, because they help keep the markets flooding with money.

If inflation goes up, it will spur demand for goods now and spin the economy wheel fundamentally.
If inflation goes down, Central Banks will QE or lower interest to create inflation, which boost asset prices.
Today's investment climate is a good investment climate because either way, the market will win!

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You need Stocks to Retire

With record low-interest rates set to stay and expected to almost never go back to levels during 1970s-1980s, retirees must now start planning to a pathway for their retirement via stock investing.

MORE LINKS
Accrued Interest More than Housing Profits?
CPF Interest for those Aged 55 & Above
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest
CPF +1% Interest for those age Below 55

In Singapore, our government pension system CPF guarantees our retirement fund a minimum interest of 2.5% on the ordinary account and 4% on other accounts. However, when compared against history, this is one of the periods where we are actually getting really low returns even though it is above normal savings accounts' interest.

We had had a period of 10 years where interest rates were at 6.5% and from 1963 to 1986, interest rates on the CPF were above 5%. Today, we are earning a minimum interest of 2.5% on our retirement fund.
Interest Rates here: http://mycpf.cpf.gov.sg/NR/rdonlyres/5C7AAE66-A2F1-4DCD-9898-D6D1F37A8FB0/0/InterestRate.pdf

If our parents and grandparents are currently having trouble enjoying their retirement because they have an insufficient retirement fund, we might need to reconsider if our retirement fund is enough for us to retire. Especially since we are getting returns almost half or less what their generation got.

Relying on CPF's minimum interest alone for retirement is no longer possible - in fact, it was never a possible goal financially. This is not the fault of the government but rather, this is just how the economy works. Demanding the government to make 6.5% interest mandatory is not possible because it would create a financial hole that would need to be covered by future generation.

The market currently gives an interest of less than 1%, the government by providing 2.5% interest, is actually putting up its money to cover the extra 1%+. If the minimum interest is raised to 6.5%, it will create a 5% hole that the government has to cover, which is a heavy financial burden.

To retire, we must now start saving and put money aside for investment - invest in your retirement.
As written in many of our other articles, investment is not like gambling, is less risky and more rewarding if done correctly - which is not really difficult.
"An investment in knowledge always pays the best interests" - Benjamin Franklin
Investment is a knowledge that pays one of the best interests.

Above is an index price chart that tracks 500 US biggest companies.
You can invest in the index above, and had you done that, you would have reaped enormous returns.
As seen, there will be ups and downs in investing, but if you do nothing - buy and hang tight, over the long-term, it will work out.

As age 20, if you bought the index in 1970 at around USD $90, 40 years later today (2010), each index share you own is worth USD $1170, that excludes all the annual dividends paid out to you.
How could you have lost money during this period?
A lot of people did because they buy but did not hang tight.

So, buy today, and hang tight for your retirement!

Recommended Post: Paying my HDB with my CPF after 55 Years Old

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A new year means a new set of challenges to overcome (and also to profit)

We had a rocky welcome for year 2015 with the disappearance of the AirAsia plane QZ8501 in the Java Sea. One of the numerous aviation mishaps that occurred in 2014. To add on to this rocky start, Coca Cola (one of the world's largest business empires) and Standard Chartered (one of the major banks in the world) decided to cut jobs and to close down its equities business worldwide respectively. In just a span of 2 weeks, a total of at least 5800 jobs have been announced to be cut.

To add gravity to subject, the Swap Offer Rate (SOR) rose to 0.75%, from 0.43%. A 70% increase in just a month. Most home loan packages are based on either the SIBOR or SOR rates, which means fluctuations in these rates can directly affect the property prices and even default rates.

Is this the beginning of the end?

Well, we are not sure. With the oil prices at 5-year low, there may be opportunities to profit. A phenomenon known as a contango is occurring in the oil market. Traders with storage facilities are profiting almost risk-free by locking-in future higher prices. More information can be found in this article: http://www.bunkerportsnews.com/News.aspx?ElementId=d1b5fede-eff0-43e1-a03b-cd1fec7395fa. While this may not be accessible to us retailers, there are still many ways to profit from the low oil price. 

However, there is one thing to be sure of. As said in our previous post, this year will be a good bull year for the stock market, proven by historical performance. 

Do join in our email list for more articles that we will release to a private group of interested participants. We are also looking to create a platform where like-minded people can discuss and share their knowledge together.

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Why you should not follow the financial news when investing

Are you one of the "investors" whom invest in stocks after reading the hot picks recommended by financial banks or advisers? By faith, you trust them for their superior knowledge and right away, you jump straight into your investment. However, the share price immediately starts to drop and regrets sets in instantly.

This might be the typical story that you hear from the streets while chatting with your friends, where the "recommendations" might just differ and changed to "news" or "rumors". The only reason is because these "news" often lagged behind share price movements. Why is this so?

News directors and casters often do not have specialised knowledge in the functionality of the stock market. Their jobs are to attract viewers to their channel by offering information in return. To do so, these "information" must be carefully selected and presented to their type of audience such that they will continue to tune in to their channel. Who would want to watch something that they do not like or agree on? Furthermore, as much as the news channel wants to present information in real-time, there is often a delay as the share prices have already moved in retrospect to when the news is being aired.

However, this does not mean that news is an negative indicator of what to invest on. Rather, it is an indicator as to when you should invest in. What do I mean by that?

Since the news is a lagged indicator, if a stock appears in the news, the share price should have been reflected in the market. As such, usually by then, there are no more profiting opportunities. (By that, I mean usually). Ideally, you should invest before news are released and, in relation let the market reflect the share price.

If 2014 is a bad investment year for you, great! Now is 2015 and I hope that this post can help you in achieving your investment goals.

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