Coming from a financial (fund management) background and having a strong interest in Feng Shui, it is natural that I have often looked at the financial events of this world from the perspective of Feng Shui. I am always amazed that the annual CLSA Feng Shui event is always well attended by investors. The forecast made by the CLSA Feng Shui team is usually made in consultation with a number of Feng Shui professionals in Hong Kong. The forecast has a mixed record but that has not stopped CLSA from continuing holding the event or investors from paying attention to the forecast. Rightly or wrongly, investors will turn to anything that will give them an edge to outperform the market.
Use of Element of Yearly’s Horoscope to forecast financial events
Most Feng Shui Masters tend to forecast economic or financial events based on the elements associated with the horoscope of the Year. For instance, the year 2013 is a water snake year and snake's ruling element is fire. Thus, the year 2013 is marked by the presence of water and fire. Most Feng Shui practitioners will then base their predictions on financial and economic events in 2013 based on these two elements. For instance, any industry which belongs to metal element is not expected to do well since metal is destroyed by fire and water erodes metal. Based on this analysis, most Feng Shui Masters will predict that any industry which deals with metal (steel, mining, etc) will do badly in year 2013. Well, so far, this simple analysis is quite accurate at this time of writing!
How about year 2012? It is a water dragon year (symbolized by water and earth). Since earth destroys water, an industry belonging to water element (e.g shipping or airlines) is not likely to perform well. Also, fire is an undesirable element in year 2012 because water destroys fire. Thus, any industry belonging to fire element such as Energy and Food & Beverage is not expected to perform well. For the record, shipping (water), airlines (water) and energy (fire) stocks did fare badly last year while most consumable staples like Food & Beverage (fire) stocks enjoyed a strong run-up.
Forecast based on an analysis of the elements associated with the ruling horoscope in any year is reliable to a certain degree. Since no forecasting method is perfect, one cannot get too critical on this approach. Nevertheless, from my experience, applying the Flying Star Feng Shui tends to yield more reliable forecast, whether used in conjunction with or in place of the above Feng Shui forecasting method based solely on the element of the ruling horoscope in a year.
Flying Star Feng Shui in Brief
In Flying Star Feng Shui, there are nine stars and each star symbolises a variety of objects, events, direction, colour, etc. Each era (180 years) is divided into nine 20-year periods and each period is governed by a Ruling Star, with the period number named after the number of the Ruling Star. For instance, the 20-year period 2004-2023 is considered Period 8 and the Ruling Star during the period is Star No 8. Each star also an Element (Fire, Water, Earth, Metal or Wood) associated with it. The five Elements (and its productive and destructive cycles) are the building blocks of every branch of Feng Shui and are also used in many Chinese arts such as Fortune-telling, Chinese Medicine, Qigong, Horoscope, etc. It should be pointed out that the transition from one period to another is a gradual and revolving one, not a sudden change. For instance, as we move close closer towards year 2023, the Ruling Star No 8 will slowly fade into background (and things associated with Period 8 will gradually lose its colour) while Star No 9 will gradually gain its influence.
Application of Flying Star Feng Shui in finance and stock market forecast
The application of Flying Star Feng Shui in financial or economic field is nothing new. Even a novice in Flying Star Feng Shui knows that the current Period 8 is ruled by Star No 8 which symbolises Child, Mountain, Fingers/Toes among other things and is associated with the Earth Element. Given that Period 8 commenced in year 2004, the major economic events which unfold in the new millennium should not surprise anyone with basic knowledge of this school of Feng Shui. The rise of China (a northeastern nation), the fad associated with South Korean culture, the numerous killings of U.S. school children, the boom in real estate (which belongs to the Earth element) in most countries, and to a lesser extent, the strong performance of the Philippine economy (located in East-NorthEast region), etc are evidence of the effects of Ruling Star No 8. The strong debate (and media publicity) on one-child policy in China and Singapore, the debate and concerns surrounding the low fertility rates are yet more examples of influence of the Ruling Star No 8. (In China and Singapore, where one-child family is common, more parents are even engaging a
private investigator to track their children).
Mongolia is experiencing strong double-digit economic growth due to China while Russia (eastern part of Russia fall within Northeast) is benefiting from strong oil prices and undergoing transformative political changes which are helping to attract increasing amount of foreign investment. Even Japan, an economy which has been in stagnation for almost decades is making some kind of a recovery thanks to Abenomics. Meanwhile, for good or for bad, the publicity on North Korea has never been greater after the change in leadership in this communist country. The geopolitical conflict between Japan and China over the East China Sea, between the two Korean countries and between China and the Philippines over the South China Sea have dominated headlines in recent years from time to time.
In Flying Star Feng Shui, Period 8 has superceded Period 7 and events (or things) associated with Period 7 such as telecommunication, terrorism, robbery, etc will lose its prominence in this period. Terrorism peaked in 2001 marked by the September 2011 attack on the Twin Towers. The loss of economic momentum in many Western countries and the bust in dotcom and TNT stocks since 2000 is yet another phenomenon due to the change from Period 7 to 8.
Using Annual Flying Star to forecast annual financial events
On a deeper level, Flying Star Feng Shui can be applied to forecast yearly economic or financial events using the interaction of period stars with annual stars. From my experience, applying this annual Flying Star Feng Shui method yields even more accurate (specific) forecast than a forecast made from an analysis of the elements associated with the ruling horoscope of any given year. The performance of stock markets depends on various factors and in particular, the monetary policy of central banks. Nonetheless, other factors like economic, political or acts of gods play a major part as well. From my experience, Flying Star Feng Shui has a good record of forecasting such events. Indeed, several major events which occurred in the last few years can be explained by Flying Star Feng Shui (Please see
Feng Shui and Japan Earthquake and Tsunami 2011,
Feng Shui and Arab Spring 2011 and
Feng Shui and European Debt Crisis (Eurozone Crisis 2010-2012). Combining my financial and Feng Shui knowledge, I shall now attempt to make my financial forecast for 2014.
Decade-long property boom peaking
First, the real estate boom many countries are experiencing is likely to face strong headwinds. Why? This is because the Ruling Annual Star in 2014 is No 4. This Star belongs to the Wood Element and since Wood Destroys Earth (Element of Period Star 8), there is a good chance that real estate stocks and REITs might suffer from the negative effects. My view is that as bond yields continue to go up due to perceived or actual tapering of bond purchases by the U.S. Fed, investors will shun these two sectors. Physical property prices in most countries are already at multi-year high and it is likely that most of the real estate boom most countries enjoyed in the past several years will come to a peak in 2014.
Emerging market equities outperform US equities
Second, emerging market equities (especially Asian equities) are likely to outperform U.S. stocks. After a strong performance in 2013, U.S. stocks are likely to take a backseat. The annual flying star visiting Northwest (where U.S. is situated) is the inauspicious Star No 5. Since this inauspicious star is mostly negative, U.S. economy and stocks are likely to underperform most of the other regions. U.S. economy has enjoyed some revival due to increasing shale gas production lowering energy costs for manufacturing firms in the U.S. This has led to some claim that U.S. will be able to achieve U.S. energy independence by end of this decade. I suspect this claim to be put to test this year as there is a likelihood of some accident involving shale gas or oil production. It is possible that the accident might give credence to the environmental concerns surrounding shale production. Shale production (oil and gas) is likely to disappoint this year. After enjoying the benefit of cheap feedstock for last few years, petrochemical companies in U.S. are likely to face strong challenges this year as shale production disappoints and cost of feedstock rises. While the economy and certain industries (especially energy-related industries) are likely to disappoint, it is not all that bad for U.S. stocks because the Earth Element of the Star No 5 is favourable to the Metal Element of the Star No 6 (Earth produces Metal). In Feng Shui, when there is interaction of Earth and Metal Elements, there will be some wealth. (In Flying Star Feng Shui, U.S. is associated with Star No 6 because of its Northwest location).
Asian equities performance to be highly volatile
As for Asian equities, North Asian markets (Greater China, Korea, and Japan) are likely to enjoy a strong upside, at least initially. The Flying Stars present in Northeast in 2014 are Period Star No 2, Annual Star No 7 and Original Star No 8. This is an interesting combination. The Earth and Metal Elements of the former two stars guarantee some kind of wealth but since both stars are regarded as inauspicious, it is likely that any wealth that is made will be subsequently lost (robbed - Star No 7 represents robbery). The combination is also an inauspicious Fire Element, but since "Fire" enhances the Earth Element of the highly auspicious Star No 8, the final outcome might yet be neutral. My interpretation is that these stock markets are likely to enjoy a quick, sudden but powerful rally (indices are likely to go up by double-digit in a short span of time). However, most of the gains will be eroded away upon a global stock market correction or due to concerns on internal Chinese politics or heightened geopolitical tensions between China and Japan (or between North and South Korea). Political conflict (internal or external) in that region is likely to be heightened next year due to the presence of Star No 7. If there is no major financial crisis (unlikely next year), the returns are likely to be positive. The magnitude will, of course, depend on the pace of U.S. Fed tapering of bond purchases. Regardless of Feng Shui, quantitative easing affects the absolute price level of all assets.
European equities to perform steadily well
As for the European markets, they are likely to do well due to the presence of the auspicious Star No 9 visiting the North (most of European countries are located in North) where the Period Star No 4 is present. Stars No 4 and 9 is an auspicious combination (unlike the combination of 2 and 7) and the combination produces metal which in turn strengthens the Water Element of the North. While this is a productive cycle of element interaction, the positivity is not wealth-related unlike the star combination that North Asia enjoys. My suspicion is that European markets are likely to do even better than most Asian stock markets though I cannot be sure. However, it is my strong conviction that both markets are likely to outperform U.S. stocks in 2014.
Commodities to regain investors' favour
Third, commodity prices are likely to perform better this year, compared to last year. Energy prices (crude oil and natural gas) are likely to average higher in 2014 as the global economy recovers. In particular, natural gas prices appeared to have bottomed out in 2012 and are likely to enjoy a strong surge in 2014. However, energy is unlikely to be the strongest performer within the commodity sector in 2014 as they will be outshined by the metals (base and precious metals). In the last few years, most metal prices have taken a bad hit and this year (2013) witnessed a rout in gold and silver that left many investors still feeling the pain. Why am I so bullish on the metals in 2014?
Gold bottomed in 2013 and silver to outperform strongly in 2014
First, the South, North, West and Northeast regions have auspicious combinations of Stars present in 2014. As many countries in the South, West and Northeast (notably China) are major producers of metals, the positive influence of these stars are likely to beneficial to the metals. Within the previous metals segment, silver is likely to be the best performer. As global economy recovers, demand for these silver will outweigh the demand for gold. From Feng Shui perspective, the Star No 2 and No 7 combination in the Northeast (where China is the largest gold producer and second largest producer of silver) is more beneficial for silver than gold. In the South where South Africa is a major platinum and gold producer, the auspicious Star No 8 will bring great wealth to the countries located there. The most auspicious combination is, however, Stars No 1 and No 6 in the West. Many countries located in this region, Mexico and Peru to name a few, are major producers of silver and copper.
Copper could benefit from natural disaster in Chile
Copper tends to do well in an improving economy and correlates very well with silver. As China is also the second-largest largest producer of copper, copper will also be a beneficiary of the Star Nos 2 and No 7 combination. Chile (located in the Southwest) is the biggest producing country of copper. However, Chile might not be able to benefit as much from the strong copper price. In current Period 8, this country is very vulnerable to earthquakes (please see
Feng Shui and Japan Earthquake and Tsunami 2011). In 2014, Star No 1 will visit Southwest. The clash between Earth and Water Element brings up the possibility of an Earthquake and/or Tsunami, similar to what happened in Japan in 2011. Of course, it doesn't mean that a similar disaster will definitely befall Chile (or Argentina) in 2014. Feng Shui is not perfect when applied prospectively. Moreover, in 2015 (please see my posting on
Feng Shui and Stock Market 2015), the chances of these countries experiencing a fire and/or earth disaster (such drought, volcano eruption and earthquake) are even higher than in 2014. And in 2016, the probability of a major earthquake is equally high. Thus if Chile were to avoid another earthquake/tsunami in 2014, the chances of a natural disaster dominating headlines happening in the next two years are extremely high. This means that investors betting on a major disruption of copper production in Chile over next three years have odds heavily on their side.
Soft commodities to perform well
The outlook for soft commodities (particularly coffee, grains, and sugar) is also favourable. Columbia, Venezuela and parts of Brazil are located in West and are likely to benefit from the stronger soft commodity prices in 2014 as a result of the highly auspicious Stars No 1 and No 6 combination. Moreover, the Earth and Water combination in Southwest (Argentina, Chile and southern Brazil) introduces the possibility of a major flood in the region. If a major flood happens, crop production is likely to be adversely affected. Argentina and Brazil are major producers of grains, especially soybeans. My suspicion is that a major flood might inflict Brazil or Argentina, leading to a run-up in soybean prices. Soybean oil is likely outperform other edible oil like palm oil.
Cocoa, coffee, cotton and sugar are commodities that are likely to perform well in 2014. As the European economy continues to recover, demand for cocoa is likely to be strong. Cotton will benefit from China's economic pickup as well as the Wood Element of Star No 4. Coffee and sugar will have a run-up if there is a flood disrupting production in Brazil.
US bonds likely to underperform; Emerging market currencies to shine
I also need to mention fixed income and currencies as matter of completeness. Fixed income and currencies are considered the most "paper" (Yang) of all paper assets. In a year when hard assets (Yin) dominates, they are unlikely to do well. Therefore, U.S. bonds and developed market currencies (especially the U.S.) are unlikely to have a good year. Currencies that will do well in 2014 are mostly the Latin American currencies and the South African Rand.
7 3
4
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South
3 8
9
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5 1
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6 2
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8 4
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1 6
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2 7
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4 9
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9 5
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L:Period Star; Ctr - Original Star; R- Annual Star
Summary
In summary, my 2014 forecast based on Flying Star Feng Shui is as follows:
(1) Real estate boom is several countries are unlikely to perform as well as in previous years. REITs might continue to underperform within stocks.
(2) Within equities, U.S. stocks are likely to be main underperformers. European and North Asian stocks will fare better.
(3) Within commodities, metals and soft commodities stood out. Metals such as silver and copper are likely to be the strongest performer. Gold bottomed out this year (2013) but will likely be a laggard in 2014. Soft commodities will be strong performers as well, with soybeans, coffee, cotton and sugar among the better performers.
(4) Developed market bonds and currencies are unlikely to perform well in 2014.
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