Official Shiny Things thread—Part IV

[Kayeesha]

Hi Shiny and everyone,

Based on the recommendations here for China ETFs, I found these sectoral biasedness.

2801: >32% Consumer discretionary
2822/2823: >42% Financials
2846: >30% Financials

Is being overweight in consumer discretionary less risky than in financials? Thanks.

Btw, I know that ES3 has more than 63% in Financials but I don’t think it’s comparable. Also, I don’t really have a view on the Chinese banking stocks. Thanks once again.

 

[Shiny Things]

Hi Shiny and everyone,

Based on the recommendations here for China ETFs, I found these sectoral biasedness.

2801: >32% Consumer discretionary
2822/2823: >42% Financials
2846: >30% Financials

Is being overweight in consumer discretionary less risky than in financials? Thanks.

Um. Both of them are “risky”, inasmuch as you’re making a bet that Chinese-consumer-discretionary or Chinese-financials will outperform whatever else you might have invested in. That’s the bet you’re making, and I don’t think either one is necessarily better or worse.

Is it still worth to invest in STI

Seem like not performing very well for the past 4 years

Don’t forget those dividends (4%+ a year!).

That said: yeah, the STI hasn’t done tremendously well over the last few years, mostly because of the hefty sell off post-COVID. It’s now back to where it was at the lows in September 2018, once you factor in reinvested dividends.

That said, remember that markets are cyclical. The sector that’s hot one year (US mega cap tech) won’t be the one that’s hot next year. Emerging-market equities (true or not, the world considers the SGX an “emerging” market) and banks (which the STI is heavy on) have both been out of favor for a long time, but when the dollar starts to weaken (which is already happening, and makes non-USD stocks more interesting to USD-denominated investors) or yield curves start to steepen (which makes banks more profitable), global investors will come sniffing around Singaporean equities again.

Thanks for your input. This is more of a "feel good" play that I'm doing with a tiny proportion of my portfolio. Maybe I'll just pick one ETF which has a prospectus that matches what I'm looking for and is relatively liquid.

Yeah, that’s the right move.

Got it. Since SARs have expiration date just like call options, that means exercise them on the last day if it's above water, and waive if under water. That's a simple strategy. Thanks a lot.

Yep, you got it. (I’m going to assume you can’t delta-hedge by shorting your employer’s stock, or hedge outright by trading options on your employer? Most times, the stock agreement or your employment contract will ban you from this, but if not, the answer will change.)

 

[moolala]

yield curves start to steepen (which makes banks more profitable)

hi ST, with interest rates so low, is it a concern that banks would have more bad loans when interest rates hike due to massive borrowing?

would the hike in interest rate offset bad loans, all things considered to make banks a good investment?

 

[ftpofmpo]

as us treasuries yields rise, should we expect mbh prices to fall?

 

[Okenba]

Emerging-market equities (true or not, the world considers the SGX an “emerging” market)

What? No it doesn't.

SG is listed as 0.36% of FTSE developed markets.
MSCI similarly classifies SG as a Developed Market.

 

[streetfighter]

Why you fret China banks when they are all SOEs with China Gov implicit guarantee? You just need to see US even bailing out private US banks you will know. So, just ignore those lies from western media & esp Americans!

Hi Shiny and everyone,

Based on the recommendations here for China ETFs, I found these sectoral biasedness.

2801: >32% Consumer discretionary
2822/2823: >42% Financials
2846: >30% Financials

Is being overweight in consumer discretionary less risky than in financials? Thanks.

Btw, I know that ES3 has more than 63% in Financials but I don’t think it’s comparable. Also, I don’t really have a view on the Chinese banking stocks. Thanks once again.

 

[RoLanTo]

You can directly transfer your SGX stocks to IBKR. That IWDA is the bigger issue, it seems not possible to transfer so you might have to sell and buy back.

how to transfer ah?
mine currently holding some in Standchart

 

[mtclam]

Rebalancing

Hi, grateful if the laojiaos in the forum could assist me with rebalancing my portfolio.

i have a 40-40-20 portfolio (nikko AM sti etf / IWDA / ABF bond). its november and i intend to rebalance my portfolio. based on the abovementioned ratios, i have an excess of around S$600 for Nikko AM STI etf and IWDA each.

Based on shiny thing's book, it says that i should rebalance by selling off S$600 worth of Nikko AM sti etf and IWDA. However, can i achieve rebalancing by not selling my excess, and instead buy S$600 more of ABF bonds next month in December?

In short, can i achieve rebalancing by not selling what i have in excess, but buying more of what i am short of?

Thank you in advance for your help and advice.

 

[sexy_pterodactyl]

hi all - my portfolio is mostly on FSMOne (ES3, MBH) and I'm keen to port everything over to IBKR to hit the 100k USD mark asap. Has anybody been through the process and have any advice to share?

 

[brfish]

Hi, grateful if the laojiaos in the forum could assist me with rebalancing my portfolio.

i have a 40-40-20 portfolio (nikko AM sti etf / IWDA / ABF bond). its november and i intend to rebalance my portfolio. based on the abovementioned ratios, i have an excess of around S$600 for Nikko AM STI etf and IWDA each.

Based on shiny thing's book, it says that i should rebalance by selling off S$600 worth of Nikko AM sti etf and IWDA. However, can i achieve rebalancing by not selling my excess, and instead buy S$600 more of ABF bonds next month in December?

In short, can i achieve rebalancing by not selling what i have in excess, but buying more of what i am short of?

Thank you in advance for your help and advice.

You definitely can. However, If I understand it correctly, your have excess of $600 in 80% of your portfolio. Then what you are short on the 20% is just $150 and not $600.

 

[ftpofmpo]

Don’t forget those dividends (4%+ a year!).

That said: yeah, the STI hasn’t done tremendously well over the last few years, mostly because of the hefty sell off post-COVID. It’s now back to where it was at the lows in September 2018, once you factor in reinvested dividends.

fundamentals in sti blue chips seem weak and the index is non-diversified; it was a mistake to invest in it from the start rather than choosing iwda which is more diversified

 

[Okenba]

fundamentals in sti blue chips seem weak and the index is non-diversified; it was a mistake to invest in it from the start rather than iwda

Personally, I don't understand the preference for IWDA either. VWRA is easily available and almost as cheap.

As mentioned, IWDA completely foregoes China, 3rd highest allocation in a Global index, completely ignored.
I personally would not want a portfolio with 0% China. I do not think that the probability of China outperforming the rest of the world over the next 5-10 years is 0%.

Global weight is fine. (I would not recommend it, but even 100% China is only 20x overweight, compared to the 50x overweight that some have in SG.)

 

[limster]

Personally, I don't understand the preference for IWDA either. VWRA is easily available and almost as cheap.

To be fair to Shiny, when he wrote the 1st edition of his book, VWRA was not available. I think his current position is that when starting out either IWDA and VWRA are fine.

Whichever you choose, when your portfolio is small, there's not going to be a huge difference between the 2. As your portfolio gets larger, those that go the IWDA route have the option of adding EIMI which has quite a bit of China.

But there are some extremists that seem to have converted the 'advice' in the book into a 'law' that must be followed otherwise you are 'wrong'... Shiny himself is not that rigid.. he has said if you want to put, say 5% into overweighting something or even stock picking, go right ahead... just don't ask him to tell you what stock to pick

 

[viventa]

this is how most people are wrecked...
stick w what ST prescribe.
...
this is why i am a long-term fan of what ST prescribes.
have you looked into the eyes of idiots who did stock-pickings without understanding what they are buying?
...
stick to ST's book, it provides slowly but surely.

well, the reality is... buying a whole world index is pretty stupid.

in fact, i don't agree with buying a developed world index, i mean... seriously, how many of us are busting in funds?

You poor, confused VHNWI...

 

[popol]

how to transfer ah?
mine currently holding some in Standchart

I also want to know. Thx

 

[crystalnox]

how to transfer ah?
mine currently holding some in Standchart

There's an option within the settings on the trading website(must be website not app) to submit a transfer request.

 

[ftpofmpo]

Personally, I don't understand the preference for IWDA either. VWRA is easily available and almost as cheap.

As mentioned, IWDA completely foregoes China, 3rd highest allocation in a Global index, completely ignored.
I personally would not want a portfolio with 0% China. I do not think that the probability of China outperforming the rest of the world over the next 5-10 years is 0%.

iwda has one of the lowest spreads; if you do rebalancing often, it might be worth it;

many mncs have exposure to china market, you dun need china stocks to have exposure to china; so you're not forgoing it

vwra and iwda track each other very closely

 

[streetfighter]

Exposure to China yes but still very very small vs Alibaba, ICBC, & other Chinese biggest companies, so no way can replace China stocks if you want to invest in China.

iwda has one of the lowest spreads; if you do rebalancing often, it might be worth it;

many mncs have exposure to china market, you dun need china stocks to have exposure to china; so you're not forgoing it

vwra and iwda track each other very closely

 

[streetfighter]

Is IBKR Singapore account SPIC protected? I check its Singapore webpage but it seems everything mentioned there is for US account.

Also, can IBKR buy HK & China listed stocks?

Got free real time price data?

Exposure to China yes but still very very small vs Alibaba, ICBC, & other Chinese biggest companies, so no way can replace China stocks if you want to invest in China.

 

[Okenba]

iwda has one of the lowest spreads; if you do rebalancing often, it might be worth it;

many mncs have exposure to china market, you dun need china stocks to have exposure to china; so you're not forgoing it

vwra and iwda track each other very closely

I have nothing against shiny. I think my point is that everyone has the responsibility to do their own due diligence and think through how they are spending their money. And also that as far as possible, our arguments should be coherent, or just admit that we aren't as principled as we try to say we are.

For instance, it's fine to mention low spreads, but if that's our argument, then are we also recommending constant rebalancing? Because it seems to me it is a non-issue for those who rebalance less often. Low spreads are really more a concerns for day traders. Less for long term investors.

If our argument is that we don't need geographical representation, then we should be fine even without a global or developed market index. After all, many Americans only buy the S&P, arguing that US companies have a global market.

I have nothing against such an argument, but we cannot on the one hand dismiss the US arguments and then on the other hand claim that it is okay to go without China using what is essentially the same argument that we just dismissed.

As for the argument that iwda tracks vwra closely, this is only in terms of performance. There is a 10-15% difference in the companies that they are vested in. To use past performance as an argument that the two will continue to be the same... is rather laughable yes? It is a common sight on investment factsheets that past performance is no indication of future results.

If we accept this argument of past performance, then likewise, we should be prepared to accept other 'past performance' arguments such as how Nasdaq is better than S&P and how US is better than international.

Otherwise our own arguments are inconsistent and we are just fooling ourselves. Shrug.