Part 18 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

Since then till 1993, I found Japan stock market, which had been falling for two to three years, showed no obvious rebound. And I noted that only if Japanese yen had appreciated, Japan stock market would fall. Most importantly, if the United States stated that Japanese yen still has much room for appreciation, it would do so and caused the downfall of the stock market. This especially impacted Japanese electronic industrial, that was acting high status, its stock price had terribly plunged much more than the index.

I finally realized the power of a country was considered as its most powerful and strong economic weapon. At the beginning of 1980th, Japan hold the world’s most powerful electronic industrial. American pilots knew their airplane would never fly without Japanese electronic component. Not very long ago American companies such as Inventec has grown significantly, and Microsoft has taken the place of world’s largest software maker. How about NEC, Toshiba and Fuju?

The truth is that American was worried about their airplane cannot fly and the weapon may cause problem without Japanese electronic technology. Therefore, the main target of Plaza Accord was to deal with Japan. Japanese yen had appreciated from 360 yen in 1973 to 79 yen in 1995 against one USD. Although Japanese was awesome, still couldn’t afford 400% of huge appreciation over a decade. This was a part of global market competition. Until then, I suddenly realize how important to consider the international political issue when viewing the financial and stock market. For it is the most significant influence to the market.

What called “individual companies’ revenue and profit" are the second consideration, because they are lack of total autonomy. Once the international political environment has changed, they will be impacted as well. According to the example of former American presidents. Only if Republican Party took role, America would get busy internally and externally. However, once Democratic Party replaced the role, it would give another look. Therefore, President Clinton oversaw a period of considerable economic growth and expansion during his tenure; George W. Bush resulted in bail out damaged financial institutions and a weakening economy.

To be continued…

Part 17 -Ten-thousand fold profit in six years- the legend of Taiwan stock market

“Only if one pay attention to the surrounding environment, will he be able to discover the global trend is taking place. Behind these trend is the enormous investment opportunity."

Were it not for my global investing opportunity, I could not think of MSFT and see the treasure in advance of others. In fact, I noted the opportunity of the United States’ bull market in the fourth quarter of 1994. Meanwhile, the market was already starting to appear its best investment status – low interest rate, foreign exchange rate and stock price. It was like Japan’s stock market in June and July of 1975. Therefore, I boldly indicated that Dow Jones would had boomed to 10,000 point before 1999 while it was not only 4,000 point. (Many “professional" global fund managers and financial newspaper’s editorial said Dow Jones would not excess more than 5,000 points.)

Afterwards, the fact has proved I was correct. In the same time, I was also incorrect. Because what mainly caused this happened was not DJIA (Dow Jones Industrial Average), but NASDAQ. Specially, MSFT (Microsoft stock) was the leading stock which I had bought earlier. Was this another fortunate occurrence? Someone believe that it was because CNY had depreciated to 8.7 RMB from 5.3 RMB against one USD by China government (There was still dual exchange rate system at time). This depreciation of RMB caused global transformation that obviously remain today. In my opinion, the depreciation of RMB was not an occasional cause, but an inexorable trend. As my past experience, how should I know I was going to unveil another enormous treasure while I was purchasing (2915) Ruentex Industries Limited in the end of 2008.

Jintao Hu had a speech about China’s labor income, he hope it could grow faster after the event of Foxconn suicides in 2010. Just like the saying: “Fruits fall off when they ripe"- things will be easily settled when conditions are ripe.

Due to China’s lack of funds after the government was taking control of economic policy in 1978. It want to follow the example set by Japan and Taiwan: increasing external funds from export trade. Besides its extremely fossil and opposite concept. China found its costly labor expense, according to the currency at time, was the main problem of economic decline. Therefore, it always found ways to liberalize its currency and foreign exchange currency rate. Not until 1994, RMB had greatly depreciated and got the significant progress after that. (We can obviously see the change of RMB/USD from the illustration. Nevertheless, it is the official price, the black market was about 2.8 RMB against one USD. )

I don’t want to mention about my awareness of purchasing NASDAQ. Here I want to talk about was I unconsciously hold the key of another map’s treasury box, not only the present wealth. (2303) United Microelectronics Corp., a manufacturer of DRAM at time, have gradually raise while I bought MSFT in 1991. Meanwhile, I was unaware about the relationship between MSFT and (2303) United Microelectronics Corp, for my lack of knowledge in electronic industrial. I was curious why this semiconductor stock, that had ignored by most investors before, was increasing. Although I have worked in Advanced Semiconductor Engineering and understand what so called " Semiconductor" and all its progress of packing. I still had no clue about the relationship between Semiconductor and Microsoft.

I was so upset after I figured them out. Because I lose the great chance to have my first bucket of gold. Under this uncertain conditional, were few Taiwan traders know to buy the semiconductor stock, especially MSFT. In spite of that, I got to know about semiconductor industrial in advance than others.

To be continued….

Part 16 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

What caused me to purchase MSFT (Microsoft stock)? Because I was so frustrated about my “old" computer, and MSFT was the only few US stocks I known. However, I gasped with surprise after the agent’s reply. The price of MSFT boomed tens and hundreds fold after it had been listed on the Stock Exchange. I think I was a genius who dared to buy this burgeoning stock which had been raised numerous fold. Fortunately, my supervisor had great discerning and allowed me to do this transaction. (Past experiences has proved my advices was right although it was always out of his expectation.)

However, things was not going well as expected. Everyone was fear and away from the electronic stocks – high risk and unlikely high profit. Although my supervisor did not understand stock market well, the “dukes" of my group who considered themselves as the US stock experts. So, I had the verbal battle to fight before achieved this transaction. I found many excuses to face these “dukes" – Remembered?! They were oversea Financial PhD. Many of them had lived in America for many years, and some of them were teachers whom taught American students how to invest US stock.

Therefore, the reason I gave them was simply from the analysis which they could not understand. I was exactly right! Also I found a fact: A good teacher may be not a good investor.After all, MSFT’s price had boomed hundreds fold before I left this organization.

Note here, the stock splits of MSFT from 1986 to 2000: Sep 21, 1987[2:1], Apr 16, 1990 [2:1], Jun 27,1991 [3:2], Jun15, 1992 [3:2], May 23, 1994[2:1], Dec 9, 1996 [2:1], Feb 23,1998 [2:1], Mar 29, 1999 [2:1], Feb 18, 2003 [2:1]

The price had jumped absolutely 60 X 288=17,280 fold

Only in 1991 to 2000, the stock had splited 36 fold. There were about 450 fold increasing during the progress of this investment. (see the illustration below)

I have been inspired by investing MSFT: only if one pay attention to the surrounding environment, will he be able to discover the global trend is taking place. Behind these trend is the enormous investment opportunity. Besides MSFT, I did not purchase any other electronic stocks at that time. For I had no idea about “globalization trend" ,which I am talking about now, nor any concept about that. I only felt “earning money is easy" after profited hundred times from it. Anyhow, I stepped forward to “profit ten-thousand fold in six years" by purchased MSFT.

To be continued…

Part 15 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

Before the end of Gulf War in 1991, I obviously had no clue about any investing strategies. My main strategy was avoid Japan and Taiwan stock market. Others like purchased European and American stock mutual funds. And of course, the necessary during the war – gold. After that, I was suspicious stared at the financial market.

Most my updates and information were given by the mutual fund companies and the underground futures office that I had mentioned in my previous blog posting. I remember that the most I purchased were Fidelity and Jardine funds. Why I was so concentrated on those two companies. The reason was simple. I just wanted to exchange more information from them between the transactions.

Although my company was big enough and had the fatal attraction for any of the financial instruments companies (If I told them our company had hundred billion dollars as capital, they would had believed.) We didn’t have enough information resources such as internet, updated computers, mine was an old 80860 system one, economic and business daily, nor any other newspapers. I always had to deal with the computer virus, specially when I was typing reports and see the sudden falling words. Dealing with virus wasted most of time instead of making the reports. In my first year of career, I was always away from my office and spent most of time in the underground futures office which was two blocks from mine. There were Reuters, business and economic daily to read and people to discussed.

Most of people from my company though I would never achieved success, although I already passed the six months examine period.

To be continued…

Part 14 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

It wasn’t hard for me to reach 7.875% on ROI in 6 month. For I known Taiwan stock market would surly be bursted down, as well Janpan’s. But I just couldn’t figure out the situation was that worse. After many years, one of the manager in Barings reminded me I said in March, 1990 that TWSE would crash down to 2,500 points while the highest point was 12,682 in February. He said I was predicted right, however I indeed forgot I had told him that.

Six month passed, my ROI was 16.5% (include NTD depressed 3.8% against USD), therefore I passed the first level. In comparison, a proprietary trading department broker had lost 40% of ten hundred million dollars on investing. Ironically, her securities manager ever said to me that I was like “small feet walking in big shoes” ,because I put money into oversea stock market.

I think the reason I could stand firm in this organization was I stayed away from the crisis of TWSE 2,500 points tumbled from 12,000 point. I dare to said “No” to a group of oversea PhD, big men of the stock market while they forced me to invest Taiwan stock market. This made they very impressive about me. Why I dared to said “NO”? The reason was simple, I had involved in Taiwan stock market for ten years since the index only 300 points. Anyone would be trembling with fear in the process of 300 points to 10,000 points. Therefore, my sincere advice to you: if one are too optimistic about the market when the point is booming, his should take the thinking of those who involved in the lowest point. This is a very important way of thinking. For those who involved in low point are majority shareholders whom understand their own company well, therefore they still buying the stocks during the economic depression. Although they may not judged correctly about the trend, however they understand companies’ quality and constitution well. This caused them to buy in the low point while people are negative toward the market. Besides that, if you are a hipper active investor who invested while the market seem to be excellent, you would learn to see the trend chart upside down.

Still remember the broker who worked in the proprietary trading department I was mentioned above? On January 1990, she got ten hundred million dollars to invest, however only four hundred million left in the end of August 1990. Until September, She had been layoff. Maybe she might be an expert, however she didn’t have a look of empty market and asked suspension of operating. If not, end up fired. In many consequence, the turning point may considered “crisis” or “chance”.

To be continued…

Part 13 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

The illustration above is the foreign exchange rate (DEM, FRF, GBP, JPY vs USD) in 1981-1990. 

Apparently the highest exchange rate of Japanese yen had appreciated to 79.5 yen against one dollar. It was more than four times against USD from 1973 to 1995, and caused great depression in Japan’s economy.

This illustration of foreign exchange rate is my first treasure map, which I found it through Plaza Accord (hereafter refer to PA) and its meaning impacted global market. “A short article worth thousands billion US dollars" (https://philwu5389.wordpress.com/2015/08/11/ten-thousand-fold-profit-in-six-years-9/ ) was talking about this event. However, it was a pity that United Daily News only gave a small place to this big global event due to Taiwan Martial law- the political effect I called. So, only celebrities like Wan-lin Tsai was able to know the fact behind the story. How much money worth of this news report? It is uncountable! It gave birth to Taiwan’s Fubon Financial Holding Co., and defrosted many “frozen shares" while average daily stock volume was only about ten to hundreds shares in those year. CDFH(2883)’s capital boomed to tens billion from original few hundreds million, price from 20 NT dollars to 1,000 NT dollars. Cathay Life Insurance boomed from 50 NT dollars to 2,000 NT dollars, capital also from few hundreds million to tens billion. Wan-lin Tsai became the richest man in Taiwan, because he saw the business opportunity of PA. This opportunity also ended up Taiwan’s Martial law. After lifting foreign exchange control, TWSE (Taiwan stock) boomed to 12,682 points.

Above all, I am going to talk about: “How to find the treasure?" In the end of May 1989, just few days before June Fourth Incident, TWSE was very active and boomed to 10,000 points. This number was much higher than the one I had been laughed. During that time although index had already risen 10 times and more, people was alive again. The restaurants were full house everyday; a go-for of the security earned about seventy to eighty thousand per month. If a securities specialist not earned at least five hundred thousand per month, he would consider an unprofitable one. Lately, I received a call from one of my department professors, he asked my interest to work for a “big" legal person as the financial planning personnel. “big"? How “big" was it? I wondered. But my second thought was that if someone dared to give me ten hundred million for investing? Who cares? America stock seemed to be stagnation. It might be a chance for me better than doing nothing in America.

I was shocked when I first walked into this “legal person" ! It was a really “big" company which I trembled to enter it. However, I finally exercised my specialty to reply the company’s representative when he was asking me about investing in Taiwan shares. My answer surprised both of us: “TWSE seems to be booming to high, it is not a good time to purchase them."Was I crazy?! I flew hundred miles back to Taipei and said “No". Why wasn’t I told them on the phone? I was really a freak. My sense told me to say “No", however I really wanted to work in this big company. So I said even more curiously,
“Although TWSE is rising rapidly, other countries still have much potential." Gosh! I was nervous about my words, for I had never had any experience with international stock market. But only some mutual funds. Nonetheless, this company held many stocks that since they were founded. And so, none of them involved in TWSE before, not even “international stock market" which made them be caught unprepared.

Lately, when I was about to present a plan of global stock market investing, I suddenly found 2/3 of examiners were oversea PhD and the big men of Taiwan. Some of them were often reported on the newspaper. I was fussy to step up for my presentation. Why was that so serious? I wondered. Twenty big men had against a young man like me (I was the youngest at the meeting). After, I felt they spoke to me with kind words and agreed with my opinion. But, my teacher unexpectedly said “most of them seemed to hold opposite point of view from you." I astonished about his reply that I couldn’t get what people actually mean in my age of thirty. I finally understood the way how big men talked. It suddenly reminded me a trick called “needles in cotton", which was from a kunfu novels I used to read when I was little. I thought that was it.

Anyhow, I thought it was because of my teacher’s influence. They had bit the bull and given me some money: about two hundred million. Although this number was different from what was expected, ten hundred million. But it was better than nothing.
And above all, I was a real broker, especially a global financial broker.

To be continued….

Part 12 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

If one is too much focused on the surface of the stock market will lost money easily.

After I examined myself, why did I not earn much money before? Apparently, I was at the right time to buy and sell. I especially run away from the highest points twice (4,600 points in 1987 and Shirley Kuo’s event in 1988). Although I lose money from selling short the stock too much in 1990, after that, I earned money again. But I wondered why I was unprofitable in annual revenue ?

Maybe the main factor of losing money was on tracking rebound. I looked down the rebound after booming, how could the market busted that much? In the end, I lose money from the stock market. Besides, another factor might be I was too much focused on what the stock market appeared like on the surface. I was always looking around in every side to chasing and killing stocks. At that time, it was the bull market that made me profit a bit from chasing stocks. What a pity the profit I earned was only a short period of time. The only satisfaction for me at time was to show off my transactions to my friends.

No matter what, I was about to have the ability to indicate the market. However, I did not operate this indication, nor figure out the main cause of booming. Fortunately, I had not been drowned in the bust and boom stock market. Because my operating direction was correct that I indicated the market from the big global events point of view. – “When the market is up, do not sell short of it; when the market is down, do not buy too much." I was annoyed about not profit much although I could indicate the market. Until after I left this “legal person" and operated TWSE (Taiwan stock market) myself, which will be mentioned in my following blog posting called “raw material age", I finally found the mistake.

Lastly, the investors shall be award that although treasure map was found, no one was ensure to find and own the treasure. This process may be more challenge than the movie. However, if you are following the globalization trend unless you will be kept safe. Although you may not profit ten-thousand fold, you will at least be profitable.

To be continued…

Part 11 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

A good indication in long term investing is the foundation of successful operation.

Both Jiabao Wen (the premier of China) and Hu Jintao (the paramount leader of China) said China must change its system of absolute power and introduce more democracy. However, their political statements still not exceeded Xiaoping Deng's in 1979. From learning curve's point of view in average income between the second tier NIC (newly industrial country) and China. We can see that NIC take less time to involved in global supply chain than China and Europe's second tier countries. In other words, China's cheap labor is the main factor drives economic boom. However, this motivation may gradually slowing down by the countries chasing after it. Following, economic activity begin to slow down and finally hit the bottleneck of economic develop growth. Even if you can't see the result now, but the problem will be rise up in 5 to 10 years. Although it may have some time lag, the problem will surely be bring on the table.

Nowadays, there is less competition between China and the international, because its rapidly rising currency and income. This situation is getting worse, and pressed on every side. China' situation just as same as Taiwan in 1986, business seem to be flouring although the main reason was cheap labor. Until NT dollar got stronger on the international, Taiwan's economic growth becalmed in the recent 20 years.

In 20 years ago, I had indicated Taiwan stock will boom to 8,000 points while the average index was only 1,000 points. A good indication in long term investing was the main factor to achieve "ten-thousand fold profit in six years". It is just as said "one will not enter a tottering state, nor dwell in a disorganized one." For one who gets into the stock market, conducting research on which countries and industries might be dangerous or influence the market considers the most investment indicator. Otherwise, random stock picking will happened frequently in the process of investment.

Under the condition of lacking international updates and resources 20 years ago, financial magazine' stock chart was the only information we had. From these trend line, however, you would never predict the boom from 1,000 points to 8,000 points in Taiwan stock. I was forced to be aware of some big events such as "Foreign Exchange Control", because most information obviously was incorrect. Important statements such as "lifting of Martial Law" and "lifting Foreign Exchange Control" became the only and most important clues in long term investing. In the present stock market, I think still many people depend only on the technical analysis which influenced by earlier condition. The shortage of stock market information sources in my early experience, build my long term investing skills. It is a blessing in disguise. However, I did not profit explosively from my correct indication. I think lately. Not was I only lacking of analysis skill, but my most problem was incorrect operation method. No matter what, I was glad that I had not been drowned in the bust after boom stock market.

During the process of the end of 1990, I never forget I had always dreamed about an elder man, according to my age at time. In the dream, this man visited and said to me every night "you are not helping me, but killing me". And then, I awoke from this nightmare. In fact, this elder man was my neighbor who I usually chatted with about the stock. I know he was a retired teacher, and lived alone. When Taiwan stock was just about to going up, I told him, "I am involving in the stock market."

He said, "it is gambling, do not get into it. "

He warned me seriously, " find a regular job and work hard to gain money."

I told him that I was working in the stock investment company.

He looked at me curiously and thought "you are so dead ! "

But do not know what happened, he got in to the stock market while Taiwan stock is booming to 8,000 points. As soon he earned a lot of money.

In the beginning of 1990, I was holding the opposite option from him. I started to sell while he persistent to buy more. Lately, the stock turned south. I always boasted that I profited a lot from my selling. Lately, he suicide. After I known he was not only invested with all his retirement pay, but also took up the mortgage loan into the stock market. When he was ready to return home in mainland China after making quick money, however it totally came to nothing.

Investors shall take this example as a lesson: if you are not in the stock market, keep yourself away from it. However, it is the weakness of human nature.

To be continued... 

Part 10 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

I think, I would had be aware of America’s struggle if I was paying attention on the global trends. As well as its usual problems, I would have noticed how American solved them, and the agreement of “Plaza Accord". I would also understand what Wan-Lin Tsai, the founder of Cathay Life Insurance, said “everyone shall understand the investment knowledge" Surely, it would be reasonable why Mr. Tasi bought the land beside China airline with 30% of price above the stock market.

Therefore, I think the freedom given by the government allow people to think freely is very important to the investors. For most traditional rulers of China (including Chiang’s family in Taiwan), appreciated the order of Martial Law. For them, it would be the best to go back the emperor period- “It is legal because I wish it. Everyone shall under my control. I said what I mean; I have what I want." Isn’t that a perfect world? As it turns out, this is the killer of the people’s energetic. A French political philosopher, Montesquieu said that Democracy is unsuitable for Chinese with their “slavery" character. In the present society, large quantities of basic commodity provided by few people is normal. If there isn’t creative thinking to develop the variety and depth of industries, the majority of people will go hungry while only few who hold manufacturing resources could live well. An absolute monarchy shuts down “creative" elements of one’s mind. For no one would know when to be arrested by his “renewal" ideas. Still remember a quote my parents emphasized me when I was a child, they always said “children should be seen and not heard." Under this circumstance who dared to be “renewal" ?

From this direction we assume that though economy of China is good and has reached the “Lewis Turning Point" ( a point at which surplus rural labor reaches a financial zero. This in turn typically causes urban wages to rise dramatically. Upon reaching the Lewis turning point, a country usually experiences a food shortages which leads to a rise in agricultural and unskilled industrial real wage.), however, this “labor" economy was caused by the hard work of 13 billion population. While China’s GDP is close to 4,000 US dollars, China’s future nether toward “democracy “, allow people to communicate their opinions and ideas with the open mind to develop new industries. Or the economy of China will gradually slowing down. Nowadays, many countries such as Bengal, Sri Lanka and and India’s average GDP is around 1,000 US dollars. In the future, the orders of MTO (made-to-order ) will gradually turn to these countries. Therefore, the opposite speeding force will reverse China’s direction. This will cause surplus rural labor flow back to the urban in 5 years. On the occasion, less working opportunity of manufacturing and service will not sufficient this unemployment trend. In my option, Communist wants to have its absolute government control while China’s economic growth become stronger. However, this idea would probably be challenged in the following 10 to 15 years.

To be continued...

Part 9 -Ten-thousand fold profit in six years- the legend of Taiwan stock market

A short article worth thousands billion US dollars-“ G5 reached an agreement about managing the fluctuating value of the US dollar."

Due to the conflicted between the United States and the Soviet Union in 1950th , the treaty of NATO(North Atlantic Treaty Organization) and “Warsaw Pact" were created and form two groups of power between countries. In the late 1980th, this had greatly impacted the national power of the United States.

The rising of interest rate and inflation had led to appreciation of the US dollar.

From four of the main factors of economic boom that the United States was against them: consumers hold off spending (people had constantly been threatened by the war) and investment slowdown (government departments reduced their cost except the department related with arms and wars). Budget deficit caused by the increasing of government military spending. And in addition to that, the cowboy president Ronald Reagan, the most American chauvinism after World War II, on the one hand growing the government spending; on the other hand reducing the federal income tax and capital gains tax. After “Reaganomics", the financial deficit had got worse with the high inflation rate settled at 15%. Under this situation, the Unite States had no choice but used its political supremacy to solve their tough problems. Not only did it forced the Soviet Union to agree the strategic arms reduction treaty, but convened a very important meeting – “Plaza Accord". G5 (the United Kingdom, France, West Germany, Japan and the United States) had signed the accord on 1985 at the Plaza Hotel in New York City. This big global event, however, occupied a small place in Taiwan’s newspaper. Apparently, with the dollar’s depreciation, relative prices of the United States exports fall, leading to increased export demand. In effect, the United States wanted to beat Japan to grab the largest semiconductor market. Also in 1986, “semiconductor trade agreement" between U.S and Japan had opened the door for the joint of Window and Intel in the following 1990th.

Though this process, no one could know the Taiwan stock market will soon boomed to 12,682 point from the “Technical Analysis". On the contrary, if one pay less attention to technical analysis, and focus more on the reaction between Taiwan and its instructor -the United States, will he understand the reasons of lifting martial law and decontrol of foreign exchange in the following 1986 and 1987. And then, choosing and buying the profitable stock will be a piece of cake to the investors. Although you did not recognized to buy Cathay Life Insurance, you would know to buy (1419 Shinko.Textile), (1903 Shihlin Paper ) or construction stocks. You might not be like Wan-tsai Tsai, know to sell the stock of Cathay Life Insurance in the price of 2,000 NT dollars. Unless, you would not be vanity and a striving after wind as I was after this process of luxury. I had lost the greatest opportunity on Taiwan stock market in its biggest bull market period. Thankfully, I have learned to pay close attention on the economic development, statements and movements between the powerful nations. A lesson I have learned: be aware of international trend.

To be continued…

Part 8 -Ten-thousand fold profit in six years- the legend of Taiwan stock market

For one who gets into the stock market, conducting research on which countries and industries might be dangerous or influence the market considers the most important investment indicator.

In the year of 1986, I was in my early thirties. I got admitted to the gugraduate school with the top grad in my department. However, continuing study was just a dream for me while I was already working. I thought working and learning to invest at the same time could not made me enrolled that great school. Fortunately, by the grace of God, I had been finally accepted by the school. Not very long after few classes, all my classmates knew I was involved in the stock market. Although my major was closest to the stock, my classmates felt less interesting about it. For the Taiwan stock exchange index settled just between 850 to 1,000 points during that time. And there was not many securities, people did not even know where to buy the shares.

However, Taiwan stock index suddenly stepped up at 1,000 points, even to 1,100 points in January 1987. I was full of enthusiasm and energy to tell my classmates, colleagues and professors that,"the index will boom at least 8,000 points. In terms, reaching at 8,800 points and the stock volume will increase up to one hundred twenty billion NT dollars." while the index was just few hundreds million per day. Everyone was laughed at me about my crazy idea. These words seemed like nonsense to them, however, my reason for that involved with the political issues that I was carefully not to defended the government for I was not as bold as Nori Shih and Shin-chieh Huang just after the period of martial law. My reason simply was that if only half or one third of money, from the calculation of trade surplus in the past decade, goes into the stock market after decontrol of foreign exchange, it will probably be at least ten billions US dollars. And the index will boom to 8,000 points. I thought Japanese price earning ratio was close to 50 times, Taiwan will probably be 60 times (In my option, Taiwan was greater than Japan. ) No matter what happened, the index kept going up and boomed to 4,000 points. This made me “the sage of stockbroker", and impressed the department’s professors in September 1987. I think this had caused me to work at the financial department of a well-know legal person in the future.

Seriously, I did not know the fact about decontrol of foreign exchange was forced by American. Ching-kuo Chiang, the former president of Taiwan, had no choice but to appreciate the currency at that time. Therfore, I felt “what a great president" Ching-kuo Chiang was. And the classmates from my department zealously attended the speech out of Kuomintang party seemed so inconceivable to me. My most problem block me to see the clear picuture was lacked in basic knowledge and resulted to insufficient data collecting. I did not even know the major international agreement which was not signed by Taiwan would severely impacted Taiwan’s market.

After all of these, it seem unbelievable to me that many investors have infatuated with only “Technical Analysis", but ignored the globalization events which severely affected Taiwan stock market. Most technical analysis operators like to said, “all the information will be shown on the trend line", although it has its time difference between the fact and the trend line.

To be continued…

Part 7 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

In the strategy of Globalization Trend Investment, “continuity" is one of the most important issues, however, no one ever mentioned about it. No other investment paradigm like “continuity" that could pinpoint the next profitable stock from the previous one. Others security analysis methodology such as technical analysis for short and medium term, and “value investing" for long-term process will not obtain the same result. Because they are only the single term investment strategy that even you had made one profitable stock, you will not able to predict the next profitable one.

What is the correlation between stock movement and its performance? Take the last decade years as the example: What cause the raw material age? The answer is the rise of China’s economy made themselves to become world’s largest construction market in that period of time. What caused the fastest-growth of Chinese economy? Because China lowered its currency and joined the system of global free-trade.Why China wanted to do that? It caused by the dissolution of the Soviet Union led by the conflict between US and Soviet Union in 1970th.

We can think from another way: The conflict in 1970th between the US and the Soviet Union resulted the break down of Soviet Union. By the effect of dissolution of the Soviet Union, the US dollar was able to lower its currency to recovery from the financial crisis due to the Plaza Accord. The joint effect between Intel and Microsoft defeated Japanese semiconductor, and severely impacted the US’s economy. And how these US economy effects impacted Taiwan stock market? Taiwan stock market surged 20 times by the risen of New Taiwnese Dollar. How is the effect on WINTEL to Taiwan? It brought out Taiwan’s digital age, and make it the leading semiconductor manufacturer.

Just as this process, globalization trend movement is time to time, generation to generation related one another. The specialize of its “continuity" proves its correlation between the two, and it appears on the stock market. Only when you grasp the globalization trend and understand the correlation between stock movement and its performance, will you be able to forecast the direction of the market prices.

The specialize of “continuity" causes:

1. To increase the “stability" on stock investing. In another word, you will be able to enjoy the profit growth stably and explosively. The different of your investment is not about make or losing money, but how much profit you make.

2. You are able to keep calm on the investment. For the globalization trend is caused by the government policy and the world’s situation. Therefore, it could not be changed immediately.

If you think world’s situation may or may not be changed, although the price is not going up, you will not running around like headless chicken. Say here: " the line index looks good, buy it now." Say there: “the price is low enough, buy it now."No continuity between every investment. Therefore, It is normal to lose money; making money only if you are lucky. The “Globalization Trend Investment" looks simple, however, I have already investigated the whole process for 20 year. And I believe the same situation will keep going on in the future.

To be continued...

Part 6 -Ten-thousand fold profit in six years- the legend of Taiwan stock market

Many investors do not have the experience as I had been trained to think from the global perspective in stock market. They usually think inside the box as the true example below: In the history of Taiwan stock market, investors noticed the falling price of 2317 HON HAI PRECISION IND. CO., LTD., while raw material stock was rising rapidly in that generation. However, they miss the opportunity of 2015 FENG HSIN STEEL CO.,LTD. Surely processing of the result was opposite from their expectation. Not most investors adopted wrong strategy, but also an "investment gurus", called by one famous investment newspaper. He said on TV, " The price of raw ingredient is only a result of manipulation. It would not last more than two or three month." Even the "expert" would make this mistake, how about the inexperienced investors? To numerous investors who put their money into the stock market of Taiwan, take this example as a lesson and find the right direction from "Globalization Trend Investment".

It is not difficult to understand the method of "Globalization Trend Investment". If you take its thinking you will see:

1. You will grasp the trend in Taiwan stock market. 

2. Every trend stock appears on the market would be predictable. 

Most of all, you will enjoy the profit growth stably and explosively, avoid slippage in breakout and stop loss. Do not be so surprised if you saw what I have written in my blog posting: earning the basic investment return of 850%. For it really has happened. When I invested 2915R UENTEX INDUSTRIES LIMITED at the price of TWD $13 in the end of 2008, however, price went up to TWD $92 in July, 2010. It was just one of my experience in Taiwan stock market, not even the most profitable one. If you keep following my blog posting, the strategy of "Globalization Trend Investment" may seem simple enough to you.

To be continued...

Part 5 -Ten-thousand fold profit in six years- the legend of Taiwan stock market

“Globalization Trend Investment” is the method tells investors how to invest money in the right opportunities at the right time through the major global events. The reason for that is to accumulate long-term profit as the number I mentioned in my earlier blog posting (profit ten-thousand fold and more in six years) In fact, it not only helps investors like you to find which stock is benefited the most. It also gives clue about when to buy and hold the stocks. In particular, its information does not require much effort of getting it. If you pay attention on the global investment flows, you will be able to determine the market and make profit MORE than 500%, even to 1000% in eighteen month. (LTD 2915 is a typical example between 2008-2010.)

In reality, what I have mentioned is a common knowledge about “the major and quick changes” around us nowadays. We have witnessed these changes while reading the newspaper. Its big and clear printing words tell us desperately “I am here.”

My first purchased stock “Micorsoft” was the “must buy” stock to me while I was tried of the continually upgraded software and CPU. (I believe many people around the world had the same feeling as I did.) The awareness of changes in the generation drove me to purchase the share of NOKIA, CISCO, TSMC and SoftBank afterwards. The simple thought of “I must buy them” drives by the power of Globalization Trend. Think under its condition make us to see farther than others and understand the market flows.

Maybe I was lucky that I had my career in global investment management. This experience trained me to see farther through the global perspectives. I have been greatly benefited from it, after I stepped back into the smaller stock market in Taiwan. Although my average annual profit was 35% (a very high rate in the global investment) over the past ten years in the legal person, the title of “global investment manager” is not mysterious to me anymore. Because my experience teaches me: investment is just the common life knowledge. If you want to have this knowledge, know things of their priority.

I feel that my words just are the wisdom of living. Do people not know when US financial crisis happens, Taiwan stock market will be impacted greatly and goes down rapidly? However, many investors do not analyze the reasons why the US financial crisis happened? They only ask questions such as “will Taiwan stock price go up or down? “The wisdom of living” I called, points out this bad investing habit.

To be continued...

Part 4 -Ten-thousand fold profit in six years- the legend of Taiwan stock market

What I said below is about Taiwan stock market and those who put money in.

Many investors  are zealous about the short term operation in the stock market. Day after day; week after week, they care only about the surface of the stock prices pattern, such as uptrend and downtrend lines; double top(M  pattern) and double bottom(W  pattern). They will ask questions like, is that any trend line break? If the downtrend line appears, will Taiwan stock market keep goes down? How low will the stock index go? Although they focused on the daily ,weekly or monthly price fluctuation, they paid no attention total annual profit. They do not concerned about the major global events as September 11 attacks and Plaza Accord, which was an important international agreement impacted currency market severely. In the history of Taiwan stock market, many investors were involved in the growth of Foxconn Technology Group, the extension of Taiwan Semiconductor Manufacturing Co., Ltd., the rising of 2601 FSC, 2014 CHUNG HUNG, 5483 SAS, but only few would be able to accumulate wealth in the end of the process. Only when one knows how to pinpoint a profitable stock after stock and then repeat the process, will he be able to profit from it tens of thousands fold and more.

The stock market investment is a competition of wisdom, not skills. Many people are wondering why couldn’t I accumulated much money while I had profited at the short term operation? When one operate wrong strategy, he will not be able to find the wealth. The mistake they made is that they didn’t see the big picture of globalization trend, but only focused on the narrow view of trend line analysis. They knows nothing about the causes of Foxconn’s success. I had read many books about Foxconn. None of the books were mentioned about the historical background of his time, but only words to praise the success of Terry Gou, the founder of Foxconn. The fact is that without Mr. Gou sized the opportunity of “globalization trend” in his time, he would never achieve his success. There were the same stories as Morris Chang, the chairman of Taiwan Semiconductor Manufacturing and Jonney Shih, the chairman of ASUSTeK, they were taking the opportunity during the burst of WINTEL(Window - Intel)  framework.

The wise men like them appeared in every generation, including the period of electronic stocks arising and the time of Plaza Accord. There were more examples like the stepped-up of Fubon Group and bursted of Cathay Life Insurance between 1987-1989. The fact tells a truth, you will achieve their success if you follow their example.

To be continued...