*Official* Shiny Things club - Part 2

[polyglob]

*newbie question,pardon me*

wah i was checking the price for IWDA at SCB. buy at $53 done at $60. $7 difference. that's a lot is it normal?
usually how you guys buy based on the above price?

You mean you put in buy order for $53 and you actually bought at $60?

For SCB, unless you subscribe to their live feed, their prices are 20 min behind.

 

[YouHeypiCanLiao]

You mean you put in buy order for $53 and you actually bought at $60?

For SCB, unless you subscribe to their live feed, their prices are 20 min behind.

I didn't buy since the market has yet to open.
what I meant there is $7 difference.

so how do you guys approach this? Just buy at $60 when market opens?

 

[kram62]

It's been months since IWDA price was $53. No way to get that price now. I think you are seeing 53 because someone put a bid that low just before market closed Friday. Also see a bid of 53 from another app. But I don't think that is gonna happen.

Just wait until market opens, check the price on Google, and put a LIMIT BUY order at or slightly above the price if you want to buy IWDA. Don't hope getting it lower than 59 unless market moves significantly down today. Even then, it would not been anywhere near 53 unless we experience a real market crash.

 

[engkeat.yeo]

Hi ST, is it a good idea to cover China Market as well, such as ishares China large-cap (FXI)?
Thanks.

 

[converse2010]

Hi all, still trying to rebalance my portfolio. Despite reading the book, still not too sure how can I invest moving forward.

Currently, my portfolio consist of 100% G3B. Coming January, I would like to start on IWDA.

How should I allocate it accordingly?

Thanks

 

[flowerpalms]

What is your age and monthly investment?

Hi all, still trying to rebalance my portfolio. Despite reading the book, still not too sure how can I invest moving forward.

Currently, my portfolio consist of 100% G3B. Coming January, I would like to start on IWDA.

How should I allocate it accordingly?

Thanks

 

[YouHeypiCanLiao]

It's been months since IWDA price was $53. No way to get that price now. I think you are seeing 53 because someone put a bid that low just before market closed Friday. Also see a bid of 53 from another app. But I don't think that is gonna happen.

Just wait until market opens, check the price on Google, and put a LIMIT BUY order at or slightly above the price if you want to buy IWDA. Don't hope getting it lower than 59 unless market moves significantly down today. Even then, it would not been anywhere near 53 unless we experience a real market crash.

assuming that I want to buy early of the week.

I need to convert SGD => USD when market opens late at night( after 11pm ) and buy the next day at LSE ( after 4pm ) right?

 

[Shiny Things]

Hi ST, is it a good idea to cover China Market as well, such as ishares China large-cap (FXI)?
Thanks.

No.

You don’t want to overweight anything - stock, sector, country, whatever - unless you have a good reason for it. It makes sense to overweight Singapore, because you live there and you’re going to retire there (presumably); but you don’t have any reason to overweight China. You certainly don’t have any informational advantage over professional traders.

Separately: “But China is the future!” is a meme we get here about once a week. The problem is that that meme’s been doing the rounds since literally 2001. “China is the future” already happened: at this point, China is a well-established developing economy, that’s also struggling under the weight of a graying population and frankly hilarious bad debt problems in its banks and its local governments.

*newbie question,pardon me*

wah i was checking the price for IWDA at SCB. buy at $53 done at $60. $7 difference. that's a lot is it normal?
usually how you guys buy based on the above price?

I think you’ve got some dodgy data. The price for IWDA is $61.27 as of the London close.

Anyway, the right way to do it is to wait for the London stock exchange to open (in the afternoon Singapore time); look up the last-done price on Google Finance or wherever; then add like 1% to that price and put that as your limit price on your buy order. That’ll make sure you get done straight away.

It's nearing year-end and am looking to top up $15k into my SRS.
With the SRS funds, I'm thinking to just lump sum into MBH (I'm separately doing DCA for IWDA with cash).

Any potential pitfalls with this? Thanks!

If you've already got an allocation to ES3, then yeah, that seems fine.

Price of MBH is steadily increasing past few months. I wonder if this is normal/sustainable?

It's totally normal - especially for bonds and bond ETFs, where the price naturally ticks up as the bonds accrue interest.

hi ST,

Right, let's get something straight. I think the question you're trying to ask is "are constant injections of liquidity by central banks—aka 'quantitative easing'—causing stocks to become overvalued? And if so, should I avoid investing in stocks?".

The answer to both of those questions is "no".

Stocks around the world are not overvalued. There are certainly some markets that are expensive (lookin’ at you, India!), but the US—the one you seem to be asking about—is right in the middle of its long-term valuation range; and some markets (like Europe and EMs) look quite cheap, though that tends to be for structural reasons that might take a long time to work out.

And if the answer to the first question is “no”, the answer to the second question is “no” as well.

Ray Dalio announced that he's shorting it with a 1b usd fund.

He did not announce that.

The Wall Street Journal published an article saying that Bridgewater had bought $1.5 billion of puts on the S&P 500 and the Eurostoxx 50 indices, and Ray Dalio actually said that the Wall Street Journal report was wrong.

(I suspect the actual truth is that Bridgewater did buy a bunch of equity index puts, but that didn't make them short, it just made them "less long".)

2.1. what do you think of the 2008 till present QE?
do you think we would follow a similar trajectory just like what Japan did as they did their first national QE to save every japanese biz in the 90s' which resulted in an eventual bubble burst. They never really recovered from it and has gone through decades of deflation.

Who's "we"? I think you're confusing the US and Singapore.

Also you're getting Japanese economic history completely the wrong way around. The Japanese bubble burst at the end of 1989; the bank of Japan began purchasing assets after the bubble burst.

And Japan's economic stagnation is due in very large part to demography: their population is shrinking and graying, and they're not particularly open to immigration, both of which are bad for the economy. The demographics of the US look absolutely nothing like Japan.

2.2. With all these liquidity, do you think this is the reason why we have the longest bull-run?

No. I think "the reason why we have the longest bull run"—again, assuming you're talking about US markets—is that the US economy has been growing slowly and stably ever since mid-2009. The 2010s are the first decade in American history where America didn't once fall into recession.

3. Do you think that we will run into the liquidity trap? So essentially, what is necessary is inflation and a sharp raise in interest rates instead of a flat, near-zero at the Fed side of things?

"A sharp rise in interest rates"? No, that's absolute lunacy.

Again, assuming you’re talking about the US economy, it’s doing relatively well: growth is steady and inflation is low. I suspect it could even grow a bit faster, and the Fed wouldn’t be at all mad to see higher wage growth and slightly higher inflation.

But a sharp rise in interest rates won’t help that—it would cripple it. The policy mix that the US needs right now is low interest rates (which they have), loose fiscal policy (which they have), and a meaningful passthrough to wages (which they don’t have).

Hi all, still trying to rebalance my portfolio. Despite reading the book, still not too sure how can I invest moving forward.

Currently, my portfolio consist of 100% G3B. Coming January, I would like to start on IWDA.

How should I allocate it accordingly?

Thanks

Don’t forget MBH as well. But all you need to do is buy IWDA and MBH each month instead of G3B, until you get to your target percentages.

 

[Ilovemathstutor]

hi ST.

- "But a sharp rise in interest rates won’t help that—it would cripple it. The policy mix that the US needs right now is low interest rates (which they have), loose fiscal policy (which they have), and a meaningful passthrough to wages (which they don’t have)."

do you mean meaningful passthrough to wages as the effect of increasing minimum wage increase prices?

- yes, you are right, I was looking and referring to US's economy and not SG's in my previous post to you.


- "A sharp rise in interest rates"?

I was thinking that closer global trade ties and a rise in interest rate would ensure we absorb all that liquidity in the market as much as possible. That way, we will ensure that we do not become in the japan / europe state where they have negative interest rates to stimulate growth / expenditure?

thanks for your insights, as usual.

 

[Shiny Things]

hi ST.
- "A sharp rise in interest rates"?

I was thinking that closer global trade ties and a rise in interest rate would ensure we absorb all that liquidity in the market as much as possible.

I chopped off a lot of your post because you seem to be going down side paths and coming up with more and more things that are either wrong or irrelevant; and I want to make sure we focus on the core point of your discussion.

Firstly, on this point: you've got cause and effect the wrong way around. Interest rates are (handwaving away a lot of stuff) the price of money. Withdrawing liquidity causes higher interest rates; not the other way around.

But the main point, from your original post, is that liquidity injections have very little do with stock prices; and freaking out about "what happens when liquidity gets withdrawn?!" is not a good reason to panic about stocks.

Since we're talking about the US: the US stopped quantitative easing in October 2014. The S&P 500 is up 50% plus dividends since then.

It's up nearly the same amount since they started hiking rates in December 2015.

And it's up 20% plus dividends in the two years since the Fed started actively quantitatively-tightening.

 

[Brown24]

Hi ST,

A newbie question here.
I want to do DCA with monthly RSP usd200-300 on IWDA, but the min brokerage fees is quite high for my quantum.
I'm thinking to use FSMOne to buy the VT in RSP (brokerage fees usd1 plus dividend handling fees usd 2.5). What is yr opinion on this approach? Thanks

 

[cassowary18]

Hi ST,

A newbie question here.
I want to do DCA with monthly RSP usd200-300 on IWDA, but the min brokerage fees is quite high for my quantum.
I'm thinking to use FSMOne to buy the VT in RSP (brokerage fees usd1 plus dividend handling fees usd 2.5). What is yr opinion on this approach? Thanks

VT is not tax appropriate because of the 30% dividend withholding tax, whereas IWDA (or the Irish equivalent of VT, VWRA/VWRD) is only subject to 15% dividend withholding tax.

If brokerage fees are an issue, may I suggest "batching up" for a few months then buying a large amount at one shot using Standard Chartered?

 

[Brown24]

VT is not tax appropriate because of the 30% dividend withholding tax, whereas IWDA (or the Irish equivalent of VT, VWRA/VWRD) is only subject to 15% dividend withholding tax.

If brokerage fees are an issue, may I suggest "batching up" for a few months then buying a large amount at one shot using Standard Chartered?

If I were to do that, I will need to batch 10 months and kind of losing the advantage of DCA. that's my major concern especially price is at the historical peak now

 

[kram62]

If I were to do that, I will need to batch 10 months and kind of losing the advantage of DCA. that's my major concern especially price is at the historical peak now

Well there's no free lunch. Hard to have both small monthly investment amounts and very low fees. There are solutions that allow for small monthly amounts, roboadvisors are one example, but they all add a layer of fees too (not on transactions but on AUM instead).

 

[kram62]

If I were to do that, I will need to batch 10 months and kind of losing the advantage of DCA. that's my major concern especially price is at the historical peak now

Thinking about it, even with the 10 USD min activity fee of IBKR, and low *monthly* investments, as long as you *really* want to do *monthly* that might be one of the cheapest options. Basically the other fees will be inside the 10 USD per month, and you will have very competitive conversion rates as well. So all in all you would pay 120 usd per year nothing more nothing less. You can compare this annual cost with other options (to do a fair comparison, don't forget to count *all* the fees and hidden costs like not so competitive conversion rates, annual AUM fee, and others...).

If you don't do monthly but batch up by quarters, maybe ibkr loses the comparison but I didn't run the numbers.

 

[cassowary18]

If I were to do that, I will need to batch 10 months and kind of losing the advantage of DCA. that's my major concern especially price is at the historical peak now

Well you don't have to batch up for 10 months. 3 months is fine. Don't be penny wise and pound foolish.

 

[Ilovemathstutor]

I chopped off a lot of your post because you seem to be going down side paths .

thanks as always.

 

[converse2010]

Don’t forget MBH as well. But all you need to do is buy IWDA and MBH each month instead of G3B, until you get to your target percentages.

I'm 29 this year, planning to invest 750 via SCB.

May I know what will the ratio be, for IWDA and MBH respectively considering that I have existing G3B already?

 

[stu4rt86]

hi just wanna be sure abt the 10 usd commision thingy..

we dca 1000 into ibkr every month right.. so lets say i bought my first ibkr on the 10th of July... does it mean i must dca in by 10th of august or do they go by start of the month means start frm july first..

2ndly. the 1000 that is always being discussed here is in SGD right? not 1000 usd right?

 

[flowerpalms]

110-29= 71

G3b 35
Iwda 35
Mbh 30

I'm 29 this year, planning to invest 750 via SCB.

May I know what will the ratio be, for IWDA and MBH respectively considering that I have existing G3B already?