US Economic News

(29-02-2020, 09:23 AM)karlmarx Wrote:

(28-02-2020, 10:21 AM)Bibi Wrote: Which local stocks have been inflated by hot money? I tot out local STI fare very badly for the past decade compared to dow even indonesia index. Even our local banks pe are lesser than USA ones despite giving out higher dividends. Interest rate is getting lower, there isnt much places for investors to put their money to earn higher rates.

If you were a fund manager and you're looking for securities with cash-like characteristics -- to allow you to enter/exit easily and earn a higher return on your 'hot money' -- you will likely be looking for securities which have:

a) high liquidity
b) high yield
c) stable/predictable operating business

Which are the securities with such characteristics?

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When there's too much money chasing too few assets, it is quite natural to expect asset values to rise. When asset values get too high, it is again quite natural for the market to get more nervous as the valuation become increasingly ridiculous. And when they get nervous, they all rush for the exit upon seeing a group starting to make their way out. It's just like the rush to buy toilet paper; nobody wants to be the last one with no toilet paper to buy.

While interest rates have been low, it doesn't mean that asset values, as some may believe, can only go higher. This is particularly so for assets which are deteriorating in productive quality, assets whose productive quality is only/mostly speculative, and assets whose price have risen faster than its productive quality.

Hmm...let me venture a guess. REITS. 

See how they have fallen this week and probably more to come.

https://www.straitstimes.com/business/co...rs-pile-in

(29-02-2020, 10:13 AM)karlmarx Wrote: ....While we cannot tell where the top/bottom is, it should not be difficult for a somewhat skilled investor to tell whether asset valuations are cheap or expensive. I think that if an investor has managed to buy when it is cheap, or sell when it is expensive, then he/she should do pretty alright. If you only wish to buy when it is at the cheapest, and sell only when it is at the most expensive -- which is what most investors expect -- there will likely be plenty of disappointments with missed opportunities (i.e. ahhh, should have sold it last week!).....

My take is, as always, the same; buy when you think it is cheap. If you are out of cash, just wait, or switch from the more fairly-valued assets to the more under-valued ones. If you find that the price of the assets you have purchased have continued to fall far further than what you paid for, you may have to reassess whether you have valued the assets correctly, and given sufficient margin of safety not just in terms of purchase price, but also to possible deterioration in asset quality....

Good advice.

I find it more feasible to profit from small gains by buying undervalued stocks and selling them when their values revert to the mean. However, this takes a lot of monitoring and patience (like a day time trader played out over several years) other than researching on many listed companies.

Furthermore, it is difficult to spot super multiple baggers like APPL($0.23 to $324.95), SBUX($0.34 to $99.11), much less to sell at the perfect timing(lowest/highest).

Perhaps, contentment is also a virtue that might benefit investors.


On a separate note, when reading the BT article below, unless I misinterpret, it makes me wonder who then has been buying and pushing the stock mkt up all these years - perhaps share buybacks from the companies themselves.

https://www.businesstimes.com.sg/wealth-...-take-over
"Our analysis has shown that most investors, including long term pension, insurance, endowment and sovereign wealth funds, have in the past years missed out on this 12-year-old bull market."

I think this recent WB interview is very useful for practitioners of long-term investing. It addresses many of the questions on the minds of most investors. And it is interesting because WB repeats the same points, even as seemingly different questions are posed to him.

https://www.cnbc.com/video/2020/02/24/wa...ffett.html

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The multibaggers that now appear apparent to us wasn't so for investors of that period.

At the time, nobody foresaw Apple to be able to create its own ecosystem of popular consumer electronics. Microsoft was the monster in the industry and its market valuation reflected that. The common perception then was that Apple will soon be a casualty of Microsoft's continuous drive to be the standard setter -- through monopoly -- of the software (and hence hardware) of the emerging consumer electronics market.

That Apple continued to develop and sell competitive hardware, software, and finally, big-hit products like the iPod -- which was the break it needed to further increase the market for its ecosystem of hardware and software -- was not something that was generally expected. For an Apple investor to have held their share from 1990 to 2020-ish, he/she had to be a firm believer in the superior creative ability of Steve Jobs, vis-as-vis the other software/hardware developers of the time, which of course, we now conveniently forget, but weren't dismissed at the time.

So let's look at the tech landscape now, where you have numerous new tech companies, and still growing. Which of these look are going to be big winners in the future? For sure, one amongst the hundreds of them will be a multibagger. But which, and why not the others? I have completely no idea at all. There is probably more luck involved than rationale in being able to pick such a multibagger. I would, however, love to hear/read an investment thesis on this topic.

In any case, and if tech isn't your forte, it probably isn't necessary to try to pick a tech multibagger. WB produced superior returns without any tech investments.

(29-02-2020, 03:39 PM)MOV Wrote: Hmm...let me venture a guess. REITS. 

See how they have fallen this week and probably more to come.

https://www.straitstimes.com/business/co...rs-pile-in

Make hay while the sun shines. The REIT managers have done very well last year to sell assets and raise money when there was plenty of market interest.

I wonder if any of them will make a move to raise equity through a rights issue, as a pre-emptive measure against possible a recession.

Getting interesting.

Xi Jin Ping actually had a ton of problems for the past 5yrs - the deleveraging campaign to wring out excesses, getting rid of his foes thru corruption drive, trade war from Trump, African swine flu driving up CPI, HK Protests, and now a very real COVID which not only kills people but also causes real economic damage and real company shutdowns and layoffs.

In comparison, Trump had to...lower taxes. And twitter. And bash Powell.

The combination of the two basically meant capital flight from China and esp South east Asia+HK since the latter had less capital restrictions. USD + USD assets bootstrapped each other higher.

Now lets see how the US admin actually deals with a real problem which needs action, instead of just talking.

Perhaps COVID will be the needle that finally pricks the entire US bubble. 

The question is: If the US bubble burst, will the capital outflow go into the fallen i.e. emerging markets or pile into UST driving them to -ve yields?

美日英央行喊降息救市...股市現止跌訊號！ 新台幣衝30元大關4創個半月最大升幅｜主播丁士芬｜【iStock盤前解析】20200303｜三立iNEWS
https://www.youtube.com/watch?v=swA0-pBYsqY


2020.03.01【文茜世界財經週報】新冠疫情升溫　全球股市上演黑色星期一
https://www.youtube.com/watch?v=PSOmm_rc...xu&index=6

Fed cuts rates by half a percentage point to combat coronavirus slowdown -
https://www.cnbc.com/2020/03/03/fed-cuts...wdown.html

Spend time to watch this
美國大選初選拜登逆轉勝激勵美股 央行"趕錢入股"外資終結連八賣轉賣｜主播丁士芬｜【iStock盤前解析】20200305｜三立iNEWS
https://m.youtube.com/watch?v=oLe3YXEQ_hU

The coronavirus is bringing a painful but much-needed end to an era of economic excess
https://www.scmp.com/comment/opinion/art...mic-excess

(28-10-2019, 11:21 AM)Behappyalways Wrote: Big VIX Options Trade Braces for a 2008-Like Volatility Surge
https://www.google.com/amp/s/www.bloombe...lity-surge

Such clairvoyant...