Official Shiny Things thread—Part III

[candy crush]

Hi Shiny, can I ask, is the worse over?

So market is recovering now?

 

[highsulphur]

Hi Shiny, can I ask, is the worse over?

So market is recovering now?

Seriously.... You are relying too much on ST

 

[BBCWatcher]

Not from income but from excess savings

No, I don't think so. You'd just add windfalls to regular pattern buying, splitting up the windfalls into a few installments if you'd like. If you actually backtest increasing 360+ monthly buys to 720+ semimonthly buys, it doesn't really matter enough to worry about.

To be fair, I have been thinking through this issue quite alot too and it's been a worry. When you get laid off, you can't DCA anymore, at a time when equities prices might be at the lowest.

"It depends."

Practically everybody recommends having an emergency reserve fund to deal with urgent situations such as job loss. One possible approach is to continue making your regular investments for at least a couple months. If you're then back at work, great, you keep chugging along. You keep making those regular investments, and you also build back up your emergency reserve. In other words, you can calculate your emergency reserve inclusive of monthly saving/investment flows and with an overall size that is appropriate given your particular profession and position within that profession. If your profession and/or role is inherently unstable, then you'll probably want to have a bigger reserve (and higher savings rate).

The 6 month emergency fund is to cover 6 months worth of living expenses, not inclusive of DCA investments.

That's not written in stone. You can choose 9 months of living expenses with the first 3 of those months including your regular savings/investment flow, as one example. This is up to you.

The minimum "rule of thumb" recommendation is 6 months of emergency living expenses, including CPF Ordinary Account funds that could service a mortgage. You are certainly allowed to exceed the minimum "rule of thumb." Also, if you're reliably backstopped by the "Bank of Mom and Dad," then you can take that factor into consideration.

To mitigate this risk, would you recommend to also keep a buffer of funds to cover monthly DCA investments (6 months?) when laid off?

It's up to you, but for what it's worth I don't expect to curtail my regular monthly savings/investment flow if my income is interrupted -- not right away at least.

One could even make an argument that job loss (in Singapore) results in a cessation of compulsory CPF contributions, and perhaps you should take that loss of savings flow into account in structuring your emergency reserve and how it'll be drawn down. In other words, maybe you engineer an increase in monthly savings/investment flow during the first X months of a job loss emergency to compensate for the loss of compulsory CPF contributions. The increase might not be dollar-for-dollar since your alternative vehicle(s) will probably have a somewhat higher long-term yield (or at least that'd be a reasonable forecast), but it's up to you. All of these variations I've described are defensible.

 

[Purplestars]

Hi Shiny,

To be fair, I have been thinking through this issue quite alot too and it's been a worry. When you get laid off, you can't DCA anymore, at a time when equities prices might be at the lowest. However, you have been DCAing at high prices when economy was good. Such risk has to been managed. The 6 month emergency fund is to cover 6 months worth of living expenses, not inclusive of DCA investments. To mitigate this risk, would you recommend to also keep a buffer of funds to cover monthly DCA investments (6 months?) when laid off?

He will tell you time in the market beats timing the market, don't hold cash because it's very very bad, you have war chest means you fear the market...

 

[chrisloh65]

This is like saying that when US throws tonnes and tonnes of money at the corona-virus, all the corona-virus will be killed and Americans' lives will all be saved and go back to normal again after the stimulus package passed and ETF prices will also spring to rocket high again?

News from this side of the pond: markets are rocketing higher because it looks like the Senate and House are going to be able to agree on a substantial stimulus package for the US economy. We're not out of the woods here yet, but a deal is looking likelier than before.

This reminds me of the failed TARP vote in 2008. I was over in the Dresdner London dealing room (god rest its soul) and we were all watching the markets tank as the first TARP vote failed—“no bailout for you!”. The S&P 500 ended up dropping 7% that day.

The House members realized what they’d done, and a few days later waved through basically the same bill by a huge majority.

This seems to be what’s happened this time around as well. The Democrats did their thing, voted down the first bill… then, when markets tanked, everyone came back to the table. (Pleasingly, it seems like the bill that’s about to get approved has _huge_ stimulus attached to it, which might be enough to tide businesses over as long as it takes to social-distance away COVID-19.)

For what it’s worth, I’ve been buying stocks all the way down; bought a bit more yesterday.

 

[moolala]

Never ever use historical stuff to predict future cause it will fail

This vote is different because it's not a bailout

Whoever holds up this bill will lose power

 

[flowerpalms]

Hold your investments, dont panic sell and dont panic buy either

Increase your investment amount

Do your regular investing once a month so that you remain fully invested whether the price moves up or down

 

[Shine.gdj]

Is anyone using their CPF OA to buy Singapore stocks and the ES3? Is this a wise move? I know that there are additional charges by the agent bank but is seems manageable. $2.50 per 1000 units and $2 custodian fee every quarter. Why do we need to have an agent bank? How is this transaction different from using cash to buy?

 

[_dXter]

Is anyone using their CPF OA to buy Singapore stocks and the ES3? Is this a wise move? I know that there are additional charges by the agent bank but is seems manageable. $2.50 per 1000 units and $2 custodian fee every quarter. Why do we need to have an agent bank? How is this transaction different from using cash to buy?

There are only a limited set of stocks and unit trusts that can be bought. The agent bank is to ensure compliance, moreover CPF is not "your" money.

 

[Torenoo]

Think of it this way. Because the USD is so strong, you have to spend relatively fewer USD to get the same lump of stocks in IWDA.

Hi ST,

regarding your above quote - so actually its quite balanced on both sides regardless SGD/USD up or down ?

ie - USD strong (although you pay more SGD to get the X dollar value of USD) - but you get more IWDA with the same X dollar v amt of USD when you actually purchase IWDA

ie - USD weak (although you pay less SGD to get the same dollar value of USD) , but that dollar value of USD gets u lesser IWDA

is the train of though correct?

And if i can choose - which is the safer scenario to be in ?

thanks in advance

 

[ranchfarm]

Hi, I'd like to ask about a rough estimation of the dividends I get from an ETF with US companies only, both on US stock exchange and LSE(Ireland domicile)

Let's say I want to buy S&P500 etf:
US stock exchange: 0.7 x dividend yield - expense ratio
Irish-domiciled LSE: 0.85 x dividend yield - expense ratio
Would this be a good estimation?

 

[Calpha K]

Anyone here using Standard Chartered, and is familiar with buying stocks OTC?

Why can't I see OTC stocks such as TENCENT:TCEHY? Is it that SC does not provide OTC access?

 

[EmporioArmani]

Hi ST, I recently bought your ebook and enjoyed every part of it! Just one question that may not be related to the content inside though.

When you write the content and publish this book, you are publishing it under your name. Do you have any concerns that people might sue you over what you have said in the ebook because what they have done exactly what you said, but maybe it didn't give the result they were expecting to have.
I'm just curious as I know people like to sue over every small little thing in life.

Sent from Xiaomi MI NOTE 10 using GAGT

 

[Thoreldan]

Hi ST, I recently bought your ebook and enjoyed every part of it! Just one question that may not be related to the content inside though.

When you write the content and publish this book, you are publishing it under your name. Do you have any concerns that people might sue you over what you have said in the ebook because what they have done exactly what you said, but maybe it didn't give the result they were expecting to have.
I'm just curious as I know people like to sue over every small little thing in life.

Sent from Xiaomi MI NOTE 10 using GAGT

ST is talking about long term strategy.
I doubt anyone has invested for 20-30 yrs after reading his book.

 

[Purplestars]

Firstly: if you’re a laid-off bar worker or cinema worker, I have sympathy. Life is tough right now, and you shouldn’t feel obliged to keep to a regular investing plan if you can’t afford it. This is an extremely tough downturn; it will be tough for everyone; and you need to take care of yourself first. Ideally you’ll have an emergency fund you can dip into, but if you don’t, that’s okay too. Taking care of yourself is your first priority.

Secondly, Purplestars, your “useless” comment was, itself, useless. I haven’t seen you giving any constructive suggestions about how to make a better strategy, though. It seems like you’re just looking to tear down other people, and you don’t have anything to add. If you’re not going to stop fighting and be civil, you’re going to get banned.

Nobody is fighting you at all. I can understand why you feel you are being "fought" when you are facing difficult questions that you cannot answer adequately. Perhaps getting me banned is the best way to sell your book by silencing all doubters?

There are many constructive suggestions that have been offered, you just chose to ignore them and avoid answering any doubts about them. Or simply brush them aside with some simple tropes. Some offered include:

1) Opting for high interest bank accounts instead of MBH/A35 to avoid lack of liquidity and lack of negative correlation when stocks tank. Cash is king.

2) Allocate some assets in cash to keep a war chest to time the market when it falls. This allows you to continue to DCA when your income is affected as well.

3) Have a better asset allocation rule other than 110-age.

These were posted nicely in my previous post which you simply ignored BTW.
I expect you to brush this aside with some simple tropes again as well.

There are also many other suggestion by others which you'd simply ignore.

These are genuine concerns by people who have followed your method are currently experiencing. Besides, how many people actually stick to your method for the long term? Most of your current fanboys here are recent joiners and readers, the others who I have seen in the past have largely disappeared/deviated going their own way.

Saying "Stonks only go up! Herp DURRR just keep buying! Oh you lost your job and can't buy? Sorry please take care of yourself with your emergency fund!" doesn't do anyone any favors in addressing the concerns as this is just brushing them away.

 

[hkchew03]

Hi Shiny,

To be fair, I have been thinking through this issue quite alot too and it's been a worry. When you get laid off, you can't DCA anymore, at a time when equities prices might be at the lowest. However, you have been DCAing at high prices when economy was good. Such risk has to been managed. The 6 month emergency fund is to cover 6 months worth of living expenses, not inclusive of DCA investments. To mitigate this risk, would you recommend to also keep a buffer of funds to cover monthly DCA investments (6 months?) when laid off?

By keeping a "emergency DCA" fund, you are not fully utilising your cash in the stock market. Secondly, you do not know when is the next huge drop coming. It may be 10years? That means miss out 10 years of time in the market.
Better idea is to balance your bond into equities, but that would mean you will not be following the ratio.

idea of DCA is to have consistent grow over long period, and not quick rapid growth over a short period.

Posted from PCWX using Redmi K20 Pro

 

[flowerpalms]

Then how much cash do you think one should have

Besides the 6 months emergency fund

By keeping a "emergency DCA" find, you are not fully utilising your cash in the stock market. Secondly, you do not know when is the next huge drop coming. It may be 10years? That means miss out 10 years of time in the market.
Better idea is to balance your bond into equities, but that would mean you will not be following the ratio.

idea of DCA is to have consistent grow over long period, and not quick rapid growth over a short period.

Posted from PCWX using Redmi K20 Pro

 

[chrisloh65]

https://www.straitstimes.com/busine...ing-leveraged-clients-to-sell-in-market-rally

Bank of Singapore urging leveraged clients to sell in market rally!

And this:

https://www.bloomberg.com/news/articles/2020-03-19/the-great-coronavirus-crash-of-2020-is-different

"The Great Coronavirus Crash of 2020 Is Different
People have to live with social distancing to save lives. But what if the economy shuts down, too?

The scariest aspect of the crash is that, for once, it’s about something real. The crash of October 1987, which featured the largest one-day decline ever, was a hiccup, a market malfunction that didn’t even cause a recession. The crash of 2008 also had an internal cause: the popping of a debt bubble inside the financial system, which was addressable with fiscal and monetary stimulus. This crash hasn’t been caused by an imbalance in balance sheets but a life-and-death struggle with a microscopic invader, the virus that causes the lung disease Covid-19. Investors are wrapping their minds around the awful reality that the pandemic is out of control. The coronavirus infects stealthily: It’s too late to stop it at the border or to seal off hot spots within a nation. It has spread so widely, the only way to halt it now is to operate on the assumption that anyone could be a silent carrier.

When sickness can come from anywhere, the agreed-upon solution is extreme social distancing—for a long time. "


Looks like they are expecting this stock markets rise to be dead-cat bounce since this crash is caused by life-and-death Covid-19 and cannot be solved by throwing money at it, unlike 2008 financial crisis which can be easily solved by fiscal and monetary stimulus, and so worse will come after this and hence stock indexes and index ETFs will suffer more drop in future?

He will tell you time in the market beats timing the market, don't hold cash because it's very very bad, you have war chest means you fear the market...

 

[Investnewbie82]

Actually doesn’t this mean ST keeps warchest too? How to buy down if DCA monthly?

News from this side of the pond: markets are rocketing higher because it looks like the Senate and House are going to be able to agree on a substantial stimulus package for the US economy. We're not out of the woods here yet, but a deal is looking likelier than before.

This reminds me of the failed TARP vote in 2008. I was over in the Dresdner London dealing room (god rest its soul) and we were all watching the markets tank as the first TARP vote failed—“no bailout for you!”. The S&P 500 ended up dropping 7% that day.

The House members realized what they’d done, and a few days later waved through basically the same bill by a huge majority.

This seems to be what’s happened this time around as well. The Democrats did their thing, voted down the first bill… then, when markets tanked, everyone came back to the table. (Pleasingly, it seems like the bill that’s about to get approved has _huge_ stimulus attached to it, which might be enough to tide businesses over as long as it takes to social-distance away COVID-19.)

For what it’s worth, I’ve been buying stocks all the way down; bought a bit more yesterday.

 

[hkchew03]

Then how much cash do you think one should have

Besides the 6 months emergency fund

do you have problem understand english? i am replying to him regarding about his suggestion on addition fund to buy when dip.