2020 market expectations and positioning

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yantao

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Need a quick advise.

My Citibank RM is offering 0.65% interests to leverage on my current investments.
She is recommending buying more bonds (-15% before margin call) since the market is going sidelines & equities is at all-time high.

Enough funds outside Citibank to cover the leverage, but will like to remain liquid for equities when the timing is right.

Is that a good advise?
 
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DukeCS33

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yantao said:
Need a quick advise.

My Citibank RM is offering 0.65% interests to leverage on my current investments.
She is recommending buying more bonds (-15% before margin call) since the market is going sidelines & equities is at all-time high.

Enough funds outside Citibank to cover the leverage, but will like to remain liquid for equities when the timing is right.

Is that a good advise?
Click to expand...

0.65% appears low and for how long? - what is the catch?

You can always apply your funds towards your investments and leverage it down the road when need. Why pay interests for it unless you can secure a better deposit rate on your spare cash.

You need to determine your optimal bond / equity mix. If equity market continues to rise, would your bond decline in value? And do you think that this is a market top or it could still run higher? The coronavirus barely dented the market rally so you have to make a call on this. Do not depend on RMs to make recommendations - they will only recommend instruments that make them the most commissions. Most of them are not Markets trained. They are only trained on how to pitch and sell current products and not wholistic solutions.
 
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yantao

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0.65% is promotional rate offered to selected RMs to their clients. Not sure for how long, but good question, i will ask.
She did mentioned about taking CHF/YEN loan for leverage, since both currencies are on a high and if it start to dip, it will benefit the leverage loan.
I am certainly clueless about how leveraged loan works.

I just want to keep some funds on the standby which i am deploy quickly.
Thinking of buying a property as well when the right one & price comes along.
My job requires me to travel ~80% of the time, hence no time to monitor and timezone difference are my constraints.

PIMCO Fixed Income Fund is give me around 4% per annual and by leveraging would provide ~6-7% after deducting leverage interest rates.
Totally agreed that RM are commission-driven & certainly earning from both leverage & unit trust sales charges.

I am on the fence whether to enter equities right now, already had some positions and thinking of exiting them.
Companies are issuing earnings warning due to delay in China manufacturing but the stock market are ignoring them and on a high. Not sure when and if the market will start to slow down.

DukeCS33 said:
0.65% appears low and for how long? - what is the catch?

You can always apply your funds towards your investments and leverage it down the road when need. Why pay interests for it unless you can secure a better deposit rate on your spare cash.

You need to determine your optimal bond / equity mix. If equity market continues to rise, would your bond decline in value? And do you think that this is a market top or it could still run higher? The coronavirus barely dented the market rally so you have to make a call on this. Do not depend on RMs to make recommendations - they will only recommend instruments that make them the most commissions. Most of them are not Markets trained. They are only trained on how to pitch and sell current products and not wholistic solutions.
Click to expand...
 
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DukeCS33

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yantao said:
0.65% is promotional rate offered to selected RMs to their clients. Not sure for how long, but good question, i will ask.
She did mentioned about taking CHF/YEN loan for leverage, since both currencies are on a high and if it start to dip, it will benefit the leverage loan.
I am certainly clueless about how leveraged loan works.

I just want to keep some funds on the standby which i am deploy quickly.
Thinking of buying a property as well when the right one & price comes along.
My job requires me to travel ~80% of the time, hence no time to monitor and timezone difference are my constraints.

PIMCO Fixed Income Fund is give me around 4% per annual and by leveraging would provide ~6-7% after deducting leverage interest rates.
Totally agreed that RM are commission-driven & certainly earning from both leverage & unit trust sales charges.

I am on the fence whether to enter equities right now, already had some positions and thinking of exiting them.
Companies are issuing earnings warning due to delay in China manufacturing but the stock market are ignoring them and on a high. Not sure when and if the market will start to slow down.
Click to expand...

I see... The catch maybe that the loan is in jpy or chf. You will have currency exposure and you risk losing more via fx then the interest rate saving.

My RM has given up selling me anything as I would dissect the structure and replicate it cheaper.

In any case, I share your concerns about China. But it is now a background concern in so far as we have ample official support and flush liquidity. I did take a short in SP and STI futures but covered them when price action appears to turn. Now I will trade very short term.
 
MrHighlander

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Damn it

Now converting USD to SGD will be so much more expensive

I only have about 70K USD converted
 
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yantao

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Haha, i do that as well.
Based on their recommendations, i buy enough from them and then self-service (one-time/RSP) on FSM for bulk of the investments.
Give them enough biz to keep them engaged.

But i am interested to explore in the leverage and low interests rate to boost my passive income (PIMCO Fixed Income ~4%) even more.

DukeCS33 said:
I see... The catch maybe that the loan is in jpy or chf. You will have currency exposure and you risk losing more via fx then the interest rate saving.

My RM has given up selling me anything as I would dissect the structure and replicate it cheaper.

In any case, I share your concerns about China. But it is now a background concern in so far as we have ample official support and flush liquidity. I did take a short in SP and STI futures but covered them when price action appears to turn. Now I will trade very short term.
Click to expand...
 
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