May 10, 2018

What is $70 Oil Price Trying to Tell Us

A year ago, I wrote about why commodities is in a sweet spot to invest in and at that point in time. Oil is hovering at around the $50 mark, and fast forward to 2018, oil has reached a new high at $70, having appreciated 40%. Even though oil has performed exceptionally well, its performance has been eclipsed by Bitcoin with a 500% yearly gain. For investors who are looking for a high risk investment and has a more practical use as compared to cryptocurrency, oil may be your answer.

Apr 10, 2018

Trade Wars Are Good... And Easy to Win! Not When you are Facing the Chinese...

The trade war initiated by President Trump escalated in the month of March as he instructed the US government to devise a plan and impose a tariff on $50 billion dollars worth of goods targeted at China. Unfair trade practices, stealing of US technology and intellectual properties are some of the reasons stated for the implementation of the tariff, in an attempt to narrow the $385 billion trade deficit with China.  In retaliation, the Chinese government implemented a 25% on 128 U.S. products, ranging from wine to soya beans. As of now, the proposed tariffs are just threats which will only be implemented come June 2018. Meanwhile, diplomats from both countries scramble to nail some form of agreement together, in order to let both superpower retreat from a devastating trade war with their face intact. Meanwhile, President Trump and President Xi took to the media to denounce the unfairness of the treatment to their respective countries.

Mar 13, 2018

US Trade Wars: Good or Bad?

The financial markets are thrown into turmoil once again, by the implementation of steel tariffs by the Trump administration as a barrier to the cheap China steel. However, instead of targeting just China, the steel tariffs are imposed on a global scale whether they are friends or enemies. The problem is that, US imports 70% of its steel from Canada and Mexico while China only constitutes 2% of its steel imports. After much protests from Canada and Mexico, the Trump administration excluded both countries and went on to impose the tariffs to include every other countries. What are the implications of this action to our investment portfolio? Let me address some of the frequently asked questions:

Feb 13, 2018

Market Correction! 3 Sectors You Can Buy Into

The recent market correction sent the news media into a frenzy, declaring that the stock market has "collapsed" or "crashed". The truth is that the stock market simply has gone way above its valuation and a good 10% correction will do some good to trip the fats down. Prior to this market cycle, it is normal to have a 10% correction on an annual basis, and it is a combination of easy money and low inflation that lead to years such as 2017 which we did not see a single correction despite a tightening monetary environment. However, is it time to throw your entire wealth into this window of opportunity and ride the market right to the stop? 

Once again, I will like to caution my readers that we are at the tail end of the economic cycle and the big crash might come in a year or two. So while it is a good thing to take advantage of this opportunity, investors should be selective in selecting sectors which are not overly expensive and be prepared to take profit when the opportunity is ripe. Here are the 3 sectors that are interesting to watch in the coming year.

Feb 1, 2018

Xeo's Annual Investment Review & Outlook 2018

Dear Friends,

2017 was a good year for the global stock market with the Asian stock market doing the best thanks to a combination of low inflation, low interest rates and a recovering Chinese economy after the hiccups suffered in 2016. The geo-political volatility caused by Brexit and Trump winning the US Presidential election was generally absent in 2017. The greatest geo-political risk of 2017 was the confrontation between North Korea and America, but even that fails to rattle the stock market as few people actually believe that a real military confrontation will ignite from the war of words. The most exciting development of 2017 was probably the rise of cryptocurrency as a potentially new asset class, with the prices of top traded cryptocurrencies such as Bitcoin and Ethereum soaring by a few hundred percent. The worst performing asset was surprising, the US dollar which lost 9% in Singapore dollar. Back in 2016, many analysts predicted that the USD will rise, thanks to the trade protectionism and tax friendly policies of the Trump administration and the rising interest rates. Instead, USD fell, in one of the worst routs seen in recent years. The question is, as the Trump administration policies started to be implemented and interest rates continue to rise, will the USD climb back in value?

Dec 18, 2017

Why Bitcoin is a Bubble in Making

The rise of cryptocurrency and Bitcoin took Wall Street by surprise with many industry leaders stepping forward to give their opinions what they think of this new technology that can potentially disrupt the role of banks.

What is cryptocurrency? It is a form of digital currency that can be used to purchase goods and services and is limited in quantities, much like gold. However, unlike gold, cryptocurrency can be transferred through the internet, across the borders, without the need of going through customs nor banks. This creates a burning problem for governments in the form of illicit money flow which can be used to finance illegal activities and threatens the central banks abilities to control money supply, which is one of the key tool for economy management. Read more about cryptocurrency.

Nov 26, 2017

I Met My Girlfriend Through Kickstarter and She Blew Up My Campaign.

After years of fruitless sessions of speed dating and empty conversations with Tinder, I kinda of gave up on dating for a while. My personal life also underwent major changes which makes it almost impossible for me to focus on dating. First and foremost, my grandma was diagnosis with vascular dementia and she was transformed from a sweet lady, into an irrational angry person, constantly cursing in 4 different languages and accusing me and my dad sleeping and impregnating my helper. None of this is true of course as her delusions were the result of dementia play tricks on her mind. The stress on the caregivers was tremendous as we adapted.

Nov 20, 2017

5 Financial Lessons from Financial Boardgame: Debtzilla

Debtzilla: The Board Game is a superhero co-operative board game that puts players in the role of a secret identity superhero, who has to manage his finances as a common salaryman during the day, and combating villains at night. At the end of the game, the players have to defeat Debtzilla as the final boss in order to win the game. The game is making use of the superhero theme to bring out essential financial lessons and here are 5 of the important ones:

Nov 9, 2017

Tapering? Split-up of Spain? Events in Europe and their Impact

Europe, the continent that has rocked the global financial markets with debt crisis and a Brexit has been relatively quiet on the financial front in the past few months. However, there are 2 significant significant developments that warrant the attention of investors. Here are some of the newsworthy events which we should watch out for:

Implications of EU tapering of QE

The EU central bank initiated their Quantitative Easing (QE) program in 2009 and since than, the EU economy has recovered sufficiently to warrant the EU central bank to start tapering back on the QE program. The tapering involves decreasing the amount of monthly bond purchase until it reaches zero. The last time US Federal Reserves started tapering in 2014, the emerging market currencies and stock markets suffered a major correction. The good news is that the EU tapering will be slow and gradual and expected to end and is expected only to end in Q4 of 2018. Further more, Emerging markets' debt are mainly denominated in USD and the EU tapering will not have an direct impact on their finances. The countries which were badly affected during the last taper tantrum such as Indonesia and Malaysia have clean up a good portion of their foreign debt and are at lower risk right now.

The implications will be much more indirect as the easy money has resulted in governments within the EU region to slow their reforms towards their spending and any tapering will create a strain on governments with weaker balance sheets such as Italy and Spain. Further more, with both US and China tightening their money supply, the likely candidates that will hurt from the tapering will be the weaker EU countries and their weakness may be felt in the global stock market again.

The more obvious impact which we will feel immediately is the strength of the Euro as tighter monetary policies tend to strengthen a nation's currencies. However, the speed of tightening will be slow and probably match the speed of the US counterparts, which will help to maintain an equilibrium among major currencies. Hence Euro is expected to fluctuate around a range, with the trend of a weakening Euro broken, since the outbreak of the EU financial crisis.

Catalonia Independence

One of the richest states in Spain, Catalonia with its capital in Barcelona, has declared independence. The stock market did not react much despite all the negative press. The market has assumed that the independence movement will not succeed and base on the recent developments, seem to be holding true. So, we can discount this political upheaval for now and the bigger issue of Brexit will come back to haunt the European markets again.

What's Next

The tapering of the monetary policies is a signal that the EU zone's recovery is picking up steam and the stock market should benefit over the next few years. However, the European equities have rallied strongly ever since the Brexit crisis last year and hasn't corrected significantly. Furthermore, the prospect of a fragmented EU will still produce geopolitical shocks every now and than, so it may be prudent to pick up some good quality EU equities every time such events occur.

Oct 10, 2017

Implications of Trump Tax Reforms on Your Investment

The failure of repealing and reforming Obamacare has left the Trump administration without any legislative victory. Both the Trump administration and the Republican controlled government are eager to pass a tax reform before the end of the year. The key points of the tax reforms will have the following effects:
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