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2020 market expectations and positioning

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Old 22-01-2020, 12:39 AM   #61
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https://www.bloomberg.com/news/artic...-must-collapse

If you guys are feeling terrible, missing out on all the juicy gains, just remember, this is behavioural, when you have the maximum urge to go and invest money into the market and feeling of FOMO, it is usually the wrong time. When you are really fearful and cautious to invest, it is usually a good time.

Right now, nobody wants to hedge, everyone wants to be as long as possible. I think people with patience will have better opportunity in the future.
repo liquidity will help lift all boats. You came here for the truth, so let me unveil that for you.
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Old 22-01-2020, 09:34 AM   #62
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WTH! This market doesnt even want to stay down for more than 1 day. It is like there are unlimited number of people with unlimited amount of money, willing to buy at every dip. Doesnt matter, what is the reason for the dip, dip must be bought.

Ray Dalio said cash is trash! Stanley Druckenmiller says he is still riding the horse. Being bearish right now and staying into cash is a very lonely thing.

I wonder where all this cash goes, if everyone buys assets, someone needs to sell them. Companies too are buying their own stock, then who is selling?

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Old 22-01-2020, 10:15 AM   #63
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STI flat for the last 1 year.
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Old 22-01-2020, 10:22 AM   #64
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WTH! This market doesnt even want to stay down for more than 1 day. It is like there are unlimited number of people with unlimited amount of money, willing to buy at every dip. Doesnt matter, what is the reason for the dip, dip must be bought.

Ray Dalio said cash is trash! Stanley Druckenmiller says he is still riding the horse. Being bearish right now and staying into cash is a very lonely thing.

I wonder where all this cash goes, if everyone buys assets, someone needs to sell them. Companies too are buying their own stock, then who is selling?
You know that interest rates have been unusually low for the last decade right? My guess is that the whales, i.e pension funds have nowhere left except the equity market to capture returns. These institutions require on average around 7% returns to meet their obligations. Investment grade bond yield is only about 3% now,the private equity bubble has more or less been deflated by Softbank.

Where else to allocate assets other than equities?
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Old 22-01-2020, 10:42 AM   #65
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You know that interest rates have been unusually low for the last decade right? My guess is that the whales, i.e pension funds have nowhere left except the equity market to capture returns. These institutions require on average around 7% returns to meet their obligations. Investment grade bond yield is only about 3% now,the private equity bubble has more or less been deflated by Softbank.

Where else to allocate assets other than equities?


high yield bonds with 5% onwards are the way to go.

though high yield, dun worry, low interest rates mean that default rate is lower as well so it is all well balanced.

pension funds can't buy high yield bonds? oh don't worry, maybe lower risk of default can push these to investment grade. let's buy these high yield bond etf and cover it with insurance. I'm not sure what is the actual term for this called though.

hmm... in the midst of it, high yield defaults are increasing.



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Old 22-01-2020, 11:03 AM   #66
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STI flat for the last 1 year.
yeah, saw the unrealized P/L in my statement and went like wtf...
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Old 22-01-2020, 02:29 PM   #67
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I came across this Global Value ETF, GVAL

https://www.etf.com/GVAL#fit

Interesting part, it has 8% allocation to Singapore and 0% to US
It also has similar allocation of 8% to Brazil, Turkey, Russia, Greece, Spain and UK.
Singapore in this league, seems odd. Other countries, there is some reason for the low valuation.

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Old 22-01-2020, 11:19 PM   #68
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Learnt a new phrase, what is the opposite of FOMO ?
FOLL(Fear of large losses)
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Old 22-01-2020, 11:48 PM   #69
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Market is ejaculating like crazy.

Ironically, F&G index is at 79 only.
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Old 22-01-2020, 11:52 PM   #70
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yeah, saw the unrealized P/L in my statement and went like wtf...
Regions and sectors performance do rotate.

For STI, I won't expect much returns. SG is a small economy and growth is going to be limited since FT policy is tightening. Long term total returns is likely in mid single digit.

For US, I am happy to realize profits gradually as the market continues to skyrocket.
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Old 22-01-2020, 11:57 PM   #71
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rates are so low >> bonds are not yielding enough + rates probably have no capacity to go lower (bonds will not gain in value)

the hunt for yield will go down the credit curve. many are pitching for those just below investment grade which carries risk

rotation from bonds to equities has not happened yet. 2019 was the year where there was so much fear that funds all piled into bonds. if the rotation materializes, there is still much to run for equities

cash is continuing to pile into equities because, as DBS CIO puts it, there is simply no alternative (TINA) to get higher returns but the stock market. REITs are hot because they yield higher returns than bonds and are relatively stable. earning season continues to surprise on the upside and growth, although slow, is still positive

my guess will be another stella year for equities even in a US election year
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Old 23-01-2020, 06:52 AM   #72
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high yield bonds with 5% onwards are the way to go.

though high yield, dun worry, low interest rates mean that default rate is lower as well so it is all well balanced.

pension funds can't buy high yield bonds? oh don't worry, maybe lower risk of default can push these to investment grade. let's buy these high yield bond etf and cover it with insurance. I'm not sure what is the actual term for this called though.

hmm... in the midst of it, high yield defaults are increasing.



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Sounds like a recipe for disaster. Repackage the high risk investments into something else and pass it on.
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Old 23-01-2020, 08:02 AM   #73
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I came across this Global Value ETF, GVAL

https://www.etf.com/GVAL#fit

Interesting part, it has 8% allocation to Singapore and 0% to US
It also has similar allocation of 8% to Brazil, Turkey, Russia, Greece, Spain and UK.
Singapore in this league, seems odd. Other countries, there is some reason for the low valuation.
If you peek behind the scenes at how they make up ETFs, you'll be looking at a sausage machine.
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Old 23-01-2020, 08:19 AM   #74
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If you peek behind the scenes at how they make up ETFs, you'll be looking at a sausage machine.

In my view, only ETFs which track a decent index like the S&P500 is any good.
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Old 23-01-2020, 08:39 AM   #75
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Regions and sectors performance do rotate.

For STI, I won't expect much returns. SG is a small economy and growth is going to be limited since FT policy is tightening. Long term total returns is likely in mid single digit.

For US, I am happy to realize profits gradually as the market continues to skyrocket.
STI can skyrocket, if the authorities start behaving like FED and Trump. If CPF interest is reduced from 4% to 2% and Temasek, GIC and MAS start doing large scale asset purchases of Singapore equities, it will rocket.

But it is good that they are not doing it. Valuations are low and it allows people to accumulate cheap, while property markets are kept out of speculation.
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