Official Shiny Things thread—Part III

[Han Shot First]

this is my first time posting in this thread. I have gathered from a few earlier posts that this thread related to "buy and hold" type of investment strategy which does fall in line with my strategy.

I've been looking into buying either VUG or IWF. I am leaning towards VUG due to its low expense ratio. Does anyone have any positions on VUG? What are the dividends like over the past few years? I know this is a growth ETF so the withholding tax may not be substantial.

So which growth ETF did you finally pick - VUG or IWF?

Did you find a growth ETF that is Ireland-domiciled (or one that "avoids" US estate tax)?

 

[cassowary18]

Shiny Things advice is to rebalance in May and November, but should I put off my rebalancing until December or January in view of potential volatility from the US elections?

 

[moolala]

Shiny Things advice is to rebalance in May and November, but should I put off my rebalancing until December or January in view of potential volatility from the US elections?

can i ask why did he choose may and november?

is it cuz prices are usually low? what's the reasoning behind these 2 months?

 

[cassowary18]

can i ask why did he choose may and november?

is it cuz prices are usually low? what's the reasoning behind these 2 months?

I always thought that it was because liquidity is highest during these times, because traders go for summer holidays in June and Christmas holidays in December.

 

[chrisloh65]

No I don't touch option. Option is for speculators only and any serious long-term investor will not touch option at all.

are chiu option trader?

 

[Visa4550]

For IB accounts, does net liquidation value include trades done but not settled yet? Trying to find out my account is down a certain amount but cant see why after doing a few trades.

Sent from Samsung SM-N960F using GAGT

 

[Kayeesha]

Hi Shiny and everyone,

Have you heard about Vanguard planning to close its ETF business in Hong Kong? I had intended to include either their China (3169) or Asia ex Japan index ETFs (2805) to my DM portfolio. This has thrown a spanner in the works.

Can you advise how I should proceed if I still want some exposure to China market? I’m not keen on EM ETFs though.

Thanks.

 

[streetfighter]

If 2 persons present different investment strategy & 1 is able to use own strategy to make a lot more money than the other, unless we are stupid idiot, we will obvious believe the one who earned much more money. Still, there will always be more stupid idiots than smart ones in this world otherwise most of us will be multimillionaire or even billionaire.

Another thing we need to look at is intention, whether the person is looking at making some profits from what they advocated, which to me is clear here who is the one, but stupid idiots will not be able to tell.

One thing I learnt early on in my investing journey is never to trust the "advice" of those who only make grand-sounding but unsubstantiated arguments, repeatedly boast about how much money they have, and resort to ad hominem arguments because they think making personal attacks on others automatically makes them correct.

 

[chrisloh65]

What do you expect the financial planner to be able to do for you that you can't do yourself?

It’s just what financial planning is at least that’s how I see it. Which is based on

1. managing risk
2. NOT believing u or anyone can time the market and continue to do well long term
3. Meet clients expected return given their risk appetite with given suite of products
4. Do it cheaply
5. Meet returns with the lowest risk possible
6. Tax
7. Etc etc..

I have never seen anyone claiming to be experts in investing or timing to be exact.

Its more like all of them claim they are crap at timing the market hence crap investors if that’s your definition and that I agree we all are &$@& crap and continue to believe so with all sincerity.

Thats why we are here and not on other market timing blogs which I call load of BS.

Again, its more financial planning and hopefully backed by statistical evidence.

I would pay for a good financial planner than one who claims he can beat the market or one who runs a hedge fund even if that person is Ray Dalio.. no thanks.

 

[chrisloh65]

Yes, you are right. Such currencies hedging is necessary when you have a large portfolio invested globally.
And the larger portfolio you have, the more closely you should watch it grow (instead of just investing into passive index ETFs) because nobody has more interest in growing your own portfolio than you yourself.
And if you can grow your large portfolio faster, why need to work for people?

Many thanks swan02, chrisloh65 and bobobob for your views.

I guess in a perfect world we will be hedging. But it does make managing the investment portfolio more complicated and instead of passive investing, it’s more like active passive investing.

On the other hand, maybe such hedging will be necessary when the portfolio grows larger and when the rebalancing amounts gets larger?

 

[swan02]

1. If only financial planning was that easy...then many of us would be rich.
2. How hard is it to establish an AA that is best suited to your risk appetite and expected returns ?.VERY HARD !
3. Because the client may not even know he or herself well enough !
4. Do clients know what they want ?, not until they decide either to choose the path of the investor who tries to time the market, or the path of Modern Portfolio Theory which simply suggests DO NOT time the market but instead increase the odds of success via risk management including yourself.
5. And after saying all these, this only forms a small component of what a good financial planner does
6. Tax is another area that is complicated and tricky. There are just as many dodgy tax accountants around, that who will you trust ?, if only you have a financial planner all packaged all in one, not having to earn their keep via a percentage of the funds they manage, but instead via how you pay a doctor.

But ALAS !, how many are brave to pay a financial planner such an amount ? after all, we seem to equate they to the insurance sellers, not to say there ain't many good ones....just ...I myself have not met one.
7. The quality of noobs ever present, can't even go beyond understanding the merits and mechanics of CPF. Not even able to have the motivation to self learn many easy concepts is baffling but rightly expected....as again, we all would have been rich.....thus a financial planner still fulfills a fundamental role, which is to begin the journey........There are enough evidence in real life, that ACTION usually begin after you pay the service for it. So much is lost via procrastination.

What do you expect the financial planner to be able to do for you that you can't do yourself?

The bigger the AUM, the harder it is to manage. The more mistakes you will make, because your emotions will be your greatest archilles heel.

It is actually a damn good idea to start practicing with small amounts from young, thus building emotional resilience over time

but many have been burnt to never begin the journey. So are financial planners required ?..... Sure is, if you have a good one who knows more about you and your emotions, or perhaps roboinvesting might be a good alternative.......

even with passive investing, so many just could not stick to a plan.
i know...cuz I'm one such person and it has dire consequences. The beauty of passive investor is actually so that you DO NOT need to look at it closely. That is the central beauty of diversification. To let your winners run (takes approx a year), then exploit it via rebalancing (buy low, sell high). Less you look, the lesser the chances of fiddling with it.

And that's why I advocate for gold up to 10 percent generally speaking simply because of the large amount of USA international biased shares.

Yes, you are right. Such currencies hedging is necessary when you have a large portfolio invested globally.
And the larger portfolio you have, the more closely you should watch it grow (instead of just investing into passive index ETFs) because nobody has more interest in growing your own portfolio than you yourself.
And if you can grow your large portfolio faster, why need to work for people?

 

[polyglob]

What are some good ways to hedge a USD stock portfolio against USD devaluation?

Yes, you are right. Such currencies hedging is necessary when you have a large portfolio invested globally.

 

[Wishdom]

What are some good ways to hedge a USD stock portfolio against USD devaluation?

Why need to hedge currency risk?

Currency value drop, stock priced in that currency will increase accordingly.

Posted from PCWX using Ilovennp

 

[decibel.]

What are some good ways to hedge a USD stock portfolio against USD devaluation?

What's the point of this in the first place? In the long run, your currency risk will be net out and to be honest it's quite insignificant compare to your gain right?

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[swan02]

This is my arbitrary take. I do agree with you to some extent. But it isn't that clear cut.
3 typical scenarios occurs.
1. Simply exchange differential and prices adjust accordingly like u suggest
2. USA companies especially those export oriented or have a lot of base in foreign countries will benefit over time hence improved biz and share value.
3. Lastly, competition for investing dollars

I think point 3 is most important for short term. USA investors seem to have appetite and culture for stock investing, meaning they will have huge impact on others. They know their US dollar will weaken, hence if overseas assets are cheap enough and if they think USA companies risk doing badly, will invest overseas and thus fully exacerbating the drop in USD value. This can be seen many times post year 2000, 2008.

So bottom line is...if you DO NOT wish to invest in eg CHINA or ex USA countries, thus the more gold you will need to hold because any of point 2 or 3 might surface.

Anyways this is my take and its something i've read some where (you know those free investment articles in their truck load) and remains stuck in me as to why we need to hedge, how to hedge without having to use derivatives.

Gold is one simple and popular means thus this the very reason for the popular all weather popular..catered to USA investors who hold the s&P 500. People seem to think they are hedging for inflation. In reality, its effect is similar, not necessarily for inflation but an alternative to holding onto USA assets. More people run from USA assets into others, USD devalues.

I really do not think you need to hedge for FX if you hold enough IWDA and EIMI and in fact, if you follow shinys rule, u will already be holding to a hefty amount of STI. That's already hedging for if USA does badly which is directly linked to the USD.

Why need to hedge currency risk?

Currency value drop, stock priced in that currency will increase accordingly.

Posted from PCWX using Ilovennp

 

[swan02]

True long term will net out and it can be beneficial due to the diversification but can you risk the period of the lost decade in USA ? That is a mighty long time to feel sorrowful. Hedging would have helped.

Hedging FX is no different from lets say buying EIMI or STI or Europe in place of hedge inflationary assets (in the eyes of usa investor) such as non USD foreign currencies or gold. Its effect from observation is similar. Hedging is especially important if you hold way too much or concentrated into USA shares.

What's the point of this in the first place? In the long run, your currency risk will be net out and to be honest it's quite insignificant compare to your gain right?

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[polyglob]

What's the point of this in the first place? In the long run, your currency risk will be net out and to be honest it's quite insignificant compare to your gain right?

Why need to hedge currency risk?

Currency value drop, stock priced in that currency will increase accordingly.

Dunno. I am asking a follow up question based on what Chris wrote:

Yes, you are right. Such currencies hedging is necessary when you have a large portfolio invested globally.

 

[celtosaxon]

True currency hedging is not a practical or economical activity for the vast majority of investors. Instead, you want to manage the currency risk by keeping investments you need to tap for short-term income needs in local currency.

For SGD in particular, it is a managed float based on a trade weighted basket of currencies, so another way to manage currency risk is to overweight your portfolio in the equity markets of Singapore’s largest trading partners.

 

[moolala]

even with passive investing, so many just could not stick to a plan.
i know...cuz I'm one such person and it has dire consequences.

can share what happen?

how u get burnt?

 

[swan02]

Burnt may not be the most appropriate word. Rather I would call it opportunity cost and that is costly. There are many examples of how you get burnt when you do not follow a plan. But the most recent for me was...

1. I needed to up my equity. I plan to put in 150k when from peak to trough is 10 percent, also planned to put all in to meet required AA and hence no need for DCA anymore if its negative 20 percent....When it reached negative 10 percent, I didn't buy at all !!!

2. Makes me wonder would I still buy when its negative 20 percent ?

This is not following a plan even when I did have one.

I'm certain people have faced many of such issues. When you are supposed to buy 10k worth of stocks on this date and yet not buying. or when they are supposed to be rebalancing, yet didn't. Greed and fear to play. It is normal.

Keeping it simple has merits on its own. Having too many moving parts (eg. all weather portfolio) may actually be difficult to implement even given with a large AUM. Ultimately, and I believe many of us have this "timing" characteristics in all of us...DCA is timing. Even just DCA VWRD monthly and ignoring STI and Bonds etc....can actually be useful..cuz ultimately, we all need to stick to a plan, better to be invested than nothing at all. How many have delayed even buying a simple MBH, cuz they go try research, and research and one year later, still researching, then they are exposed to many concepts of asset allocation, get more confused, and still researching.

I know two individuals are still doing that. Years later, still think the market will crash. They can rattle on about their theoretical knowledge.. Even I suggesting 20-30 percent allocation to equities telling them that they can't be always right, is still not good enough, its either yes or no...how strange humans are, but that's what we are.

can share what happen?

how u get burnt?