Official Shiny Things thread Episode V, The Empire Strikes Back

kenpachi82

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pardon me, but that's exactly FX risk!! (px of gold doesn't change but SGD/USD change)
p.s not trying to be a troll here

I get you. 20yrs ago USD 1.6. Now USD 1.3.
So if we hold for 20years and If USD goes to 1.1 (printer go brrrrrrrr) then we lose in terms of SGD. Cannot avoid. That's the risk you take when buying USD denominated etf for longterm.


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little pupsky

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I get you. 20yrs ago USD 1.6. Now USD 1.3.
So if we hold for 20years and If USD goes to 1.1 (printer go brrrrrrrr) then we lose in terms of SGD. Cannot avoid. That's the risk you take when buying USD denominated etf for longterm.


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To put it very simply (or perhaps simplistically), if indeed 20 years from now, USD/SGD goes to 1.1, then the PRICE of the stock in USD will have to be MUCH higher. Do not confuse the value of the stock with its price in the currency it is denominated in.
 

hwckhs

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Do you know of any free tool that is able to plot USD-quoted stocks (eg. IWDA, VWRA, ISAC) or indices (MSCI World, MSCI ACWI, FTSE All Word) in SGD? Better still, if it can show past returns (YTD, 1Y, 3Y, 5Y, 10Y, 20Y) in SGD.

Something like the one at the top of this document but over a much longer term.

People can then look at them and decide for themselves, whether the return is still attractive.

The alternative will be to calculate this manually by looking up historical stock and USD/SGD prices, but it is too tedious.
 

zoneguard

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cassowary18

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lololhaha

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lololhaha

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What are the tail risks you need to deal with and what's the replacement for TMF? Can you code with quantconnect?
There is WisdomTree US Treasuries 10Y 3x Daily Leveraged. Not 20years but it should do the trick? Only manual rebalancing is required, quantconnect is not really needed for execution.

The risk is stagflation but I guess that issue is already addressed in the reddit thread. Another risk is that ETN doesn't really function like ETF and there is a risk that WisdomTree will go bankrupt, leaving with no assets?
 

zoneguard

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The risk is stagflation but I guess that issue is already addressed in the reddit thread. Another risk is that ETN doesn't really function like ETF and there is a risk that WisdomTree will go bankrupt, leaving with no assets?

You might want to re-read the reddit thread again on tail risks. I posted on lifecycle investing in this thread before but concluded it wasn't possible for us to execute.

Anyway good luck and please only invest with an amount that you can afford to lose. Leverage is very powerful and also very dangerous at the same time.
 

kram62

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Aren't these leveraged (2X, 3X) funds only viable for intraday speculation purposes?
Yeah that was my first reaction, but looking at the thread, while not convinced the proposed strategy makes any sense, I still noted that some seem to have been looking deeper into the topic and there may be more to analyse before reusing reflex thoughts. Didn't have time to read all points made in the thread yet, but there's some effort to back the idea.

In the end, this is still highly risky, and the thread OP seems to be already known on /r/wallstreetbets for losing millions (in another situation where he was over leveraged, allegedly 24x).
 

ExEngineer

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You might want to re-read the reddit thread again on tail risks. I posted on lifecycle investing in this thread before but concluded it wasn't possible for us to execute.

Anyway good luck and please only invest with an amount that you can afford to lose. Leverage is very powerful and also very dangerous at the same time.
Why did you conclude not possible to execute?

I heard of this strategy recently and ended up reading the entire Reddit thread. The logic seems sound so long as in market crash situations, longterm treasuries remain uncorrelated with stocks (which seems reasonable).

After all the heavy reading I might consider putting down a small allocation towards this (nothing more than I can afford to lose completely). Basically along the same lines of people who put 5% of their money in some moonshot like crypto…just that I have more faith in the underlying logic of this strategy versus Bitcoin which feels to me like a gamble.
 

zoneguard

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Why did you conclude not possible to execute?

I heard of this strategy recently and ended up reading the entire Reddit thread. The logic seems sound so long as in market crash situations, longterm treasuries remain uncorrelated with stocks (which seems reasonable).

After all the heavy reading I might consider putting down a small allocation towards this (nothing more than I can afford to lose completely). Basically along the same lines of people who put 5% of their money in some moonshot like crypto…just that I have more faith in the underlying logic of this strategy versus Bitcoin which feels to me like a gamble.
That conclusion predated the reddit thread, I started from this Bogleheads thread actually.
1. Tax inefficiencies.
2. No appropriate vehicles for execution.

I also looked at the book mentioned here. If you are going to have some skin in the game, I'll be happy to be proven wrong with your results as intellectually, I understand the approach's appeal but I don't think I am emotionally ready (read too old) to assume this type of risk profile myself. I'll stick to buy&hold index investing.

EDIT: Should also read the version that blew up.
 

lololhaha

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Why did you conclude not possible to execute?
I heard of this strategy recently and ended up reading the entire Reddit thread. The logic seems sound so long as in market crash situations, longterm treasuries remain uncorrelated with stocks (which seems reasonable).
After all the heavy reading I might consider putting down a small allocation towards this (nothing more than I can afford to lose completely). Basically along the same lines of people who put 5% of their money in some moonshot like crypto…just that I have more faith in the underlying logic of this strategy versus Bitcoin which feels to me like a gamble.

How do you intend to implement this in Singapore? I can't seem to find good ETFs to emulate the portfolio.
 

ExEngineer

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How do you intend to implement this in Singapore? I can't seem to find good ETFs to emulate the portfolio.
I’m still in the early stages of evaluating this, but I’m pretty sure you don’t want to do this with SG-based secutities.

The whole premise of the strategy depends on 1) leveraged investing into an equity index that rises over the longterm (eg S&P, VWRA etc), and I’m not sure that the STI offers high enough or consistent enough growth; and very importantly 2) At the same time leveraging into a vehicle which is negatively correlated with the equity index , especially on days with sharp downturns (this plays the role of market crash insurance) - again I can’tthink of something to pair with the STI that would play this role.

What I am contemplating is simply to put a portion of money into the original US-based strategy as-is - eg UPRO as the 3X S&P, paired with TMF - and possibly a bit of VXX as the crash insurance.
 
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