2018 Investment Outlook

Macro outlook from Fundsupermart. Agreed with some points eg overweighting of Asian equities & the overstretched valuation of the US mkt. 

https://secure.fundsupermart.com/fsm/art...cale=en_us

Reasons for optimism.

https://www.project-syndicate.org/commen...ky-2017-11

(18-12-2017, 02:04 PM)psslo Wrote: Reasons for optimism.

https://www.project-syndicate.org/commen...ky-2017-11

Many thanks for posting this. At last, a straw in the wind indicating that irrational exuberance really is upon us. When everyone says 'watch out for the possibility of a market crash', things are still under control. Once we start seeing 'this market is going to keep going up and up for a long time', it is time to get nervous. We also have Rupert Murdoch selling off a large part of his empire, Li Ka Shing selling a major office tower in Hong Kong and Warren Buffett sitting on US$109bn in cash, all great investors who have been through many downturns. Maybe more straws in the wind? It may still take quite some time to get there, but having the elephant gun loaded (as suggested by BlueKelah in a recent post) looks like an attractive option - though will probably need a lot of patience.

(19-12-2017, 06:27 PM)Dosser Wrote:

(18-12-2017, 02:04 PM)psslo Wrote: Reasons for optimism.

https://www.project-syndicate.org/commen...ky-2017-11

Many thanks for posting this. At last, a straw in the wind indicating that irrational exuberance really is upon us. When everyone says 'watch out for the possibility of a market crash', things are still under control. Once we start seeing 'this market is going to keep going up and up for a long time', it is time to get nervous. We also have Rupert Murdoch selling off a large part of his empire, Li Ka Shing selling a major office tower in Hong Kong and Warren Buffett sitting on US$109bn in cash, all great investors who have been through many downturns. Maybe more straws in the wind? It may still take quite some time to get there, but having the elephant gun loaded (as suggested by BlueKelah in a recent post) looks like an attractive option - though will probably need a lot of patience.

I used to lend a lot more weight to the macro environment in deciding when to invest. I have found this strategy sorely lacking as there is no way we can accurately predict the next crash. I have since been trying to be an all-weather investor since. The key to investing success is simply buying good businesses on the cheap, and this can happen rain or shine. Obviously, when irrational exuberance kicks in, there will be less or no bargains, and you will be selling instead of buying, so your elephant gun will automatically get loaded as result. But by not being in the market & waiting on the sidelines for the market to collapse, you will be heavily penalised by opportunity cost.

My take today is that yes, there are expensive stocks & markets (eg Chinese tech stocks & US mkt in general), but the overall global market is not yet over valued. Just compare the market P/E & P/B ratio against historical highs/lows & average to see for yourself. There will always be a reversion to mean and in between the market will overshoot on either extremes - I have a sneaking suspicion that most markets have not even climbed back to their historical mean. The fact is, I can still find good & cheap stocks, so when they start disappearing, then I will start to be more careful. Another reason I think we are not at the stage of irrational exuberance is that there are still many bears & naysayers around. When bears start turning bullish, that may be time for caution.

Big investors manage billions of dollars of asset, and have greater considerations & market constraints like liquidity. Put yourself in their shoes. It is not easy to sell a billion dollar business or real estate at a price you like. There can be a myriad of business considerations for what they do. Since they are operating in a different sphere than us small investors, there may be little correlation between the two and looking to them for inspiration may not be so beneficial after all.

Anyway, that's just my 2 cents. Only time will tell.....

(19-12-2017, 10:40 PM)psslo Wrote: I used to lend a lot more weight to the macro environment in deciding when to invest. I have found this strategy sorely lacking as there is no way we can accurately predict the next crash. I have since been trying to be an all-weather investor since. The key to investing success is simply buying good businesses on the cheap, and this can happen rain or shine. Obviously, when irrational exuberance kicks in, there will be less or no bargains, and you will be selling instead of buying, so your elephant gun will automatically get loaded as result. But by not being in the market & waiting on the sidelines for the market to collapse, you will be heavily penalised by opportunity cost.

I share the same thoughts. It is unwise to attempt any market prediction. Time will be better spent searching and making value investments.

If the businesses bought were good and cheap, they will survive market corrections/crashes.

Yes agree that there is no need to time the market.
One just need to be invested in good stocks and keep buying.
If you stay invested all the time and keep buying stocks all your life you will
be rich. Picking stocks well help to improve your performance. But just  buying consistently
all the time with most of your money that you don't need for your monthly expenses you
will do much better than those who try very hard to pick value stocks but invest very little.
You will also be better off than most who always wait for market crashes. Obviously you will be better than those who
invest on a adhoc basis and those who just put money in the bank.
In fact you will be better off than 95% of those with a CDP account and all those without a CDP account.
But this is difficult to achieve.  I mean buying stocks and keep buying all your life rain or shine. My experience tells me that 99% of those ( those with CDP accounts ) that I mention to cannot do it. Even after repeating 100 times they don't believe or they simply cannot do it.
Most do not believe that you don't need to bother about macro factors, the economy or politics.
For me it is simple, buy stocks and keep buying and I will be rich. Warren Buffett said 'compound interests guarantee it'.
I an glad that I believed him.

Timing the market
https://www.valuebuddies.com/thread-131.html

The above discussion lasted from 2010 to 2014.

Quote from one of the very astute investors in this forum:

Quote:Twice in the last few years, I increased my cash, thinking a correction was around the corner. I was wrong both times.

I'm slowly increasing my cash again. I could be wrong again, but that's the price of safety.

As for me, if I timed the market correctly, I will attribute it to luck and not any sophisticated theory or calculation.

I came across this article today which expanded the gist of my earlier post.

https://www.theedgesingapore.com/investi...b-87243593

This reminds me an article i wrote to remind myself about staying away from the market without good rationale.

Just missing out a good few years of 5% compounded is a self created one crisis.
Please don't create your own financial crisis.

http://corylogics.blogspot.sg/2013/10/co...-from.html

wow 4 years ago

Riding all the ups and downs is easier said than done.
Have been thru 2 crisis in 1997 and 2007. Some notes.

1. Downturn will come hard and fast.
2. There is no way to call a bottom, it can go lower and it will.
3. When the time comes, liquidity will be in short supply.
4. Economy will take a hit, unemployment will increase significantly.
5. Most investors will be too scared or out of bullets during the best buying opportunities. I belong to the low liquidity side during the previous crisis, bought too much on its way down. (see point 2)

My best guess is that the next crisis is not close. Most indicators are pointing up, you dont get a crisis with unemployment rate this low and having bigger companies enjoy profit growth. More indicators are pointing to a continuing bull run locally. Having said that, I am seeing a lot of small to medium sized local companies being financially stressed out. Many start ups are disrupting the industries they are targeting but the funny part is that many if not all of them are just burning investors cash. Most have not proved to be a viable business. Besides start ups, I cant think of any industry which is mildly profitable that new entrants are not feverishly trying to enter. Price war and a race to the bottom is created and everyone loses.(Except the consumers) Nowadays you get to ride a bike for free, get cheap groceries delivered to your doorstep with margins insufficient to pay for the delivery van's parking at the HDB carpark.