2022 Market Sentiment & Positioning

[Mephist0pheLes]

brought more sp500 today. if it falls to 23-25% below ATH, will go in again at a bigger amount .

maybe will also consider nasdaq if it falls to 35% below ATH

 

[revhappy]

Just my actions and thoughts.... Not for anyone . If you find it entertaining...great...

I have gone from 30% stocks in my portfolio to 60% stocks over last year. The dip is providing oppertunity to add more but at a slower rate as my funds are depleting. All my current investment are in All World ETF's.

After more than 15 years during GFC, I am also doing Low risk small tiny trading on the side . Depending on the day, I might get a return of 100 - 700 dollars or 0 as I might decide not too based on what I notice in the flow.

Hard to know when this will stop, Will there be a recession? Will it lead to bigger drops? or there will be no recession, maybe a big drop but without recession? maybe this the beginning to a bull?

Who knows? I guess.... Just investing for long term and having small trading fun on the side to take care of my itchy side. Hope I can make little on the side for some staycation and good makan session...heheheh

From my past experience doing this small trading on the side could sometimes lead to accidents which then become part of long term portfolio. I stay away completely from trading now. I am only managing my portfolio for retirement and once I get to full max allocation I will just hold on to it, not try to sell for small profit. Sometime in the future markets will double and our networth will also double. The best returns are made when you have a diversified portfolio and you just forget about it for a decade.

 

[kickass22]

From my past experience doing this small trading on the side could sometimes lead to accidents which then become part of long term portfolio. I stay away completely from trading now. I am only managing my portfolio for retirement and once I get to full max allocation I will just hold on to it, not try to sell for small profit. Sometime in the future markets will double and our networth will also double. The best returns are made when you have a diversified portfolio and you just forget about it for a decade.

Hi, Thanks for the comments.

Agreed with your comments.

My "trading" is on the specific Index ETF's actually and not on single stocks. So if I have to keep it, its not an issue as I wil sell it later in the future. But it really helps with the itch.

But I totally agree with you and reason why you should not do it.

When you do these , you learn a lot about yourself and discipline.

A key aspect for me is to keep to the discipline of the amount I use for this particular "trading" I do.

 

[limster]

All my orders getting filled early tonite. VWRD, LSPU, VHYD.

This sort of crash, may flip prata on Friday as shorts need to close their position.

I never trust Friday rallies which may just be short covering, which is why I normally don't buy on Fridays.

Hope the crash continues next week so that I can buy more.

 

[MrHighlander]

I have entered about 15K this month in World ETFs.. not sure if enough or too little. But yes hoping for crash to continue

 

[Mephist0pheLes]

brought more sp500 today. if it falls to 23-25% below ATH, will go in again at a bigger amount .

maybe will also consider nasdaq if it falls to 35% below ATH

now i dunno what to do if the indices continue to recover.

 

[kickass22]

I have entered about 15K this month in World ETFs.. not sure if enough or too little. But yes hoping for crash to continue

Whether it is enough or not, depends on a good financial plan and asset allocation that you have thought through and decided on. That plan will indicate to you if you have gone over or you are still under the allocation for equities.

Without a carefully thought out plan, it is hard to have a guage.

Just my two cents.

 

[limster]

I have entered about 15K this month in World ETFs.. not sure if enough or too little. But yes hoping for crash to continue

So far i've entered 20k into World ETFs in May but I hope to pick up the pace next week.

This month, I'm getting refund from Frasers, refund from SPH, plus May is a good month for dividends, usually quite a high amount (power of CD!) Need to make sure that all of this is reinvested.

As for exact plan, I don't need a detailed plan. I've already achieved FI based on passive income flows and my holding time period is forever, so I guess all I have to do is to put all my free cash flow into World ETF when the price is right, or otherwise build up warchest when the price is not right

 

[TehSi99]

I have entered about 15K this month in World ETFs.. not sure if enough or too little. But yes hoping for crash to continue

Well, nobody knows if it will go lower. The best is to DCA if your strategy is to buy at dips.

In long term, market will go up. It is only a matter of time and how long it takes. It is anyone's guess, 1 year, 3 years.....

Standard advise: Invest the money you can afford to lose or dont need in short term.

 

[churnmaster]

So far i've entered 20k into World ETFs in May but I hope to pick up the pace next week.

This month, I'm getting refund from Frasers, refund from SPH, plus May is a good month for dividends, usually quite a high amount (power of CD!) Need to make sure that all of this is reinvested.

As for exact plan, I don't need a detailed plan. I've already achieved FI based on passive income flows and my holding time period is forever, so I guess all I have to do is to put all my free cash flow into World ETF when the price is right, or otherwise build up warchest when the price is not right

Good timing (I.e. waiting for the markets to correct) and DCA (I.e. buying on different days with the intention to achieve overall lower acquisition cost).

As a long term investor who wants to hold forever, this is the right thing to do.

Btw, have you never sold any of your buys ? or Say bought and then sold after X years to buy some other fund / ETF/ etc ?

Long weekend controversial keywords: Timing, DCA

 

[limster]

Btw, have you never sold any of your buys ? or Say bought and then sold after X years to buy some other fund / ETF/ etc ?

I hardly ever sell. If I look at my records:

In 2021 I sold some US$ bond funds to raise cash to buy US$ denominated ETFs (should have sold ALL my US$ bond funds since higher interest rates will cause prices to fall but didn't)

In 2020, I sold $45k SIA 3.03% bonds to buy more stocks since I had used up my most of my cash to buy stocks already. However, I still have a fair bit of SIA bonds left ... couldn't bring myself to sell everything as usual

So I guess I average 1 sell transaction a year....

even my SPH I held on to the bitter end though I really should have sold them much earlier. I admit this is a real weakness - so hopefully with ETFs less of a problem... As I posted elsewhere, if I don't take into account the dividends (luckily the dividends I collected were more than my buying price), the CAGR is only 0.4% a year for 12 years.

 

[revhappy]

I feel there is really no need to keep trading, especially if you have broad market ETFs. If you have speculative stocks/sectors then it is a different thing. I am only now getting this concept of price to earnings. So if PE ratio is 20. It means you are paying 20 times its 1yr earnings. The earnings either get paid out as dividend or reflect in the stock price and as long as every year the earnings are same,(base case assumption on an inflation adjusted basis) the stock price needs to theoritically keep growing by its EPS amount, if it is not paying it out as dividend. At the end of 20 years you kind of get back the money you paid and after that all the future earnings of the company is for free for you to enjoy forever.

Nikkei PE ratio at its peak in 1986 was 58, which means you need to wait for 58 years with constant earnings to get your cost back. Japan went into deflation and aging population lost decades of 0 growth, so the earnings was probably inflated and on top people paid 58 times. No wonder Nikkei never went back to its highs.

But if the world is going to have inflation, companies will be able to atleast maintain their earnings by passing on the price increases, so current PE ratio of S&P500 is about 17 times. The money you pay for buying the S&P500 basket you get back in 17 years and after that all future earnings is free forever.

Now compare this with bonds. US 20 year bond yield is 3.32%. This means if you hold the bond for 20 years, you get paid your money back and a fixed 3.32% interest per year for the holding period. If there is high inflation, you are screwed you get only 3.32% nominal. So inflation is bad for bonds, deflation is good for bonds.

Once you understand this concept, how stocks and bonds work and how inflation impacts them, it is easy to make the choice.

 

[homer123]

I believe a lot of fallen growth stocks will be stuck in a doldrums for decade like dot com bubble in 2000 when after 10 years are still showing negative return

 

[revhappy]

I believe a lot of fallen growth stocks will be stuck in a doldrums for decade like dot com bubble in 2000 when after 10 years are still showing negative return

In Mar 2000 Nasdaq bubble peak the pe ratio of the Nasdaq as a whole was 157! It was insane. It is like wait for 157 years to get your money back! The story was that earnings will grow like crazy, yet Nasdaq broke it's high within 15 years and we didn't have to wait 157 years.

I believe now that we should never trust such crazy projection stories and pay such multiples. In Feb 2021 meme stock boom, it was something very similar for small growth stocks like zoom, Sea, palantir etc
But Nasdaq as a whole PE ratio is 19 right now, so I don't think we need to wait for 10 years to see returns.

 

[homer123]

In Mar 2000 Nasdaq bubble peak the pe ratio of the Nasdaq as a whole was 157! It was insane. It is like wait for 157 years to get your money back! The story was that earnings will grow like crazy, yet Nasdaq broke it's high within 15 years and we didn't have to wait 157 years.

I believe now that we should never trust such crazy projection stories and pay such multiples. In Feb 2021 meme stock boom, it was something very similar for small growth stocks like zoom, Sea, palantir etc
But Nasdaq as a whole PE ratio is 19 right now, so I don't think we need to wait for 10 years to see returns.

The current Nasdaq stock components are much better now with the like of FANMG and semi-conductor companies compare to year 2000. My previous post was to compare the current growth stock demises and dotcom bubble of 2000..They spot the same insane financial metrics. Most will go bust than recover like the 2000 dotcom

 

[homer123]

Very interesting blog on how to position your investment decision in 2022
https://financialhorse.com/how-i-will-invest-1-million-in-2022s-market-crash/

I do nothing until I see the Feds changing their mind.

And when the Feds change their mind, I buy the dip, in size.

Until the Feds change their mind, I see any big rallies as countertrend moves (in a broader decline).

And my clues for when the Feds change their mind are:

1. Treasury (or credit) markets break
2. Inflation goes away
3. S&P500 melts down 20-30%
   

   Basically… don’t buy the dip yet…​

   Long story short – I still don’t think we are at the bottom.
   
   Short term bottom maybe given the oversold sentiment, but the bottom for this credit cycle?
   
   I don’t think we’re there yet.
   
   I’m happy to start nibbling here and there, but I’m still saving the heavy firepower for later in the year, closer to the Fed pivot.

 

[elvintay07]

Very interesting blog on how to position your investment decision in 2022
https://financialhorse.com/how-i-will-invest-1-million-in-2022s-market-crash/

Most cock article I have read

 

[blu_black]

From my past experience doing this small trading on the side could sometimes lead to accidents which then become part of long term portfolio. I stay away completely from trading now. I am only managing my portfolio for retirement and once I get to full max allocation I will just hold on to it, not try to sell for small profit. Sometime in the future markets will double and our networth will also double. The best returns are made when you have a diversified portfolio and you just forget about it for a decade.

agreed, have been holding onto a counter since October 2021 until now still haven't breakeven....

 

[revhappy]

Very interesting blog on how to position your investment decision in 2022
https://financialhorse.com/how-i-will-invest-1-million-in-2022s-market-crash/

I am a believer of efficient market hypothesis. If you have 1 million and if you want to make it into 2 million, then maybe the advise in this article can be taken. But if you get it wrong, maybe now is the bottom and you miss out in the future gains.

But if you have 1 million and you don't mind seeing it cut by 30%, but don't want to miss out on any gains, then it is better to just stay invested.

We need to consider earnings and earning growth. S&P is at 4000, while earnings are still strong. Without this fed drama, s&p should have been at 5500 by now as per its previous run rate. So as long as companies are able to pass on the price hikes and sustain and grow their earnings, I think everything should be okay. We might see a dip, but that would be a good time to buy more rather than trying to go in cash now and try to time the bottom with size.

 

[homer123]

I am a believer of efficient market hypothesis. If you have 1 million and if you want to make it into 2 million, then maybe the advise in this article can be taken. But if you get it wrong, maybe now is the bottom and you miss out in the future gains.

But if you have 1 million and you don't mind seeing it cut by 30%, but don't want to miss out on any gains, then it is better to just stay invested.

We need to consider earnings and earning growth. S&P is at 4000, while earnings are still strong. Without this fed drama, s&p should have been at 5500 by now as per its previous run rate. So as long as companies are able to pass on the price hikes and sustain and grow their earnings, I think everything should be okay. We might see a dip, but that would be a good time to buy more rather than trying to go in cash now and try to time the bottom with size.

As for me, I am in no hurry to deploy my war crest. I am fully invested on mainly dividend stocks and will buy with my dividend cash flow that is now running almost 80k pa. As a dividend investor, I usually hold my stock for very long term and that can expose my portfolio to capital loss in prolong bear market. However, the reinvested dividend will help me lower my yield on cost and increase the annual dividend received.