Official Shiny Things thread—Part III

[cassowary18]

Just wondering...

If you buy O87.SI, would you still be subject to 30% estate tax?

 

[w1rbelw1nd]

That said, your point about “your toiletries come from Unilever, your cars come from overseas, etc etc etc” is well taken. That’s why I encourage people to have an allocation to overseas stocks, and why I point out a very easy way to get broad-based exposure to those overseas stocks.

If your complaint is that you think there should be a bigger allocation to overseas stocks, that’s fine, but be civil about it.

To be fair, based on what I seen so far you have been harping on about 50:50 global:local allocation without putting up IMO a decent argument about having it at 50:50.

1. Lets be reminded that Singapore stocks, on a weighted capitalisation basis, is 1% of the MSCI All country World Index. Singapore stock market is that small.

2. Being a open and trade dependent economy, a huge part of our economy is made of foreign companies, foreign listed companies, like what s0crates says.

Taking into consideration the above, why is it that a 50:50 split more appropriate than a 90:10 split?

This is absolutely true. The ES3 + MBH + IWDA strategy is appropriate for most Singaporean investors. That said, I have a pretty steady stream of people reaching out for tailored advice because they have a particular situation—they’re retiring in another country, have large asset bases overseas, need to hedge a particular exposure, are already wealthy and need a more conservative allocation, etc etc etc.

Are you sure you want to put it out openly that you are giving tailored advice? Might get you into trouble.

There are other obvious sg sexperts here but don't spend all their time answering basic questions repeated 9999999 times.

I can understand that - when I was posted to London there was less time spent on family and friends, so I actually had more time on online activities. The same could be assumed for our foreign forum members here.

 

[BBCWatcher]

If you buy O87.SI, would you still be subject to 30% estate tax?

You read the prospectus, right? The managers of O87 think GLD is most probably subject to U.S. estate tax. I agree. Does the merely crosslisted/alternate ticker (O87) mean it isn’t? “I don’t know,” but if I were you I’d assume it’s still U.S. estate taxable.

Surprise!

Also, the top marginal U.S. estate tax rate is 40%.

 

[cassowary18]

You read the prospectus, right? The managers of O87 think GLD is most probably subject to U.S. estate tax. I agree. Does the merely crosslisted/alternate ticker (O87) mean it isn’t? “I don’t know,” but if I were you I’d assume it’s still U.S. estate taxable.

Surprise!

Well I didn't, frankly because I have no interest in gold at this point in time. You and ST put up some convincing arguments upthread about why gold isn't a great safe haven.

 

[assiak71]

Did some posts get deleted here? Cant find my last post

 

[chrisloh65]

Not sure about yours, but I am sure some of my posts had been deleted from here (secretly without any warning).

Did some posts get deleted here? Cant find my last post

 

[FrostWurm]

To be fair, based on what I seen so far you have been harping on about 50:50 global:local allocation without putting up IMO a decent argument about having it at 50:50.

Taking into consideration the above, why is it that a 50:50 split more appropriate than a 90:10 split?

Can you all please stop coming into his thread and post stuff like this? I don't agree with 50:50 either, but it is just a general guideline for you to follow. ST has already given his basic reasoning for it (read the book), and has also said that you can vary it if you want.

If I take your argument to its logical extreme, then I must ask why do you choose 90:10? Why not 85.5:14.5? Why not 81.62:18.38? I don't think you have an answer, and the term "answer" here meaning a precise formula that you used to derive your 90:10 allocation. Prove me wrong.

It is just his opinion, and it is a reasonably-informed one. You all keep coming here and insisting his opinion is wrong. That's really bizarre. You have been on this thread for the longest time but you don't want to agree to disagree. smh

 

[chrisloh65]

You seems to be painting US in too bright light and did not consider other effects if you are residing in Singapore and using S$ which you failed to highlight.

Example US has been printing too much money (and still continue do so), and once it is no longer the biggest GDP country in the world and USD is no longer the world's main reserve currency, USD will collapse in value vs S$.

Then if you invest in stocks with large US domestic exposure, e.g. IWDA with >50% exposure to US domestic, your value in S$ will drop significantly. This is a considerable risk which you failed to highlight.

Yes, I agree. There should be no first order real effects on non-currency assets when a currency devalues. The apple example is a good one.

However, there will be second order effects. If the U.S. dollar falls relative to other major currencies by half, U.S. goods and services exporters would be even more competitive, and real U.S. consumer import purchasing power would be impaired, presumably. All that would have real effects on businesses around the world, including here in our small, open economy named Singapore. The Monetary Authority of Singapore wouldn’t actually allow a 2:1 devaluation relative to major currencies to be fully reflected in the Singapore dollar. MAS would manage our currency so that it’d incorporate some of that hypothetical devaluation (not all). That is, the Singapore dollar would be pulled in the same direction, albeit not all the way. So maybe relative to the Singapore dollar it’d be a 1.8:1 devaluation — something like that.

Also, why is this hypothetical devaluation happening? Probably for some real reason(s) that affect real businesses. Thus real business valuations could be impacted up or down.

 

[assiak71]

Not sure about yours, but I am sure some of my posts had been deleted from here (secretly without any warning).

Maybe there was a bulk delete of your posts which caused other posts to be deleted as well

 

[kram62]

FYI a number of posts about chrisloh were not deleted but moved to the chrisloh thread apparently.

 

[assiak71]

My post wasnt related to chrisloh65 but it is gone

 

[w1rbelw1nd]

Can you all please stop coming into his thread and post stuff like this? I don't agree with 50:50 either, but it is just a general guideline for you to follow. ST has already given his basic reasoning for it (read the book), and has also said that you can vary it if you want.

If I take your argument to its logical extreme, then I must ask why do you choose 90:10? Why not 85.5:14.5? Why not 81.62:18.38? I don't think you have an answer, and the term "answer" here meaning a precise formula that you used to derive your 90:10 allocation. Prove me wrong.

It is just his opinion, and it is a reasonably-informed one. You all keep coming here and insisting his opinion is wrong. That's really bizarre. You have been on this thread for the longest time but you don't want to agree to disagree. smh

Isn't disagreement part and parcel of a civil discourse? Does it mean that people who disagree with him have to GTFO?

I am not trying to be rude here, I am here to share my perspective.

And I do have a basis on how someone can decide on a certain ratio. I believe that no Singaporean should own more of the largest market cap company in STI (15% for DBS) than the largest cap in a globally diversified world index (3% for MSFT) That works out to be 17:83.

Unfortunately, we have to monitor SGX attractiveness as a listing location, and reflect on the recent changes in STI components in assessing the attractiveness of using STI as a long term investment vehicle as well.

Perhaps doing a 50:50 5 years ago makes sense, but with SGX track record of losing big listing, major delisting, are we certain that what we are investing in a robust index that will have diversified good underlying equities in the long run?

BTW I am going 0:100 local:global, simply because I have no faith in the LT prospects of the exchange, which the index is based on. Said my piece, for all's consideration and reflection

 

[hwckhs]

And I do have a basis on how someone can decide on a certain ratio. I believe that no Singaporean should own more of the largest market cap company in STI (15% for DBS) than the largest cap in a globally diversified world index (3% for MSFT) That works out to be 17:83.

I have some trouble understanding your explanation/calculation.

How do you arrive at:

• 17 from 15% for DBS
• 83 from 3% for MSFT

Care to explain? Thanks.

EDIT: Never mind. I think I understand now.
0.15 x 0.17 = 2.55% of portfolio in DBS
0.03 x 0.83 = 2.49% of portfolio in MSFT

 

[makav31i]

Isn't disagreement part and parcel of a civil discourse? Does it mean that people who disagree with him have to GTFO?

I am not trying to be rude here, I am here to share my perspective.

And I do have a basis on how someone can decide on a certain ratio. I believe that no Singaporean should own more of the largest market cap company in STI (15% for DBS) than the largest cap in a globally diversified world index (3% for MSFT) That works out to be 17:83.

Unfortunately, we have to monitor SGX attractiveness as a listing location, and reflect on the recent changes in STI components in assessing the attractiveness of using STI as a long term investment vehicle as well.

Perhaps doing a 50:50 5 years ago makes sense, but with SGX track record of losing big listing, major delisting, are we certain that what we are investing in a robust index that will have diversified good underlying equities in the long run?

BTW I am going 0:100 local:global, simply because I have no faith in the LT prospects of the exchange, which the index is based on. Said my piece, for all's consideration and reflection

I don't see any problem with the point that you brought across and you are being quite civil and polite about it...This is the thing, when someone raised a point about ST opinion on any matter, the immediate response is to ask the person to leave and stop posting in the thread...The funny thing is ST isn't the one replying you to get out but some random hardcore fans who want others to get out...What I realized after a while is this thread is meant to recruit a "cult-like" following and to serve as a circlejerk for ST...If ST feels that he don't want people to engage in any form of discussion just say so...If not, please try to reign in on your followers not to ask people to leave just because people question your opinion on any matter...

 

[BBCWatcher]

And I do have a basis on how someone can decide on a certain ratio. I believe that no Singaporean should own more of the largest market cap company in STI (15% for DBS) than the largest cap in a globally diversified world index (3% for MSFT) That works out to be 17:83.

This logic is logical, I think. I get to a different number a different way, though.

There's a "rule of thumb" (only that) often applied to Employee Stock Purchase Program (ESPP) participants encouraging them to keep a single stock holding at or below 4% of net worth (1/25th). So let's assume a simplified portfolio consisting of 20% bonds and 80% stocks. At last report DBS is 14.76% of ES3, a Straits Times Index fund. (G3B is presumably identical since it's tracking the same index.) If ES3 represented 40% of this model portfolio then DBS would be about 5.9% of it (40% * 14.76%). That would violate the "4% rule of thumb." So we have to solve this equation:

14.76% * X = 4%

And the answer for X is about 27%, meaning that if you believe in this "4% rule of thumb" then ES3 should represent no more than about 27% of this total model portfolio, i.e. about 2:1 global versus local stocks. Then no single stock would represent more than 4% of your portfolio. (Although this could change quickly. If DBS rises to 16% of the value of ES3 -- that could happen really quickly, actually -- then X = 25%. This is part of the reason why I'm going to suggest a different cap in a moment.)

This particular rule of thumb is a cap, though, and doesn't say anything about whether there's a minimum. It's also a rule of thumb based on net worth, and this oversimplified model portfolio is probably a little more complicated in reality. All that said, I feel more comfortable with a "cap local Singaporean stocks at 20%" operating principle. That's a cap please note, not a minimum. I feel somewhat more comfortable about the specific 20% figure (or being closer to it) at the current time when the STI has been COVID-crushed, but I would still be uncomfortable above my cap figure. That's me, though. Your views may certainly vary.

Footnote: DBS represents a tiny portion of a global stock index fund, but I'm ignoring that rounding error here. Close enough is good enough.

 

[assiak71]

Isn't disagreement part and parcel of a civil discourse? Does it mean that people who disagree with him have to GTFO?

I am not trying to be rude here, I am here to share my perspective.

And I do have a basis on how someone can decide on a certain ratio. I believe that no Singaporean should own more of the largest market cap company in STI (15% for DBS) than the largest cap in a globally diversified world index (3% for MSFT) That works out to be 17:83.

Unfortunately, we have to monitor SGX attractiveness as a listing location, and reflect on the recent changes in STI components in assessing the attractiveness of using STI as a long term investment vehicle as well.

Perhaps doing a 50:50 5 years ago makes sense, but with SGX track record of losing big listing, major delisting, are we certain that what we are investing in a robust index that will have diversified good underlying equities in the long run?

BTW I am going 0:100 local:global, simply because I have no faith in the LT prospects of the exchange, which the index is based on. Said my piece, for all's consideration and reflection

Gonna ask again

What about bonds for singaporeans. Specifically,

1. Why do you dislike a35 and mbh
2. If not a35 and mbh then which bond fund(s)

Reason for asking is imo a35 and mbh rank pretty high among the available options but you seem to not feel so

Or do you think there is no need for bond funds because we have e.g. cpf

 

[darklighter]

I have a few ten thousands that I can invest in accordance to Shjny's sound strategy detailed in his book. How should I put this lump sum in seeing that IWDA is still considered to be on the cheaper side even though I've missed the recent bottom? Should I split it into a few months? I want to make up for my lost 20s..

 

[psyfy]

You seems to be painting US in too bright light and did not consider other effects if you are residing in Singapore and using S$ which you failed to highlight.

Example US has been printing too much money (and still continue do so), and once it is no longer the biggest GDP country in the world and USD is no longer the world's main reserve currency, USD will collapse in value vs S$.

Then if you invest in stocks with large US domestic exposure, e.g. IWDA with >50% exposure to US domestic, your value in S$ will drop significantly. This is a considerable risk which you failed to highlight.

Actaully why shouldn't the number 1 economy be painted in too bright a light? You are making assumptions in your views. What are those assumptions based on? Personal feelings or are there real data it's based on?

If not overweight in the US than what is your recommendation?

 

[chrisloh65]

My statement is based on real economics of US and US debts trends.

If you understand economics and current US situation, you will know why US is so afraid of China over-taking US in terms of GDP and economic status and world-standing that they need to resort to outright lies to smear China and pressuring many other countries from being friendly with China and threatening them from working with China, and also resorting to hacking and stealing to get ahead of China, including hacking into Huawei servers and blacklisting many successful Chinese companies and trying to kill them.

Remember the lies propagated by US and the Western Ang Mo Media about China Gov and states and China banks huge debts and they will burst sooner or later? Well, it has been >20 years and China banks are still going strong (despite the Ang Mo repeating their lies almost every year), while US banks need to be bailed out by the US Gov in 2008/2009!
And remember that US keep stressing that no country should interfere in open market and shouldn't bail out their country's banks?! Well, you can see the double-standard practiced by US and how a hypocrite US is!

Actaully why shouldn't the number 1 economy be painted in too bright a light? You are making assumptions in your views. What are those assumptions based on? Personal feelings or are there real data it's based on?

If not overweight in the US than what is your recommendation?

 

[5408854088]

knowing that the strategy would be not to stock pick and to go for index fund, any thoughts on Berkshire Hathaway shares? they somewhat act like an investment company with stakes in listed companies and having their own companies. even in their holdings, they are also holding onto SPY and they seem to compare themselves to the performance of S&P 500 index.