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Hi, I'm new to investing and only just finished reading ST ebook. Few weeks back, I opened an ocbc account as I want to start investing. Only reason I chose ocbc was because it's the bank I'm using. Now after I've read the book, i would like to switch to ST recommended broker
- is there any fees to be paid if I switch broker within such short time frame?
Nope, just close your account. They can't stop you.
- Any other broker to recommend? I saw saxo markets which offer lower rates. Is it because of the custody fee they charged, hence the lower trading fees?
Yeah, I explicitly discourage people from using Saxo. They have custody fees, which are always and everywhere a ripoff. (I used to use Saxo, and they used to be good! I moved away from them when they started imposing custody fees, though.)
- I've set aside a sum of money for investing. What's the recommendation on the initial amount to put in based on current market situation?
For anyone who's sitting on a lump sum, my usual recommendation is to split it into four or six lumps, and invest one lump each month. That way, you'll spread out your purchases, so if the market dips you'll be able to take advantage of it, and if the market rallies from here, at least you'll have bought some.
I'm very new to investing. I would like to learn more about it. Any other books to recommend?
Ooh. I personally quite like Burton Malkiel's
A Random Walk Down Wall Street as a starting point.
There needs to be a supply shock of some kind to cause stagflation
Yeah, this is right. I genuinely do not understand all the people who are screaming about stagflation when the price of energy—the biggest driver of inflation markets—is collapsing literally through the floor. At some point these people need to admit they're wrong.
Yes, the cost of this most effective inflation hedge seems quite high right now.
If you're looking for someone to blame: funnily enough, the entity to blame for the cost of inflation hedges is UK life insurance companies.
UK lifers have
phenomenally large inflation-indexed liabilities, and because they are not insane, they like to hedge those with UK-inflation-linked bonds. The size of their inflation-indexed pensions books is so large, and the duration of those liabilities is so long, that UK pensions have hoovered up basically the entire market for UK linkers up to the longest maturity available (currently a 2068). I'd say the UK Treasury could issue basically any amount of linkers they wanted, and UK pensions would buy everything on offer.
For a normal bond, an increase in demand -> increase in price -> decrease in yield. Linkers work pretty similarly: increase in demand -> increase in price -> decrease in
real yield (the return of the bond above inflation).
The 2068 UK linker was issued at a paltry premium of 0.125%; they're now trading at a real yield of nearly -2.4%(!!). So if you bought the 2068 linker now, you'd be guaranteeing that you
underperform UK inflation by about 2.4% a year for the next forty-eight years. Where do I sign, he said facetiously.
The first thing I did was to look into the benchmark exposure (reflected in my original post); I still am trying to figure out for what types of investors and WHY would IGIL make appropriate investment allocation.
I'm trying to find the market for it as well and I'm struggling. The only sort of investors who really
need inflation-linked exposure are investors who are close to retirement and want a good cost-of-living hedge. And the way IGIL's exposure is sprayed across a bunch of currencies means that it's a very dirty cost-of-living hedge, trading at very rich prices (see above); if you want a cost-of-living hedge you might as well just buy equities, TBH.
Ah yes, thanks. For the record, I'm not a goldbugger. But I've been reading up a lot recently on gold as a hedge and Ray Dalio's All Weather Portfolio.
Yeah, I'm a bit sceptical of All Weather. I keep hearing that Ray "Look At Me I'm A Management Philosopher" Dalio came up with All Weather as a strategy to invest his own personal account... but Dalio's in a very different situation from most people. He's a squillionaire! He doesn't need to run up the score; his focus would be on protecting his wealth rather than growing it, so he would have a much more conservative allocation than most people. And that's what All Weather feels like to me: an excessively conservative allocation for someone who's already fabulously wealthy.
