warning to all investors,the folly of the STI investor

[disavowed]

Amateur mistake to neglect dividends...sigh

 

[limster]

6 figure portfolio u say small!?

haiz why am i so poor,100k in my bank/stock portfolio i can hardly imagine.

http://forums.hardwarezone.com.sg/97463818-post46.html

Wahkao, I think you misread his post, "I can hardly imagine" doesn't mean he has a 6-figure portfolio. Unless he got other post where he says he got 6-figure portfolio, pls share link.

 

[highsulphur]

Why need to ascertain ts portfolio value in this discussion?

 

[limster]

Portfolio size and investing experience may be linked to the level of risk the investor/trader is taking.

It may also indicate that their portfolio may not be suitable for you because you may have a different profile.

It was the same for me. When my portfolio was smaller and I was younger (still got more years of working to earn salary to cover any losses), I also took more risk punting (lucky I also have NTUC Living policy as insurance).

As you get closer to retirement and your portfolio has grown, your risk profile changes.

 

[frenchbriefs]

Amateur mistake to neglect dividends...sigh

yes yes im a noob,but can we focus on the issue at hand?proving the superiority of the SPY vs the STI.

im not william bernstein,PHD so i dont have a whole bunch of charts and statistics and dots graphs to bring out.

 

[peterchan75]

Timing is everything.
If one bought STI ETF at less than $2 per share, then the capital gain takes care of everything. Plus, it gives dividend too.
http://www.spdrs.com.sg/doc/STI Dividend.pdf

It's hard to time the market, but no harm trying. If don't have the patient to wait, then just DCA.

 

[focus1974]

i believe in index passive investing and all that crap but mostly in the US market since the number of variety of goods on offer is so so much more and the quality so much better.

I repent....
even for individual blue chip stocks, the potential to grow sustainably with wide economic moats will be those from US of A.

Somehow, US companies have a proven history of successfully venturing out globally to diversify their income streams in terms of geographical locations.

not to mention, the liquidity of the blue chips is really really amazing..

just taking a look at the S&P 500 versus our STI 30 or even 100, i think we will know the answer to compounding wealth is the big markets like china, usa.


i was stu.pid enough to let the estate duties deter me in 2009...
but now .. i allocate a third of my equity allocation to USA, third to SGX ..and third to Australia/Hongkong.

Still no way to estate duties though... hope to sell before i die... of coz.. all bets are off if i die unexpectedly.. lol... though i heard from my rm... (she donno got experience the estate duties or not)... nominee account sell ... usually bank dont go report.. .. maybe she b.s me... ..dunno

 

[klarklar]

Counter-argument: because the STI's underperformed the SPX over the last few years, it's more likely to outperform the SPX over the next few years.

Even after the big rally of the last month or so, the STI's still trading about 12x trailing 12-month earnings. The S&P 500's trading at something like 19x projected 2015 earnings. At those prices you'd much rather own Singaporean stocks than US stocks - even though the STI is bank-heavy which means it'll inherently trade at a lower multiple.

How about a cheeky 5-year bet, because I know how much you like putting your money where your mouth is: STI total return index to outperform the S&P 500 total return index, even money.

Bigpelican, in answer to your question: if you specifically want to own the US stock market, buy VUSD off the London stock exchange. It's an S&P 500 ETF with rock-bottom management fees, and because it's Irish-domiciled you save a bit on dividend taxes.

Good advice!

 

[klarklar]

Counter-argument: because the STI's underperformed the SPX over the last few years, it's more likely to outperform the SPX over the next few years.

Even after the big rally of the last month or so, the STI's still trading about 12x trailing 12-month earnings. The S&P 500's trading at something like 19x projected 2015 earnings. At those prices you'd much rather own Singaporean stocks than US stocks - even though the STI is bank-heavy which means it'll inherently trade at a lower multiple.

How about a cheeky 5-year bet, because I know how much you like putting your money where your mouth is: STI total return index to outperform the S&P 500 total return index, even money.

Bigpelican, in answer to your question: if you specifically want to own the US stock market, buy VUSD off the London stock exchange. It's an S&P 500 ETF with rock-bottom management fees, and because it's Irish-domiciled you save a bit on dividend taxes.

Hi Shiny Things,

Does buying VUSD allow Singaporeans to escape the 30% withholding tax on dividends? Is that what you mean? Thanks.

 

[Johnpierpontmorgan]

Sti is too concentrated on financials, s&p500 has only ~16% in financials. Just comparing financial sector,s&p500 has prolly around 60-80financial firms, whereby sti, your betting on our three local banks. Not mentioning in my own bias view, SG is gg downhill with the current govt policies, as evidenced by widening inequality and dying middle class

I haven't have 1 es3/g3b but I got exposures to Singapore through other mixed etfs where SG has 10% allocation in that etf.

 

[Perisher]

Hi Shiny Things,

Does buying VUSD allow Singaporeans to escape the 30% withholding tax on dividends? Is that what you mean? Thanks.

Tax 15% only.

 

[klarklar]

Tax 15% only.

Still better than 30% any time.

 

[The Accountant]

exchange rate is irrelevant,if u started investing recently in the past few years,the exchange rate difference u get is small and insignificant,if u want to talk about the exchange rate back in 1990 or something,sure the USD might be down 30 or 40 percent,but the performance of the US stock market kick's SG stock market so hard in the last 25 years its like hitting a golf ball from Houstan that landed somewhere in China.

index investors are long term investors so we should be looking at time periods of 10 to 20 years at least.

To me exchange rate is relevant, I'll explain it in a while. i actually made my own set of data to compare STI against S&P. Unfortunately it only starts from 2002, the date STI ETF starts trading. what i found out after factoring exchange rate, is that the recent 10 year performance, STI beats the S&P by a small margin. (and we haven even talk about costs since S&P is gonna be expensive after tax.)

But i'm gonna extend that further by taking on an alternative, the MSCI Singapore Index.

reference: Singapore historical return.

S&P total return

First, we have to understand that we are now living in a flat world. One sectors fundamental performance is highly correlated across the world. For instant. If a US bank is doing well, do you think a UK bank won't be doing well? Take a look at O&G now, all companies around the world is bleeding. So as far as fundamental are concern, sector performance have the same beta. What makes the different is the volatility of their reporting currency, market risk and each individual's specific business risk.

next, currency volatility is relevant because if you look at specific pockets of time between 1990 and 2012, there are pockets that STI outperforms S&P, and there are times that S&P outperformance STI after factoring currency volatility and it becomes clear that this non correlation adds diversification benefits if you don't only invest in S&P.

last, i'm gonna talk about the performance of S&P between 1990 and 2000. We must understand that there is two decade of S&P performance thats making history by giving double digital annualised compounded return, that's the 80's and 90's. The problem with this is that there are a handful of folks (experts per sa) suggesting that this kind of return will not happen again. If you look at the PE of the index, the S&P have clearly outrun STI by a significant margin. This is the very reason why Mr Bogle has changed his expected return to 5% annualised over the next ten years.

according to Mr Bogle, market return is : Dividend yield(fundamental) + earning growth (fundamental) + changes in PE ratio (speculative). The reason why he is doing this, because is thinks its right to adjust PE back to the mean level. Now, we don't know where the market is heading. But if you believe in the fundamental correlation that i talked about above, then the only thing thats gonna affect the difference in S&P and STI is the speculative return which is the change in PE ratio.

But it is because we don't know about the future, that's why a couple of us have always suggest to include VWRD/IDWA with STI instead of just S&P only. that way, we don't have to worry about which market is gonna outperform because if any one outperforms, your re-balancing alarm gets triggered.

 

[Shiny Things]

Do you happen to have a personal insight to explain STI's under performance?
Because US was having QE, and there were so many uncertainties, but yet the SPX still rallied, while over here in the stable and safe Sg, we're underperforming.

No particular insight, though I've got a couple of guesses:

1) The STI is relatively financials-heavy (the big three banks make up about one-third of the index, compared to 16% of the S&P 500 index in financials). This is going to weigh on the index because banks have to trade at lower multiples now than they did before 2008 happened (they're required to hold more capital, so their leverage ratios are lower, so their return-on-equity is lower, so their multiples are lower, so their share prices are lower). Incidentally, this is a problem for Australia as well - if you think Singapore's market is bank-heavy, check out Australia, where the big banks make up nearly half of the benchmark ASX-200 index.

2) Emerging markets in general have been poleaxed this year, because money has flooded out of emergings into the US and other developed markets.

#2 will reverse itself in a few years when the pendulum swings back toward "emerging markets are so hot right now"; #1 I'm not so sure about.

Either way, you can't go too far wrong owning the Singaporean market at 12 times earnings.

 

[blengend]

No more counter argument by TS?

 

[frenchbriefs]

To me exchange rate is relevant, I'll explain it in a while. i actually made my own set of data to compare STI against S&P. Unfortunately it only starts from 2002, the date STI ETF starts trading. what i found out after factoring exchange rate, is that the recent 10 year performance, STI beats the S&P by a small margin. (and we haven even talk about costs since S&P is gonna be expensive after tax.)

.........................................................................................................
..............................................................................
................................................

But it is because we don't know about the future, that's why a couple of us have always suggest to include VWRD/IDWA with STI instead of just S&P only. that way, we don't have to worry about which market is gonna outperform because if any one outperforms, your re-balancing alarm gets triggered.

i would argue with you point by point in a long ass winded post but im too lazy and cant be arsed to do it right now.besides its all opinions and theories and people's just gonna believe what people's gonna believe.

but i would say this in summary:IRRELEVANT!!!!!COMPLETE AND UTTER GOBSHITE AND BOLLOCKS!!!!we are not here to debate whether the SPY or STI is superior or discuss textbook classical economics or why does the moon orbit the earth at a 2 degrees angle.WE ARE HERE TO DETERMINE FACTUAL EVIDENCE WHY HAS THE STI UNDERPERFORMED THE SPY SO MASSIVELY SINCE 2007 AFTER THE FINANCIAL CRISIS AND SINCE 1993,22 YEARS SINCE ITS INCEPTION,AND THE REASONS FOR ITS MASSIVE UNDERPERFORMANCE DURING THE 22 YEAR TIME PERIOD AND THE LAST 8 YEARS.

now data is abit incomplete at the moment,any help in researching and collating the data would be greatly appreciated.

 

[Perisher]

i would argue with you point by point in a long ass winded post but im too lazy and cant be arsed to do it right now.besides its all opinions and theories and people's just gonna believe what people's gonna believe.

but i would say this in summary:IRRELEVANT!!!!!COMPLETE AND UTTER GOBSHITE AND BOLLOCKS!!!!we are not here to debate whether the SPY or STI is superior or discuss textbook classical economics or why does the moon orbit the earth at a 2 degrees angle.WE ARE HERE TO DETERMINE FACTUAL EVIDENCE WHY HAS THE STI UNDERPERFORMED THE SPY SO MASSIVELY SINCE 2007 AFTER THE FINANCIAL CRISIS AND SINCE 1993,22 YEARS SINCE ITS INCEPTION,AND THE REASONS FOR ITS MASSIVE UNDERPERFORMANCE DURING THE 22 YEAR TIME PERIOD AND THE LAST 8 YEARS.

now data is abit incomplete at the moment,any help in researching and collating the data would be greatly appreciated.

Why? Because Sg is a dependent economy. Only rises along with the giants. When rise, we rise slower, when fall, we fall as hard but usually we have mutiple source of dependant and so is resilient during any fall except when it's GFC.

Unless we got mutiple good local company that can earn a fraction of the likes of XOM, AAPL, GOOG, FB, JNJ etc... we will be a dependant one.

 

[frenchbriefs]

No particular insight, though I've got a couple of guesses:

1) The STI is relatively financials-heavy (the big three banks make up about one-third of the index, compared to 16% of the S&P 500 index in financials). This is going to weigh on the index because banks have to trade at lower multiples now than they did before 2008 happened (they're required to hold more capital, so their leverage ratios are lower, so their return-on-equity is lower, so their multiples are lower, so their share prices are lower). Incidentally, this is a problem for Australia as well - if you think Singapore's market is bank-heavy, check out Australia, where the big banks make up nearly half of the benchmark ASX-200 index.

2) Emerging markets in general have been poleaxed this year, because money has flooded out of emergings into the US and other developed markets.

#2 will reverse itself in a few years when the pendulum swings back toward "emerging markets are so hot right now"; #1 I'm not so sure about.

Either way, you can't go too far wrong owning the Singaporean market at 12 times earnings.

for those of u who think a 18 p/e is a hindrance to investing in the US market,that is insignificant.this is a different time and era.just looking at the stock market chart alone,USA has gone thru 3 major booms and busts in the last 15 years alone,practically unheard of in the history of the US stock market,each time the bubble gets bigger and bigger and each time the gyrations get wilder and wilder.just look at the massive swings,it makes all the markets booms and crashes in history look like tiny ripples in a puddle.

i contribute this effect to the internet and the advent of easy access to stock brokers online and cheap brokers and globalisation,each year more and more speculators' money pour into the US stock markets both domestic and foreign investors,in fact foreign investors overtook US investors as the biggest investors in US markets since the early 2000s.trillions and trillions of dollars is pouring into US from every country in the world from China to Brazil to Spain to India,USA is like the Las Vegas Casino of the world.

this is why i will never be afraid of US stock markets making another record breaking high,the speculative force of the global money pouring into USA is like a tsunami.look at how many hundreds of billions the americans are injecting into their economy and stock market,how can it not go up?how can it not go higher?the whole damn thing is like a game,just wait for the next crash and recession,buy up all the cheap shares u can and wait for q.e. to begin and investors to start throwing money into the us stock market and the cycle of boom starts all over again!!!!!

now tell me again who cares about the STI or singapore stock market?what country in the world gives a shyt about SGX?booooooooooorrrrrrrrriiiinggggggggg.....does PAP have a unlimited printing press to get the party started and party in the house tonight>>>!!!!!!!!

 

[disavowed]

Frenchbrief highlighted a very important point here and i think it has great repercussions on the global economy. No one really knows what will happen when the qe bubble bursts. The usd has lost over 95% buying power over the last 100 years due to inflation and fiat money leverage. I think sooner or later the whole system will have to collapse and we need to restart from scratch again using gold.

 

[Perisher]

Frenchbrief highlighted a very important point here and i think it has great repercussions on the global economy. No one really knows what will happen when the qe bubble bursts. The usd has lost over 95% buying power over the last 100 years due to inflation and fiat money leverage. I think sooner or later the whole system will have to collapse and we need to restart from scratch again using gold.

No one can escape from a total financial collapse.