Monday, January 18, 2016

[XMM STI ETF Investing] Next Purchase Triggered

Excuse me for not updating this particular portfolio for quite a long time. I've been so busy the end of last year with work, and then after that travelling and having a life. I'm glad to report that it's chugging along just fine. Even though I did not make specific posts for it, I have been updating my end of month account values on the sticky page, and as you can see, the portfolio is very surely but slowly growing month by month.

Anyway, the last time I talked about my STI ETF playbook was in September when it hit the 20% trigger and I bought my next few lots.


Since the STI ETF dipped below my pre-planned trigger of $2.66, I went into the market and bought 6 lots at $2.65, bringing my total number of lots to a respectable 13 lots, which is worth about $3400. My average price is roughly $2.80.

Don't get me wrong, the STI ETF is NOT the holy grail of all investing decisions and your path to financial salvation. As great as the STI ETF is (which is better than a lot of other "vehicles" being peddled), it is not without its own shortcomings.

It is being even more and more apparent to me that plenty of people haven't the foggiest clue that ETFs exist, what they are, how they can be used and what are the risks that they assume by buying them.

The most simplistic caveman answer I've heard is "It's diversified hor? So safer and better lor!"


Oh gawd. Just shoot me already.


If you want to read more about my thoughts on ETFs, you can head over to my previous article and start from there. An ETF does not "diversify" away all your risks.

The earlier you figure out that there is no one magical investment, the better off you are going to be dealing with the endless stream of hot steaming bullshit that runneth out of the financial world.

4 comments:

  1. This sounds like a good approach having pre-determined levels to purchase more shares of the ETF. I assume before the target is hit you just accumulate cash in your account and do nothing with it.
    I can see how you are doing this in the bear market adding whenever the price is dropping down you are new lots, but I wonder how you do this when the fund is going up? Let's say if the fund is now at 2.65 and it goes to 2.83 do you add 4 lots? And when it reaches 3.01 you add 2 lots? Basically trading and adding in both directions? What do you do, if the fund exceeds 3.54?

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    Replies
    1. I think GMGH is doing some form of value averaging, following a periodic portfolio target. So when price rises to >3.5 there is a sell element embedded in the mechanism

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  2. Can also don't sell and just collect dividend. The average dividend yield of STI EFT is 3% (if you bought the correct one which gives dividend). If you did dollar averaging and you bought the majority below average price, then likely your dividend is about 3% which is not bad.
    If STI behaves like US indexes which has long term up trend (at least keep pace with inflation hopefully), then this buy and hold strategy is also not bad.
    In meantime, you can build up your war chest for the next rainy day or selectively buy undervalued shares of individual companies.

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  3. typo error above - supposed to be "above 3% which is not bad"

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