Official Shiny Things thread—Part III

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swan02

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Personally that’s why I only read the Yield to Maturity nothing else. That’s the only marker which makes sense in bonds.

Btw. Capital appreciation actually leads to lower YTM n that’s why the MBH YTM has fallen from 2.4 to 2.29%.

I've been reading MBH yields more than A35 but looking at the most recent dividend payouts and based on the 52 week average price, the yield is about the same at about 2%. I'm guessing the higher yield is due to higher capital gains for MBH or am I missing something else?
 
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parkson

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Personally that’s why I only read the Yield to Maturity nothing else. That’s the only marker which makes sense in bonds.

Btw. Capital appreciation actually leads to lower YTM n that’s why the MBH YTM has fallen from 2.4 to 2.29%.

Ok that explains it, thanks!
 
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hmm. Age old problem that is commonly heard convincing these herd.

1. If he is close to 65 yo, he can start to draw on his retirement.
2. Convince him on the notion of creating the "CPF bank account". This bank account can be withdrawn at anytime, and earning a high interest and guaranteed.
3. You can only achieve this by ensuring your FRS and medicare is maxed out.
4. After that, you either choose ERS or continue to contribute via the yearly 37.7k cap that spilts across. But since RA and Medisave are maxed out, excess go to the OA.
5. However this is 37.7k yearly, every year.
6. You may also convince your dad, there is another advantage of ERS. Which is that since the CPF life is the BEST annuity in the world, that means he can invest purely in equity assets !!!!..........there'll be literally little risk to his lifestyle as that has been taken care off by CPF life. After ERS, u can DCA everything within 3 years. Any earlier I think he will be too afraid. If so...start 100 percent MBH, by dca over 6 months, and slowly increasing his equity base.
7.However, this is great in theory........convincing these people at their age and lack of CPF knowledge is a terrible hurdle. You yourself would have to prove to your dad the three fund portfolio works....too bad you don't have that history unless at least 5 years.
8. If all fails, like me, I'm already prepared........which is invest in a physical property with your dad-you don't have much a choice. Old chinese people especially tend to like the idea of physical properties.

Thanks.
How much liquid cash should he set aside for emergency like hospital bills etc? He doesn't have any hospital insurance and already has pre-ex conditions.
 

Han Shot First

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Anyone here changes his mind about gold and think we should be buying now?

Berkshire Hathaway bought Barrick Gold Corporation (symbol: GOLD) and not gold. BRK and Warren Buffett are big investors so they have no choice but to buy large companies. For small investors (like us) it may be better to buy Junior Gold Miners. There could be more upside potential (to make more profit) than a large gold mining company.
 

swan02

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Anyone here changes his mind about gold and think we should be buying now?

This forum does not teach speculation but investment by asset allocation.

1. However, gold is seen by some speculative even within your Asset Allocation and serve no purpose whereever.
2. but I don't see it as a negative. It is because of its erratic behaviour compounded by its large BETA aka magnitude that it serves nicely ONLY when it is part of an all season portfolio.
3. An all season portfolio is very diversified comprising of equities, gold/commodities/TIPS, long duration/intermediate bonds, and lastly CASH.
4. Currently I hold no more than 10% in gold and I don't care whether it goes up or down as I see my portfolio as a whole. But I beefed it up with inflationary bonds, I may bring it down to 5% and keep it there.
5. Gold 81% of the time moves similar to your equity.
6. Gold performs very very badly in a rally or tightening or USD strengthening
7. Best to see gold as a currency for easy decision, no diff to an emerging currency but has the FANTASTIC benefits of not being limited by the fiscal/monetary/economic policies of these emerging like currency countries such as Australia, CAD and the UK. So with just a little let say 5 percent always, you have a decent hedge when the USD is debased.
8. More S&P 500 you hold, the more benefit GOLD shines during debasement.
9. However, international shares can serve a better purpose than GOLD. The more international shares you gold, the less GOLD/ or any inflationary hedges you need.
10. I think that if your equity component is very well diversified e.g. 40 percent S&P 500, 40% ex-USA developed, 20% Asian.....you really need very little or zero gold. Your EX-S&P 500 shares will SHINE, not forgetting the S&P 500 will still profit from a weakening USD but not as much as the rest. This leaves you room to decide whether you wish to invest a true more reliable inflationary hedges like short term TIPs, and more reliable nominals for deflationary scenarios.
8. Don't believe the hype gold is for inflation hedge, etc etc..no evidence supports it for any purpose .........except it moves due to investors expectations. It is just not reliable.
9. It is this unreliability (uncorrelated) that I like gold but in small amounts no more than 20 percent but I think 5-10 is better and get more reliable alternatives such as inflation linked short term---and long term TIPs.
10. There is an argument by Bridgewater to replace some nominal bonds with TIPs i.e. 10 year or more..........as I'm convinced after watching them move for long enough that indeed there is a high correlation between long term TIPs and nominals--a dual effect but lack beta in both cases, ........but observation seem to imply to have the same beta as nominal treasury intermediate but more clarity to confirm.
11. Lastly, I think you should perceive gold as part of your equity component due to it moving with equity a lot during USD debasement, and it makes a lot of sense when you just see it as a currency as it is USD priced.
12. NEVER hold gold by itself. I know a dude who sold his house everything, to buy all GOLD. Those were the days in 2013. He lost hell a lot.
13. If you want to speculate. Then I will wait USD 1800. Remember, speculate is gambling. In fact I have money for GOLD speculation, and so far have been very lucky, maybe because I have fast fingers, I can sense fear being a fearful person myself .........

do you guys know that around 3pm-5pm... vs 10-11pm........that whatever happens earlier get magnified later assuming other variables do not change ? If a speculative asset such as gold drops significantly while I sleep, it will reflect at 3pm/4pm...the european markets sentiment will reflect from there on...and later magnified when the USA market opens.

Make a decision to sell/buy/hold before the USA market opens.

Thanks.
How much liquid cash should he set aside for emergency like hospital bills etc? He doesn't have any hospital insurance and already has pre-ex conditions.

1. I don't know your families financial situation hence how can I recommend an emergency amount ?

2. Things like whether you may be able to support your dad.

3. age of dad, fully paid residence, goals, expectations etc etc ?

4. Assuming no debt, fully accommodation, no liabilities to support like his kids or grown up kids who only goal is to fleece their parents...then I personally think he does not need more than 10k in his bank.

5. Don't forget there will be recurring cashflow from the ERS every month.
6. And he already is covered by a hospital insurance which is the mandated govt basic plan medishield life, any preexisting will already be covered whether you get it after or before. However, upgrading the level of cover, if i'm NOT mistaken WILL NOT be covered.

7. If you have read enough of BBC or this forum, you will realise there is a central theme that you won't need CI insurance. This is exactly also why you do not need cash to cover "hospital bills". Hospital bills I refer to that you have to stay in the hospital for greater than 24 hours. It will then be covered by your hospital insurance and the excess payment will be covered by your medisave.

8. but if the illness is not serious that warrants medical treatment such as a cosmetic removal of fat deposits, then that has to come out of your pocket. Still CI won't cover such things.

9. And don't forget once FRS is set, and Medisave is maxed. And also contribute 37.7k to your CPF yearly. He still has that so called EMERGENCY fund in his CPF bank account sitting in the OA and SA ( I don't recommend touching it) that he can withdraw anytime that is growing every year. An also the excess money he invests can be conservative 2 fund (VWRD/MBH) 50:50, to allow him to withdraw cash from the MBH component if he really really needs it i.e. only touch your equity or bond component when it is at a good price to sell not during let say a crisis we recently had.
 

swan02

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Already a bet on metals is fraud with many variables n hella dangerous.

Why go for equity miners ? If u seek beta, then speculate on silver or bitcoin or mix. This way is a more reliable punt minus the not required firm specific risks.

Berkshire Hathaway bought Barrick Gold Corporation (symbol: GOLD) and not gold. BRK and Warren Buffett are big investors so they have no choice but to buy large companies. For small investors (like us) it may be better to buy Junior Gold Miners. There could be more upside potential (to make more profit) than a large gold mining company.
 

chrisloh65

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Are you prepared for a weakening USD?

I suppose avoid holding USD, avoid US stocks that earns predominantly from US domestic economy? What else?
That means don't put most of your money in S&P500 stock index ETFs, and also IWDA, VWRD/VWRL ..............

Looking back in history, people who are able to earn significantly from investment and retire rich are people who don't follow the crowd, use their own brain to make their own judgement to invest! There is no free lunch in this world! No such thing as being lazy and can still want to earn good returns by DCA blindly into passive ETFs over long term!

https://www.barrons.com/articles/how-to-prepare-your-portfolio-for-a-weaker-dollar-51598009400

It’s Time to Prepare for a Weaker Dollar
Updated Aug. 21, 2020 9:25 am ET





Another expert economist has this to say about unsubstainable US debt and USD bubble!:

https://www.economist.com/finance-and-economics/2020/07/30/emmanuel-farhi-has-died-at-the-age-of-41

"Jul 30th 2020 edition
Emmanuel Farhi has died at the age of 41
The economist was one of the brightest minds of his generation

Emmanuel farhi showed a lot of promise in a lot of fields. At 16 he won a national physics competition in France. In the test to enter its most prestigious engineering school, he received the highest mark. After considering a career in maths, he settled on economics, where he flourished. “He was one of the greatest economic minds of his generation,” says Xavier Gabaix, a colleague at Harvard University. But on July 23rd that career was cut short when Mr Farhi died unexpectedly at the age of 41.

................................

Mr Farhi saw America’s role as the world’s banker as unsustainable. If it produced too few safe assets then, with interest rates unable to adjust fully, global aggregate demand would stay depressed. But if it tried to keep up with investors’ demand for safety, its ability to repay its debts might one day be called into question. Speaking to the Richmond Federal Reserve in 2019, he noted America’s shrinking share of the global economy and worried that its role was becoming too much to bear.

"
 
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Torenoo

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just curious, is there no monthly activity fee USD10 (Interactive broker) for retirees? my dad had account since mar 20 and currently a bal of USD 2000 in there.

He was expecting a monthly USD10 deduction to kick in from June20 , but have not see it in the monthly statments so far?

any idea?
Thank you
 

swan02

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Isn’t the weakening USD the whole idea ? Else how would I expect the S&p 500 to go any higher. Without weakening, I’ll be more afraid of holding to the s&p 500. It has been a nice match without additional risk to tech stocks.

Are you prepared for a weakening USD?

I suppose avoid holding USD, avoid US stocks that earns predominantly from US domestic economy? What else?
That means don't put most of your money in S&P500 stock index ETFs, and also IWDA, VWRD/

Updated Aug. 21, 2020 9:25 am ET
[/I]
 

little pupsky

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swan02, I’d like to seek your opinion on the counter VDCP, since you clearly know a lot about bonds, far more than the average retail investor on the street anyway.

Would VDCP be worth considering in a, say, 7-figure portfolio with globally diversified stocks, locally diversified bonds, a small smattering of regionally diversified reits, and all in an age-appropriate allocation. Goal is wealth preservation, 3% yield, and risk tolerance is moderate.

TIA!
 

3sniper

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Can someone post the spreadsheet download link from ST on comparing commissions from various brokers? Thanks!
 

chrisloh65

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Weakening USD means when converted to S$ your value is depreciating, so S&P going higher is an illusion. Anyway, sincerely, how much higher you think S&P500 can go up from here at such bubblish stage? :s13:

Isn’t the weakening USD the whole idea ? Else how would I expect the S&p 500 to go any higher. Without weakening, I’ll be more afraid of holding to the s&p 500. It has been a nice match without additional risk to tech stocks.
 

crystalnox

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Weakening USD means when converted to S$ your value is depreciating, so S&P going higher is an illusion. Anyway, sincerely, how much higher you think S&P500 can go up from here at such bubblish stage? :s13:
You mean like how the S$ has weakened by <5% while the S&P has grown by 25% since March? =:p
 

jugzter

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@swan02

What r the guidelines for an etf to be considered as having good liquidity?

From what I see now, vwrd has higher volume and lower bid ask spread than vwra. Kinda surprise cause I thought ppl will usually prefer accumulating etf

An ETF that holds large-cap stocks is highly liquid regardless of its trading volume. A common misconception is that ETFs with low volume are illiquid. What really determines an ETF's liquidity is its underlying securities.

ETFs are open-ended funds, which means that new units can be created or redeemed as needed on the secondary market. Because of this, an ETF's liquidity is largely determined by its underlying securities.

In VWRA's case, it is highly liquid because it's comprised of the world's biggest stocks by market cap.
 

swan02

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Correct me if I’m wrong any experts.

Secondary liquidity which we are speaking off is the bargaining between buyers and sellers. This is characterised by volume and tight spreads. One can have low volume yet tight spreads if u the buyer or seller transacted value amount are sufficient hence to these participants is liquid.

One perceives an etf liquid while another may not as each individual trade value amount is different.

Now I didn’t know “authorised participants” are involved in redeeming and creation in the secondary market ?

It does not make sense as this participants are actually active in the primary market.

Yes u can always go straight to the primary market and u can buy or sell likely at the NAV. I think we had an interesting discussion about the liquidity of a35 and MBH.

Anyways all the years I’ve been trading in the secondary market, I’ve only spotted market makers and these fellas wanna make money. I’ve always seen them in illiquid etfs in aussies vanguard etf in the early days.

Anyways tight spreads are matter of perception. But why would I who does not do research nor time the market take the risk of over paying my purchases if I’m unlucky enough to have bought from a market maker?

these dudes appear in poor liquid etfs. I would assume Vwra and VWRD would move similarly but it doesn’t as liquidity in the secondary market is qualitative such as psychology.

An ETF that holds large-cap stocks is highly liquid regardless of its trading volume. A common misconception is that ETFs with low volume are illiquid. What really determines an ETF's liquidity is its underlying securities.

ETFs are open-ended funds, which means that new units can be created or redeemed as needed on the secondary market. Because of this, an ETF's liquidity is largely determined by its underlying securities.

In VWRA's case, it is highly liquid because it's comprised of the world's biggest stocks by market cap.
 

swan02

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At least give me some credit to the obvious?? I’m not dumb.

1. anyways. We need a weak usd. It helps international developed shares.
2. It helps my emerging market investment
3. it helps my S&p 500 too and it’s not linear. If I throw one dollar but get back any amount above one dollar is still worth taking. Why ?
4. Cuz didn’t I tell u I’m an investor based on diversification. Ie one reason is u still keep assets that serves little return yet is effective in weakening the portfolio variance. I believe s&p 500 index serves that role better than any index. Even if it’s expensive.

Weakening USD means when converted to S$ your value is depreciating, so S&P going higher is an illusion. Anyway, sincerely, how much higher you think S&P500 can go up from here at such bubblish stage? :s13:
 

swan02

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Seriously this is a very difficult question as I do not have enough information to make an opinion. I find a few info self contradictory such as age appropriate allocation-r u using an algorithm eg 120-age ? If so it may redundant the notion of moderate risk appetite and wealth preservation. I need clarity. Share with us your AA.

Even the term yield can be misconstrued. IRR or annualised ROI ? Dividend or coupon yield ?

My computer is down and pains my heart to buy or repair. Being stingy, DIY. it will take quite some time to think and reply.

swan02, I’d like to seek your opinion on the counter VDCP, since you clearly know a lot about bonds, far more than the average retail investor on the street anyway.

Would VDCP be worth considering in a, say, 7-figure portfolio with globally diversified stocks, locally diversified bonds, a small smattering of regionally diversified reits, and all in an age-appropriate allocation. Goal is wealth preservation, 3% yield, and risk tolerance is moderate.

TIA!
 
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