Official Shiny Things thread—Part III

[duckyboi]

I really appreciate the feedback on my bond ETF conceptions. I may be a little off on some aspects, but if you compare holding a bond ETF versus holding an individual bond to maturity, the individual bond can be compared to a fixed deposit, but with a higher risk of default, hence, higher yield to compensate. Provided no default, with an individual bond the principle can be redeemed in full at maturity, even if the market price moves out of your favor. In my mind, that is a major advantage over a bond ETF which cannot be held to maturity, and when things move out of your favor, you are subject to continuous duration inherent in the bond fund, which may not always be desired.

Am i making too much of the differences? Would a person doing a bond ladder and a person in bond ETFs achieve the exact same outcome?

Theoretically, yes, that js an advantage of a bond ladder in that it is predictable- you know you will get $x back on a specific date (provided no default)

The con, though, is that conversely you have to put in alot of effort to manage the bond ladder. And this is quite alot of effort! Is the juice worth the squeeze?

Also, if you have DCAed into the bond etf this isn't really an issue?

 

[Colourfulbutterflies]

hi guys is Saxo invester any good? I see yall keep mentioning SC and IB but never touch on Saxo.

 

[tangent314]

Looks like something to add to the FAQ

hi guys is Saxo invester any good? I see yall keep mentioning SC and IB but never touch on Saxo.

0.12%/year custody fees for non-SGX stocks

 

[Colourfulbutterflies]

i see, but IB also charges 10 usd a month which adds up to 120 usd per year. I dont see how I can bring my networth to above 100k or buy enough stocks per month to meet the 10usd in commission in a month.

 

[limster]

hi guys is Saxo invester any good? I see yall keep mentioning SC and IB but never touch on Saxo.

https://forums.hardwarezone.com.sg/111060818-post2.html

i am unable to verify, pls DYODD.

 

[ftpofmpo]

It depends on the bond.

Lots of high quality governments issue real return bonds (a.k.a. inflation indexed bonds), and for that matter there are some annuities structured that way. They have no inflation risk, because their outcome is pegged to the inflation rate. Buy a basket of these and you’d even be very well defended against Singapore dollar inflation.

what are some of these annuities?

 

[sunbox]

Hi Folks, is IWDA still a good buy considering the price has dropped considerably?

 

[unknownplayer]

Hi Folks, is IWDA still a good buy considering the price has dropped considerably?

Nobody knows. Is a 20+% discount to peak good enough value for you? If you can stomach this then. By all means go ahead

 

[chrisloh65]

IWDA has gone up by about +119% since 2009 low to current price of about US$51.79, which is a drop of about -18% from recent peak.
Is this price dropped considered considerable? - I don't think so!
It this a good bargain price considering that corona-virus is still raging world-wide and new death and critical condition cases occurring every day going by the thousands? - I don't think so (going by historical standards)!

The final decision is up to you!

Hi Folks, is IWDA still a good buy considering the price has dropped considerably?

 

[Shiny Things]

Hi Folks, is IWDA still a good buy considering the price has dropped considerably?

Yep. It's on sale!

It this a good bargain price considering that corona-virus is still raging world-wide and new death and critical condition cases occurring every day going by the thousands? - I don't think so (going by historical standards)!

So are you short? Or are you just on here making noise? Put your money where your mouth is.

I really appreciate the feedback on my bond ETF conceptions. I [...]the individual bond can be compared to a fixed deposit, but with a higher risk of default, hence, higher yield to compensate. Provided no default, with an individual bond the principle can be redeemed in full at maturity, even if the market price moves out of your favor.

This much is correct.

In my mind, that is a major advantage over a bond ETF which cannot be held to maturity, and when things move out of your favor, you are subject to continuous duration inherent in the bond fund, which may not always be desired.

This is not really correct.

A bond ETF is just like owning a portfolio of bonds, or a bond ladder (with the added benefit that you're diversifying across issuers; a bond ladder implies that you're buying it all from one issuer).

Am i making too much of the differences? Would a person doing a bond ladder and a person in bond ETFs achieve the exact same outcome?

Basically, yep.

 

[SpeedingBullet]

many many words..

Check out Howard Marks' latest memo (a follow-up from his recent one sent only to clients)

Always love reading his letters

 

[BBCWatcher]

what are some of these annuities?

Inflation-indexed annuities (a.k.a. inflation-protected annuities)? As one example, last I checked, Principal Financial sells some, in U.S. dollars with escalation pegged to the U.S. Consumer Price Index.

A few countries allow certain individuals to buy into their retirement annuities (government social insurance), and some are inflation indexed.

These examples aren’t accessible to everyone in Singapore, but “shop around” if you’re really interested. The closest thing I’m aware of that’s easily accessible to most in Singapore is the CPF LIFE Escalating Plan, but that’s a fixed 2%/year escalation.

 

[chrisloh65]

Interesting!

Particularly:

As for the current episode, here’s some data from Gavekal Research’s Monthly Strategy piece for April, bearing on the question of whether the bottom was passed in March:

. . . markets rarely clear after one massive decline. In 15 bear markets since 1950, only one did not see the initial major low tested within three months . . . In all other cases, the bottom has been tested once or twice. Since news-flow in this crisis will likely worsen before it improves, a repeat seems likely.

And here’s some data from my son Andrew regarding the movements of the S&P 500 index around the time of the last two big crises. The first and second declines were followed by substantial rallies . . . which then gave way to even bigger declines:


9/1/00 - 4/4/01

-27%

4/4/01 - 5/21/01

+19%

5/21/01 - 9/21/01

-26%

9/21/01 - 3/19/02

+22%

3/19/02 - 10/9/02

-33%

10/9/07 - 3/10/08

-18%

3/10/08 - 5/19/08

+12%

5/19/08 - 11/20/08

-47%

11/20/08 - 1/6/09

+25%

1/6/09 - 3/9/09

-27%


Gavekal’s and Andrew’s data tell us markets rarely rally in a straight line. Rather, their movements represent a continuous tug-of-war between the bulls and the bears, and the result rarely goes in just one direction. After the optimistic buyers of the initial dips have responded to the low prices and bought, the pessimists find the new, higher prices unsustainable and engage in another round of selling. And so it goes for a while. Thus, as Oaktree’s Wayne Dahl points out, it took until mid-May 2007, or almost seven years, for the stock market to regain the September 2000 highs, and it took until mid-March 2013, or five and a half years, to regain the highs of October 2007.

I tend to believe more in proven experience experts than young amateur giving out free advice that It's on sale, just keep buying, even when at market top, there is no wrong time to buy!

Check out Howard Marks' latest memo (a follow-up from his recent one sent only to clients)

Always love reading his letters

 

[kram62]

Interesting!

Particularly:

As for the current episode, here’s some data from Gavekal Research’s Monthly Strategy piece for April, bearing on the question of whether the bottom was passed in March:

. . . markets rarely clear after one massive decline. In 15 bear markets since 1950, only one did not see the initial major low tested within three months . . . In all other cases, the bottom has been tested once or twice. Since news-flow in this crisis will likely worsen before it improves, a repeat seems likely.

And here’s some data from my son Andrew regarding the movements of the S&P 500 index around the time of the last two big crises. The first and second declines were followed by substantial rallies . . . which then gave way to even bigger declines:


9/1/00 - 4/4/01

-27%

4/4/01 - 5/21/01

+19%

5/21/01 - 9/21/01

-26%

9/21/01 - 3/19/02

+22%

3/19/02 - 10/9/02

-33%

10/9/07 - 3/10/08

-18%

3/10/08 - 5/19/08

+12%

5/19/08 - 11/20/08

-47%

11/20/08 - 1/6/09

+25%

1/6/09 - 3/9/09

-27%


Gavekal’s and Andrew’s data tell us markets rarely rally in a straight line. Rather, their movements represent a continuous tug-of-war between the bulls and the bears, and the result rarely goes in just one direction. After the optimistic buyers of the initial dips have responded to the low prices and bought, the pessimists find the new, higher prices unsustainable and engage in another round of selling. And so it goes for a while. Thus, as Oaktree’s Wayne Dahl points out, it took until mid-May 2007, or almost seven years, for the stock market to regain the September 2000 highs, and it took until mid-March 2013, or five and a half years, to regain the highs of October 2007.

I tend to believe more in proven experience experts than young amateur giving out free advice that It's on sale, just keep buying, even when at market top, there is no wrong time to buy!

Maybe we didn't bottom (I also think it's going to get worse for the economy before it gets better) but the main issue here is how will you know when the bottom will be?

Will you stay in cash until your crystal ball tell you that?

If you get a paycheck every month, you'll accumulate it? And then what? When do you start to invest it? What's the strategy that will make you start going out of cash?

 

[SpeedingBullet]

Interesting!

I tend to believe more in proven experience experts than young amateur giving out free advice that It's on sale, just keep buying, even when at market top, there is no wrong time to buy!

I think you're missing the point here. The average person doesn't have access or the smarts of Marks and his team of experts. I posted this particularly to Shiny is because he has spent considerable time in the markets and has probably hard of Marks, it's more a market commentary than anything else. I usually use these snippets to have some good banter with him

The whole point of DCA is to neutralize market timing. It's for people who have no time nor expertise to want to invest in the markets. Sure, if the market drops again, they'd be buying. If the market rises, they'd still be buying.

Interesting that you left out the part where Marks says it's also a time to consider buying.

If you want to time the market, go right ahead. Nobody's stopping you. You can head over to SSI where there are many more like-minded market timers like you, it'll be a more fun discussion.

 

[kram62]

Interesting read for those trying to catch the bottom by waiting in cash: https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/

 

[jack-320]

Interesting read for those trying to catch the bottom by waiting in cash: https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/

A good read on this article

Just to share below

If you are feeling horrible then I should go kill myself.

I have been on the POSB Invest Saver for 6 years now and each month I put in $500. My investment cost is close to $40K and it has already lost 38% value. Best part. This money is meant for my son local university education. How am I to explain to my son that he can't go U because his father has lost all the money. Sound like a typical Korean movie man!

I better go kill myself so that my wife can claim a little insurance money. Now cannot go Bedok reservoir then better use the pail in my home toilet and put my head in ....

https://forums.hardwarezone.com.sg/126186273-post486.html

However have to consider the investment cost when doing DCA, not saying that it is bad, nor it is good to blindly do DCA

 

[unknownplayer]

Chrisloh should just go to wallstreetbets and get rich there ;]

My view is (similar to HM) that the true bottom isn't here yet so I'm just dca downwards and steadily deploy

but do you want to like he said be substantially less invested and sitting on cash and miss the rebound? Even if it is the true bottom (only you'll know if you have a crystal ball) you would also be afraid and not dump all in. At that point it could still be better or worse. You'll get the same answer, nobody knows.

 

[chickenessence]

Hi all,
Thanks for all the replies.
Didn't know my simple question can cause a bit of commotion..

Anyway maybe can put it as this way, for MBH the max drop is from price of 1.053 to 1.007 which is about 4.4% "only".. compare to stock market which is about 20 to 40% drop. Therefore already a "cushion"?
Understand the other consideration is how much return can be expected from MBH.
*End of the day, we would like to learn how to generate more money in our account by this investing strategy when come to retirement.

Thanks for the rest of the info. Took some time to catch up all the message and data shared.


Would like to know too.
IWDA should be on par to S&P500TR (of course slightly worse, as taking consideration of ER, expense ratio)?
Is that correct?

This is a fair question. First, let’s get this clear: MBH is down about 1.5% since the start of the year. It’s done exactly what it’s supposed to—stabilise your portfolio during a volatile time.

MBH has been tugged in two different directions by two different impulses. On the one hand, corporate credit spreads widened (corporate bonds became perceived as riskier), which was bad for corporate bonds. On the other hand, interest rates collapsed, which has been good for bonds as a whole: lower yield = higher price.

This is very normal behavior for corporate bonds during crises, and it pays to take a slightly longer-term view. Month-to-month swings are volatile, but if you’re investing for years or decades, you shouldn’t even notice them.

MBH wasn’t around during the GFC, but LQD (an equivalent for US dollar bonds) was. Its value peaked in August 2018, dipped in October, and it was back in the black on a total-return basis by December.

The upshot is that I’m still comfortable with corporate bonds instead of government bonds. Investment-grade corporate bonds still have a much higher return than government bonds—more than enough to compensate for any extra risk, as long as you’re comfortable holding them and not bailing out at the lows.

Most of the time we're not in a crisis. And when we're not, IG corporate bonds significantly outperform government bonds.

 

[chrisloh65]

The truth is, only people who fears of missing out and keep buying when the price dip only a little bit are also the people who fear of buying when the true bottom occurs.

Many people just need to learn to master their fears.
This world now is mostly made up people always about preaching the best is yet to come, so wait long term!
Even flowerpalms keep a war chest, so has you? And what is a war chest for?

After long term than many people realize got bluffed for so long, like bluffed by those feng shui master!

Chrisloh should just go to wallstreetbets and get rich there ;]

My view is (similar to HM) that the true bottom isn't here yet so I'm just dca downwards and steadily deploy

but do you want to like he said be substantially less invested and sitting on cash and miss the rebound? Even if it is the true bottom (only you'll know if you have a crystal ball) you would also be afraid and not dump all in. At that point it could still be better or worse. You'll get the same answer, nobody knows.