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starbiz@thestar.com.my

IT is trying times for everyone as the global financial world melts down but the order of the day is really to stop the spread of coronavirus (Covid-19) so that some normality could return.

Ironically, two things seem to be rising amid the turmoil – the demand for toilet paper caused serious fights in supermarkets across the globe and this has gone viral across various networks.

The other is the US dollar. Its rise has many reasons.

Everything else, including stock markets, oil, bonds, commodities, currencies and bitcoin are plunging to new lows with no clear signs of immediate reversal. Just in a month the FBM KLCI is down by 20% while the Dow Jones Industrial average 31%.

The rise in demand for toilet paper cannot be comprehended but the rise of the US dollar in a mayhem is understandable. Corporations across the global are rushing to draw down credit lines and seek the US dollar for their funding needs.

In fact, people are scrambling for the US dollar and as a report said “world markets are still very, very nervous …people are scrambling for cash any way they can.’’

Ringgit against the US dollar has reached the RM4.41 range.

Bonds are also seeing the biggest wave of withdrawals since 2017 and gold has fallen as there are concerns of a global economic recession.

The timing of the Saudi Arabia-russia oil price war was shocking and a report said it is a “risky move likely to further destabilise a world economy that is already wobbly with the pandemic.’’

Oil has plummeted to about US$30 a barrel and experts believe it could plunge to US$20 a barrel though the Us-trump Administration may intervene as US producers are suffering from the historic crash in prices.

Amid all these fears, governments across the globe are coming out with stimulus packages to help its citizens and businesses. It is a much needed aid as many countries have enforced total lockdown and people on daily jobs need money for survival. The US alone is forking out US$1 trillion in aid. Other countries have set aside billions of dollars including Malaysia Rm20bil.

StarBiz compiled by B.K. SIDHU & EUGENE MAHALINGAM

Profiting from market downturn

Investment strategy: The benefit of dollar-cost averaging is that you don’t have to monitor the price movement and you don’t have to make a decision every time you want to invest. In fact, dollar-cost averaging is quite a no-brainer strategy.

MOST people tend to be very bearish about the stock market after a crash. In fact, most investors would feel that it would be best to avoid the stock market for now.

Some may even want to cut their current investment losses and get out of their investments in equities, even though seasoned investors would tell you that the best opportunity to enter the market would be after a market crash

Following the recent global stock market downturn, market sentiments, the desire and motivation to invest is at an all-time low. Understandably so, after all, once bitten twice shy.

However, the legendary “Oracle of Omaha” and one of the most successful investor of all time, Warren Buffett, once said that as an investor, it is wise to be “fearful when others are greedy, and greedy when others are fearful.”

It’s hard, if not impossible, to convince oneself to invest when the whole world is panicking.

On one hand, you think the market crash is so sharp that you are fearful it may drop even further. On the other hand, you can clearly see that premium stocks are now trading at a great discount, and hence now would be a great opportunity to snap them up. What should you do?

If this is your dilemma, there’s an investment strategy that can help you to take advantage of the market downturn and allay your fear: the method is called dollar-cost averaging.

How dollar-cost averaging operates

Dollar-cost averaging is a strategy to invest a specific amount of money in the market at routine intervals (monthly, quarterly, half-yearly or yearly). Done right, you can protect yourself against fluctuations and downside risk in the market.

For example, instead of investing a lump sum of, say, RM120,000, you invest RM10,000 a month over one year. By doing this, you average out the cost of investments over an extended period of time. This is to make sure you don’t invest all your money at the peak of the market.

On the other hand, this strategy works especially well in an extended market downturn (like what you expect now) as you will keep buying at lower and lower prices until the market recovers.

For example, you invest RM1,000 in an equity unit trust fund at RM1 per unit. So, you end up with 1,000 units. The following month, you invest another RM1,000 in the same fund but because the unit price has dropped to 50 sen, you end up with 2,000 units.

So, what is the average cost of all your units? If your answer is 75 sen, you’re wrong. That’s because you have used the arithmetic mean (RM1+50sen/2>75 sen). You should use the harmonic mean.

This is how to calculate the average cost of all your units correctly: Your total investment is RM2,000 and you have 3,000 units of the fund. Divide RM2,000 by 3,000 units and the average cost is 67 sen. This means by using harmonic mean calculation, dollar-cost averaging gives a lower average cost.

How it helps you to profit from current market

Now, let’s see how we can apply dollar-cost averaging strategy to the current market scenario. You’re bearish about the market and think it will go down for another six months.

Dollar-cost averaging works well if you believe the market will continue to go down.

With reference to Table 1, if you invest RM1,000 a month for the next 12 months, you would have invested RM12,000 and accumulated 25,648 units at the end of the period. At 80 sen (which is lower than the original price), your investment value at the end of the period is RM20,518 (80 sen x 25,648 units).

It means that you would have gained RM8,518 (RM20,518 – RM12,000). That’s a 71% gain over 12 months, despite the fund price being beaten down by as much as 78% (90 sen – RM0.20 = 70 sen, then divided by 90 sen = 78%).

Why it can help you

Dollar-cost averaging is a discipline that can help investors overcome their emotion, dilemma and other human feeling when it comes to investing, be it fear or greed. We’re always tempted to invest when the market is high and so we end up buying high instead of buying low. With dollar-cost averaging, we’re automatically programmed to buy less units at higher prices and more units at lower prices instead.

Thus when the market crashes and prices are low like now, we would be empowered to invest, not react out of fear.

For this strategy to work, you would need to invest a specific amount of money at specific intervals, say RM10,000 a month over one year, no matter what the market condition is in. If you think that the market may crash and rebound in a shorter period, you may want to implement the strategy within one month. For example, RM30,000 a week over a one-month period. It does not matter which interval, what’s important is that it’s done consistently.

Your current investment strategy to buy only when the price has dropped to a certain “attractive” level is commendable. However, to execute this strategy well, you must be disciplined enough to monitor the market movement closely and spend time and energy to decide when would be the right time to buy the investment.

The benefit of dollar-cost averaging is that you don’t have to monitor the price movement and you don’t have to make a decision every time you want to invest. In fact, if you’d ask me, dollar-cost averaging is quite a no-brainer strategy.

How to make dollar-cost averaging work better

Dollar-cost averaging offers the most benefit when you invest in investments whose prices are highly volatile (move up or down in a big quantum).

An investment that is highly volatile is often perceived as a risky investment. However, this risk plays to your advantage when dollar-cost averaging is applied. How so? The strategy helps to perform an efficient accumulation of investment units. When a particular investment drops significantly in price, you get to accumulate more units. The bigger the drop, the more units you accumulate, thus your accumulation is more efficient (you get to buy the units at a cheaper price).

In comparison, if you invest in an investment that has low volatility, the drop in price would be too small and you can only accumulate a few units, thus rendering your accumulation to be less efficient.

Therefore, when you apply dollar-cost averaging strategy on your unit trust portfolio, go for equity funds. Avoid money market funds or bond funds.

Warning: Don’t apply dollar-cost averaging strategy on a single share. There’s usually an underlying reason why the price of a particular share is in a continuous downward trend. In such circumstances, there’s no assurance that the price will ever go up when the whole market rebound. Worst, the share may not even survive the tough economic crisis and ends up getting delisted.

Do remember that for dollar-cost averaging to work, your chosen investment must be resilient enough to rebound when stock market recovers.

Dollar-cost averaging is best suited if you have a portfolio of equity unit trust funds that is diversified into various regions, so that risks is spread across the share of many companies.

Act on it

To truly benefit from dollar-cost averaging, you have to apply it to your investments. During the implementation process, your resolve would be tested.

There will be times where you will be tempted to abandon the strategy especially when the price of your investment has dropped even further.

Do not waver! Be discipline in executing your strategy and enjoy the gains when the market recovers. Onwards and upwards.

– Yap Ming Hui (ymh@whitman.com.my) is thrilled that his mission to empower every Malaysian with a roadmap to financial freedom has finally come to fruition with the release of a free DIY roadmap to financial freedom tool on the iWealth mobile app. The views expressed here are the writer’s own.

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As readers will recall from the earlier article (above), Japanese and Taiwanese epidemiologists and pharmacologists have determined that the new coronavirus almost certainly originated in the US since that country is the only one known to have all five types – from which all others must have descended. Wuhan in China has only one of those types, rendering it in analogy as a kind of “branch” which cannot exist by itself but must have grown from a “tree”.

The Taiwanese physician noted that in August of 2019 the US had a flurry of lung pneumonias or similar, which the Americans blamed on ‘vaping’ from e-cigarettes, but which, according to the scientist, the symptoms and conditions could not be explained by e-cigarettes. He said he wrote to the US officials telling them he suspected those deaths were likely due to the coronavirus. He claims his warnings were ignored.

Immediately prior to that, the CDC totally shut down the US Military’s main bio-lab at Fort Detrick, Maryland, due to an absence of safeguards against pathogen leakages, issuing a complete “cease and desist” order to the military. It was immediately after this event that the ‘e-cigarette’ epidemic arose.

Screenshot from The New York Times August 08, 2019

We also had the Japanese citizens infected in September of 2019, in Hawaii, people who had never been to China, these infections occurring on US soil long before the outbreak in Wuhan but only shortly after the locking down of Fort Detrick.

Then, on Chinese social media, another article appeared, aware of the above but presenting further details. It stated in part that five “foreign” athletes or other personnel visiting Wuhan for the World Military Games (October 18-27, 2019) were hospitalised in Wuhan for an undetermined infection.

The article explains more clearly that the Wuhan version of the virus could have come only from the US because it is what they call a “branch” which could not have been created first because it would have no ‘seed’. It would have to have been a new variety spun off the original ‘trunk’, and that trunk exists only in the US. (1)

There has been much public speculation that the coronavirus had been deliberately transmitted to China but, according to the Chinese article, a less sinister alternative is possible.

If some members of the US team at the World Military Games (18-27 October) had become infected by the virus from an accidental outbreak at Fort Detrick it is possible that, with a long initial incubation period, their symptoms might have been minor, and those individuals could easily have ‘toured’ the city of Wuhan during their stay, infecting potentially thousands of local residents in various locations, many of whom would later travel to the seafood market from which the virus would spread like wildfire (as it did).

That would account also for the practical impossibility of locating the legendary “patient zero” – which in this case has never been found since there would have been many of them.

Next, Daniel Lucey, an infectious disease expert at Georgetown University in Washington, said in an article in Science magazine that the first human infection has been confirmed as occurring in November 2019, (not in Wuhan), suggesting the virus originated elsewhere and then spread to the seafood markets. “One group put the origin of the outbreak as early as 18 September 2019.” (2) (3)

China’s New Coronavirus: An Examination of the FactsWuhan seafood market may not be source of novel virus spreading globally. Description of earliest cases suggests outbreak began elsewhere.

The article states:

“As confirmed cases of a novel virus surge around the world with worrisome speed, all eyes have so far focused on a seafood market in Wuhan, China, as the origin of the outbreak. But a description of the first clinical cases published in The Lancet on Friday challenges that hypothesis.” (4) (5)

The paper, written by a large group of Chinese researchers from several institutions, offers details about the first 41 hospitalized patients who had confirmed infections with what has been dubbed 2019 novel coronavirus (2019-nCoV).

In the earliest case, the patient became ill on 1 December 2019 and had no reported link to the seafood market, the authors report. “No epidemiological link was found between the first patient and later cases”, they state. Their data also show that, in total, 13 of the 41 cases had no link to the marketplace. “That’s a big number, 13, with no link”, says Daniel Lucey . . . (6)

Earlier reports from Chinese health authorities and the World Health Organization had said the first patient had onset of symptoms on 8 December 2019 – and those reports simply said “most” cases had links to the seafood market, which was closed on 1 January. (7)

“Lucey says if the new data are accurate, the first human infections must have occurred in November 2019 – if not earlier – because there is an incubation time between infection and symptoms surfacing. If so, the virus possibly spread silently between people in Wuhan – and perhaps elsewhere – before the cluster of cases from the city’s now-infamous Huanan Seafood Wholesale Market was discovered in late December. “The virus came into that marketplace before it came out of that marketplace”, Lucey asserts.

“China must have realized the epidemic did not originate in that Wuhan Huanan seafood market”, Lucey told Science Insider. (8)

Kristian Andersen is an evolutionary biologist at the Scripps Research Institute who has analyzed sequences of 2019-nCoV to try to clarify its origin. He said the scenario was “entirely plausible” of infected persons bringing the virus into the seafood market from somewhere outside. According to the Science article,

“Andersen posted his analysis of 27 available genomes of 2019-nCoV on 25 January on a virology research website. It suggests they had a “most recent common ancestor” – meaning a common source – as early as 1 October 2019.” (9)

It was interesting that Lucey also noted that MERS was originally believed to have come from a patient in Saudi Arabia in June of 2012, but later and more thorough studies traced it back to an earlier hospital outbreak of unexplained pneumonia in Jordan in April of that year. Lucey said that from stored samples from people who died in Jordan, medical authorities confirmed they had been infected with the MERS virus. (10)

This would provide impetus for caution among the public in accepting the “official standard narrative” that the Western media are always so eager to provide – as they did with SARS, MERS, and ZIKA, all of which ‘official narratives’ were later proven to have been entirely wrong.

In this case, the Western media flooded their pages for months about the COVID-19 virus originating in the Wuhan seafood market, caused by people eating bats and wild animals. All of this has been proven wrong. Not only did the virus not originate at the seafood market, it did not originate in Wuhan at all, and it has now been proven that it did not originate in China but was brought to China from another country. Part of the proof of this assertion is that the genome varieties of the virus in Iran and Italy have been sequenced and declared to have no part of the variety that infected China and must, by definition, have originated elsewhere.

It would seem the only possibility for origination is the US because only that country has the “tree trunk” of all the varieties. And it may therefore be true that the original source of the COVID-19 virus was the US military bio-warfare lab at Fort Detrick. This would not be a surprise, given that the CDC completely shut down Fort Detrick, but also because, as I related in an earlier article, between 2005 and 2012 the US had experienced 1,059 events where pathogens had been either stolen or escaped from American bio-labs during the prior ten years – an average of one every three days.

* Note to readers: please click the share buttons above or below. Forward this article to your email lists. Crosspost on your blog site, internet forums. etc.

Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He can be contacted at: 2186604556@qq.com. He is a frequent contributor to Global Research.

Notes

(1) https://mp.weixin.qq.com/s/CjGWaaDSKTyjWRMyQyGXUA

(2) https://science.sciencemag.org/content/367/6477/492.full

(3) Science; Jon Cohen; Jan. 26, 2020

https://www.sciencemag.org/news/2020/01/wuhan-seafood-market-may-not-be-source-novel-virus-spreading-globally

(4) https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)30183-5/fulltext

(5) https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)30183-5/fulltext

(6) http://wjw.wuhan.gov.cn/front/web/showDetail/2020011109036

(7) http://wjw.wuhan.gov.cn/front/web/showDetail/2020011509040

(8) https://sciencespeaksblog.org/2020/01/25/wuhan-coronavirus-2019-ncov-qa-6-an-evidence-based-hypothesis/

(9) http://virological.org/t/clock-and-tmrca-based-on-27-genomes/347

(10) http://applications.emro.who.int/emhj/v19/Supp1/EMHJ_2013_19_Supp1_S12_S18.pdf

By Larry RomanoffGlobal Research, March 11, 2020Region: USATheme: Intelligence, Science and Medicineprint 1291 125 23 1598 It would be useful to read this prior article for background:

China’s Coronavirus: A Shocking Update. Did The Virus Originate in the US? By Larry Romanoff, March 04, 2020

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The first clinical trial of the novel coronavirus vaccine in China has kicked off as volunteers taking part in the project started to share their experience on social media, a Chinese newspaper reported on Saturday. China Daily/ANN

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