Official Shiny Things thread—Part III

[WC32890]

I highly suspect that you either have comprehension problem or you practise selecting reading

Please see my post below, which I already clearly stated that:

Index ETF itself is not ponzi scheme, it is just an investment instrument.

Keep advocating other people to "DCA blindly into index ETFs over long term regardless of market conditions" (and don't sell), this strategy itself is a ponzi scheme!


So clearly if index ETF itself is not a ponzi scheme but an investment instrument, "stock market" itself is an investment instrument, and "real estate market" is an investment instrument.

Hope the above clarification helps you. I believe you really need help in your comprehension or selecting reading problem. Wish you well......

Then aren't you advocating timing the market?

 

[chrisloh65]

I always advocate buy low sell high to defeat this ponzi scheme and prevent this vicious self-fulfilling prophecy.
This is really no different from what psyfy advocated that we should do:

In stocks people buy when they see value for example and sell when they think otherwise. Same thing can be done for ETFs.


Time that you learn from psyfy's wisdom from above statement.

Then aren't you advocating timing the market?

A) In a ponzi scheme you are buying a make believe product and hoping a greater fool will come in to prop the price and the scheme. It'll eventually collapse because there is nothing underpinning it.

B) In stocks people buy when they see value for example and sell when they think otherwise. Same thing can be done for ETFs. For simplicty sake, one is a single stock and the other one is an amalgamation of a number of stocks. Not that many differences.

C) If ETFs are a ponzi scheme than what are unit trusts and funds being sold by asset managers or even hedge funds?

Short of it, you need to calm down and don't attack for the sake of attacking.

If ETFs are ponzis it means all assets that behave like funds are ponzis. So what do you advocate? Stock picking? What's your track record like for picking stocks, better than Warren Buffett?

If you are only attacking and not providing an alternative than why are you wasting your time here? I've not seen anyone at all in this thread listening to your advice, on the contrary you are pushing people to the path of ST because he makes sound reasonings and give helpful advice.

 

[d5dude]

Your argument is rather unpersuasive.

Even if a lot of people were to buy an ETF, the price of the ETF is generally kept in line with the prices of its constituent stocks via the arbitrage mechanism of the ETF manager. Bond ETFs tend to have a larger tracking error because they are more illiquid but the ETFs of well-known stock indices have low tracking errors.

ETFs and the prices of its underlying stocks are kept inline via arbitrage so huge fund inflows into ETFs should in theory cause the underlying stocks to move higher, the way they affect each other should be 2-way traffic.

But I dun agree that index ETFs are a ponzi scheme, its just an easy and cheap way to get exposure to a bunch of stocks.

 

[WC32890]

I always advocate buy low sell high to defeat this ponzi scheme and prevent this vicious self-fulfilling prophecy.
This is really no different from what psyfy advocated that we should do:

In stocks people buy when they see value for example and sell when they think otherwise. Same thing can be done for ETFs.


Time that you learn from psyfy's wisdom from above statement.

Ceh.....talk is easy. But who has a crystal ball to predict the lows and the highs? If i could i would also have bought Tesla at the lows of $930 per share a week ago, if i had known a week later the share will surge up to $1200.....

 

[swan02]

1. I'm not vouching for Shiny. Shiny's methodology is nothing new, it is largely based on the passive investing ideology backed by lots of research which is widely known. Shiny simply repackages these ideas into a Singapore perspective and provides his personal touch.

Keeping it simple aka three components make it doable even if you believe it to be flawed, actually encourages people to invest. There are **** loads of people sitting on the fences. Try encouraging investment with your timing strategy and ROI--they go blur and can't even differentiate the math between ROI and ROE.

2. So next question is, I believe in evidence. So far I have found nothing in support for Timing the market. P/E ratios are great at telling something is expensive and having high correlations for a poorer return over the LONG TERM, but it never tells you when to exit the market or timing in the short term.

Expensive market can still be more expensive and vice versa. Furthermore, "expensive" is just a man made construct, what really is considered "expensive" ?...there is no answer to it as investing is also largely psychologically influenced among competing assets and investors.

So really what is expensive ? book value ?, cashflow ?, tons of fundamentals ratios ?....you see the problem here...the majority of us do not do fundamentals..or technicals--what moving average ? recently i hear a so called real estate agent technician fumbling on zoom to predict the market and getting beaten up by the public.

3. I do admit that STI is not exactly as correlated to your 2822. But 2822 is still a narrow base and not representative of the broad market of china. STI in my opinion though not a very good index, is still highly correlated to broad base China.

Perhaps one genius should create a narrow base of the STI, with balanced allocation per sector in manufacturing, finance, reits, etc etc and compare that to 2822.

Still the way I see it, the world is separated between USA, Developed markets, and ASIA. The correlation of ASIA inclusive of Australia are very much more correlated to each other due to currency and export orientation. Developed markets falls in between because it still exports like 70 percent, in contrast to USA.............yet overall, they are all highly correlated to USA, even China but not vice versa.

USA won't die when China screws up. Buying China cheaply, does not necessarily give you an edge when things crashes as evidenced by so many recessions.....it is akin also to why you still need to hold quality bonds as a ballast even when it is expensive, many articles argue for it to be seen more of a ballast than for absolute return, in other words, the focus is still diversification in the realm of modern portfolio theory.

Obviously these are just my observations and I may be wrong but nothing i've heard so far has changed my perception. Prove to me with research based evidence for anything otherwise.

Even as I believe the market is expensive based on notions of shillers cape ratios, or percentage allocation survey and fundamentals.....my real aim to remain invested is simply to beat cash and bonds returns....the real danger is not en expensive market but an L shape market or flat one.....all I need is while in the spirit of passive investing, simply adjust the asset allocation to expose less to equity.

A broad base equity construct of VWRD, and yes STI (though I not a big fan and prefer a selection, and yes I do support having china, or eimi in it, vs losing FX benefits) is still warranted. After all, its only like 30 percent USA, ...that is not overkill. ....We don't have a good alternative to STI etf as many can't afford the exuburent transaction fees of stock selection as I do.

As I mentioned, FX to me is very important as I've been burnt severely. Vanguard wouldn't have encouraged so much local shares usually about 40 percent if it hadn't thought forex risk was important...So I guess you're gonna argue Vanguard non independent ?...why is it Vanguard I've read is actually owned by the customers ?....wait you are gonna come up with another conspiracy theory ?

4. Having a broad based VWRD is definitely sound considering that the whole motto of the passive investment community is NOT ROI. It is largely risk adjusted returns which is very much influenced by diversification and the efficient frontier. That's why I keep repeating, make up your mind which school of thought you belong to and stick to it and wish you luck.

Chris, you belong to the other school of thought, nothing will ever convince you otherwise so why bother trying to convince us believers of passive investing ?

I actually have been DCA before 1998...so 20 years later, are you expecting me to change ? so what if you turn out right in the end ? do you really think a reasonable man should still change ?...this sounds like the conspiracy theory that the Govt of SG won't return your CPF even at age 65.

Since you encourage that I be suspicious in western or USA, perhaps I should also throw away my three degrees, remain always suspicious that all i've read are western propaganda and highly biased. I do have a scrutinizing mind, at least these info are fully open for scrutiny and not China's. That is the whole point.

To put it simply, Trump tells you indirectly don't trust the numbers. As for China, it appears to say "trust me" trust my numbers. But because it is not open for scrutiny, its useless even if China is telling the truth, period.

When I think of China, I think of inferior product. From the faulty test kits they donated, to dodgy masks.......I worked with many medical people from china.........many buy their goods from Australia, everywhere, but China..its big big biz......and you wouldn't have to go so far, recently none of the telcos selected Huawei....and its not to anyone's surprise. Sure the govt say they gave Huawei a fair go..........do you really believe that ?.........ok I can't help with TIK TOK, it keeps an aging man feeling young.

Ultimately, I only care about making money. As long as the majority of investors continue to believe China is dodgy, I will have to follow the herd. I don't want to be stuck with the crowd still barking about how cheap China shares are for the next 10 years.......but having it 10-20 percent is still sensible but definitely NOT over weighting it....as I'm a student of diversification and modern portfolio theory and risk adjusted returns is my core belief. China along with emerging markets still remain far away from the efficient frontier. By being away from the frontier, I suspect it also encapsulates the huge distrust the mainstream investors have for Chinese companies and this is not going away soon. Why bother even fighting against the flow ?

5. Now lets talk about DCA. This appears to be the crux of of what you do see as a problem as verbalised.

Shiny's book is designed for the mainstream and people will still do well, its still better than investment linked insurance products, and definitely over cash or bonds over the long term.

Better for the mainstream to be invested then you scaring them over TIMING the market, ratios, techincals yada yada where I've seen nothing that timing works for the general population.

DCA. be it in business or when I sell/buy my ingots in ultima online in order to reduce risk is just a common sense approach to everything in life. That's about it. It is an excellent simple tool to reduce risk and it has shown to do so by evidence.

Since I'm not smart enough to spot the next Tesla and definitely the majority in this forum do not, what are the best alternative ?

a. DCA lor ..........There are **** loads of evidence supporting the buy and hold DCA approach long term perspective investing. Coupled with a well diversified portfolio based on modern portfolio theory. I can't see anything wrong with that for the common people such as I....do you really think I want to spend hours on end, like I used to stock picking, trading, etc ? NO.

6. So whats the other alternative ?.....buy real estate and that is why you will find more people getting rich over physical real estate than stocks. Why ?............
because so many novices actually believe when it comes to stocks, it is about timing, stock picking, buy and sell etc etc.....how many of them have even heard about the "modern portfolio theory" unless they have done finance 101.

.......These novices delve into a rabbit hole and get bitten by a snake and never will they return...........they end up keeping cash, scared of stocks, can't afford real estate...and remain poor and miserable forever.

7. The only issue I have is with the 110-age. A simplistic approach but can work for the masses as long as your risk appetite is on par. The rich however, will have tailored asset allocation...its an unfair world.......or you self learn about it and tailor it for yourself- it can be challenging to many unfortunately....that's why fee based financial planners CHARGE.


8. again, I shall reiterate. DCA is useful in supporting the notion of continual buying of shares in an EXPENSIVE market by reducing risk. It is USELESS when the market is cheap as you can just LUMP SUM.

By CONTINUAL BUYING (which you are so against) of shares in an expensive market or flat market, its aim is LARGELY to beat the next worst alternative aka having long periods in cash and bonds. And that is why timing even if you are god, is likely to still fail in probability to DCA/continual buying when risk and return are considered as of equal importance. Not to mention, the psychological dangers it reduces.

Should return be of more importance, evidence suggest higher probability to LUMP SUM-------it gets more dangerous when the market is supposedly expensive---so pick whether the 33 percent that you become wrong is worth it--this is the only time the argument of TIMING the market warrants careful thought.

In summary Chris, you and I have way too much time in our hands and writing long passages that many just skimp through. No one bothers anymore hence as I have learnt, no one really bothers to really understand or read what I or you write. You can tell by now can't you ?...so really why bother ? anyways, this is my last refute to you...gonna spend time on more fruitful endeavor.

1. I am not sure why you are trying to twists and turns for Shiny Things here. It is a fact that Shiny Things advocate you to buy IWDA or otherwise VWRD as alternative which includes some EM. Go find his posts and they are everywhere here that can verify what I said is true.

2. I don't see how STI can be compared to China's stock market and can be substitute for China market's exposure. GDP of Singapore is $372B vs China's $13,368B and hence ultimately the stock market effect will be vastly different. Furthermore based STI ETF and China A50 ETF price movements, I can't see close correlation between STI ETF ES3 vs China A50 ETF 2822.HK. Example, based on inception date in Aug 2012 where 2822.HK is HK$7.13 and now is HK$14.52 vs ES3 where in Aug 2012 is S$3.06 and now is S$2.711, so 2822.HK has gone up by +103.64% while ES3 has gone down by -11.40%, so there is no close correlation at all between STI index and China A50 index!

3. Again, you comments about all those questionable reporting / financial statements etc are limited to small number of Chinese companies, but you wrote as though all Chinese companies got the same problem, which of course is a false claim (just like what Shiny Things made)!




Based on your analogy, anybody can also say USA/Western companies are full

 

[Thoreldan]

Hi swan02 & others, u should just put him on ignore list. As always, he's just here to seek attention.

 

[tcwehcs]

HYG follow what FED do

If keen to have small allocation to high yield bond , what are the recommendations for a high yield bond etf ?

 

[Listopad]

https://earlyretirementnow.com/2020/07/01/passive-investing-bubble/
For anyone interested to read further from diff perspectives .

 

[chrisloh65]

Nobody has crystal ball, but it is better than falling into the trap of ponzi scheme, because ponzi scheme only benefits the early adopters while the later adopters will 100% suffer losses.

Ceh.....talk is easy. But who has a crystal ball to predict the lows and the highs? If i could i would also have bought Tesla at the lows of $930 per share a week ago, if i had known a week later the share will surge up to $1200.....

 

[Kaypohji]

Maybe the ponzi scheme will last another few decades?

As long as everyone keeps believing in it, it doesn’t matter

Just don’t go against the market like now. Fundamental not good but still bull market

Nobody has crystal ball, but it is better than falling into the trap of ponzi scheme, because ponzi scheme only benefits the early adopters while the later adopters will 100% suffer losses.

 

[psyfy]

I always advocate buy low sell high to defeat this ponzi scheme and prevent this vicious self-fulfilling prophecy.
This is really no different from what psyfy advocated that we should do:

In stocks people buy when they see value for example and sell when they think otherwise. Same thing can be done for ETFs.


Time that you learn from psyfy's wisdom from above statement.

Heh, can't help it, I'm a sucker for a good debate.

This is that you mentioned : Index ETF itself is not ponzi scheme, it is just an investment instrument.

Keep advocating other people to "DCA blindly into index ETFs over long term regardless of market conditions" (and don't sell), this strategy itself is a ponzi scheme!

So it is not the instrument that is the ponzi scheme but the mode of investment i.e. DCA that is a ponzi scheme. Ok that's clearer, so in your view DCA should be avoided at all costs because it is a ponzi scheme.

So let's put it right smack on the table and let everyone see what a ponzi scheme is from this link here : "A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money."


First question, please reconcile between your version of a ponzi scheme i.e. DCA and what the US govt says a ponzi scheme is.

Next, since you don't advocate DCA I can only surmise either you advocate a buy and hold or a trading mindset. On the assumption that a buy and hold is a derivative of the DCA I should strike that out as well? Which means you are a trader vs an investor?

Next, how do you determine what is low for a buy and when is a high for you to exit? How often do you buy and sell? Also are you advocating trading for all individuals since it is not a ponzi scheme or only for those with the strongest heart, gobs of time to spend and is not risk averse?

Couple more follow up questions but am interested to pick your brains and understand what your thought process is.

 

[chrisloh65]

First, people have to admit whether they can see that:

"Keep advocating other people to "DCA blindly into index ETFs over long term regardless of market conditions" (and don't sell), this strategy itself is a ponzi scheme!"

If they cannot see, then don't need to discuss or say anything more, because just plain waste of time just like "playing music to a cow" right?

As to definition of "ponzi scheme", the above scheme is a relatively new scheme, that is why it does not fit into traditional definition of ponzi scheme you mentioned, just like "ponzi scheme" cannot describes some form of MLM schemes but they are also ponzi scheme!

Heh, can't help it, I'm a sucker for a good debate.

This is that you mentioned : Index ETF itself is not ponzi scheme, it is just an investment instrument.

Keep advocating other people to "DCA blindly into index ETFs over long term regardless of market conditions" (and don't sell), this strategy itself is a ponzi scheme!

So it is not the instrument that is the ponzi scheme but the mode of investment i.e. DCA that is a ponzi scheme. Ok that's clearer, so in your view DCA should be avoided at all costs because it is a ponzi scheme.

So let's put it right smack on the table and let everyone see what a ponzi scheme is from this link here : "A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money."


First question, please reconcile between your version of a ponzi scheme i.e. DCA and what the US govt says a ponzi scheme is.

Next, since you don't advocate DCA I can only surmise either you advocate a buy and hold or a trading mindset. On the assumption that a buy and hold is a derivative of the DCA I should strike that out as well? Which means you are a trader vs an investor?

Next, how do you determine what is low for a buy and when is a high for you to exit? How often do you buy and sell? Also are you advocating trading for all individuals since it is not a ponzi scheme or only for those with the strongest heart, gobs of time to spend and is not risk averse?

Couple more follow up questions but am interested to pick your brains and understand what your thought process is.

 

[chrisloh65]

The problem is nobody knows when this "DCA blindly into index ETFs over long term regardless of market conditions" ponzi scheme will last. I doubt it can last another full decade though, but enough for early adopters like Shiny Things and even swan02 to retire early and retire very rich! Thereafter, even if the index ETF crash will not affect them anymore!

Maybe the ponzi scheme will last another few decades?

As long as everyone keeps believing in it, it doesn’t matter

Just don’t go against the market like now. Fundamental not good but still bull market

 

[chrisloh65]

More balanced perspective:

https://edition.cnn.com/videos/business/2020/01/29/markets-now-passive-investing.cnn-business
Portfolio manager: Passive investing has become a Ponzi scheme

https://www.cnbc.com/2019/09/04/the...says-he-has-found-the-next-market-bubble.html
Michael Burry of ‘The Big Short’ says he has found the next market bubble
Passive investments are inflating stock and bond prices in a similar way that collateralized debt obligations did for subprime mortgages more than 10 years ago, Burry told Bloomberg News.
“Like most bubbles, the longer it goes on, the worse the crash will be,” said Burry.
“The theater keeps getting more crowded, but the exit door is the same as it always was. All this gets worse as you get into even less liquid equity and bond markets globally,” he said.



‘Passive investing is in danger of devouring capitalism’ – Paul Singer, Elliot Management.

‘ETF’s turn market into the ultimate Ponzi scheme’ – Alan Kohler

Two powerful statements from knowledgeable men that strike at the core of our stock market and its reason for being. Paul Singer added ‘what may have been a clever idea in its infancy has grown into a blob which is destructive to the growth creating prospects of free market capitalism.’

And again from Alan Kohler, ‘When the history of the next market collapse is rritten ETF’s are likely to figure prominently.’

Then from Howard Marks co-founder of Oaktree Capital ‘When management of assets is on autopilot, as it is with ETF’s, then investment trends can go to great excess’ He cautioned that ETF’s promise of liquidity has yet to be tested in a major bear market. “It is not clear where ETF’s and index mutual funds will find buyers for their holdings if they have to sell in a crunch.

.................
When a financial product causes stocks to be priced on money flows (in and out of an index ETF product) rather than on specfic stock’s fundamental valuations then there will be trouble on the horizon and even of more concern is Paul Singer’s statement above. Passive investing threatens the efficent functioning of the market and may lead to more distrust of an essential capital raising vehicle which is for what the stock market was originally created.

https://earlyretirementnow.com/2020/07/01/passive-investing-bubble/
For anyone interested to read further from diff perspectives .

 

[chrisloh65]

Anyway, I just want to sounding the warning this about:

"Keep advocating other people to "DCA blindly into index ETFs over long term regardless of market conditions" (and don't sell), this strategy itself is a ponzi scheme!"

People who want you to adopt above ponzi scheme will always tell you how difficult it is to buy low sell high, you can always "have your cake and eat it too" to be able to earn above market returns while doing basically nothing than to practice above ponzi scheme, blah blah blah.

Well, to each his own, ultimately it is up to you how you want to invest.

Anyway, let's wait for next 20 years and we will see whether this ponzi scheme explode or not and whether many people here will get burnt and cannot retire anymore?

And anyway I know you would do very well even if this ponzi scheme explode because you have retired and have full time to watch market development and get out at the first sign of trouble, not to mention you are early adopter like Shiny Things who will benefit the most from advocating this scheme.

1. I'm not vouching for Shiny. Shiny's methodology is nothing new, it is largely based on the passive investing ideology backed by lots of research which is widely known. Shiny simply repackages these ideas into a Singapore perspective and provides his personal touch.

Keeping it simple aka three components make it doable even if you believe it to be flawed, actually encourages people to invest. There are **** loads of people sitting on the fences. Try encouraging investment with your timing strategy and ROI--they go blur and can't even differentiate the math between ROI and ROE.

2. So next question is, I believe in evidence. So far I have found nothing in support for Timing the market. P/E ratios are great at telling something is expensive and having high correlations for a poorer return over the LONG TERM, but it never tells you when to exit the market or timing in the short term.

Expensive market can still be more expensive and vice versa. Furthermore, "expensive" is just a man made construct, what really is considered "expensive" ?...there is no answer to it as investing is also largely psychologically influenced among competing assets and investors.

So really what is expensive ? book value ?, cashflow ?, tons of fundamentals ratios ?....you see the problem here...the majority of us do not do fundamentals..or technicals--what moving average ? recently i hear a so called real estate agent technician fumbling on zoom to predict the market and getting beaten up by the public.

3. I do admit that STI is not exactly as correlated to your 2822. But 2822 is still a narrow base and not representative of the broad market of china. STI in my opinion though not a very good index, is still highly correlated to broad base China.

Perhaps one genius should create a narrow base of the STI, with balanced allocation per sector in manufacturing, finance, reits, etc etc and compare that to 2822.

Still the way I see it, the world is separated between USA, Developed markets, and ASIA. The correlation of ASIA inclusive of Australia are very much more correlated to each other due to currency and export orientation. Developed markets falls in between because it still exports like 70 percent, in contrast to USA.............yet overall, they are all highly correlated to USA, even China but not vice versa.

USA won't die when China screws up. Buying China cheaply, does not necessarily give you an edge when things crashes as evidenced by so many recessions.....it is akin also to why you still need to hold quality bonds as a ballast even when it is expensive, many articles argue for it to be seen more of a ballast than for absolute return, in other words, the focus is still diversification in the realm of modern portfolio theory.

Obviously these are just my observations and I may be wrong but nothing i've heard so far has changed my perception. Prove to me with research based evidence for anything otherwise.

Even as I believe the market is expensive based on notions of shillers cape ratios, or percentage allocation survey and fundamentals.....my real aim to remain invested is simply to beat cash and bonds returns....the real danger is not en expensive market but an L shape market or flat one.....all I need is while in the spirit of passive investing, simply adjust the asset allocation to expose less to equity.

A broad base equity construct of VWRD, and yes STI (though I not a big fan and prefer a selection, and yes I do support having china, or eimi in it, vs losing FX benefits) is still warranted. After all, its only like 30 percent USA, ...that is not overkill. ....We don't have a good alternative to STI etf as many can't afford the exuburent transaction fees of stock selection as I do.

As I mentioned, FX to me is very important as I've been burnt severely. Vanguard wouldn't have encouraged so much local shares usually about 40 percent if it hadn't thought forex risk was important...So I guess you're gonna argue Vanguard non independent ?...why is it Vanguard I've read is actually owned by the customers ?....wait you are gonna come up with another conspiracy theory ?

4. Having a broad based VWRD is definitely sound considering that the whole motto of the passive investment community is NOT ROI. It is largely risk adjusted returns which is very much influenced by diversification and the efficient frontier. That's why I keep repeating, make up your mind which school of thought you belong to and stick to it and wish you luck.

Chris, you belong to the other school of thought, nothing will ever convince you otherwise so why bother trying to convince us believers of passive investing ?

I actually have been DCA before 1998...so 20 years later, are you expecting me to change ? so what if you turn out right in the end ? do you really think a reasonable man should still change ?...this sounds like the conspiracy theory that the Govt of SG won't return your CPF even at age 65.

Since you encourage that I be suspicious in western or USA, perhaps I should also throw away my three degrees, remain always suspicious that all i've read are western propaganda and highly biased. I do have a scrutinizing mind, at least these info are fully open for scrutiny and not China's. That is the whole point.

To put it simply, Trump tells you indirectly don't trust the numbers. As for China, it appears to say "trust me" trust my numbers. But because it is not open for scrutiny, its useless even if China is telling the truth, period.

When I think of China, I think of inferior product. From the faulty test kits they donated, to dodgy masks.......I worked with many medical people from china.........many buy their goods from Australia, everywhere, but China..its big big biz......and you wouldn't have to go so far, recently none of the telcos selected Huawei....and its not to anyone's surprise. Sure the govt say they gave Huawei a fair go..........do you really believe that ?.........ok I can't help with TIK TOK, it keeps an aging man feeling young.

Ultimately, I only care about making money. As long as the majority of investors continue to believe China is dodgy, I will have to follow the herd. I don't want to be stuck with the crowd still barking about how cheap China shares are for the next 10 years.......but having it 10-20 percent is still sensible but definitely NOT over weighting it....as I'm a student of diversification and modern portfolio theory and risk adjusted returns is my core belief. China along with emerging markets still remain far away from the efficient frontier. By being away from the frontier, I suspect it also encapsulates the huge distrust the mainstream investors have for Chinese companies and this is not going away soon. Why bother even fighting against the flow ?

5. Now lets talk about DCA. This appears to be the crux of of what you do see as a problem as verbalised.

Shiny's book is designed for the mainstream and people will still do well, its still better than investment linked insurance products, and definitely over cash or bonds over the long term.

Better for the mainstream to be invested then you scaring them over TIMING the market, ratios, techincals yada yada where I've seen nothing that timing works for the general population.

DCA. be it in business or when I sell/buy my ingots in ultima online in order to reduce risk is just a common sense approach to everything in life. That's about it. It is an excellent simple tool to reduce risk and it has shown to do so by evidence.

Since I'm not smart enough to spot the next Tesla and definitely the majority in this forum do not, what are the best alternative ?

a. DCA lor ..........There are **** loads of evidence supporting the buy and hold DCA approach long term perspective investing. Coupled with a well diversified portfolio based on modern portfolio theory. I can't see anything wrong with that for the common people such as I....do you really think I want to spend hours on end, like I used to stock picking, trading, etc ? NO.

6. So whats the other alternative ?.....buy real estate and that is why you will find more people getting rich over physical real estate than stocks. Why ?............
because so many novices actually believe when it comes to stocks, it is about timing, stock picking, buy and sell etc etc.....how many of them have even heard about the "modern portfolio theory" unless they have done finance 101.

.......These novices delve into a rabbit hole and get bitten by a snake and never will they return...........they end up keeping cash, scared of stocks, can't afford real estate...and remain poor and miserable forever.

7. The only issue I have is with the 110-age. A simplistic approach but can work for the masses as long as your risk appetite is on par. The rich however, will have tailored asset allocation...its an unfair world.......or you self learn about it and tailor it for yourself- it can be challenging to many unfortunately....that's why fee based financial planners CHARGE.


8. again, I shall reiterate. DCA is useful in supporting the notion of continual buying of shares in an EXPENSIVE market by reducing risk. It is USELESS when the market is cheap as you can just LUMP SUM.

By CONTINUAL BUYING (which you are so against) of shares in an expensive market or flat market, its aim is LARGELY to beat the next worst alternative aka having long periods in cash and bonds. And that is why timing even if you are god, is likely to still fail in probability to DCA/continual buying when risk and return are considered as of equal importance. Not to mention, the psychological dangers it reduces.

Should return be of more importance, evidence suggest higher probability to LUMP SUM-------it gets more dangerous when the market is supposedly expensive---so pick whether the 33 percent that you become wrong is worth it--this is the only time the argument of TIMING the market warrants careful thought.

In summary Chris, you and I have way too much time in our hands and writing long passages that many just skimp through. No one bothers anymore hence as I have learnt, no one really bothers to really understand or read what I or you write. You can tell by now can't you ?...so really why bother ? anyways, this is my last refute to you...gonna spend time on more fruitful endeavor.

 

[cassowary18]

If you really think that index investing is a Ponzi scheme then why don't you short it? Since it will crash to 0 eventually.

 

[highsulphur]

What are your views on the prices of a35 and MBH here? What's the expected yield at current prices?

 

[Shiny Things]

People. Oh my goodness. Stop replying to Chris and just ignore-list him, otherwise he'll keep posting walls of text where every third word is boldfaced and underlined and red text. He drowns everything else out.

Chris, you have an entire thread—literally with your name on it!—where your posts will be welcome and you'll be able to have discussions without annoying people. Go there. Heck, I’d even join you if you went there and we could talk about what an actual Ponzi scheme looks like. But I have no interest in talking to someone who just comes into this thread and screams DEBATE ME DEBATE ME DEBATE ME, because those people never actually want to debate. They just want to score points.

And switch to decaf.

I am looking for margin interest.

In your Activity Summary report, look under the Interest section.

A good practice (and habit) for retail investors would be to take a look at the materials available to help inform your decision before jumping right straight into the product.

Given how low cash rates are right now, an expected yield of 1.9% to 2.2% for a "cash" product initially caught my eye as well. I've extracted from Endowus' website the factsheet for UOB AM United SGD Fund that makes up 50% of the Enhanced Cash Smart product, and noted that the credit risks embedded in the fund is higher than what I had expected:
- Weighted average YTM of 4.16%, implying quite a large credit spread to compensate you for bearing credit risks. A quick google search of the fund's top 5 holdings (15% of NAV) would reveal some attributes: emerging market corporates, mostly BBB-rated, most of them have mature 2-3 years later

Holy screaming zombie Jesus. Putting all your cash in BBB EM corp hard-currency debt—yes, that is certainly a way to get extra yield, as long as you don’t mind a hell of a lot of FX gap risk!

What Shiny postulated of the negatives of China r readily available on the web. I know cause I’ve read about them many times.

However, I’m also in the believe that the negatives of those postulation along with additional risk premium for eg assumed questionable reporting standards are already factored into the share price.

And this is a totally valid question. Chinese banks are trading at a P/E ratio around five, and a p/b ratio around 0.7. Those numbers are more depressed than German banks, and as someone who used to work for a German bank boy howdy that is saying something.

Interest rates are low, the curve’s flat, earnings growth has been anemic for half a decade… buying Chinese banks amounts to betting on a sudden, sharp turnaround in the Chinese economy, and asset quality getting better (which it isn’t, even the Chinese regulators are saying NPLs are getting worse right across the sector), and the government stepping back from its current policy of “asking” banks to cap their profit growth.

These things might all happen, and if they do, that’d light a rocket under Chinese banks’ earnings and their multiples. But it’s a long shot.

1. I've always held the perception Shiny's always pro IWDA and not VWRD. The way Shiny's answer was half hearted approach towards VWRD.

It’s more that IWDA is perfectly good and there isn’t a compelling reason for people to switch. Stability is a virtue!

If keen to have small allocation to high yield bond , what are the recommendations for a high yield bond etf ?

IHYU LN, if you just want USD bonds. You don’t need this until you get bigger, though… having a few hundred dollars (or even a few thousand) in a high-yield ETF isn’t going to make any meaningful difference to your returns, it’s just going to run up transaction costs.

My father (59) lump sum endowment plan is maturing on Aug this year. Term is 10 years. Principal: 37k, Sum Assured: 45.5k Net Cash Value: 54k. Any advice if he should continue putting or to take out?

TY!

Surrender it.

Hi,
this is my first time posting in this thread. I have gathered from a few earlier posts that this thread related to "buy and hold" type of investment strategy which does fall in line with my strategy.

I've been looking into buying either VUG or IWF. I am leaning towards VUG due to its low expense ratio. Does anyone have any positions on VUG? What are the dividends like over the past few years? I know this is a growth ETF so the withholding tax may not be substantial.

Any advise is deeply appreciated.

I’m gonna take a step back, and say look beyond growth ETFs. Growth stocks have done quite well over the last few years, but trends like that don’t—can’t!—last forever. Value stocks (the opposite of “growth”) will rise again eventually, and you don’t want to miss big sectoral trends like that when they start.

I can’t find any earnings-growth ETFs listed in the UK unfortunately, though there are momentum-factor ETFs aplenty (which is a similar thing, but for price growth instead of earnings growth). If you must, IWMO is the best London-listed option for momentum-factor; though I still think you’re better off with big daddy IWDA.

Did anyone check whether poems MMF also suffered the same financial crisis drawdown recently and in GFC ? Ie there is still risk of it below its NAV ?

I checked, and it didn’t. Though, the POEMS MMF is a floating-price structure, not a fixed-price structure; while it doesn’t “break the buck”, in theory its price could dip on any given day if it needs to sell its holdings and there’s no buyers.

 

[Shiny Things]

What are your views on the prices of a35 and MBH here? What's the expected yield at current prices?

I've been a bit "meh" on bonds for years now and they just keep rallying in my face, so, take my view here with a grain of salt—but I'm not bad at relative value, and A35's portfolio has a 1.19% YTM against 2.51% YTM in MBH's portfolio. So MBH has a 1.3% higher yield (more than double the yield!), and a three years' shorter duration (which means less interest rate risk—if rates go up, A35 will lose more money than MBH will).

On that basis, even factoring in credit risk, MBH looks like an absolute steal compared to A35.

 

[BBCWatcher]

I've been a bit "meh" on bonds for years now and they just keep rallying in my face, so, take my view here with a grain of salt....

It doesn’t seem like a great time to pile into anything with gusto. Just don’t sit on excessive cash hoards (which is worse), and ease into long-term allocations if you are, that’s all. “Ease in” means over a couple or several months, depending on how big your excessive cash pile is.

A quick comment about MBH: it’s certainly not perfect. The fund is literally called an “Investment Grade” bond fund, but may I point out it’s holding several Singapore Airlines bonds, as an example. Singapore Airlines is an entity that just issued bonds with promised 6+% yields, right? Even Hyflux wasn’t that edgy. On no planet are Singapore Airlines bonds investment grade! They’re really quite junky, actually. Nikko AM is not managing this fund per its stated objectives. It should have dumped the Singapore Airlines bonds already. We have a very, very big problem in Singapore with mislabeled products — and it seems to be getting worse. We now have “Cash Smart” funds that are being aggressively marketed to individuals hoarding too much cash who are trying to chase yield that hold BBB rated bonds, as another example (if you choose “Cash Smart Enhanced,” which is not any place you would sensibly park cash). Unfortunately you cannot take even fund names at face value in Singapore. Caveat emptor.

That said, I agree that MBH is the best available, general purpose, long-term Singapore dollar bond fund.