May 02 2008
Clemen Chiang on Make Money in 2008
Dr Clemen Chiang was the first speaker of the day at the Wealth Expo. Clemen is the CEO of Freely and one of the pioneers in the options trading coaching industry in Singapore.
The first part of his presentation focused on analysing the history of US recessions and the impact on the stock market.
According to Clemen, over a 60 year business cycle period, the US recession lasted for an average of 10 months where the expansion phase lasted for an average of 57 months.
There were 2 instances where the stock market undergone a severe correction. One was during the oil shocks in the seventies, another was during the savings and loans crisis in the eighties.
At this current moment, we are faced with a double whammy. We have both the high cost of oil and the subprime crisis.
Clemen provided two strategies for making money in this climate.
Strategy 1
The first plays on the Fed’s decision to cut interest rates. Whenever the rates are cut, the market tends to rally.
From Jul 90 to Mar 91, the rate was cut from 8-3%.
From Jan 02 - Jun 03, the rate was cut from 6-1%.
The lower range is usually between 1-3% before the FOMC reverses the direction.
During the Mar 01 to Dec 01 recession, the recession only kickedin on the 3rd announcement of the 3rd Fed annoucement of rate cuts. If we take that information and apply it to the current situation, the end of recession should be in Sep 2008.
His Predictions
- From Oct 2008, markets to rally ahead of presidential election.
- From Mar 09, markets must rally otherwise we could enter into a stagflation phrase.
Strategy 2
Clemen has studied that whenever there is a casino development, the property prices within a 5k radius will appreciate greatly. That was the reason he bought a home in Sentosa Cove.
The Sentosa opportunity is obviously not there, but Clemen points us to the fact that Taiwan might be opening a Casino resort too. This might happen on Pescadores, or Penghu County. The conditions appear just similar to Sentosa and there could be a potential property play there.
The rest of his presentation was pretty much a sales pitch for his options trading seminar.
This is the second time I have attended Clemen’s presentation. When it comes to investing, Clemen’s a guy that does his homework and uses his own independent thinking. However, one thing that was quite irritating in his presentation was his never-ending examples of his students making triple digit percentage returns on individual trades.
Making a 1000% return on a single trade is always possible, especially when you are using leverage. But we all know that the consistent returns over time will be much, much lower than that. Unfortunately, the sizzle and not the steak is always the thing that sells.
