Timing the market

[corydorus]

[@Life is a game Haha Bro Blue. How many percent cash now? I'm 70 into cash already. 
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I am over 70% cash already.

Overall the ratio is not changing much as dividend income adding to cash is being balanced by value of stocks rising.

Still have a couple counter not gone up yet might be moving soon with Sti chionging every week and on a bull run, should be 80% cash in a few months time if STI hit 3800 or 4000

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I am also 70% cash at this moment. When market crashed in Jan 2016, prepared 3 bullets and only spent 1 bullet. did not expect such a fast recovery. Heart pain with the remaining bullets growing smaller due to inflation in the last 2 years collecting pathetic bank interest.

Just have to be patience to time the market. Prefer to preserve bullets for Mr Bear instead of seeing portfolio value dropped during correction.

How do we define cash level ? Percentage of Networth ? Percentage between Equity and (Cash + FD + SSB) only ?

I won't add more easily now in stock. May recycle within. Any new addition probably limited to gov securities.

Cory

[sgmystique]

Just thinking out loud...the STI reaching 3800 or 4000 means that the price of the index components would perhaps be at all time highs or nearby. However I am not very sure if it would make sense to start selling a portfolio of micro/ mini caps at this point of time when they are still massively undervalued (Especially with reference to the index components) due to varying reasons. 

Having followed the market for long I have seen that it takes a very short time for the market to revalue small caps but such scrips may remain undervalued for long periods of time with very low levels of market / trading interest. I would think that it would make more sense to sell off counters which one feels have reached fair valuation/ are currently richly valued (as per each individual's own perceptions) rather than just going into 70 or 80% cash because the index is reaching historical highs...

[BlueKelah]

The thing u will realise is as index goes up, a lot of your small caps will suddenly rally as well, some well past the NAV, doubling or even tripling in the process, which for value investors usually is the time to sell. In which case the hard part would be to decide which one to take profit on naturally ur cash position will be bumped up fast with each divestment, especially if u have less that 20 stocks.

For example, 1m capital vested 50%, 500k in 10stocks, 50k each when STI was last low at Jan 2016 dip 2600+ levels (plenty of undervalued small caps)

Now market is up >30%, most would have been lifted by the market same amount if not doubled, even some low volume and unloved ones(that is if you didnt buy those with shaky financials/balance sheets).
So let's say out of 10, 2 stock doubled and you sold completely. now you have extra 200k cash. Portfolio now 1.2m with 700k cash(58.3%) holdings.

Let's say in this time, 2 more went up 30% and you decided to sell and get back your capital and let the profits run, you would get back another 100k cash-> so 800k cash holdings with portfolio value now 1.23m means cash holdings 65%(which is getting closer to 70% and will slowly creep to that amount with dividend flow coming in.)

Of course the STI index should be used as a guideline but it is a good reflection of market sentiment and helps greatly in determining when to buy and sell. Also another thing you will notice in low trading volume small caps is when the STI index is rally and market in a good mood, there will be some uptick in trading volume of small caps. Inversely, when market is in a really bad mood, sometimes even if you queue one bid lower than the current bid at market opening, someone will see those lots in that queue and sell down so as to clear their position allowing you to collect much more easily

One thing many investors (even some claiming to be value investors) are unable to do is to be patient and wait in a cash position for a market dip. If one is going to be fully vested or near fully vested most of the time, then might as well go and buy index fund and compound via div reinvestment.

@cory : my definition of cash level is just cash / cash+stock.

[corydorus]

Jan of 2018 has been Awesome. So are whole year of 2017 year. I would say to wait for market starts to be shaky before down sizing a little immediately if we are really concern but I feel we will likely miss the boat if we sell without any indication which i feel so far. The economy is rumbling along world wide generally.


Cory

[Life is a game]

A lot of investors believe they can get out in time. But when everyone is selling in a bear who is buying? Are you really confident of getting out in time? A minute of pondering in a bear market will make a difference in price sold.

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[CY09]

A lot of investors believe they can get out in time. But when everyone is selling in a bear who is buying? Are you really confident of getting out in time? A minute of pondering in a bear market will make a difference in price sold.

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Hi Life is a game,

Your comments reminds me of a quote made by Warren Buffett, which I shall paste here:

"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ¾ that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future ¾ will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

[thinknotleft]

Teh Hooi Ling has an article in 2013, noting that if you get out of STI at PER of 25 times and get into STI at PER of 15 and below, one will avoid the major crashes
http://www.asiaone.com/print/News/AsiaOn...96826.html

I used Shareinvestor data to compute STI PER ratio, which is around 16.1 now. (I am a subscriber of shareinvestor.)

[Life is a game]

A lot of investors believe they can get out in time. But when everyone is selling in a bear who is buying? Are you really confident of getting out in time? A minute of pondering in a bear market will make a difference in price sold.

Sent from my SM-N9005 using Tapatalk

Hi Life is a game,

Your comments reminds me of a quote made by Warren Buffett, which I shall paste here:

"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ¾ that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future ¾ will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

Hi CY09 many thanks for sharing this quote. I hope our value buddies appreciate it as well.

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[Ray168]

Teh Hooi Ling has an article in 2013, noting that if you get out of STI at PER of 25 times and get into STI at PER of 15 and below, one will avoid the major crashes
http://www.asiaone.com/print/News/AsiaOn...96826.html

I used Shareinvestor data to compute STI PER ratio, which is around 16.1 now. (I am a subscriber of shareinvestor.)

Her Dec 2017 article explains why the crash is still a not a threat. 

http://www.straitstimes.com/business/why-the-big-2017-crash-didnt-happen

[Wildreamz]

Speaking about Warren Buffett, reminds me of this I saw earlier this month:


Warren Buffett: Net, We're Buying Stocks Right Now | CNBC
Published on 10 Jan 2018