Friday, October 10, 2014

Practicing Proper Property Patience and my ramblings

Boom baby, the US markets looks like it's getting a bit more volatile and cray cray! 1-2% moves everyday over the past 3 days. Is that volatile? Shucks, that's nothing. Maybe with the VIX hugging the numbers below 15 most of the year, we are getting used to the 45 degree green climb. In 2011 the market moved 4% up and down over 3 days as well. Now, that's a little more interesting when you think about it, isn't it?

I don't know what's going on, but I secretly hope for a nice, big and deep correction that lasts a bit long. Like I said before, the best thing for young investors are bear markets, since that is the best time to accumulate assets. Don't blame the market going down on me because I am wishing for it to go down, Carl Icahn, George Soros, Stan Druckenmiller and Sam Zell don't have high hopes for the US markets either. And they have a lot more money to push to the other side of the trade. Me? Peanuts, and not even the kind of peanuts that Ho Ching would call peanuts.

A few people think I'm a crazy gold hoarder, trying to sell BullionStar services and make a quick buck. But meh whatever, the internet is a free space, people can think what they want of me. I don't blog to make people feel good and stroke them while validating their trades. I just say what I think, and try not to be abusive or offensive to people. Practicing expressing my opinions. Like I said before, I only feel like I understand something if I can put it to writing. So sorry, but you might have to deal with some ramblings and roundabout logic in my writings. Oh well. Anyway, personally, I think my school of thought is in line with cycles and asset rotation. Buy what is cheap, sell what is expensive, and look for good opportunities in the middle if they present themselves.

Right now, what is cheap? Commodities, the whole lot of them. Not just precious metals like Gold and Silver, but the whole lot of Agricultural goods as well. Soybeans, Corn, Cotton and Sugar to name a few. Oil though, that's another thing. Oil looks like its slipping and sliding down to me. I told my friend back a few months ago to be careful about long Oil when he was saying it seems like a good investment with all the turmoil in the Middle East. I'm not sure if he did go in, but Oil was over 100 then. Hopefully he didn't, or if he did, he didn't use too much leverage.

What else is cheap? Bonds? The only bonds that look good to me in the long term are actually those of EM countries that are much less debt saddled than most of the developed world. Look at the yields in Japan and Europe, it's honestly... stupid. However, I think that yields are going to stay low for the next few years, before we go up cray cray. Deflation, then inflation is what I am expecting. But hey, I'm just another crazy guy. That's what I think will happen, but I only buy what I think is cheap now, with an eye out of what to look for later.

So what about equities? Damn, the US market is out of this world. If anyone wants to go long and add positions here in the broad market, they be cray. A whole TON of long term metrics are warning that the market is all bubbly again. But hey, people only can see bubbles in hindsight right? US stocks are ridiculous. Bio tech, small cap and tech stocks have the most ridiculous ttm PE ratios that I've seen. Don't believe me? Go look it up, you would likely think that the calculations are wrong. Growth better be flying out of everywhere in America and the rest of the world for that kind of numbers to add up.

Some equity markets are not crazily priced, like Russia, Brazil and maybe even Africa. But on the whole, looking at the MSCI World, the world looks pretty much as roided up as the US. Even with a 10 year horizon, the US or World indices do not look like a sure win. And over a 10 year horizon, statistics support that broad investments like that beat their original investment price 97% of the time. Are we in the 3% now? Sounds quite unlikely, but I think it's possible to imagine so.

While everyone is out running about flip flopping between "oh a correction is healthy and needed" and going "is this the start of the bear market?", I'm just sitting back and trying to not let any of the market noise affect me. I have a plan and I'm going to stick with it. Buy what is cheap, sell or avoid what is expensive. I know I have been looking like a fool for almost a year now saying that the markets seem expensive to me and I get burned ever so often shorting it, but hey, even a broken clock is right twice a day. Even a bearish call can be right after a few years. I don't know any more information than you probably do. The only thing that sets us apart is what we do. I know that my performance mid game does not matter, so it's all right to not be winning (who am I competing against anyway?). All I care is that my end game is a high number, and that is the only thing that matters to me. As long as I end this game with a high number, how you get there is your preference, but it honestly doesn't matter.

Looking at the local scene, this is what my title is about. I think property in Singapore is something that is latently in the back of everyone's mind, if they are over 25. Property prices are heading down, that has been the trend for the past few months. The property agents I know are uploading silly videos and articles on FB every other hour. Busy day at the showflats, must be. I think with the xenophobia in Singapore that is tightening foreign workers of all talents, along with the huge supply that is going to hit the market over the next few years, property is gonna get smacked. Unless holding power is strong enough for 2017, which I doubt many people have, things in the property market are going to get a whole lot worse before it gets better.

With that in mind, I have marked out a few property related stocks that I think look interesting to me, but I will resist all temptations to purchase them, with the hypothesis that they are going to get smoked and slaughtered when the SHTF. Yes, many are diversified in geography, but I think sentiment is going to matter more than the fundamentals when it comes to the pricing (selling) of these names.

Aspial
Bukit Sembawang
Low Keng Huat
OUE Limited
Sing Holdings
Stamford Land
Wing Tai

Of course, being the crazy person I am, I will be peeling off the S from the F after it has H and splattered all over the place. Nom nom nomzxz.

2 comments:

  1. Hi GMGH,

    I have been following your blog for quite awhile now and I have to say I am learning alot from someone who is younger than me! =p

    Some of my views are quite aligned with yours. I mean, who doesn't want to "buy stuff that is cheap and avoid stuff that is expensive".

    I am not a big follower of country indices except for those in the US and in Singapore. Even though I agree that the US market looks frothy, Singapore's still seems fairly valued. It's interesting to note that the local market seems rather decoupled from the US market. But I am also getting a little concerned since I doubt the STI would be resilient if the US market falls significantly (>15%).

    To be honest, it seems interesting that almost all asset classes are disappointing these few weeks. Oil and commodities achieving new lows with lacklustre demand like what you mentioned. Bond yields are still ridiculously low and stocks are getting hit too. Property needs to trend much lower before it can be considered "not expensive". So that leaves cash is the only safe bet? Hah!

    Generally, I wouldn't wish for a market crash (be careful of what you wish for and I don't wish pain on people who are 100% invested), although I would always try to prepare myself for one.

    Anyway, keep up the good work! I am impressed by both the frequency of your posts and the quality of them. =)

    And good luck to you in your journey, future millionaire!

    Cheers,
    My 15HWW

    ReplyDelete
    Replies
    1. Hi Mr 15HWW,

      You are following me? No no, I am following you, haha!

      Yes, I also think that Singapore's market looks very fair valued actually, but likewise I am worried about the spillover effect if the US market does fall. I do notice that about 80% of the time, the SG market will follow the previous day's direction of the US market. Whenever the US market drops, I am eager to see the next day if any of the tickers I watch are nearing my price targets to acquire!

      Many forget that Cash is an asset class on its own. There's no need to be fully invested all the time since we are not professional portfolio managers following a mandate! Actually looking at my entire portfolio's asset allocation, it seems like I am very cash heavy. I used to feel very anxious that I am "losing out" not being invested in anything, but I also have the OCBC360 account, so it is not so pain anymore to hold cash, haha.

      A market crash would be pain for many, but it's necessary to purge out malinvestments and it leaves the survivors much better off to prosper for the future. Same for investors, a market crash will force out weak hands and over-leveraged (invested) people, and those that will benefit are those with the staying power to tahan the crash. It feels quite zero-sum unfortunately.

      Thank you for the encouragement, it is nice to hear such kind words from a veteran! Please keep blogging too, I always click your posts with gleeful anticipation!

      Delete

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