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Post by oldman on Oct 19, 2013 8:06:10 GMT 7
It is around 10 o'clock on my investment clock. This is an interesting and exciting period as I really do not know whether the bear will appear or this is still the tail end of the bull market. This is why you can see me quite involved in the day to day movements in the market. This is certainly unlike what I usually do.
Reason I am so involved at this stage is because I need to have a position in the marketplace to know whether I continue buying or hold off buying. As I am still cautiously bullish, I continue to buy my favourite stocks. I don't usually buy from the sell queues unless someone is offering these stocks at a good price or in sufficient volumes to make it worth my while. Otherwise, I am more than likely to put lower sell queues and hope that someone will sell down their stocks to me.
In general, I usually collect stocks by queueing lower and lower regardless of the time on my investment clock. However, at this late stage, I would usually queue even lower. When there is fear in the marketplace, it is best to use this fear and put smaller buy queues at lower and lower prices.
Hence, by doing so, I am actually encouraging the share price to go lower and lower. This is generally how I buy stocks. I am not someone who will chase up the price of stocks. I rather see my fundamental stocks go down in market value so that I can buy more at a cheaper price. Yes, I am a strange kind of investor. This is probably because I do not need to meet short term profit objectives, unlike the fund managers. Hence, the lower the share price of my fundamental stocks, the happier I am buying more.
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Post by oldman on Oct 19, 2013 8:36:35 GMT 7
The stock market moves in cycles. A good way of illustrating this is to think of the wall clock. If you use a 12 hour clock, one complete rotation of the hour hand is like one cycle. A complete cycle consists of a period of recovery, followed by a bull market and ends with a market collapse.
We have been through the recovery from the last financial crisis and are now going through a bull market. What is uncertain is how long more the bull market will continue. The perpetual optimist will thnk that the bull market will run forever. I am not such an optimist. Neither am I a pessimist as I always believe that the big money will try to support a bull market for as long as it can. The big money comes from governments printing money to support their individual economies. Hence, to me the bull will run longer than many of us expect.
From an investment clock perspective, my hour hand is currently at 9 o'clock. It is a time to be cautious as it is quite close to the end of the cycle. The easy money has been made in the beginning of the cycle. This period is over. Now, there is a real risk of a market collapse just beyond the horizon. No one knows when this will happen but we know that it will surely happen. I think the big money will prevent this from happening anytime soon. Hence, I think we still have a year or two before we see the collapse of the stock market.
During this period, we have to be nimble and we should try to set aside as much cash as we can. This cash can then be used in the next cycle... as the best picks are in the early part of the cycle and this is where we can make the most money. This is also the time when most folks will not have much money and there will be lots of good bargains to be found. But, you need money to buy stocks during this sale period.
Hence, it is important to start saving early for this mother of all sales.
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Louis Lim
i am slowly discovering what kind of investor i am. I am a market cycle investor. From my perspective, knowing where we are in the investment clock is more important than what stock i invest in. Hi Sifu Michael, i bought your book and you talked about the investment clock as well. Where do you see our market from investment clock perspective ? Also do you think its risky to buy a stock like new wave with no volume ? Thanks
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Post by oldman on Nov 8, 2013 11:33:53 GMT 7
Your First Million, 2nd Edition
Chapter 3: The Battle Plan
In a traditional clock, time is measured consistently from 00.01 to 12.00. In an investment clock, 00.01 is the start of a new cycle and a time to start looking for fundamental stocks, while 12.00 is maturity time. A minute on the traditional clock may be months on an investment clock. Also, the investment clock does not move consistently. Sometimes, it moves faster, sometimes slower. When it is at 04.00, the market is starting to become bullish and everyone will get interested in the market again. At 08.00, it will get feverish and intense greed will reappear.
By 09.00, it is time to start liquidating your stocks as the risk of a market collapse is imminent. Shares will be toppish at this stage and rewards will be limited as compared to risk of a market collapse. Hence, during this stage of the market, it is wise to start taking profits.
When it is around 01.00 on my investment clock, I will continue picking up stocks slowly. The lower the stocks fall, the easier it is to collect more. Having this investment clock in one’s mind makes it easier for one to keep collecting stocks, even though the market is falling. My mindset is such that I keep collecting stocks for the next bull run.
Fundamental investors must have patience, and having an investment clock in one’s mind helps set the right framework for investing. Remember that one investment clock cycle usually takes around five years to complete. Hence, lots of patience is needed for fundamental investing, especially in this early phase of the clock cycle.
Seasoned fundamental investors know that they will never be able to buy at the ultimate lows, as no one is able to predict when the market will hit its lowest level. Hence, seasoned investors will collect slowly when the market is bearish, which is from 00.00 to 04.00 on the investment clock.
Newbie investors will try to time their market entries as if this were a science. But they will learn in time that no one can truly time market entries and exits so perfectly, as investing in the market is more an art than a science.
It is much wiser to buy slowly when the market is bearish. Otherwise, there is a much higher chance of investors missing the boat completely. Fundamental investors should always have a firm position in the marketplace; they should know if they are a bear or a bull. Fundamental investors will normally keep the same position for many years. Traders on the other hand can switch positions many times in a day.
When the market is volatile, fundamental investors like me will keep a close eye on the markets. We are watching for signs in the marketplace that may make us change our mind on our market position. For me, if the market continues to break all its major support levels, I will reassess my position on the market.
One must remember that the market is always right with regard to presenting you with a share price. If we are wrong in our assessment of the market, there is no glory is standing firm to a position and continue to lose money to Mr Market. It is our responsibility to reassess what Mr Market is telling us and to respond accordingly.
Having a position in the market will help me decide whether I continue to buy more stocks or to sell into any strength. If I do not have a position, I would not know what to do especially when the market is volatile. Hence, it is important for fundamental investors to continuously reassess their position especially during volatile sessions when the markets can go up or down 5% every other day.
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Post by candy188 on Nov 8, 2013 17:13:29 GMT 7
Pictorial illustration suits a visual person like me:   |
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Post by oldman on Nov 8, 2013 17:20:16 GMT 7
Candy188, my investment clock is quite different from the one above. For me, the downturn (which is represented by the slowdown and recession sections) last only one third of the clock as compared to half of the clock above. Reason is because I believe that the combined period of downturn and recession, does not last as long as the bull market. |
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Post by candy188 on Nov 8, 2013 17:32:25 GMT 7
Candy188, my investment clock is quite different from the one above. For me, the downturn (which is represented by the slowdown and recession section) last only one third of the clock as compared to half of the clock above. ===> Reason is because I believe that the combined period of downturn and recession, does not last as long as the bull market. Hi oldman, Appreciate the clarification.  |
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Post by candy188 on Dec 9, 2013 14:44:27 GMT 7
Your First Million, 2nd EditionChapter 3: The Battle PlanFundamental investors must have patience, and having an investment clock in one’s mind helps set the right framework for investing. Remember that one investment clock cycle usually takes around five years to complete. Hence, lots of patience is needed for fundamental investing, especially in this early phase of the clock cycle. Seasoned fundamental investors know that they will never be able to buy at the ultimate lows, as no one is able to predict when the market will hit its lowest level. Hence, seasoned investors will collect slowly when the market is bearish, which is from 00.00 to 04.00 on the investment clock. Newbie investors will try to time their market entries as if this were a science. But they will learn in time that NO one can truly time market entries and exits so perfectly, as investing in the market is more an art than a science.
It is much wiser to buy slowly when the market is bearish. Otherwise, there is a much higher chance of investors missing the boat completely. Fundamental investors should always have a firm position in the marketplace; they should know if they are a bear or a bull. Fundamental investors will normally keep the same position for many years. Traders on the other hand can switch positions many times in a day. Hi oldman, what is your recommended months of emergency fund, that one should hold during the lengthy waiting time (based on investment cycle of 5 years) for the fundamental stocks to realise its value? Assuming one manage to pick up bargain stocks at dirt cheap price during the bear market. It is commonly advocated to possess emergency fund in the range of 3 months to 12 months of living expenses.  The WSJ Says Invest Your Emergency Cash, What?!?
Dec 5 2013, 05:13 I quipped that it sounds like a great idea until there is a crash (which is to say I think it is a bad idea). For proper context, Emergency cash is that three-six months worth of expenses that financial experts say people should set aside for some sort of unexpected hardship. Setting some amount aside like this is a great idea but people should pick a number of months that makes them comfortable, not what someone else suggests. A few people retweeted me including Helaine Olen who said "you always see stuff like this as the stock market gets too good to be true. It's like a sign." I replied "very common for people to Forget what the last Very large Decline Felt like, impatience always replaces fear" eventually (that last word did not fit in the tweet).  Whether we are at a point now where people have forgotten what 2008 felt like and now they are impatient and willing to take on more volatility than they should is certainly debatable but I do believe we are way past that point.
Whenever the next large decline comes, there will of course be people who find out they had too much exposure to the wrong asset class after that asset class falls a lot.
The idea of impatience leading too much volatility or risk in the portfolio is a predictable behavior that has repeated over and over in the past and will repeat over and over in the future.
 The reason to not invest emergency cash or any potential short-term money is that it can go down in value and take Years to Come back.
seekingalpha.com/article/1879181-the-wsj-says-invest-your-emergency-cash-what Keep Emergency Fund in Cash or Invest?WSJ, Updated Dec. 4, 2013 4:01 p.m. ET It's a common rule of thumb: keep an emergency fund of three to six months' worth of expenses in a savings account or other low-risk account. But like all rules of thumb, it doesn't work for everybody.New research published recently in the Journal of Financial Planning suggests that keeping all of your emergency-fund dollars in cash may be a bad idea, at least for more affluent investors.
The reason? With interest rates close to zero, keeping large sums in cash will slow down the growth of your emergency fund. If you diversify smartly, you could make your emergency fund grow more quickly, while still having access to the money when you need it. The risk is that you have to sell at the worst time, when markets are tumbling—but statistically that seems to be a risk worth taking, the study suggests. "There's a lot of pressure on families to save for retirement, so every dollar counts," says Jacob Sybrowsky, director of the personal financial planning program for the Woodbury School of Business at Utah Valley University, and co-author of the study. online.wsj.com/news/articles/SB10001424052702304106704579135591043205838 |
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Post by oldman on Dec 10, 2013 3:25:42 GMT 7
As I am retired, I don't have a steady stream of income anymore. This is why I keep an amount of cash separately from my investments. I call this my retirement account and should last over 5 years. For those who are still working, keeping an emergency fund of a year is a good habit to keep. This money should be separate from your investment funds.
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Post by oldman on Jan 14, 2014 15:42:02 GMT 7
Good link to article from Zuolun. Keeping it here for referral. |
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Post by stockpicker on Jan 14, 2014 21:04:41 GMT 7
Quickly glance through the article but noticing that the author is a bit biase. He totally missed out the 3 important factors which Singapore is very unlike Iceland before it collapsed in 2008/2009. The 3 factors are: 1) labor participation and unemployment rate; 2) Singapore's Foreign reserve and the conditions of the banks 3) The economy conditions with good GDP growth Yes. Singapore has some bubbles here and there; housing being one, then we have very high household debts.. but these are not threatening signs that cause a meltdown although they can be the trigger that cause severe financial crisis which can lead to banking sector failure and high unemployment rate. When Iceland was in trouble, its Central Bank’s foreign reserves dropped from 100% of short-term debt in the 1990s to 6% in 2008 while bank assets rose to 9 times GDP and consequently many speculators began to bet against the Icelandic economy. Also, the unemployment rate started to rise to above 8% with around 80% of companies were technically bankrupt leaving them with no other choice but to lay off the workers. pure.au.dk/portal/files/8757/216491.pdfRemember viewing a Youtube documentary that interviewed a bunch of young Icelanders after the meltdown.. some complained that they could no longer get bank loans to change their 2 year old car and replace their hifi and TV sets..it would appear that Icelanders were literally living on debts before the meltdown.. |
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Post by me200 on Jan 14, 2014 21:45:12 GMT 7
Singapore is not facing a credit bubble: MASSingapore is not facing a credit bubble that puts the country or the banking system at any risk of crisis, the Monetary Authority of Singapore said in a statement on Tuesday evening. Responding to media queries on the issue of a credit bubble, MAS added: "Serious observers and investors are not in doubt about the country's financial health." An online article in Forbes published on Monday suggests that household debt has ballooned in Singapore, due to ultra-low interest rates. The growth in Singapore's credit bubble is linked to soaring property prices, the article said. Singaporeans are going into debt to invest in property or buy more expensive houses than they can afford. MAS said that "it is clear that unusually low global interest rates have stimulated credit growth and an increase in property prices in recent years, in Singapore and some other economies that had recovered from the global crisis. That is why the government and MAS have taken decisive steps to cool property demand and prevent excessive leverage."
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Post by candy188 on Jan 14, 2014 21:52:09 GMT 7
Hi stockpicker, appreciate the explanation on the differences between Singapore versus Iceland. Reminded me of an article dated 4 Oct 2012 that stated that "Singapore's Economy Is Maxed out " The bulk of Singapore's population is of working age, which gives reason to the 60% of it being employed. This chart above suggests a wave of folks in their 50s will be coming to retirement age soon likely to bring down the percent of the population that is employed.
Population growth would help bring about more hours worked in the aggregate economy, but the population density is already close to that of NYC. At the same time, Singapore's birth rate of just 7.72 births per 1,000 population in 2011 ranks it the LOWEST of 222 nations measured.
It's actually a demographic TIME BOMB.
=> Today, there are 6.3 Working age Singaporeans for every Senior citizen,
====> by 2030, it'll be 2:1.It looks to me like Singapore is mightily close to what Japan was in 1990 and could be in for decades of lower total aggregate hours worked, which will mean very low GDP growth that will mostly come from gains in productivity. seekingalpha.com/article/905081-singapores-economy-is-maxed-outQuickly glance through the article but noticing that the author is a bit bias. He totally missed out the 3 important factors which Singapore is very unlike Iceland before it collapsed in 2008/2009. The 3 factors are:
1) labor participation and unemployment rate;
2) Singapore's Foreign reserve and the conditions of the banks
3) The economy conditions with good GDP growth Yes. Singapore has some bubbles here and there; housing being one, then we have very high household debts.. but these are not threatening signs that cause a meltdown although they can be the trigger that cause severe financial crisis which can lead to banking sector failure and high unemployment rate.When Iceland was in trouble, its Central Bank’s foreign reserves dropped from 100% of short-term debt in the 1990s to 6% in 2008 while bank assets rose to 9 times GDP and consequently many speculators began to bet against the Icelandic economy. Also, the unemployment rate started to rise to above 8% with around 80% of companies were technically bankrupt leaving them with no other choice but to lay off the workers.  pure.au.dk/portal/files/8757/216491.pdfRemember viewing a Youtube documentary that interviewed a bunch of young Icelanders after the meltdown.. some complained that they could no longer get bank loans to change their 2 year old car and replace their hifi and TV sets..it would appear that Icelanders were literally living on debts before the meltdown.. |
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Post by zuolun on Jan 14, 2014 22:30:13 GMT 7
Good link to article from Zuolun. Keeping it here for referral. oldman, The article did not mention the issuance of government securities to S$490 billion. Why Singapore's Economy Is Heading For An Iceland-Style Meltdown — 13 Jan 2014 Development of the government bond market and public debt management in Singapore COUNTRY COMPARISON: PUBLIC DEBT (2012 est.)CPF Statistics As at 31 December 2012List of sovereign states and dependent territories by population densityBondsGovernment securities issuance limit raised09 April 2012 2128 hrs SINGAPORE: Parliament has authorised the Ministry of Finance to borrow a further S$170 billion, through the issuance of government securities. The increase raises the ceiling for issuing government securities to S$490 billion. Minister of State for Finance Josephine Teo said 80 per cent of the increase will be issued to the Central Provident Fund to meet its investment needs. The remaining 20 per cent will go to the Monetary Authority of Singapore, for the issuance of Singapore government securities in line with the growth of financial markets, and to enhance the efficiency and liquidity of Singapore debt markets. Ms Teo reiterated that all proceeds from the issuance of securities are invested, not spent. The last increase was approved by Parliament in 2009, when the limit was raised from S$250 billion to S$320 billion. Mrs Teo said" "What has happened in that time was the increase in special government securities was faster than expected as the economy recovered very rapidly, and exceeding the expectations. As a result this initial borrowing limit, or issuance limit that we sought in 2009 is going to be reached much earlier than we expected. This is why we're coming to Parliament again to ask for the issuance limit to be raised." Singapore holds US$86.3 billion Treasury Securities as at Oct 2013
 Most Densely Populated Countries |
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Post by oldman on Jan 15, 2014 4:58:18 GMT 7
One of the issues that concerns many Singaporeans is that we are really unsure how much assets our Government truly owns. We know that the Singapore government borrows money internally to invest in these assets. As at Mar 2013, the Singapore government borrowed $396 billion (out of which $249 billion came from our CPF savings). When we talk about government reserves, we should subtract these borrowings from the total assets. As we are in the midst of a bull market, the assets will appear very healthy indeed. Good thing about the Singapore government loan is that there is little risk of recall as the bulk of it is from the CPF. Even if the market falters badly in a bear market, life still goes on. Hence, from this perspective, I too agree that Singapore is very different from Iceland. What is worrisome is the property bubble in Singapore. Many people's wealth are tied to properties. A collapse of the property bubble will have significant impact to our economy. In the last financial crisis, Singapore was relatively spared as the entry of foreigners helped our economy recover quicker. However, in the next financial crisis, I don't think we will get off so lightly..... app.mof.gov.sg/data/cmsresource/Public%20Debt%20Report%202013.pdfwww.gov.sg/government/web/content/govsg/classic/factually/Factually-310812-IsitfiscallysustainableforSingaporetohavesuchahighlevelofdebten.wikipedia.org/wiki/List_of_countries_by_public_debt |
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Post by zuolun on Jan 15, 2014 7:28:26 GMT 7
"Trickle-Down Economics" -- The Most Destructive Phrase Of All Time? — 6 Dec 2013 Lords of Finance, TodayToday, a "plug" for an excellent book written by an author who not only knows his financial history, he's a practising money man, too. "Lords of Finance - The Bankers Who Broke The World" by Liaquat Ahamed. See the "Featured Book" Amazon button on the right or click on the link above. Mr. Ahamed tells the story of the world's most powerful central bankers as they struggled to re-establish a Victorian financial ethos in a world forever changed by the Great War: Montagu Norman of Bank of England, Benjamin Strong of the NY Fed, Hjalmar Schacht of Reichsbank and Emile Moreau of Banque de France. Their short-sighted decision to re-impose the inflexible gold standard and its arcane foreign exchange and monetary policy mechanisms (which were previously abandoned during WWI) proved ruinous and ultimately precipitated the Great Depression. From a Washington Post review : The gold standard's role in the worldwide depression of the 1930s has been probed before, notably in Barry J. Eichengreen's scholarly "Golden Fetters" (1992). But Ahamed -- a hedge fund adviser, a World Bank veteran and a supple writer -- personalizes the story, exploring how insular relationships led to bad choices. Strong and Norman, for instance, became friends and gained each other's trust through lengthy correspondence. Strong used his influence to secure a loan for England, then prodded Norman to put England back on the gold standard. Norman, in turn, persuaded Strong to push down U.S. interest rates, helping to create the stock bubble that eventually burst in October 1929. When Strong died in 1928, his replacement became Norman's thrall and fell in lock-step with the emphasis on gold, extending the economic agony. The purpose for bringing this up in today's blog is not out of intellectual curiosity for the financial history of a bygone era. Rather, it is to make clear that insistence on old dogma is highly destructive in the face of new economic realities. And in this context The Lords of Finance has a very important message for all of us, right now. No, we are not threatened with going back to "that barbarous relic", as Keynes called the gold standard in 1924. Instead, our era's rapidly ossifying dogma is Permagrowth: the idea that we need to constantly grow our economies and fight GDP recessions with all tools at our disposal, fiscal and monetary. In my opinion, Permagrowth has "outgrown" its use and become but a relic of post-WWII groupthink, itself based on the erroneous application of Keynes' ideas. Such dated orthodoxy is completely ineffective - probably even dangerous - in a world confronting challenges that could not be foreseen in 1944, when Permagrowth became the official religion during the Bretton Woods meeting. Climate change, habitat destruction and resource depletion were not on the radar screen then, not even as distant blips. But they certainly loom large now and demand our immediate attention. Therefore, instead of futilely attempting to preserve the ancien regime, we should strive to develop a new global economic paradigm and the proper monetary model to fit with it. This does not mean that we should plot a course that strives for maximum gain, even at the cost of maximum pain, as some suggest. This is not only unacceptable from a purely humanitarian viewpoint it is also impossible in today's modern democracies; voters will simply not stand for it. In any case, I am certain that the transition from Permagrowth to Sustainability can be accomplished without the inevitable social upheaval and massive degradation of living standards that is envisioned by some popular tent-revivalist doomers. In fact, I strongly believe that the process of transition can serve as a secure foundation of continuous economic development for many decades to come (notice the absence of the word "growth"), replacing the current debt/asset/consumption vicious cycle. What's my two cents worth of a contribution? There is a missing link between the new Green Sustainability economic paradigm and the old monetary system, i.e. we cannot apply a new economic paradigm using an old money system. This is where my Greenback proposal comes in, a new way of creating "money" but one that is completely familiar and easy to implement for everyone involved, from consumers and businesses to financiers, central bankers and politicians. Even the day-to-day monetary policy tools are kept the same, though they have not been heavily used in some 25 years: direct targeting and control of money supply via open market operations. __________________________________________ "Late Edition" Post Script Throughout my career I have had several magazine front covers framed. One is from BusinessWeek and shows a smiling cow jumping over the moon - naturally, it's about the stockmarket and is dated a few months before the 1987 Crash. Another comes from TIME and has the simple words "THE CRASH" in black, dated November 1987. Naturally, these two hang side by side. And now, I think I have another addition for my collection. From the ever so subtle and tactful NY Post, comes today's "let's slam the barn doors shut after the (fat) cows have left" rage. We have our convenient scapegoat and we're going to milk her for all she's got - and then some.  Question: where was the mainstream press when the real looting was taking place?
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