Sunday, January 15, 2017

English translation of the Chinese blog posted on September 3, 2016 about investment opportunities in the rest of 2016

We are positive on oil, and stocks related to oil, and natural gas transportation, and some stocks in alternative energy. Oil may have some volatility in the next few months, but as supply and demand gradually balance, 60 dollars per barrel is soon or later in the next year. It can get more expensive in medium terms, but it may take a very long time to get beyond 80. Oil’s supply and demand balance will be an extremely slow process with very large back and forth volatility. In six months’ time, the situation should be much better for suppliers. So one may have to tolerate some volatility if one buys in now, but the return in medium term can be very high.

We still believe as long as the US do not hike rates, it won’t have recession until next year end or even the next two or three years. In this case, US stocks still have room to go up. If US or global stocks drop, it is a buying opportunity. In contrast, gold’s opportunity has ended in the short term. The US Fed still want to hike rate. But if they are not crazy, they should not push the US economy to recession, and any hike should only lead to corrections around the end of 2015 and the start of 2016. Then the markets will bounce back, saved by the Fed. This can create very good buying opportunities. Although there will be many events rocking the world, as long as governments can control the situation eventually, there should not be recession risk, and any big drop is a buy opportunity. High tech, and especially oversold oil exploration and production companies, are relatively good choices to buy. The devaluation pressure of RMB may be reduced for a while, but RMB should still devalue a lot in the medium term.

From the bottom at 2600, we are persistent in our positive view about Chinese stock markets. Originally I thought Shanghai index can drop to around 2500 in April before the bounce, but it only dropped to 2700 before the bounce. We think Shanghai index can reach 3500 in the next six mouths, and then stagnate with big swings for quite a while.


In three to five years’ time, the chance of US recession is great. The last US recession ended about seven years ago. The chance without recession for 10-12 years is very small. During the next US recession, global economy may have a great recession too, and global markets will drop sharply, Chinese economy will slow down sharply. In 5-10 years, reported Chinese GDP growth will surely drop to 2-3%. In 10 years, Chinese GDP growth likely will drop to close to zero. 

This is posted on the Chinese blog on September 3, 2016 about the investment opportunities in the rest of 2016

我们看好石油,天然气运输有关的股票,还有就是一些跟再生能源有关股票。石油这几个月可能还会有一些反复,但是还在慢慢供需平衡,上60是接下来一年迟早的事,中期很可能更贵,但是过80可能需要相当长时间。油的供需平衡还是一个非常慢而且还会有一些比较大反复的过程。再过6个月,应该供给方会比现在的状况更好很多。所以现在建仓可能要承受一些震荡,但是中期回报可能很高。


我们仍然坚定认为只要美国不加息,美国至少到明年年底甚至两三年内都不会有经济萧条,而美股就还有上涨空间。如果美股或者全球股票大跌,就是买的机会。反而黄金的机会短期已经不多了。美联储还是想加息,但是只要他们不疯狂,应该不至于把美国经济推到萧条,那么他们只会导致像去年底今年初那样的调整性的跌,然后他们又会救回来,这样可能创造很好的买的机会。全球动荡事件仍然会有很多,但是只要政府们可以控制局面,也不会有萧条风险,大跌还是买的机会。高科技股,超跌的尤其是能源股,应该是比较好的选择。
人民币贬值压力好长时间会小很多,但是中期还可能贬不少。

2600的底,我们一直坚持中国股市更大概率是往上的。四月本来希望上证指数可以再跌到2500左右再反弹,但是只跌到2700就反弹。我们认为上证指数很可能6个月内还是要上到3500,然后会大区间震荡相当一段时间。


35年后,美国经济萧条的概率是非常大的。现在美国离上一次萧条结束已经有七年,持续1012年不发生萧条的可能性微乎其微。等下一次美国陷入衰退的时候,全球经济都会有一个巨大的衰退,那时候全球市场很可能会出现暴跌,中国经济增速将会急剧放慢。在510年内中国GDP增长率肯定会降低到百分之23,十年后中国GDP增长率很可能降到0

接下来几个月到两年的投资机会 - posted on Chinese blog on December 28, 2016

从上次9月我们看好油股,美股,看空黄金,这些资产都有很大的完全符合我们预期的变化。其中很多美国页岩紧油股票都翻倍了。黄金已经跌大概20%。美股已经涨了。

在此新年之际,我们预测一下接下来几个月到两年的投资机会。

美元最大可能是在再下来的两年内上涨到至少120,但是很可能先要从现在的103.5在接下来的三个月回撤到大概97,然后再涨。人民币对美元再贬值20%很正常。

铜会接下来好几个月会在大幅震荡中从2.42.5反弹到3.03.2,然后再在接下来的一两年内大幅下跌很多,甚至到1.0以下。虽然中国如果经济变差可能会让这个短期反弹短很多,少很多,但是目前看这个短期持续反弹还是最大概率的可能。

黄金在短期非常弱反弹之后会下跌到960980美元,然后再会有一次比较大的反弹到1200美金一盎司,但是再之后几年总的趋势应该还是继续向下。

全球利率在一个很小的回撤(比如美国10年国债从123涨到126)以后还会很大幅上涨一次(比如美国10年国债从126跌至115118),然后才会有相当大的相当长期的回撤。中国10年国债在回涨一点后也会跟美国国债一样再跌很多。我2014年跟很多投资者说过,当时国内最好的投资机会就是买30年国债。好几个月前那些投资者中有些看到30年国债过去两年回报百分之四十,想开始投长期国债。我那个时候就跟很多投资者说,现在最好的国内投资机会是在接下来一年内做空长期国债(和买跟油有关股票)10年期国债利率应该至少从2.6%上涨到3.5%(当然我也没有想到这么快就已经到了),然后在一年左右以后全力做多最长期国债。现在看来,最终4.5%也是可能的。


通货膨胀和利率虽然会增加,但是在绝大部分情况下都应该可控。一个不可控的主要情况是因为川普有机会在第一任就任命一半以上的美联储成员,如果这些成员受他影响,在他财政刺激产生通货膨胀的情况下也不足够加息,那么通胀可以大大增加。克鲁德曼说过,如果要通货膨胀增加,我们必须让大家相信我们会不负责任。而川普在这方面是一个本色演员,他很可能可以做到。

美国股票欧洲股票2017年应该至少还会有一个大牛市,尤其是南欧国家的股票,全球银行股。现在不确定的是在这个大牛市之前是否会有一个很大的百分之十以上的调整。如果有调整,接下来3个月就很可能。这个牛市之后有相当可能美国以至于全球都非常接近经济萧条。川普所做的经济刺激只能在一定程度上延缓经济萧条的到来。中国股票除非政府又需要一个泡沫,否则最多会跟全球牛市一起到3600,所以向上空间不多。

中国最大的风险或者投资机会,也是中国可能对全球造成的最大风险,是现在的领导人到十九大前后完全掌握了权力,不需要在做面子(GDP增长),而要把越来越有限的资源用于继续做里子(保就业)gdp增长率可以下降到百分之三,甚至最终0%。这意味着中国的长期债券在一定情况下有可能大涨。

从五年半以前我回到亚洲,我跟我教过的每一个班的学生都说,如果他们可以离开亚洲去美国,他们应该尽快走,这样他们可以尽早适应美国的生活,而且他们不要再回来。如果他们有钱,应该尽快换成美金并且拿出来,应该买美国股票。我这么说有很多原因,有很多原因我想现在大家都已经有切身的体会,不需要我再提醒。当时没有听的我的劝告,现在还不晚。

其中有一个原因值得再次提醒,因为可能很多人都还仍然没有意识到。人类历史,无论是哪一个国家地区,都充满了战争,血腥,和互相残杀虐待。过去六十多年,尤其过去35年,基本上和平的时代,尤其在亚洲,是前无古人的。这种状况不是最正常的状况,而是很脆弱的状况。中美之间的较量,或者如果美国退出亚洲之后亚洲国家之间的较量,都意味着这种状况不可能继续,美国的精英和民众已经越来越认识到必须提防挟制中国。川普上台,意味着中美之间的较量会更加表面化,美国更加不可能主动退出亚洲,川普也更不会跟中国做交易。这意味着亚洲将成为全球的热点。

虽然擦枪走火不可能完全避免,局部的常规战争可能发生,我预计只要恶性事件不在接下来十年发生,之后再发生的可能性会急剧下降,这是因为中国经济增速将会急剧下降。十年之后中国总人口也开始下降的时候,中国经济增长率平均可能只有百分之零,那时候仍然保持一定增长的美国也就没有必要再提防挟制中国。

另外全球气候变暖继续恶化的话,青藏高原(新疆)的冰川会急剧减少。亚洲大部分淡水都是从青藏高原(和新疆)来,而且每个国家都污染很严重。除非能源变得几乎不要钱,冰川的急剧减少意味着最终可能会因为水资源分配而发生战争。

美国得天独厚的地理位置意味着战争对他的影响是相对最小的。不过如果中美真的发生冲突,华裔美国人也要有准备可能受到很大的冲击。如果只是绿卡的,要有准备被迫离开美国。


房地产的巨大机会还要等待。中国2017年也许还有一次涨,但是那大概就是最后一次下车的机会,之后最大可能是几十年慢慢跌趋势。美国出租房还是不错投资机会,尤其短期和长期。中期,美国经济萧条的时候,会有一定波动,但是20092011年的机会很难再重复。

2017 and subsequent years' investment opportunity preview - posted on Chinese blog on December 28, 2016

This is the translation of a post that I put on my Chinese blog on December 28, 2016. I also uploaded the translation of the post on my Chinese blog before this blog, which is referred at beginning of this blog.

Since the last post in September in which we were positive on shale tight oil stocks, US stocks, and negative on gold, these assets have behaved exactly per our expectations. Many of the shale tight oil stocks have doubled, gold has dropped by about 20%, and US stocks have gone up.

At this juncture of a new year, I try to make predictions about the investment opportunities in the next few months to next couple years.

US dollar index will most likely increase to at least 120 in the next couple years. However, there should be an adjustment for USD index dropping from the current 103.5 to 97 in the next three months before this coming big surge. A drop of about 20% for RMB against USD is only natural.

Copper may bounce from the current 2.4 to 2.5 USD per pound to 3.0 to 3.2 in very wide swings over the next few quarters. Then it should drop a lot in the next couple years, with the possibility to drop below 1 dollar per pound. Although China’s economic deterioration may diminish the length and extent of this short term bounce, for the time being this short term bounce is still the most probable outcome.

Gold should drop to 960 to 980 dollars per ounce after a weak bounce in the next few months, and then has another big bounce from slightly below 1000 dollars to about 1200 dollars per ounce. After that, the long term trend is still down. But gold stocks may not drop much beyond the lows they reached in early 2015 and in the coming drop to 960 to 980 dollars per ounce.

Global interest rates should have a little retreat first (e.g., US 10 year T bond futures bounce to 126 from 123) and then increase again substantially (e.g., US 10 year T bond futures drop from 126 to between 115 and 118). After that interest rate will have a long term large retreat. Chinese long term T bond will bounce first and then drop a lot like US T bonds. In 2014, I told many investors that the best and surest  investment in China then was to buy Chinese 30 year T bond. A few months ago, some of those investors asked my advice to start investing in Chinese 30 year T bonds after they saw it returning more than 40% over the last two years. At the time, I told the investors that the best investment opportunity then was to short long term debt (one can do it through 10 year T bond futures) and buy oil related stocks. 10 year T bond rate should jump from 2.6% to 3.5% (of course I did not imagine it will reach 3.5% in such a short few months from 2.6%). Then the 30 year T bond would be the best investments. Looking back, all predictions are right, except that we are probably looking for 4.5% as the top end of 10 year T bond rate, instead of 3.5%, before the yield finally drops to 1%. That means a return of about 50% over two or three years.

Although inflation and interest rates will both increase, they should be controllable in most situations. One uncontrollable situation is that Trump influences the Fed governors so as not to hike rates when he can get enough fiscal stimulus which subsequently lead to higher inflation. His influence can be great as he has the opportunity to nominate more than half of the Feb governors in the next couple years. In that case, inflation can jump a lot. As Krugman said, to increase inflation, we should credibly promise to be irresponsible. As Trump is a natural in this regard, he is likely to be able to achieve it if he sets his eyes on this target.

US and European stocks should still have a big bull run in 2017, especially the stocks in southern European countries and banks globally. The only thing uncertain is whether there will be a correction of more than 10% before this bull run. If there is a correction, it is likely to be in the next three months. After this bull run, the US and the world are very close to economic recession. Whatever stimulus by Trump can only delay the recession to some extent. Unless Chinese government needs another bubble for certain purpose, Shanghai index will at best go up to 3600 in the coming bull run. So the upside in Chinese stocks is limited.

China’s biggest risk, or investment opportunity, and also the biggest risk of China to the worlds, is that the current leader won’t need to keep doing the vanity project of keeping GDP growth around 6.5% and will use the more and more limited resources on the core issue of securing employment and stability, once he has full control at every level of government after the 19th party congress in November 2017. GDP growth rate can quickly drop to 3%, and eventually to 0% as population growth become negative within at most 10 years. This means Chinese long term government bonds can appreciate a lot under certain situation.

From the time that I came back to Asia five and half years ago, I have told every class I taught the following. They should leave Asia to the US if they can. They should do it as soon as possible to get used to life in America, and should not ever come back permanently. If they have money, they should exchange their currency to USD and buy US stocks. There are many reasons why I say this, and I think by now all should have first hand personal experience of these various reasons. For those who did not heed my advice, it is still not too late.

Another reason that I mentioned from 5.5 years ago is worth mentioning again because many still may not have realized it by now. Human history is littered with frequent war, blood, abuse, and mass killing in all countries or regions. The last sixty years, especially the last 35 years, we have an unprecedented period of peace in the whole world, especially Asia, due to the sole hegemony of the US. This situation is abnormal and fragile. The rivalry between China and US, or the rivalry among Asian countries if the US retreat from Asia, means that this situation cannot last. American elite and common people have come to clear recognition to contain and preempt China’s rise. Trump’s ascendance means that the rivalry between China and the US will become more apparent. The US become even unlikely to retreat from Asia, and Trump unlikely to make a deal with China. This means that Asia will become the hotspot globally.

Although it is not impossible to avoid accidental conflicts leading to regional conventional war, the possibility of very bad outcomes, e.g., a full scale conventional war, will drop sharply, if they do not happen in the next 5-10 years. This is due to the coming sharp economic slowdown in China. Once Chinese total population start to drop in less than 10 years, Chinese economic growth could drop to 0%. As long as the US can keep some growth, US can grow faster than China. In that case, China’s share of global GDP will peak and shrink, just like Japan after 1990s. China’s economic power will never catch the US, and there is no need for US to contain and preempt China’s rise.

Further, if global warming deteriorates further, the glacier in Tibet (and Xinjiang) will recede much quickly. As most of the fresh water in Asia comes from those place, and almost all major Asian countries are extremely polluted, the disappearance of glacier would increase the chance of war due to the distribution of water, unless alternative energy becomes so cheap that we can easily convert sea water to fresh water. Note that China is building dams in almost every river flowing from these regions to other countries.

The natural endowment of the US, with wide oceans on both coasts and weak neighbors in the Americas, means that it will be the least impacted by any war. But if conflicts really break out between China and the US, Chinese Americans need to be prepared to be negatively affected significantly. For Greencard holders, they could even be forced out of the US.

The great opportunities in real estate is still quite some time away wherever one looks in the world. China may have another bubble run in housing price in 2017, but that may be the last chance to cash out handsomely and is certainly the worst time to jump on board. Chinese housing market is likely to be on a slow bear market trend for decades with wide swings from there. US residential rentals are still a good investment opportunity, especially for the short and long term. They could have a very good run in the next couple years and are good investment in the long term. In the medium term, during the next US recession, there can be a drop after the very good run in the next couple years. However, that also provides a good entry point. But if one still waits for an opportunity as in 2009 and 2011, one may not ever see it in this lifetime.


Further, the country that can eventually catch up with the US may be India. But it still has lots of baggage that prevent its takeoff. 

Sunday, February 21, 2016

The prediction for the returns of different asset classes in the next couple of years.

Sorry for the absence from this blog for a long while. Was very occupied with many things, including investing. It was also because I have been using Wechat moment posts to broadcast my view on global macro in China as the fund that I am advising has mostly Chinese clientele. Time constraints means I was not to translate those views to English and post here. Below is a prediction piece that I wrote on February 21, 2016 about the returns of different asset classes in the next couple of years. As it is more important, I put the Chinese and English versions here in public view. Let’s see if I can be as accurate as I have been in the past 15 years. Here is the message:

On Thursday, February 18, 2016, I saw some pattern of market on the verge of another leg down. But as it was just after three days of a big relief rally, I was not sure if we can have another leg down so quickly given that it seems that although US markets have reached the full extent of allowed bounce, the other markets may not. I posted on Wechat moments about my suspicion of another leg down but I need more evidence. Friday’s market movement convinced me that this is the case. So I post on my Wechat moments that all friends should be very careful. When I check on Saturday, I find that all global markets have stayed around the technical support points. So it is possible that the downward adjustment next week is just a small one, and we could even have a bounce up, continuing the rally. This is important as my kind reminder may make some friend worried for nothing, I look through all the markets and asset classes carefully. I realize that most of the markets, not just the US markets, have bounced to close or at the full extent. So next week, we can have some bigger leg down, including Chinese A shares, and the leg down can start from Asian trading hours, which is different from the last two trading sessions when we have the leg down after US markets open.

Much more important than this short term movement is that all asset classes in all global markets are at a crucial point from a long term point of view. If markets keep jumping like what we had in the last year, most likely all markets will experience a big bear market. Whether we will also have economic recession is not a sure thing yet, but the volatility of markets can feed back into economy. At the same time, governments are not paying enough attention (US Fed even keep talking about rate hikes), or are occupied by other issues (European immigration issue and the crazy austerity straightjacket). This serious tightening of financial condition can lead to a global economic recession, which will in turn make the bear market even more severe. Although the momentum is not completely irreversible at this point, this possibility is bigger and bigger, flashing red light already. This economic recession may not be as scary as 2008, but will still be quite scary. After all, global markets have not experienced real bear markets, and global economy has not experience global recession for eight years. Note that a large part of the severity of the 2008 crisis is due to the monumental tightening of financial conditions after Lehman Brothers crash.

If we continue on this torturing path in global markets, SP500 will drop from the current 1915 level to at least 1600, Nasdaq from 4160 to 3000, Hong Kong Hang Seng from 19300 to 11000, Japan Nikkei from 15900 to 11000, German Dax from 9400 to 7500. At the same time, Japanese Yen will increase from 113 to 60, and Euro from 1.10 to 1.80, per USD. Yen, Euro, Hang Seng may need a few years to reach the price target. The rest will likely be realized in the next year.

So it would be foolish for investors to bet on bounce up or bull markets. They should put all money into cash or longest term developed government bonds. Gold may be a good bet in the next few months or a year, and should increase from 1200 to 1400 an ounce. I am not sure about its longer term future yet.


Markets are an evolving process. So I can be wrong in the end. But without preemptive, huge scale government actions soon, and just reacting after the risks already become fruition, or even creating uncertainty and tightening financial condition like the crazy US Fed (especially Fischer), I think it is a likelihood the above risks will explore in our face. Even government take huge actions now, it may only be effective in the short term, and is only ineffective in the long term, at least from market point of view. I still have some unsure hope for the effectiveness of government actions for the economy but even that is wearing thin. What if we will never get back to prior trend growth rate we experience in the last six decades? Also, the governments are barking on the wrong tree unless they focus on increasing final demand instead of focusing on productivity, reform, infrastructure, competitiveness, and other sounds good but useless or even harmful things.

接下来一两年的预测

好久没有再在这个网址发我的评论了,因为过去这段时间我一直在使用微信通过微信朋友圈发中文的宏观投资评论。因为时间忙,所以就没有把中文的评论翻译成英文放到这里。2/21/2015写了一个关于接下来一两年宏观投资的预测,觉得比较重要,所以把它放在这里,这次看看我是否跟过去一样准确。

周六一看,周五各个市场到收盘都守住了关键点, 所以有可能下周的调整只是一个比较小的向下调整, 甚至上涨都不是不可能。因为事关重大,怕我一番好意,反而让有些朋友白白受惊,又把全球各类资产都仔细看了一遍,觉得很多市场其实已经反弹到位, 不只是美股已经反弹到位, 所以下周还是有可能会大一点向下调整,包括A股, 而且这个调整很有可能在亚洲交易时间就已经开始, 而不是像过去两个交易日,在美国开盘以后开始。

更重要的全球各类资产长期来说都已经到了一个很关键的点,如果市场再这样折腾下去,很可能各大类市场都会有很大的熊市。是否经济衰退还不知道,但是市场的震荡很可能反馈到经济, 而政府并没有给与足够的重视,或者忙于处理其他问题, 从而导致一个全球的经济萧条。虽然还没有最后形成不可逆转的趋势, 这个可能性越来越大了。 这个经济萧条可能不会像2008这么可怕,但是也会足够可怕, 毕竟全球市场已经几乎八年都没有真正的熊市。

如果再这样继续折腾下去,标普会从现在的1915至少跌到1600纳斯达克可能从现在的4160跌倒3000,恒生可能从现在的19300跌倒11000,日经可能从15900跌到11000,德国dax可能从9400跌倒7500 日元从113涨到60,欧元从110涨到180 日元,欧元,恒生可能需要长一点,几年,的时间达到,但是其他有可能接下来一年就会实现。 

所以投资者可能根本不要去搏反弹或者牛市, 而是全部放现金或者买长期国债。 黄金在接下来几个月甚至一年应该还是可以持有, 应该可以从1200涨到1400长期也不知道会不会又继续下跌。

场是一个不断演化的机制,所以最终我也可能出很大的错误。但是如果没有预防性的,大规模的政府对应行动和措施,而是等风险出现以后再采取行动, 甚至像美联储那样的故意造成不确定性和紧缩金融状态,个人觉得以上的风险是大概率,甚至政府即使现在大力救助,短期有用,也无法长期有用。

可能有很大错误,完全一番好意,如果觉得一派胡言,多多包涵,忘了就是。