Friday, February 28, 2014

Unit Trust Promotions!

I got bummed out earlier this week once I realized that Phillips has fixed their loop-hole regarding the lower switch fee sales charge, so you can't exploit 0% sales charge funds anymore. I was hoping to put in a nice tidy sum into the UOB bond fund.

However, there is good news though!

Starting today, a bunch of Nikko AM funds have been put onto the 0% sales charge bond promotion list!

Looking through the list, I see that all the currently listed promotions end their promotion period on 31st Jan 2015. 2015! I know right, I am pretty impressed too.

The good news is that some of the funds I follow are included in this promotion now, which is of course a wonderful thing. Also, there are some funds that I've been keeping my eye out on, and now that they have a 0% sales charge in, they are much more attractive than their rival funds with similar strategies.

They funds that are of great interest with promotions are:
  1. JPM Global Corporate Bond A (Mth) SGD
  2. JPM US Aggregate Bond A (Mth) SGD (Hedged)
  3. Nikko AM Shenton Short Term Bond Fd (S$)
  4. Nikko AM Shenton Global Property Sec Fd S$ Class
  5. Aberdeen Thailand Eq Fund
  6. Aberdeen Singapore Eq Fund
The first 2 JPM bond funds are already part of my portfolio. The Nikko STBF is part of my money management solution. The Nikko Global REITs fund is actually much much more attractively priced compared to the similar UOB fund, although distribution is less. Both Aberdeen country funds are excellent funds and would be a great addition to the contrarian fund if they decline further throughout the year!

Anyway, just wanted to share my excitement on this new promotion that should be altering and improving the cost of my strategy slightly!

Thursday, February 27, 2014

Finally, a Credit Card!

My new credit card (okay technically I just applied for it, so I don't have it yet):

Obviously my name isn't Andrea Tan, but you can believe so if you wish.

The reasons for me getting this card is simple:
  • NETS FlashPay ATU 
  • 6% rebates from online purchases 
  • Visa PayWave option
  • 0.5% rebate from everything else
  • Pretty card design
  • 2 year fee waiver

So there you go, that was how I decided on which card to get. 

I never need to worry about topping up my EZ-Link ever again, which means I can also free up 1 card slot in my wallet. I can use NETS FlashPay to purchase nonsense items like McD's without worrying about not having enough to travel.

I also realized that most of my expenditure are either for dining or for online purchases, and 6% rebates is a pretty nice and big rebate back. If $500 is purely spent on online purchases, it is as good as $1000 with 3% rebate, which even SCB only gives 1% rebate. Of course, this is assuming that you spend on online purchases, which I actually prefer to do. Another perk is that the rebates are calculated and given monthly, with a cap of $60, meaning a $1000 online purchase would fill that up quite well, so definitely flights and hotels should be use this card up to $1000.

The Visa PayWave option doesn't pack a punch, but it's a good feature to have I suppose.

The 0.5% rebate is tiny perk to have I suppose. It doesn't count for much, but it is better to get something back than nothing at all, right?

Lastly, the 2 most frivolous things are that I got to pick out a pretty card design, and the card will have annual fees waived for 2 years, so I don't need to bother about that for a while.

Gotta say on hindsight, the 6% online rebate might workout better for me than the SCB Manhattan rebate, since their hurdle is just so high and I really don't spend that much money on a regular monthly basis!

Brand New Allocation from March onwards

After figuring out a new genius strategy, here are my new allocations.

Master Fund60%
Contrarian15%
GLD-Bond10%
SPY-SH10%
Currencies5%

Most of the investments will go into the master fund, which is my conservative DEWTAAP portfolio. As of now, it is 45% invested in the market, and 55% in cash. Of course, this changes along with the market profile.

The contrarian fund will continue to do what it has always been doing, looking for the deep discount and unloved asset classes and look to capitalize on that. The fund is slowly trying to reduce average cost of it's position. It is currently 73% invested and 27% in cash. Current returns is about 7.5% as yesterday's close.

The Gold-Bond strategy is a simple strategy that will oscillate from gold to bond, which is mainly a trade on inflation and deflation. However, I am currently conflicted between 2 strategies to execute this. I could use the Unit Trust method or the ETF method.

The UT method, which would be the Schroders Gold Fund and the Nikko STBF. A round trip from selling gold - buying bonds - selling bonds - buying gold should cost 0.85% round trip. However, expense ratio is 2% for gold and 0.3% for bonds. The plus side is that no hedging is required, because it is already built into the funds.

The ETF method would use the GLD and the db AGG proxy. A round trip would cost 2.3% (including all the brokerage costs), but expense ratio is 0.4% for gold and 0.15% for bonds. However, hedging is not built-in, and would have to be managed.

The SPY-SH strategy is a more straightforward method of the ETF trading. Using the db S&P500 and the db Inverse S&P500, it will cost about 1.4% to switch between long/short. Expense ratios are 0.3% and 0.5%, making them razor thing. There is just no UT alternative for this, so this strategy will definitely be employed using ETFs. However, with no hedging in place, this will have to be explored.

The final strategy is currency, and I should be a lot more strict and stringent on my trade selection, while also keeping my grubby hands of indices and commodities, since they behave fundamentally different from currencies, so my mainly mean reversion strategy will not be as effective as it should be.

I will be doing a more detailed analysis of the Gold-Bond strategy to figure out which is the best method for me to employ, as well as for the SPY-SH strategy between including and excluding a currency hedged strategy.

Sneaky Sneaky

Check every Tuesday! 

GLD

GLD-IEF 389, 84.62%, holding onto GLD

SPY-SH 78, 77.78%, holding onto SPY

SSO-TLT 79, 73.85%, holding onto TLT

Let's see how smart I really am, aites?

Wednesday, February 26, 2014

Goldfinger

Today, I dipped my finger in gold.



I made a big purchase into Schroder AS Commodity Fd A Acc SGD Hedged. Basically, it's a fund that tracks 75% spot gold and 25% gold equities. Miners are up 24% while Gold itself is up 13%, and the fund is up 15% YTD. So far, it has been tracking it's benchmark right on the money.



The reason for this buy is multi-fold
  • I personally believe that gold has bottomed out from my forecast in early Dec 13
  • Gold and Gold equities are similar, but different, and this fund focuses on Gold, not the so much on the equities
  • The iMarket Gold timer just went from cash to invested 2 months ago. It's previous holding periods were 7 and 2 years respectively.
  • Their modified Coppock Indicator is above to give a long term buy signal soon
  • Tactical Beta's Gold Model also recently joined the party a few weeks ago as well
  • Market Anthropology's recent chart just blew my mind, and spot gold is currently sitting above it's 50 week SMA, though it is still uncertain how it will close for the week

Basically, for me, this current buy is a much longer term investment with the intended holding period of 2+ years, while waiting for the general market to bottom out.

I will likely be following the iMarket timing model the closest, since it is the less frequently traded model, meaning it is more aimed at the long term. Their risk management statistics put max drawdown at 21%, but that was already all gains since it was invested. From their 2 buy signals, it seems like the market never went below more than 5% of their initial buy price, so I feel a lot more confident with their timing model.

Another Go for Gold?

I know I've been having a lot of gold and precious metal posts lately, but I am seriously under the impression that it is going to the big trade of 2014 and possibly 2015.

This post by Market Anthropology has confirmed my bias to this view. I LOVE their work, it is amazing, especially how they compare to previous and similar cases in history, and make their point.

Now, I'm going going to show a series of graphs.


And now look at the set-up in gold and silver today:

Now, the biggest question (and I hoped you asked this question) is, how high and how long can this "bull" last?

Please refer below.

 The forecast looks to clear $1800 and rally throughout the year.

I... am in awe of this research. I hope you are too. If you can give me an alternative bearish scenario instead, I would very appreciative of it.

Tuesday, February 25, 2014

CFD Frenzy

I've been on a frenzy lately, especially in the past few days. Here's a screenshot of my current open positions that I have:


Okay sure, it looks hella uggo when I print screen and blow it up, but blogspot isn't too kind in importing Excel tables.

Both my Canadian positions were doing well until mid month, and since then they haven't been looking pretty. Technically, the set-ups are still there for them to go in the direction I intend, or else I would've just booked the losses. In fact, both of them have fantastic technical set-ups based on the weekly charts, but that might mean I'll be holding onto these positions for a couple more weeks.

I took a short on the S&P500 when it looked like it was going to break down, and when it recovered I took another short using the Russell 2000. And now that yesterday it ramped up all the way back to all-time highs, I took yet another short with the S&P500. Honestly, I have no idea why the US equity markets are so strong, especially as of late. All the data coming out of there, as well as the rest of the world is crappy. Only a strong break above the current ATH would make me think about cutting losses before it hits my stop loss.

I went long silver after seeing it break a classic support/resistance, as well as the falling downtrend line that it has been consistently bumping off. Since then, it has pretty much just blasted off. I would likely be letting this run for a long time.

The GBP/HUF short that I'm holding onto is quite similar to my S&P trade. It was coming off highs after hitting 2 big resistances. After it went against me and went back up to the last resistance standing and could not sustain over it, I doubled down and took another shot at shorting it and it has so far been pretty good. technically it looks like it still has plenty more time to run before I close the trade.

The short USD/RUB is also due to retest of a latest high, making it look like a double top. Due to how steep it was, I took the trade. It looks technically sound still. I can imagine a strong Ukraine deal going through positively for the Russians and greatly strengthen their currency after all this political turmoil settles down. I don't trade fundamentals, but that's what the technicals are looking like to me. The pair is overbought, so upside seems limited while downside seems plentiful.

Lastly, the NOK/USD short. This pair has been bouncing off the 200 day moving average the past year, and I took the short there. It has rallied 12 out of the past 15 days, and the pair looks quite exhausted. It is showing divergence, and its moving averages are still pointing towards more potential downside. I am likely not to hold this pair for too long as compared to all the other positions that I have.

Anyway, all these trades have been taken in accordance to my strict risk management rules. With 6 different trades in the pipeline, my current total risk is 13% of my account, with the largest position being the US equity short trade. So far, my 2ATR stop loss has been a saving grace, doing it's function well and helping me know what volatility to respect and to ignore. I'm personally excited to see how these trades play out in the near future, but don't worry, I will definitely update them as I close my positions!

Monday, February 24, 2014

The Gold Trade

Because I love forecasting shit (I obviously only post and remind people about the times that I'm right), here's a #throwback to my 3 Dec 2013 post on gold.
My best bet and prediction is that the price of gold is going to continue to drift lower, not going lower than $1145, definitely not closing below $1155. This price target should be hit either in the last week of December, or by the end of the first week of January. I can't call the bottom with any accuracy, but I would guess between $1180-1155. After this is hit, I honestly expect a spectacular rally over the next year or two. 
Well, good news folks, not just me, but the iM team is also gonna be helping you out on gold.

The first good news is that their Coppock gold indicator is going to highly likely give a green light buy signal in the next few weeks. I personally feel that the Coppock indicator is a very useful indicator, especially when used as a long term indicator, which it is being used so in this case.


Of course, since Greg and Anton are both geniuses, a simple Coppock indicator will not do them any good, which is why they had to build none other than a iMarket timing system, specifically for gold.

I'm not complaining at all. I honestly love their work, and I would subscribe to them if I really did have the funds to justify such an investment. Again, they did not use a whole slew of inputs, but rather very specific and relevant inputs, such as the Fed's fund rate, 10 year treasury yield, S&P500 estimated earnings yield, and of course, the price of the SPDR Gold ETF, GLD. The market timing model was based on a research paper he wrote back in 2011, just in case you were interested. However, since I know how of you really don't give a crap, let me quote his summary point.
Conclusion
Gold’s year-over-year return is dependent on both the RFFR and the RFFR’s year-over-year change.
One must monitor the federal funds rate and the inflation rate in order to predict the direction of gold prices. If, from its current level, the RFFR trends upwards, and the year-over-year change in the RFFR is greater than +1%, then one can expect the price of gold to decline. If the trend is downwards or zero, however, then the gold price should continue to advance.
So, there you go.

Of course, I always save the best for last. Greg and Anton are such awesome people, that they have decided not to charge for their service for this gold timing model. But how do you get this information? Well, it's free, so don't expect to be spoonfed. But, I'll spoonfeed you anyway because I'm awesome that way:
  1. Click on this link. Bookmark it, save it, put it as your homepage.
  2. Look at the graph on the left. If it's flat, the model is not invested. If it's not, it's invested.
  3. To be doubly sure, click on "Stats" on the right side and look for holdings. 0 means not invested, 1 means invested.
That's it folks. It's as simple as that.

I don't know about you, but with equities at the moon and the bond bubble slowly deflating itself, those areas really don't look enticing for a value investor like me, since they offer almost no margin of safety. It's funny how it seems that commodities are looking to be the only game in town these days. First with the argi goods, now precious metals and probably soon the commodity sector is where everyone is going to be in. And hell, if I paid $1 for every time I heard any investor tell me about commodities, I still wouldn't have paid out any yet, cos NO ONE is hearing it.

I will have to think if I would want to plow more money into gold miner equities, or if I would like to reduce that leverage now and instead go for the gold ETF instead. Hmmm...

Anyway peeps, you heard it here. Precious metals are soon going to be the biggest plays of the next 2 years.

Sunday, February 23, 2014

Credit Cards Review

Update 24/02/2014 15.17: It has come to my attention that for the UOB One cashback, you need to charge $300 a month without fail to receive the minimum $30 quarter rebate. Also, there is not additional rebate above the $30, so unless you have very concise and exact spending needs of $300/$800/$1500 a month, the UOB card will not be optimal for you.

Also, the Citi Dividends card will only get 0.5% cashback once $50 worth of cashback credit is accumulated. Assuming that you never get any of those specials to increase cashback, minimum spending to redeem $50 is $10,000! (extra 1.5% for dining, extra 4.5% for petrol or groceries) This cards makes the best sense if you use it to charge for your petrol and groceries since you will be able to get your $50 cashback after charging $1000 to your card.

Therefore, I've actually narrowed down my card choices to OCBC Frank and SCB Manhattan. I will be finding out more on their T&C's, update shortly!

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So I spent like 3 hours today in the afternoon just browsing through bank websites and reading about credit cards and all sorts of other things.

First off, I'd like to say that if someone can create the ultimate credit card, I would be very happy and just have that. As of now, AFTER narrowing down choices, I've pretty much am only eying 7 cards.

Why 7 cards? Well mainly because you definitely need 5 cards for each of the major banks, since they all do have pretty good bank promotions that are tied to their credit card, especially in terms of dining discounts.

Why I don't do Frequent Flyer Miles

First off, I would like to point out that the one thing that I totally didn't look out for was frequent flyer miles. Why is that so, considering I'm a pretty hardcore traveller? Well, the reason is simple and it pretty much reflects my personal philosophy regarding air travel. I'm am agnostic to airlines. I am a price renegade. All I do is click the destination and the dates, and I search for the cheapest flight available. I don't have any strong preferences for any particular airline, nor am I swayed by the different travel classes. Therefore, frequent flyer miles are really not useful for me, since I'll be picking destinations, not airlines. In a purely economic fashion, it does not makes sense according to my beliefs.

Why I don't do Rewards Redemption

Secondly, what's up with rewards redemption? The popularity of rewards redemption really goes to show how deep rooted consumerism is within so many people. (please go watch Fight Club!) Especially if people purposely spend money to get points so that they can redeem something! You are limited to only redeeming the rewards that they offer. Food vouchers, a coffee machine, a free stay at a hotel.... why redeem these things unless you really wanted them in the first place?

I can only condone reward redemption if you were going to purchase those items you are redeeming anyway. Then that becomes more of an item rebate, instead of a cash rebate. By and large, I would never engage in any reward redemption programme that promotes that as it's core offering. Later you can see that Citi and UOB have a points rebate system, which I think is a great hidden extra layer of cash rebate that you can get to enjoy. It's definitely not a core offering, but it's a very appreciable perk that can be enjoyed.

I think that the reason why people like reward redemption is that they like to see a physical reward for their card usage. Having a constant subliminal 1-3% cash rebate off purchases isn't impactful enough that they enjoy it. Enjoyment or not, I think it's hard to beat a cash rebate, especially if rewards redemption conversion to actual dollars is less than 3%, which it is, in most cases.

(Citibank Citi Dollars is about 1.67% rebate when you convert to rewards) 3000 Citi$ = $10, $1 spent = 5 Citi$, minimum to spend to enjoy reward = $600

(Citibank Rewards is about 3.33% rebate when you convert to rewards) 21,000 Rewards = $70, $1 spent = 10 Reward Points, minimum to spend to enjoy reward = $2100

(UOB Uni$ is about 0.53% - 2.67% rebate when you convert to rewards) 750 Uni$ = $10, $5 spent = 10 Uni$, minimum to spend to enjoy reward = $375

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Anyway, back to the real topic. I'll be going down the list to what I think suits my personal priorities.

First, would be the Citi Dividends cards. This can be either Visa or Master, and it comes with the contactless option by each of the pay providers as well. It has a sick 18% off petrol from Shell or Esso, 5% groceries, 2% dining and 0.5% off everything else. So, basically, it's a definite 0.5% anything you spend, at all times. Pretty good I think. On top of that, Citi has the best dining hook-ups, and they do have a rebate programme which I think could be useful, but it's not a clear winning point for me.

Basically, with the amount of cashback you get, this is pretty much the only card I would get, if I could only get just one card. The only problem that I have now is that I don't spend money on groceries or petrol!

Next, it is the Frank OCBC card. This card only comes in Visa for the credit version, and it is like a mini reduced version of the Citi card. Basically, you get 0.5% off all purchases, but if you spend more than $500/month, your online purchases get a 6% rebate, as well as your NETS flashpay.

The main problem that I have here is the $500/month threshold, which I'm sure I won't be able to breach. But, just like the Citi card, OCBC does have good tie-ups, so I would be able to enjoy those benefits as well.

Next up is the SCB Manhattan card. This card is actually the best bang for your buck in terms of cashback. However, the main problem here is that their threshold is very high as well. Spending under $1000 only get 0.5% cashback. $1000-$3000 gets 1%, and only if your monthly spending is over $3000, do you a nice 3% cashback. The interesting thing about this is that maximum quarterly cashback is $200. Honestly, this works out great if your non-petrol, non-grocery, big ticket one-off purchases don't have any other discounts from any other cards, you can at least reassure yourself that you'll be getting 3% off. So in a full year if you spend more than $26,000 on these kind of expenses, it would make sense to split them up over each quarter to spend up to $6600 to receive the maximum $200 rebate. I mean, if you're already know you're going to make these purchases and they don't have any promotions, why not get that 3% if you can?

And I suppose last up is the UOB ONE card. Update: I was actually going to go with the Preferred Platinum Visa card, but after looking at the website one last time, I realized that the ONE card is actually pretty good in terms of cashback as well. The threshold is a cool low $300 a month to receive 3.33% cash rebate, with a minimum of 3 transactions. They payout the rebate by quarter as well, and their maximum per quarter is $150. Which brings in quarterly spending to $4500 to maximize the cashback.

So technically, if you had more than $10,000 monthly expenses (god knows what you buy), it would make the most sense to charge it to your Manhattan and ONE card, so you that can get a nice 3% those purchases.

Granted, 3% is not that much, but it is still is pretty awesome I think. And with that, the UOB card has actually just bumped itself up to 1st position!

Then there's the supporting cards, which I'm not too keen on. The Everyday POSB card, but it lacks manual NETS, the Citi Clear just for the drink promotions (not worth it for me now, I think) and lastly the Amex Platinum, which I think for a person of my frugal standing, it is definitely not something that I am would get in the near future. Though, the Palate membership with 50% for 2 people is ridiculous!

So, let me recap my cards.
POSB Go! card for being the NETS card, ATM card and the only debit card (has not failed me before!)
UOB One - (gotta check if there is any lower tier cashback if the $300 threshold isn't met) for all general expenses
OCBC Frank - for big ticket online purchases and anything else
Citi Dividends - for groceries

Well, I suppose in that sense, there really is no point to get a Standard Chartered card, if only for the benefits of of the bank tie-ups.

I'm not done yet, since I really haven't scrutinized the main bank benefits, but I think that most likely, the UOB ONE card and the OCBC Frank card are definitely good to go for me now. I'll evaluate how feasible it is for me to get the SCB and the Citi card as well. It would be really quite nice to have all those cards and always enjoy discounts.

But me being me, I really don't think that I spend more than $500 a month, with half of my purchases being in cash. I think I'll definitely be looking into getting the ONE card very soon!

Saturday, February 22, 2014

Credit Cards Short List

POSB Everyday Card (MC)
DBS Black (Amex)
Citi Dividend (MC/Visa)
Citi Clear Platinum (Visa)
UOB Preferred Platinum Card (Amex + MC)
UOB Preferred Platinum Visa (Visa)
SCB Singpost Platinum (Visa)
SCB Manhattan (MC)
OCBC Frank (Visa)
American Express Platinum (Amex)

Feb Financial Resolutions Check-up

On 26th December 2013 and 27th January 2014, I wrote a post each regarding all the things that I would like to get done so I can slowly work my way towards my financial goals. Here's an update to that list so far:

Done:
  • Rummage through all drawers, old wallets, red packets and hidden stashes for money (exchanged all my US$ with my Dad for his US trip and got credited the SGD amount straight to my bank account)
  • Sort based on currency (some random currency that I have is now in a small envelope)
  • Gather all coins
  • Sort coins based on Series
  • Encash 2nd Series coins at the Mint (managed to cash in $90.55 worth of coins)
  • Consolidate all bank accounts and credit/debit cards
  • File all monthly account balances
  • File all unit trust dividends and summaries
  • Cancel cards no longer in use
  • Contact CIMB regarding fixed deposits (I've decided against it, and I'll just do MMF or STBF instead, simplifies things for me)
  • Find out about tax credits applicable (only NS credits I believe, just a deduction on the amount taxable. Should be quite negligible)

In The Process:
  • Note down any of my hard assets (jewelry) and collectibles
  • Keep vintage notes
  • Consolidate remaining cash (still need to rummage my old primary school drawer)
  • Replace cards that are old (POSB and Citi look like they need a change)
  • Apply for new cards if needed (SCB Manhattan, OCBC Frank?) 
  • Consolidate all existing insurance policies (NTUC enhanced income shield and GE DPS. Along with MSIG travel insurance and PA insurance)
  • Print and keep all the terms and conditions of policies
  • Evaluate possible new insurance policies (term life insurance, TPD, CI and minor PA)
  • Prepare portfolio tracking template

My next post should be a quick review of the credit cards that I will be considering and applying for!

Friday, February 21, 2014

Singapore Property Cycle

I found a fantastic resource today while I was just browsing the net. A friend of mine was asking me about REITs, and recently I've been hearing so many people murmuring around that housing prices are going to drop.

The website that I found is called: Singapore Property Cycle, creative right?


They have pretty spiffy graphs, like this one above, that shows your the Property Price Index (PPI) as well as % change from the previous quarter. Pretty simple, but good to know information.

What really impresses me is the next thing though, which is the table below.

Downturns (Peak to Bottom)

 PeakBottomChange %Duration in quarters
1975-1986 Cycle52.433.5-36.2%10
1986-1998 Cycle181.4100.0-44.9%10
1999-2004 Cycle140.4112.4-19.9%15
2004-2009 Cycle177.5133.3-24.9%4
Average  -31.5%9.75
Fantastic! Now, this is the type of shit that I like to see. It's almost exactly like my drawdown tables which I use to track my funds.

So on average, if we're expecting a property downturn, we can expect to see it play out in 2 years to hit the bottom, and then prices should be down about 20+%. I can dig that.

And if based on the PPI, you see a topping pattern like I do, perhaps the next closest opportunity to purchase a house might be in 2 years time, early 2016?

We will see! Until then, my main financial goal is to make investments which are liquid within 2 years, and with downside risks capped quite well.

Wednesday, February 19, 2014

Am I a Shill?

Hopefully, I am not.

Just yesterday I was reading one of those articles that are so commonly shared on facebook titled, "How to make money online". Obviously slightly curious to see what they recommend, I took a quick peek at it.

Some of them are pretty practical, like selling old junk or working as a virtual assistant, where some were a lot more... niche, like designing an app or creating music.

Some seem like a lot more effort than they were worth, like making ad revenue from a website, while some seemed pretty passive, like earning royalties off music downloads.

Personally, after trawling through the site, 2 ideas really caught me as things that could potentially earn money without having too much of a personal investment into it as well, and they were paid surveys and stock photography.

Now, before you start telling me I'm a shill and get out of town, let me first disclaim that I'm not recommending any of these things, I'm just doing it myself. If you think it's worth your time, maybe you should give it a shot, or perhaps you can just flame me in the comments below.

I went to find my old Paypal account and dusted it off, gave it a new breath of life by logging in and resetting and setting up a new password (jeez, that's how long I haven't used it), making it my online piggybank now.

I signed up with the following paid survey websites:

I guess they do have referral programmes as well, but it's all manually typing email addresses, so I shall not be bothered by that aspect of it. I'll just see how it goes. It certainly doesn't hurt doing random surveys, especially if you're bored.

I will also be signing up at a few stock photography websites, but first I will be shortlisting stock worthy photos and try to tone down the massive filtering effects that I applied to most of them. Once I get a decent portfolio of about 10 photos which I think are stock worthy, I'll be signing up at all the websites. The websites that I will be gunning for are:





I mean, I do have a huge library of my own personal travel photos. The best part about them is that most of them don't have any people in them, so I don't have to bother with model releases. Since I already have such a huge photo library, why not scan through the library and see if any are stock worthy? If they are, great. Some touch up, remove the heavy filters, and submit them!

Since I'm not a professional photographer, and I don't have any plans to be one, I can't really see any downside to this. I've no credibility to speak of to lose, I won't piss off any of my models (since I don't have any), and I won't be affecting my future reputation (since I haven't got one). On the plus side, I might be getting income from work that I've sort of already done, and it also gives me a slight motivation to get back on my feet and take photographs with a new eye.

I'll let you know how these sideline projects turn out for me. As much as I like to think about the markets and making investments all the time, but really, the market really does not move as fast as people think it does.

Tuesday, February 18, 2014

ETF Strategy?

That is actually an old picture of the ETFs listed on the SGX (Jan 2014), but I want to keep this blog less wordy and more visual if possible. We all know how lazy people love looking at pictures!

So, I've been thinking of a suitable strategy for the remainder 15% (correction: 20%!) of my portfolio that I wanted to allocate, and I think that maybe I should think of a good strategy involving ETFs on SGX.

There's no need for an explanation for ETFs, they are better than any single stock ticker. FULL STOP. The real question here, is why the SGX? Of course, I will elaborate more on the rationale behind everything in a future white paper outlining my strategy, but let's just skip along for now for me to explode out all the thoughts in my head.

The list is pretty good, in the sense that it tells you which company is running the ETF, the base currency as well as the management cost.

What could be better and helpful to investors are:

  • Accumulating or distributing?
  • Distribution frequency
  • MM shares available
  • Average bid-ask spread
From my observation, the bid-ask spreads on the more popular ETF products (at least the ones that I'm interested in and bothered to do the calculations) and between 0.2% - 0.7%, with most around 0.5%. That means a round trip can cost between 0.5% to 1.5%

Brokerage costs for SGD dominated ETFs are 0.18% or $18 if the cash is paid upfront and directly debited from your bank account. *side note, that means only investments over $1800 into the STI ETFs would be cheaper than the invest-saver plan, since they charge no spread and their all-in commission cost is 1%. They also have no fee to sell, so actually the invest-saver plan looks very good from a transaction cost point of view.

So unless you have $10k to blow on a single SGD-denominated ETF, your transaction cost will be at least 0.4%, after including the spread and the brokerage fees. That's about 1% for a round way trip. Of course, since ETFs have a significantly lower expense ratio, you would likely be indifferent in terms of costs after 2 years, and would be getting improved returns after that.

I think that you can see that I am advocating a much longer investment horizon compared to my other strategies.

In a perfect fantasy world, this strategy would be used as a long-term, income generating investment, with the goal to continually add capital over time and keeping average costs as low as possible. Ideally, the aim here is not to produce maximum capital gains, but to create a long-lasting portfolio that will keep producing income for me in the long term.

The main drawback of this strategy is:

  • Big lumpy investment chunks due to transaction costs
  • USD-denominated ETFs (need to manage hedging properly)
  • Very long term horizon
Anyway, for the most part of this, I do think that this would be a good long-term, low-cost strategy to further explore. However, the problem with that is the fact that I will be having a short-term capital expenditure soon, and it will likely coincide with the best opportunities to lower down average costs here.

Perhaps I might temporarily close down this strategy and move over those funds to my contrarian fund, to invest in the negatively correlated asset which I've being stepping into!

Monday, February 17, 2014

Week 7 / 2014 Update


The major changes are as follows:

  • DM equities unchanged
  • EM equities unchanged
  • REITs seem to be improving
  • HY still sidelining along its 200 MA
  • Commodities are picking up very nicely now
  • Bonds looking worse


The major changes are as follows:

  • DM equitiesare almost back to ATH
  • EM equities trying to sneak under the 10% mark
  • REITs are looking better too
  • HY credit up a tad
  • Commodities are picking up quite a bit now
  • Bonds have all got worse on the whole
 So, the follow-up action that these seems to be telling me is that:
  • To remember that the individual investor does not need to take part in the craziness
  • Contrarian strategy might be maxing out on Gold stocks soon
  • Just watch the show, there's no need to place unnecessary bets for a small profit

    For you Math Lovers

    I guess since I don't really have any math geek friends who also know financial terms, this just goes out to... me.

    This is a great analysis of Meb Faber's Ivy Portfolio, which is once again, one of the strongest underlying principles that I have inculcated into the construction of my DEWTAAP portfolio.

    He makes it seem so simple:

    • 5 asset classes, equal weighted
    • reviewed once a month
    • calculate the 10 month moving average
    • buy (hold) if above the moving average
    • sell (stay in cash) if below the moving average
    and presto! A wicked sick portfolio with returns of 6%, sharpe ratio of 0.5 and max drawdown at 12%. Crazy? I know it is.

    Now let's compare it to what I've got now
    • 13 asset classes, 12 equal weighted, 1 half weight
    • reviewed weekly
    • calculate the 10 month moving average (200SMA) and 10 week moving average (50SMA)
    • respect moving averages for economic sensitive asset claases
    • 1st moving average buy/sell is based on the 200SMA, just like in the Ivy portfolio
    • 2nd moving average buy/sell is based on the 50 and 200 crossover
    So sure, I made mine a lot more complicated. If I did have access to cheap ETFs, I think I would definitely implement the Ivy Portfolio as part of my different strategies in my arsenal of investing.

    I am still pondering how to deploy that loose 15% of my savings into something productive.

    Saturday, February 15, 2014

    Some Good Links

    I don't want to be like other financial bloggers and post links, because I think some of them do really great jobs.

    For the big timers, I think Abnormal Returns is fantastic.

    For retail investors, I think Monevator's weekly round up is pretty awesome.

    Which is why, both of them are on my blogroll for all to read!

    I think Barry Ritholtz and Josh Brown are pretty good, but both of them are quite MSM.

    Anyway, I found two great articles, just wanted to point them out here for future references.

    The first is about Income Investing - The DIY Income Investor wrote a great post about what it is and how it can be beneficial to engage in it. Personally, I think this is a fantastic way to look at investing from retiree's point of view. Once you have retired, income from investments should be your main stream of income coming in and supporting you, while shortfalls should be drawn from savings. Instead, most people engage and approach retirement in the wrong matter, which is save and invest whatever you can, once you've reached retirement age, convert it to low-risk, low-yield investments and just withdraw from them.

    Maybe it's just me, but I am much more seduced by the logic and theory of investing aggressively with a specific long term future goal, with the main focus being on purely total returns, which would likely most be from capital gains. However, once you have amassed that target value of assets, you can then switch over to income orientated investing, which ought to be into income producing assets, such as REITs, fixed income and dividend shares.

    I don't believe that income investing now, while reinvesting those uneeded income streams back into those investments would be effective. There's always a cost and benefit, and I think that because of the income being paid out instead, there is a slight drawback to current and more likely, future performance. To me, it just seems like there's no free lunch. To get cash in hand now, is to give up some future value, that's it, plain and simple to me.

    So, while I do believe in Income Investing, I do not believe it is the right thing for me to do now, because now is the phase in my life where I should be accumulating the maximum amount of assets, regardless of form.

    Secondly, a point about the EV/EBITDA evaulation metric.

    I've learnt about this in business school before, but I didn't realize how useful of a metric it is. Comparing to other metrics like P/E ratio and dividend yield, I think that this is one of the most reliable metric which is not as easily manipulated and gives a much clearer picture of the investment.

    However, that being said, I still don't advocate the purchasing on single stocks. I just read another article showing that under diversification increases risk so substantially, that by reducing that from your portfolio, you are looking at an increased portfolio performance of up to 4%.

    I'm struggling to find an alternative investment method for my 15% allocation in hedge fund right now. Since iMarkets has decided to charge for their signals, I no longer have a reliable indicator to buy or to sell.

    Ideally, it would be a non-leveraged, non-CFD product. Not for any particular reason, other than that I think it would suit me a lot better knowing that I won't be mixing up and messing up the money in my CFD account. I really need to think of a good strategy, that aligns with my basic fundamental values of investing!

    Friday, February 14, 2014

    AUDNZD Closed

    So yesterday I adjusted my stop loss and take profit levels on this pair so that I can optimize my exit strategy. Here's the chart of my entries and exits.


    Identify - As per my rules, you can see that the SlowS is at an extreme end, while the MACD is quite deviated away from the zero line.

    Entry - I took 2 entries on this trade. The 1st entry was when the SlowS was looking like it was just about to leave Oversold territory. Alas, it was not so and immediately went against me, but it bounced off a 5 year resistance level. The 2nd entry was slightly after the MACD crossover and the SlowS was already halfway moving up.

    Exit - since the MACD histograms were squeezing, and the SlowS was heading downwards, I used the 50SMA for my TP and set my SL at a decent level above my breakeven.

    Improvement - The 2nd entry should have been 2-3 days earlier, which would've increased the profitability of the 2nd trade. The exit is debatable, but I should have ideally took some chips of the table when the SlowS moved out of Overbought, leaving just a single trade open.

    Account Equity used: 2.7%
    Risk (Stop Loss): 2.3%
    Profit based on margin: 62%
    Profit based on account: 1.74%
    Risk-Reward Ratio: 0.76
    Days in trade: 10 and 17 days (12 average)

    My current open trades are still USD/CAD short and CAD/SGD long, both of which are looking pretty now.

    Risking a tiny 2% on a S&P trade and a 1% on a Silver trade, but there's not much else to do other than to wait for my short listed pairs to finally signal a good entry point.

    I must remember that this trading strategy I'm using is very slow, not risky, without eye-popping profits, but it is so far, a pretty legit slow and steady profitable strategy.

    Hi Ho Silver?

    So I took a tiny position in my CFD trade today for silver. I'm taking this trade because Tiho, a guy that I follow very closely is also taking it.


    It's a double breakout here, because it's breaking a nice classical support/resistance, as well as the downtrend resistance.

    Don't think that just because of Tiho that I'm taking this trade. I've been watching the precious metals space very closely for quite a while now, but more towards the gold spectrum. It's fantastic that he alerted me to this set-up.

    If I could buy a physical Silver ETF or a Silver Miners index, I would. However, that's so far only available for gold, which is why I am doing a CFD instead. My preference would actually be a buy and hold, but I guess that's not really possible.

    I'll be following my same risk management rules and all for this trade, with only a 1% risk taken. I'm hoping that it closes above the key levels and have a tiny pop, then I can move up my Stop Loss and just sit in profits while it runs far away from these levels.

    Thursday, February 13, 2014

    Week 6 / 2014 Update


    The major changes are as follows:

    • DM equities are not looking good
    • EM equities are still as bad as ever
    • REITs seem to be improving
    • HY totally sidelining along its 200 MA
    • Commodities are picking up very nicely now
    • Bonds are a mixed bunch

    The major changes are as follows:

    • DM equities getting worse
    • EM equities getting worse
    • REITs are unchanged
    • HY credit does not seem to be moving
    • Commodities are picking up
    • Bonds are mixed, with EM bonds back to look like a good area to pick up

      So, the follow-up action that these seems to be telling me is that:
      • Stay nimble, keep your mind open to changes
      • Be prepared to let equities run away from you
      • Commodities in a bit

      Calculation Annihilation

      As you know, I've been working on a strategy for a once-a-month, regular saving plan. The targeted investment vehicle is the Nikko STI ETF through POSB invest-saver.

      However, I'm having a major major headache doing all the first.

      Even though I've already found out the transaction price of the STI on the corresponding investment days of the month, going back to the STI inception, I'm still having problems.

      Firstly, there is no strong and good website or resource that analyzes DCA as a standalone long term investment strategy. All of them assume that is it purely a different between Lump Sump Investing (LSI) vs. Dollar Cost Averaging (DCA). I cannot find a strategy that DOES not compare to LSI. What if I don't have a huge lump sum to invest? What if I want to squirrel away some money every month? The aim of my strategy is to use this as an very long term form of investment-savings, which would flat out beat any of the silly insurance saving products or funny structured deposits.

      Second, even though I only have a 5 option model (sell holdings, stop RSP and hold, $100/month, $200/month and $300/month), I need to manually allocate each month's decision because you only can change the amount to be invested in the NEXT period. You can calculate it and purchase it on the same period. Therefore all investments are actually working on a 1 month lag to the actual market, which requires me to manually review the rolling returns and decide which of the 5 options to choose. Granted, they usually run in a series, but it still is a manual and taxing job.

      Thirdly, because of the formula to calculate IRR or XIRR, it would be too tedious to map out and calculate the rolling IRR of all the investments to date. Of course, the best case scenario would to have the rolling IRR, but it is just way way way too tedious. Instead, I will think about sampling to ensure that my strategy is useful, and also to help measure risk.

      Compared to the 1 year rolling returns and the 3 year rolling returns, the 3 year returns strategy seems more robust and accurate, but it does not generate many sell signals. The 1 year returns strategy does to generate too many signals. Perhaps the best way to look at it is from a 5 year perspective?

      FX Updates

      I know that I'm supposed to post charts, but it's not easy posting charts at work. I take 15 mins a day when I first reach work to just skim through some charts and re-evaluate trades. I monitor the USD/SGD rate for work anyway, so I'm not slacking off too much, haha.

      I closed my short EUR/JPY trade yesterday, which I was holding since 31 Dec 2013. For about 6 weeks in the trade, I managed to follow the trade for 549 pips, massive!


      Identify Trade - Let me walk you through my entry first. This pair had a MACD deviation quite extended from it's zero line, telling me that it would make a good short trade.

      Entry - After seeing the Slow Stoch finally move out of the overbought territory, along with the MACD crossover, I decided to enter the position short.

      Exit - I finally exited when the MACD made a crossover under it's zero line, telling me that further shorting is probably unlikely.

      However, shown in pink should have been my actual exit if I was a better trader, and that would've been a lot more profitable as well. Since the MACD was already below the zero line then, and the Slow Stoch was moving out of oversold territory, I should have brought up the Stop Loss to sit behind the 100 day moving average. Anyway, this is just a future lesson to learn.

      5% of account equity was used as margin. Equity risked (stop loss) was set to 4%. Profit based on margin used was 97%, and based on the whole account was 9.76%. Risk-reward ratio was 2.44. Sadly, this trade was on my demo account only.

      Currently, I am trying to exit my AUD/USD and AUD/NZD long trades now, I will be updating them once the trades have closed.

      I am currently long the CAD/SGD and short the USD/CAD.

      Two potential trade pairs setting up for me now are the GBP/HUF and the GBP/ZAR. GBP/HUF looks technically more ripe in the short term based on indicators, but the GBP/ZAR actually have a very nice medium term set-up that could probably be ridden for months! I shall be trying to look for other favourable set-ups, which has not been easy as of late.

      I'm pretty happy with my new current currency CFD trading strategy. Strong risk management coupled with favourable technical set-ups leads to lower possibility of losing trades, lower downside risks if trades are losing, and also allows for large upside profits. Let's see how this strategy works in the longer run with more trades, over more time.

      Tuesday, February 11, 2014

      Kiam Chye Post

      This is so unbecoming of a future-famous investment blog, but my mind is feeling so kiam chye right now, I'm just going to vomit out my thoughts here, and hopefully maybe it'll seem coherent after that.

      First off, I guess I'd just like to say that I'm done with my weekly drawdown and moving averages updates. It's just that I'm in the office, and I'm too lazy to upload a screenshot the old fashioned way, but it'd probably go up on site later today when I'm free back home.

      Second, I've been busy the past few days have a life, so don't mind me that I haven't done more research and strategy testing for a simple DCA/value averaging strategy with the STI. I've already downloaded the STI data since inception, and I've also marked down the dates and prices that would've been locked in on the 12th of every month, or the next working day. With that tedious ground work done, now it's more about refining a strategy that is:

      1. Simple to follow
      2. Easy to manage
      3. Limited downside risk
      4. Participate on the upside
      Considering that my aims for this strategy is to be really low maintenance, but still with decent returns in the intermediate and long run, I'll see what I can do. If it's such a good strategy, then perhaps in the future after I get my own place, I can employ a larger % of my monthly savings to fund this particular strategy. For now, I will still explore it to see just how viable it is, especially in the short term, with minimal capital outlay, specifically to reduce the dollar amount of my money locked up in this strategy, especially if it is not performing well. I have a very strong feeling that the end result will be very similar to most other strategies, good, but unrealistic to be employed at that time, since opportunities would be aplenty for many.

      Third, let me give some updates on my portfolios since I no longer do monthly wrap-ups now.

      DEWTAAP: realized loses to have current cash-out value of -0.64%

      Currently, only 43% of the portfolio is in the market, with bonds and commodities positions. Equities have been recently liquidated and are no longer in the portfolio. 57% of the portfolio is in cash, yielding a low, but still relatively better than the bank, returns. Recent sell off saw a position realize a -8.75% loss, but since the position was not fully funded and it was the worst, therefore the portfolio has not suffered a big loss.

      Contrarian: Currently 61% invested in gold stocks, and 39% in cash.

      Because of dollar cost averaging, I have been slowly building up an average cost into this current position now, and cost so far is about 1.01.

      I have closed the Legg Mason HY bond fund, which the overspill went into the contrarian fund, so I have made a profit, but it is so marginal, let's just call it break even.

      S&P timing: A hiccup since iMarket has stopped publishing their signal service for free. Needs to be reviewed soon so that the remaining cash can be deployed either into another strategy or to top up other strategies while in current limbo. Cash is now just idle in the bank account doing nothing :/

      CMC Currency: I just did a bank transfer today, and it was pretty immediate and fast, I'm always quite impressed by them. I think it took them less than an hour to receive my transfer and update my account value! This strategy is currently fully funded, and I will be proceeding cautiously.

      All right, I guess that's all I wanted to say for now. Told you, my mind is a mess now, but I do feel slightly better knowing that I do have plans and ideas about what I'm going to do. I am particularly pleased with my DEWTAAP portfolio, recognizing loses, but them being so marginal. I thought it would have been more!

      Anyway, more updates soon, once I can get my mind in order.

      Friday, February 7, 2014

      Dollar Cost Averaging

      I've implicitly understood it, but I never could quite formally structure it in my mind. I am of course talking about dollar cost averaging.

      For DCA to prove beneficial, there has to be a dip in prices. This is clearly half of the old wisdom "Buy low, Sell high". This makes sense because the dip in prices allow you to pick up more units since they are now cheaper.

      What if prices increase though? Do you still continue DCA? This means that with every additional purchase, you are now getting less units for the same amount of money. Effectively, you're increasing your average cost.

      If we all had the benefit of hindsight, of course the clear and most effective strategy is to invest all capital at the lowest point, to have the lowest average cost possible.

      However, this is not realistic for 2 reasons:

      1. Investors can continual inflows of capital and seek to deploy them instead of incurring opportunity costs
      2. Nobody knows when will the cost be the lowest
      Because of DCA not being an effective strategy, especially in upwards trending markets, I have never been a huge fan of it. Instead, I fancy value averaging a lot more, which I have finally realized, in a sense, is exactly what the author of the next linked article is trying to explain.

      The Power of Buying Pullbacks is trying to explain the act of value averaging without using the words "Value Averaging". I've never been fully able to visualize value averaging as a comparison to DCA until today, and the source article I think does a fantastic job.

      I think I will have to quote his on one section, which I think just hits home as probably the most interesting way to look at value averaging:
      It simply engages a dollar cost averaging protocol – but only on the downside, which is where the real value of dollar cost averaging resides.
      ---------------------------------------------------------------------------------------------------------------------

      Personally, after looking at this, I am more strongly considering the POSB Invest-Saver programme as a vehicle to turn this into an actionable strategy.

      Perhaps a fixed sum investment every month of $200. If the trailing 1-year returns are less than 7% net of dividends, invest $300 instead. If the trailing 1-year returns are over 7% reduce monthly investment to $100 instead. As long as the cost has produced annualised returns above 7%, you can sell off all units.

      Hmmm.... Or perhaps a fixed projection of year end holdings to have $200 + 7% annualized, which actually means 0.56% a month and to adjust monthly contributions based on quarterly or yearly target rates.

      Another interesting strategy and experiment for me to analyze and work out later!

      Wednesday, February 5, 2014

      Emerging Market Debt

      Emerging Markets have been roiling lately, largely due to the tapering effect from the US, which is causing capital flight from these countries. Capital flight in turn depreciates their currency against the USD, which is a major trade currency, causing them to lose purchasing power and rile their economies.

      So a recent hot topic lately is about the outflows of funds from all these EMs, especially as central banks try to contain the capital flight by raising interest rates, in an attempt to stall outflows and currency depreciation. A rise in interest rates is of course a hard blow to bonds, which is why as the crisis continues, this can make emerging market debt appear a lot more attractive.

      Currently, my fund of choice is UOB Emerging Markets Bond Fund (Dec 13).

      I've recently stumbled upon a similar fund, Fidelity Emerging Market Debt Fund (Dec 13).

       UOBFidelity
      InceptionJuly 2001May 2006
      AUM998M SGD695M USD
      Expense1.95%1.25%
      YTM6.30%6.41%
      Div Yield4.94%4.42%
      Div FreqMthAnn
      Duration7.06.9
         
      1 Year-4.30%-4.64%
      3 Year1.61%3.58%
      5 Year7.88%9.74%
         
      Max DD14.61%40.41%
      May 07 - Oct 08  
      Anyway, after comparing them side by side based on pretty important metrics to evaluate a bond fund, even though I thought that the Fidelity fund would be substantially better based on it's lower expense ratio and higher long term NAV returns with dividends reinvested, I realized a few things.

      Firstly, the Fidelity fund has a much much higher drawdown. I find it quite strange, because after checking briefly though both funds, they seem to be holding approximately the same amount of high yield (junk rated) issues at about 40-50% of their holdings. It does seem that like UOB has a much better active management to prevent downside risk.

      However, I think their downside risk management has been mainly due to better credit risk control and not interest rate risk. During the 2013 May sell off until now, in which both funds has their latest peak, both funds have turned down in lock step and are both currently sitting at 11% of those highs.

      I feel that between the 2 funds, UOB is better able to handle credit risks and would be better prepared in managing through a stock market crash than Fidelity. However, since interest rates affects all issues, neither were able to prevent themselves from being hit hard during the May 2013 pre-tapering effect.

      Since I predict that we will be facing a credit crisis in the near future, I will continue with UOB, even though they do have a very steep expense ratio of 1.95% compared to Fidelity's 1.25%. However, if a crisis does occur and the Fidelity fund loses value to relative levels in the past, I might consider a value contrarian investment in it, since it has shown to be quite resilient in recovering price.

      I also do prefer the monthly distributions from the UOB fund more, since reinvestments are not as lumpy and therefore long term returns will not be affected by the luck of the reinvestment timing.

      Sigh, I just did a whole post and a whole bunch of research for nothing really, haha.

      Tuesday, February 4, 2014

      Why I'm Being A Puss

      Of course, majoring ripping from Tadas Viskanta from Abnormal Returns, this is why:
      In the long run, investors are hugely rewarded for avoiding big, preventable mistakes.  Our lifetime investing returns are determined far more by our psychology than they are by our knowledge of the stock market.”Phil DeMuth (Forbes)
      So, am I seeing a big mistake coming up soon, and can I prevent it?

      Well, in all honesty, WHO KNOWS?

      But given the evidence that I am facing right now, I think from a very unemotional and mechanical view point, intermediate and longer term views are telling, "Hey man, GTFO, doesn't look good from where I'm standing".

      I'll be doing a post later to justify my fickleness with evidence.

      -----------------------------------------------------------------------------------------------------------------------

      Of course me as an investor, would love to continue standing in the money building, picking up all the cash on the floor that central bankers are throwing down from the upper floors.

      I smell smoke, but meh, it's probably a fat trader taking a smoke break in the corner from picking up way too much cash today. Can't possibly be the building on fire, can it? I mean, there's heaps of people in here. Lots of old people that just heard the news from silly investment managers just came in just a while ago. I heard they paid a huge entrance fee just to join the party, hah.

      Anyway, I think I'll just leaving this building right now, it does seem kind of hot in here. After I grab a hot dog and a Dew, maybe a quick fag after that, I'll come back around and see how the building is looking. See how my mojo feels.

      I don't work for anyone. I'm not paid to stay in there to pick up money for other people. I'm basically at my own leisure. Sure, I might be losing out by stepping out for the building awhile to take some fresh air and double take the whole situation, but hey, at least I got a hot dog and a Dew.

      -----------------------------------------------------------------------------------------------------------------------

      My current portfolio positioning for my DEWTAAP portfolio is 11% in equities, 39% bonds, 6% commodities and 44% cash.

      I will be moving into safer asset classes for my DEWTAAP portfolio now.

      -----------------------------------------------------------------------------------------------------------------------

      My contratian portfolio is 6% HY bonds, 33% gold stocks and 61% cash.

      I will be selling of HY bonds and begin DCA into gold stocks, especially since gold has yet to breach the 1270 price support.

      -----------------------------------------------------------------------------------------------------------------------

      Final ending quote by Mr. Ray Dalio:
      "The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply that an asset has become more expensive and is a poorer, not better, investment."
      It's a lot better to lose a bit now in a largely uncertain environment, so to still have capital to deploy in a largely cheap environment.

      Peeps, Is This Finally It?

      Less than 3 hours into opening today, and the S&P is down 1.3%.

      Gold is up 1.5%.

      Honestly, I think this might be it boys, just like ZeroHedge with their finite bubble chart thing, pointing to to Dec / Jan, after hitting 1850.

      Well, I can't say that they didn't warn me.

      After confirmation from intermediate signals from the end of today's closing, I should be liquidating all my equity positions. Honestly, I don't feel comfortable with these valuations, especially since they are so extended from the 200DMA.

      I'll be moving all credit risk and economically sensitive assets in my DEWTAAP portfolio out and stick them either into high grade short term bond funds, or just simply into a MMF.

      I will be closely monitoring gold stocks, and I will probably incrementally add to my current position until I am maxed out.

      For my S&P timing model, I will do the math tomorrow and find out a sum to put into the account. Hopefully, by this Friday the iMarket guys will send out a sell signal, and I can be more confident shorting this. Most likely, I will split my bets 1/2 and 1/2 between the Russell and the S&P.

      Finally, for my CMC model, I think I'll either continue testing my strategy (currently, 4 open positions, 3 in the money, 1 breaking even, and 1 closed out position with a marginal profit). Personally, I think that this strategy is finally what I'm looking for. A strategy that doesn't need intraday intervention, and is very mechanical in process. In a matter of 5 weeks, I'm already looking at almost 15% profits in my demo account. I'll sleep on this.

      All right folks, that's me for the night, I need to get some sleep. Tomorrow is going to be a pretty interesting morning to wake up to.

      Week 5 / 2014 Update




      The major changes are as follows:

      • DM equities are starting to melt
      • EM equities are shot
      • REITs no change
      • HY turning into a full blown sell
      • Commodities somehow weakening
      • Bonds seem to be improving

      The major changes are as follows:

      • DM equities are now slumping
      • EM equities getting worse
      • REITs are unchanged
      • HY credit is slipping up
      • Commodities sliding back into a good buy zone
      • Gold Miners weakened a bit
      • Bonds seem to be heading lower

        So, the follow-up action that these seems to be telling me is that:
      • GET READY TO SELL THEM EQUITIES
      • HY IS ALMOST A SLAM DUNK SELL
      • WATCH CORP BONDS CLOSELY
      • TEMPLETON TR FUND MIGHT BE A SELL, 1 LAST STRAW
      • Hold onto EM bonds, it's already 76% to it's deepest drawdown, the downside is greatly muted here
      • Prepare to load up the whole contrarian truck with gold stocks
      • Currently, look to evaluate bond funds on top of MMF funds to stash cash (see performance under stock crisis)

      Monday, February 3, 2014

      Fear and Greed Index

      I was just at Andrew Thrasher's Weekly Technical Market Outlook and he had a link to this, which I find very interesting, to say the least.

      It is called, the Fear & Greed Index, and it is pretty interesting to look at.

      http://money.cnn.com/data/fear-and-greed/

      Here's an excerpt of their index:

      We look at 7 indicators:

      Stock Price Momentum: The S&P 500 (SPX) versus its 125-day moving average

      Stock Price Strength: The number of stocks hitting 52-week highs and lows on the New York Stock Exchange

      Stock Price Breadth: The volume of shares trading in stocks on the rise versus those declining.

      Put and Call Options: The put/call ratio, which compares the trading volume of bullish call options relative to the trading volume of bearish put options 

      Junk Bond Demand: The spread between yields on investment grade bonds and junk bonds

      Market Volatility: The VIX (VIX), which measures volatility

      Safe Haven Demand: The difference in returns for stocks versus Treasuries

      For each indicator, we look at how far they've veered from their average relative to how far they normally veer. We look at each on a scale from 0 - 100. The higher the reading, the greedier investors are being, and 50 is neutral.

      Then we put all the indicators together - equally weighted - for a final index reading.

       Pretty interesting, eh? It looks like fear to me too, and I'm taking my cues from the intermediate term indicators that I posted up last week. I'm thinking of taking a stab in the dark with my CMC demo portfolio to see if I can long / short the whole thing pretty well.... I'll think about that after my run.

      Since iMarket is removing their free signal service and instead replacing it with a paid service, I don't know if I want to take the risk in my own portfolio AND also pay for their signal service. It is pretty good, based on backtests, but since it has gone live, it has only made like... between 1 to 3 trades? And I remember one wasn't profitable. Perhaps given more real life data testing, especially extreme scenarios, I might consider subscribing to them ($10 a week for a signal that says buy / sell is pretty steep, isn't it?) if they can weather through that and come out of them profitable.