*Official* Shiny Things club

[CookieMonsta88]

I'm gonna consolidate these two because they're basically asking the same question underneath.

If what you have is a stream of cash coming in monthly (say it's your chunk of your salary that you've dedicated to investment), then you should just invest that every month. That's called "dollar-cost averaging", and it's a good idea. You don't try to pick what time of the month is the cheapest - you just invest the same amount every month, regularly, and the times you buy high will be offset by the times you buy low.

If you have a lump sum to invest, then the best thing to do is to just dump it all in at once. There are a couple of provisos to that, though:
1) The market-maker in A35 usually isn't there for more than about $5,000. If you want to do more than that, you'll need to pay the offer; wait a few minutes for it to reload; and pay it again. (I really hate that I have to give this sort of advice to retail investors. A35 is the most boring ETF in the world, it's basically a bunch of SGS, it should be easy to make a market in it with a half-cent spread. Any enterprising coders out there at a brokerage with good HFT infrastructure feel like making a market in A35? You'll be doing a public service, and you'll see bucketloads of flow, I guarantee you.)
2) More importantly, you might be worried about buying high and having buyers' remorse. The easiest way around this is to split your lump sum into three parts, and invest one part each month until you're fully invested. That way, if the stock goes up, at least you've bought some; and if the stock goes down, you've still got ammo to buy some more at lower prices.



No, I'm a product manager - my coding skills are not sufficiently 1337, I can read code but not really write it. (Product management is actually a great next step for people looking to break from finance but still use their domain knowledge; you can use your user knowledge to shape the way the software develops, and if you have some basic technical skills you'll be able to communicate with the engineers on their terms as well as communicating with customers and sales staff on their terms.)

And I'm very early thirties.



So I don't actually like the permanent portfolio idea very much. It's done very well in the last 15 years or so, because gold and bonds have been on a tear; and I like that it requires yearly rebalancing as well. But it's got a few major problems with it:
1) Gold is an entirely unproductive asset, and I think big allocations of it (like the 25% that the permanent portfolio recommends) are going to be a huge drag on any portfolio. It doesn't throw off yield, and if it doesn't deliver capital gains then it's just sitting in your portfolio depreciating.
2) The portfolio as a whole is massively short interest rates. Gold, cash and long bonds are all direct or indirect bets on interest rates going down. In an environment of rising interest rates (like the one we're headed for in a few years), this portfolio is going to dramatically underperform.
3) A 50% allocation between bonds and cash is going to struggle to outperform inflation in the long run (especially if you're in Singapore, where real interest rates seem to be chronically negative). And don't say "but gold is an inflation hedge!" - over the long term, gold matches inflation, it doesn't outperform it. Stocks are a much better inflation hedge; over the very long term, gold returns 0% inflation-adjusted, but stocks return 5-7% inflation-adjusted.

I think a 60-40 stocks-bonds mix (or the old "110 minus your age") is a much better bet if you want to retire on that money. If you really must have some of the yellow stuff in your portfolio, 2-5% is fine, but don't expect it to do anything spectacular for your retirement returns; frankly I think it's going to print $600 before it prints $2000.



Depends on the role. Product management, sales and presales, QA - none of these things need a comp sci degree. Heck, my bachelor's degree was in economics. (For that matter, if you don't mind hard work and you're comfortable with an entry-level-ish position, look for a QA role in a global firm - it is nightmarishly hard for firms to hire and retain QAs and testers, especially people with some domain knowledge.)



Nah, I just like shiny things.

Interesting in-depth analysis, I think I agree with ur analysis overall.

Just a curious question though, is it possible for a person with no industry experience like working for a bank or financial company and no degree in finance to become a proprietary trader, but got experience in trading

 

[Shiny Things]

I'm actually want to do like investing in Vanguard. Is it possible for someone in SG to do that? Like every month put in xxx amount of money to buy it (dollar averaging).

It seem interesting - (Betterment) something new to me.
Just wondering what's your take on it?

The Vanguard funds are available through the Flying Spaghetti Monster (ahem, I mean FSM), but the 0.5% platform fee they charge is kind of unacceptable. You're better off just using the ETFs that are available in Singapore. You have to do the dollar-cost averaging yourself, but with a Stanchart brokerage account it's pretty easy.

And Betterment is seriously a brilliant development for small investors; ditto for Wealthfront and all the other robo-advisors that are springing up like daisies over here in the USA. They're basically an automated version of the "110 minus your age" rule, with a few nifty features and a slick interface on top. Some enterprising techie should launch one over there in Singapore.

Just a curious question though, is it possible for a person with no industry experience like working for a bank or financial company and no degree in finance to become a proprietary trader, but got experience in trading

Yeah, but it's very difficult. The days of coming straight out of high school and getting hired as a desk clerk are long gone.

Basically, if you have a few years' audited track record (no big losses, minimal drawdowns, decent profits), you can try shopping yourself around to proprietary trading groups. I don't know much about that side of the industry, but seowgao here on the forums might be the right person to talk to.

 

[hysteriakx]

really appreciate your advice in the forums.

just a curious question: i know u said u left your trading job to work at a software firm to broaden your horizon but is the remuneration comparable to your trading job? if not then i guess the change in lifestyle is worth the opportunity cost?

secondly from your experience, have you noticed that the market is constantly evolving, requiring new strategies to generate alpha (eg. rise of hft/ago traders etc) . if so, where do the traders get their inspiration from? their research team or they constantly figure something out in their free time? i know some large mutual funds have inhouse professors in research universities doing the work for them. eg. dimensional fund advisor etc. also, it is sometimes different when you have such a large position that you move the markets and the strategy is no longer profitable? im not sure about the fx options market but surely the equity market has seen drastic changes in the last 20years?

oh and lastly, do you mind sharing the % allocation in asset classes for your portfolio? i know u have a sizable chunk in passive equity/bond portfolio but surely you would have tried to generate greater returns through active management, coming from a trading background?

thanks

 

[WindBoi]

Different model portfolios over a long period of time. notice the similarities and the differences.

MSCI World index with dividend reinvested over rolling 20, 15, 10 , 5 years period > MSCI World rolling returns over 20,15,10, 5 years net of dividends reinvested | Investment Moats - Stock Market Investing

Standard Chartered Online Trading removing the 0.5% stamp duty on specific ETF listed on London Stock Exchange. Here is a sample statement of a purchase of VWRD the Vanguard FTSE All World ETF > Standard Chartered Online Trading DID Removed 0.5% UK Stamp Duty From Certain Exchange Traded Fund (ETF) | Investment Moats - Stock Market Investing

Some information on Lion Global Inifnity Index Fund > The Global Stocks Index Fund in Singapore–Infinity Global Stock Index Fund | Investment Moats - Stock Market Investing

 

[CookieMonsta88]

The Vanguard funds are available through the Flying Spaghetti Monster (ahem, I mean FSM), but the 0.5% platform fee they charge is kind of unacceptable. You're better off just using the ETFs that are available in Singapore. You have to do the dollar-cost averaging yourself, but with a Stanchart brokerage account it's pretty easy.

And Betterment is seriously a brilliant development for small investors; ditto for Wealthfront and all the other robo-advisors that are springing up like daisies over here in the USA. They're basically an automated version of the "110 minus your age" rule, with a few nifty features and a slick interface on top. Some enterprising techie should launch one over there in Singapore.



Yeah, but it's very difficult. The days of coming straight out of high school and getting hired as a desk clerk are long gone.

Basically, if you have a few years' audited track record (no big losses, minimal drawdowns, decent profits), you can try shopping yourself around to proprietary trading groups. I don't know much about that side of the industry, but seowgao here on the forums might be the right person to talk to.

hmm, ok, so then its easier to just trade my own account then

what do u think of a strategy which is part investing part trading?

that is as u said the 60 stocks 40 bonds mix, the 60 stock allocated is further differentiated into 20% for covered calls and 80% for investments, so the 20% with covered calls are use as a way to bring basis down and then use the premium generated to further accumulate more stocks, sort of a self-directed drip program with premium replacing dividends, so that the portfolio is self-financing?

 

[tiny]

Hi Shiny Things, how long do you think will Gold and Silver spot prices crash and burn? Until 2016?

 

[wahkao3]

Different model portfolios over a long period of time. notice the similarities and the differences.

http://www.investmentmoats.com/pass...in-singaporeinfinity-global-stock-index-fund/

i like risk P the most. Can tell me more about risk P?

 

[wahkao3]

MSCI World index with dividend reinvested over rolling 20, 15, 10 , 5 years period > MSCI World rolling returns over 20,15,10, 5 years net of dividends reinvested | Investment Moats - Stock Market Investing

Rm market return = 8% ?

 

[Shiny Things]

what do u think of a strategy which is part investing part trading?

that is as u said the 60 stocks 40 bonds mix, the 60 stock allocated is further differentiated into 20% for covered calls and 80% for investments, so the 20% with covered calls are use as a way to bring basis down and then use the premium generated to further accumulate more stocks, sort of a self-directed drip program with premium replacing dividends, so that the portfolio is self-financing?

Weeelll... I'm not really a fan of covered-call strategies. The idea of having my positions called away doesn't square very well with the idea that I want to be in these things for 20 or 30 years. They're fine if you specifically want to sell the stocks, but I don't.

(I've been known to sell puts if I've got a stock I want to buy and I'm time-insensitive about when I buy it. But selling covered calls on a stock you want to hold for decades is just a recipe for expensive churning.)

Hi Shiny Things, how long do you think will Gold and Silver spot prices crash and burn? Until 2016?

Well, after the 1980 peak, gold didn't get back to 800 bucks an ounce for about 25 years.

Seriously though - I might think about buying some when it gets back down to 500 or 600.

just a curious question: i know u said u left your trading job to work at a software firm to broaden your horizon but is the remuneration comparable to your trading job? if not then i guess the change in lifestyle is worth the opportunity cost?

Oh god no. The remuneration's not even within shouting distance. Between the higher taxes over here in Cali and the lower pay, I took about a 60% cut in post-tax comp when I left my trading job.

But it was SO WORTH IT. San Francisco is fantastic. I've never regretted it for a moment.

secondly from your experience, have you noticed that the market is constantly evolving, requiring new strategies to generate alpha (eg. rise of hft/ago traders etc) (snip a bunch of stuff_

Yeah. Traders tend to get their ideas from the research teams and the quants these days; a lot of the development that's being done is coming from the brains on the staff. Traders are increasingly being replaced with computers, even in higher-touch stuff like FX options.

oh and lastly, do you mind sharing the % allocation in asset classes for your portfolio? i know u have a sizable chunk in passive equity/bond portfolio but surely you would have tried to generate greater returns through active management, coming from a trading background?

Sure. I'm 31, so I'm 79-21 stocks-bonds, and I occasionally risk about 2%-5% of the portfolio on prop trades (never more than 2% of the portfolio on any one trade, though).

The only thing I've got on the books at the moment is a short eurodollar call position - during the huge bond blowup two weeks ago, some muppet was paying up huge for Dec '16 99.50 eurodollar calls, which is like saying "there's a 30% chance that the first Fed hike won't be until 2017". That's pretty obviously the wrong price, and he was a panic buyer trying to stop himself out, so I sold him a small clip and I'll sit on them until they mature. It's good to have a long time horizon.

 

[klavier]

And Klavier - investing for the long term is pretty easy. I run a little consulting biz on the side, giving hedging and investment advice to large investors and corporations who need independent advice, and usually I charge for this sort of advice, but for small investors the solution is dead easy:
* Put your money in a mix of low-cost stock and bond ETFs - for Singaporean investors, that's ES3 and A35, respectively; make the percentages equal to "110 minus your age" in stocks, and the rest in bonds;
* Once a year, at the same time every year, rebalance your money - buy and sell to bring your stocks and bonds back to that "110 minus your age" proportion;
* Go to the pub.

You can ignore all the trendy cr@p out there like commodities, structured deposits, contra trading, forex, robo-trade-bots, blah blah blah, all of it is worse than a simple stocks-bonds mix. Just do this and you'll be ahead of nearly everyone else in the markets.

Sure. I'm 31, so I'm 79-21 stocks-bonds, and I occasionally risk about 2%-5% of the portfolio on prop trades (never more than 2% of the portfolio on any one trade, though).

Thanks Shiny Things.
I have finally decided to add ETFs into my watchlist. Currently trading with POEMS even though I think there are better platform out there. Did not bother to change because I do not trade actively since I find STI to be rather sterile.

Quick question, you mentioned in the first quote here that I should look for a mix of low cost stocks + bond ETFs.. I assume your low cost stocks here refer to ES3? Meaning I should look only at ETFs and not individual stocks in case I prefer to do passive trading?

 

[Shiny Things]

Quick question, you mentioned in the first quote here that I should look for a mix of low cost stocks + bond ETFs.. I assume your low cost stocks here refer to ES3? Meaning I should look only at ETFs and not individual stocks in case I prefer to do passive trading?

Yep, correct. If you're just buying-and-holding, you're better off with an ETF that holds the entire index than trying to pick individual stocks. Leave the stockpicking to people who make a career out of it; you've got better things to do with your time.

 

[sgdividends]

Hi Shiny,
Regarding A35, I notice that the " dividends" keep increasing from 2008 onwards and the A35 price also keep increasing.

As its a bond fund instead of a direct bond purchase, is there still an inverse relationship between yield and price?


a35 has underlying singapore government bonds, how is it related to Sibor?Sibor looks flat from 2009 till about now.


I know nuts about bonds. Just wondering how it works basically.

Thanks and I have been learning from u a lot

 

[sgdividends]

I remembered someone mentioning the low liquidity of A35 and es3, and if transacting huge lots, it will move the price. Shiny, u mentioned about market makers standing to buy or sell.( pls correct me if I qouted u wrongly)

A question: since ETF is basically replicating an index made up of many companies which has huge volumes, how can it be pushed up or down?
Can one push up the etf es3 price till 4.00 but the sti index still at 3120 just by him buying in huge lots?
Unless the ETF company turns around to buy the individual component stocks which cause the sti index to rise till 4000.

So actually, low liquidity is not an issue at all for efts right.

 

[WindBoi]

Hi Shiny,
Regarding A35, I notice that the " dividends" keep increasing from 2008 onwards and the A35 price also keep increasing.

As its a bond fund instead of a direct bond purchase, is there still an inverse relationship between yield and price?


a35 has underlying singapore government bonds, how is it related to Sibor?Sibor looks flat from 2009 till about now.


I know nuts about bonds. Just wondering how it works basically.

Thanks and I have been learning from u a lot

this may help > Will you lose money on a bond ETF in a rising interest rate environment? | Investment Moats - Stock Market Investing

 

[WindBoi]

I remembered someone mentioning the low liquidity of A35 and es3, and if transacting huge lots, it will move the price. Shiny, u mentioned about market makers standing to buy or sell.( pls correct me if I qouted u wrongly)

A question: since ETF is basically replicating an index made up of many companies which has huge volumes, how can it be pushed up or down?
Can one push up the etf es3 price till 4.00 but the sti index still at 3120 just by him buying in huge lots?
Unless the ETF company turns around to buy the individual component stocks which cause the sti index to rise till 4000.

So actually, low liquidity is not an issue at all for efts right.

here is the return since 2005 which is 9 years. compounded average growth 9 years 2.86% per annum

 

[sgdividends]

here is the return since 2005 which is 9 years. compounded average growth 9 years 2.86% per annum

Thanks drizzt. Love your blog and have been reading it religiously.

 

[sgdividends]

this may help > Will you lose money on a bond ETF in a rising interest rate environment? | Investment Moats - Stock Market Investing

Ok I got it. The game changer is this:
They selling bonds less than 1 year maturity and buying longer dated bonds.
No wonder the price keeps increasing irregardless ( nearly) of the interest rate environment and the " dividends" also keep increasing ( based on historical)

Which begs another question.
Why would any seller and buyer allow them (iboxx ( creator of index) not Nikko as Nikko is just replicating ) to do that at their expense? I'm seeing this as a zero sum game.

I mean this a35 thing is wonderful with all the upsides of a bond without its downside as regards to changes in interest rate environment and risk of default as it,s singapore government .

 

[Shiny Things]

Hi Shiny,
Regarding A35, I notice that the " dividends" keep increasing from 2008 onwards and the A35 price also keep increasing.

As its a bond fund instead of a direct bond purchase, is there still an inverse relationship between yield and price?

There sort of is. If interest rates go up, the price of the fund will go down (because the price of the bonds it owns will go down). Over the long term, the yield will go up, because the fund will be able to reinvest its maturing bonds at those higher yields, but in the short term, yes, the bond fund still loses money when rates go up.

a35 has underlying singapore government bonds, how is it related to Sibor?Sibor looks flat from 2009 till about now.

SGS yields and SIBOR are two different things. SIBOR is a short-end (3-month) yield; Singapore govvies generally have a longer maturity, so they yield more, and those longer-end yields move somewhat independently of the short-end.

I remembered someone mentioning the low liquidity of A35 and es3, and if transacting huge lots, it will move the price. Shiny, u mentioned about market makers standing to buy or sell.( pls correct me if I qouted u wrongly)

A question: since ETF is basically replicating an index made up of many companies which has huge volumes, how can it be pushed up or down?
Can one push up the etf es3 price till 4.00 but the sti index still at 3120 just by him buying in huge lots?
Unless the ETF company turns around to buy the individual component stocks which cause the sti index to rise till 4000.

You've got it - you just described exactly what will happen. You could, if you were particularly bored and had a lot of money, buy so much of the STI ETF that you pushed the price up to $4 - but then the market-maker would turn around, buy the component stocks, and push the STI index up in line with the ETF.

So actually, low liquidity is not an issue at all for efts right.

Exactly right. If the market-maker is competent, the only limit to an ETF's liquidity is the liquidity of the underlying market. (And the market-maker's internal risk limits, as we found out when Credit Suisse ran out of limits in TVIX a couple years ago; Matt Levine is, as always, the only person you need to read; click this, then click this.)

 

[archcherub]

So when I say QA, I'm talking about testing. And hiring testers is difficult - it's tough work; it's not glamorous; and you generally need to teach your testers about the logic behind the software you're building. Let's say your firm's product is a core-banking system: you need to teach your testers about the products that that banking system supports, about how accounting works, about how cashflows work; otherwise, they won't understand what the system does, and they'll just be robots running test cases, which i

If you have some banking or finance knowledge, and you have enough of a technical background that you wouldn't look confused if an engineer says to you "so just stick this JAR file in your classpath and run these SQL scripts", then you're a valuable asset to a financial software firm. You could come on to a testing team and already understand what the software does, and what these test cases you're running are actually supposed to test.

(The same goes for any other field of knowledge: a graphic designer testing graphics software; a biologist testing bioinformatics software; the key is to have that cross-domain knowledge of a little bit of your field and a little bit of software development.)

If you think you've got what it takes, then sniff around your network in your industry, or talk to your software vendors and see if they're hiring.

oh dear, there goes my ticket to USA.
not much financial background (im not going to kid myself to say my insurance background is financial; its not, its just plain sales)
nor any technical background. the best i can do is to do html on blogger.

frankly california is a great place to live. I love it as much as I hate new york (hate it then, still hate it now)
the climate is ideal, the people are great, and the variety of food awesome, and the scenery, well-worth it.

Weeelll... I'm not really a fan of covered-call strategies. The idea of having my positions called away doesn't square very well with the idea that I want to be in these things for 20 or 30 years. They're fine if you specifically want to sell the stocks, but I don't.
(I've been known to sell puts if I've got a stock I want to buy and I'm time-insensitive about when I buy it. But selling covered calls on a stock you want to hold for decades is just a recipe for expensive churning.)

Well selling covered calls, for far away prices, that expiry shortly, may be good to get the premiums. It may be a small premium, but probably enough to pay for starbucks, just to enjoy any sudden short spike in prices that is temporary.
but i guess the extra effort may not be worth it if its just a small cup of kopi-o....

Well, after the 1980 peak, gold didn't get back to 800 bucks an ounce for about 25 years.
Seriously though - I might think about buying some when it gets back down to 500 or 600.

if gold goes to 600, i would be very surprised..
but happy. i can finally afford to buy a golden tap.

Oh god no. The remuneration's not even within shouting distance. Between the higher taxes over here in Cali and the lower pay, I took about a 60% cut in post-tax comp when I left my trading job.
But it was SO WORTH IT. San Francisco is fantastic. I've never regretted it for a moment.

totally agree... but i guess the higher costs of living is eating out ur pockets too.

extra bonus: las vegas is near...

 

[yukari_san3]

Shiny,

Let me guess you were from CS