The Investing Year Ahead

[swissie]

On 1/13/2024 at 3:46 PM, Mike Lister said:

Yes, another reason to monitor the Dry Baltic Exchange.

The Dry Baltic Exchange only mirrors "Dry Goods" limited to a relatively small geografical area.

I would rather have a daily/weekly/monthly "container shipping index" as most goods today are shipped by container.

[Mike Lister]

7 hours ago, swissie said:

The Dry Baltic Exchange only mirrors "Dry Goods" limited to a relatively small geografical area.

I would rather have a daily/weekly/monthly "container shipping index" as most goods today are shipped by container.

The Baltic Exchange has both Dry, Wet and Gas freight market information but things get messy having to cross reference several indices, Thus far there's nothing as convenient as Dr Copper.

 

https://www.balticexchange.com/en/data-services/market-information0/indices.html

[Mike Lister]

8 hours ago, noobexpat said:

 

Japan looks like its had a nice run lately, my one has been flat for a whole year ...so i went with the flat one 55

 

Seem to have so much fund cross-over on that taiwan semi-conductor place! 

Fund overlap is almost inescapable, unless you differentiate your holdings by capitalization. My two Asian funds also overlap on the likes of Taiwan  but at 10% the percentage is so small and TSC so large that I think it's acceptable.

 

 

[Mike Lister]

9 hours ago, swissie said:

Yes it's Asia. The US and Europe is very "ripe" with too much good news already priced in. With the exeption of Brasil, South America hasen't been able to "take off" for the last 300 years. Africa has potential, but stifeled by corruption as a accepted way of life by the population.

Yes it's Asia. Surely, China has a few propbems, not sure how they will adress those problems at this time. But not to forget: While in Western Democracies it takes weeks, months, years of debate to rectify major economic problems, the Chinese political system allowes for drastic remedies within 48 hours. In todays fast changing world a tremendeous advantage.

The Taiwan question: The Chinese are awaiting the next US presidential election. Knowing that a president Trump will do nothing for the defense of Taiwan. Thus setteling the matter quickly. It remains a "wild card" though.

The problem I have with investing in Asia, especially in China is the volatility, it can be a real roller coaster. The only solution is to spread the risk to include part of Dev Asia or to stay with the EM theme and include India and other EM markets. But EM are so susceptible to USD swings that it's difficult to know how to carve up that market to manage risk effectively. FM's seem to comingle EM and Dev Asia which seems right from a volatility perspective, another angle is to use Australia which is a proxy for China. Confusing.

[Mike Lister]

I like to use a number of different reference points when I buy funds which I try to look at from as many different angles as I can,..,,,I definitely over analyze, if there is such a thing.

 

The risk index in the FT gives a good comparative view of a fund, vs it's peers and the RISK chart sometimes helps identify alternatives I had spotted previously, it's simple to understand and the LIPPER rating  can be very good.

 

I also like to model funds using Trustnet, I'll frequently compare funds over time to see which out performs to try and understand why. It's a free service so there's nothing to lose and their funds library is extensive.

 

I also like to see what Citywire has to say about a fund and it's FM, you can easily see the standard deviation over short, medium and longer timescales which is helpful.

 

Morningstar is of course the gold standard for these things, I've learned never to go against what they say!

 

Note: I have portfolio set up within Trustnet which gets updated automatically, it's easier to log on to that and see what the number look like, rather than logging into by broker/platform with all its security.

[Yellowtail]

Roller coasters are fun. 

[Mike Lister]

I’m trying to construct a detail level model for an investment approach I want to try. I’ve satisfied myself that trackers are the way to go but the scope of individual trackers needs careful control. It’s a simple enough task that just needs some time in order to find the right trackers.

 

I want to remain invested in all the major markets but I want to have the flexibility of going over or underweight in individual  markets, without altering my investment levels in the remaining markets. If I have  global tracker, that pretty much guarantees me 60% in US markets which I cannot change. The solution, I think, is to identify the markets I want to invest in and to weight each market according to the economics of the day. Today I might opt for 35% in US markets because they are overpriced but in 12 or 18 months I may decide that 50% is more appropriate.

 

My starting point is my asset allocation, which because of my age, I only want 60% in equities and as a counter weight (hopefully) I’m going for 25% in investment grade bonds which I’ll split between short and long term. I’ll put 15% into Money Markets because the rate is still good, that gives me a source of highly liquid funds that I can deploy if buying opportunities present themselves.

 

Of the 60% that are equities, I’m going to use ETF’s because they are inexpensive and they are easily and quickly convertible. I’m also going exclusively for index trackers because they are proven performers.

 

  Equities Index Trackers - 60% (placeholder funds)

japan 12% -  ISHARES JAPAN EQUITY INDEX CLASS D 

dev asia 10%  - VG FTSE Dev asia ex japan

em 12% - iShares EM equity index

Eur 11% - L&G Europe Index class c

UK 8% - L&G UK Index

US 35% - UBS S&P 500 INDEX CLASS C

small cap - 12% VG Global small caps

100%

 

Bonds Index Trackers - 25%

 

VG Global Bond Index

VG Short Term bond index

 

Money Market - 15%

 

Fidelity Cash

 

It should be easy enough to adjust the weighting of the different markets, as the need arises and as risks increase in different regions. The above is my starting point, any thoughts, anyone?

 

 

[swissie]

No logical analisys for a change. I allow myself to shamelessly expose my "gut feelings" here.

- I would like to see the recent "dip" of the US markets as a "technical correction". But the recent lows MUST hold, otherwise a more severe "correction" is likely to follow.
As the year progresses, the "Donald Trump Index" will increasingly affect "investor sentiment". Come fall at the latest, investors will be mesmerised by the weekly polls and rightly so:

A second term president Trump would mean epochal changes, too numerous to mention here. But just for starters: If sombody throws a "monkey wrench" into the machinery of global trade, this would likely make investors "shake in their boots". Affecting every form of investment. (Including the prize of your kitchen sink).
----------------------------
I always like to consult my 103 year old Romanian Gypsy Clairvoyant Lady. She claims that this Trump guy is fogging up her crystal ball to a degree, that predictions have become utterly impossible.

Otherwise she had always a firm conviction as far as investments are concerned:

- 33% is careful analisys (doing the opposite of what financial advisers tell you to do).
- 33% is your gut feelings (after having smoked some mushrooms).
- 33% is the most important factor: PURE LUCK!

[Mike Lister]

38 minutes ago, swissie said:

No logical analisys for a change. I allow myself to shamelessly expose my "gut feelings" here.

- I would like to see the recent "dip" of the US markets as a "technical correction". But the recent lows MUST hold, otherwise a more severe "correction" is likely to follow.
As the year progresses, the "Donald Trump Index" will increasingly affect "investor sentiment". Come fall at the latest, investors will be mesmerised by the weekly polls and rightly so:

A second term president Trump would mean epochal changes, too numerous to mention here. But just for starters: If sombody throws a "monkey wrench" into the machinery of global trade, this would likely make investors "shake in their boots". Affecting every form of investment. (Including the prize of your kitchen sink).
----------------------------
I always like to consult my 103 year old Romanian Gypsy Clairvoyant Lady. She claims that this Trump guy is fogging up her crystal ball to a degree, that predictions have become utterly impossible.

Otherwise she had always a firm conviction as far as investments are concerned:

- 33% is careful analisys (doing the opposite of what financial advisers tell you to do).
- 33% is your gut feelings (after having smoked some mushrooms).
- 33% is the most important factor: PURE LUCK!

Grasping at straws.....it is earnings season.

 

Sorry, that's the best I could come up with. I, like you, see no logical reason for change hence we're going to keep bouncing up and down in that same narrow gap between ceiling and floor until either something breaks or something unexpectedly delicious happens. 

 

Trump? The prospect terrifies me. Russia would probably head into Europe and the US would pull out of NATO. China meanwhile, well, you know what would happen there. 

[Baht Simpson]

Any advice on where I should stick my $200?  

[Yellowtail]

19 minutes ago, Mike Lister said:

Grasping at straws.....it is earnings season.

 

Sorry, that's the best I could come up with. I, like you, see no logical reason for change hence we're going to keep bouncing up and down in that same narrow gap between ceiling and floor until either something breaks or something unexpectedly delicious happens. 

 

Trump? The prospect terrifies me. Russia would probably head into Europe and the US would pull out of NATO. China meanwhile, well, you know what would happen there. 

Russia did not budge while Trump was in office, unlike during the Obama and Biden administrations. 

 

Trump's calling out slackers for not meeting their NATO financial obligations left most NATO members much better equipped to help Ukraine than they otherwise would have been.  

 

I think had Trump won the election, there would be no war in Ukraine or Palestine. 

 

If you do not want to talk politics fine, but then do not bring it up. 

 

 

[swissie]

30 minutes ago, Yellowtail said:

Russia did not budge while Trump was in office, unlike during the Obama and Biden administrations. 

 

Trump's calling out slackers for not meeting their NATO financial obligations left most NATO members much better equipped to help Ukraine than they otherwise would have been.  

 

I think had Trump won the election, there would be no war in Ukraine or Palestine. 

 

If you do not want to talk politics fine, but then do not bring it up. 

 

 

Quote: "Trump's calling out slackers for not meeting their NATO financial obligations left most NATO members much better equipped to help Ukraine than they otherwise would have been".

= All sent to the Ukraine? According to current NATO inventory (without US): After 3 weeks, NATO will run out of ammunition. Confirmed by European Defence Ministries.

Politics and economics are unseperable. Just saying.

 

[Yellowtail]

11 minutes ago, swissie said:

Quote: "Trump's calling out slackers for not meeting their NATO financial obligations left most NATO members much better equipped to help Ukraine than they otherwise would have been".

= All sent to the Ukraine? According to current NATO inventory (without US): After 3 weeks, NATO will run out of ammunition. Confirmed by European Defence Ministries.

Politics and economics are unseperable. Just saying.

 

 

So had they not upped their spending They'd have been out a year ago. What's your point? 

[swissie]

1 hour ago, Baht Simpson said:

Any advice on where I should stick my $200?  

I was going to suggest "Beer Chang" at around 5%. But home brewed booze is around 40%. Where else can you get a risk free 40%?

 

[spidermike007]

On 1/1/2024 at 7:00 PM, The Cyclist said:

 

I am suggesting that world geo-politics will trump any of the usual pros and cons of investing.  Not just the S&P, but every single Index.

 

The world is at a crossroads

 

* Ukraine

 

* The ME

 

* Xi latest announcement on Taiwan

 

* The race for rare minerals

 

* Water scarcity

 

And the big one that you mentioned in your initial post

 

* Debt, world debt at somewhere North of 300 Trillion.

 

Currently the World is a powderkeg awaiting a spark.

 

Which is why I suggested that normal pros and cons of investing should perhaps be relegated for the time being and investment in Defence Companies might be a good opportunity.

 

Equally, if you do not think the above applies, ignore it and do your own thing.

 

I totally agree those are all very relevant points to be taken into consideration. I think the debt maybe the largest threat. Lister mentions the debt at 34 trillion for the US, but that's official and fictitious. Anybody with a good memory will recall that Cheney had Congress pass a resolution that allowed the entire Iraqi and Afghani campaign to be conducted off the books and that's likely at least an additional 10 trillion dollars in debt. Who knows how much other debt is hidden, I think it's probably closer to 47 trillion. 

 

Then there's the possibility of a major correction, many of us think the stock markets are grossly overvalued, many of us think real estate is grossly overvalued, and there are a lot of variables that could cause a major correction to happen. Once it starts can it be stopped? I don't know the time frame but I see the Dow dropping to as low as 3,500 perhaps within the next few years. 

[Mike Lister]

The S&P reaching new highs reminds that, "markets can stay irrational, longer than you can stay solvent"!

 

Meanwhile China suffers a continued USD 6 trill+ rout hence the spread becomes even more massive.

[Mike Lister]

I'm sorry, poster yellowtail was correct, I should not have mentioned politics in this thread because it leads to the discussion that is emerging now. Please can we get back to the subject matter intended. I've hidden from view one post that expanded the political discussion. Thanks for your understanding.

[sirineou]

On 1/2/2024 at 10:56 AM, Mike Lister said:

Back on topic please!

A  difficult preposition , especially when you are older like me,  and don't have time for the long game.

consequently  , I am becoming risk averse. 

I an concerned with the BRICs issue , and the effect it will have on the dollar and consequently the US market.  Way to many variables to consider with my puny human brain . 

A one year T bill yield is up to 4.8% and my finger is hovering over the "Buy now"  button at my  Charles  Schwab account. 

  

[Mike Lister]

2 minutes ago, sirineou said:

A  difficult preposition , especially when you are older like me,  and don't have time for the long game.

consequently  , I am becoming risk averse. 

I an concerned with the BRICs issue , and the effect it will have on the dollar and consequently the US market.  Way to many variables to consider with my puny human brain . 

A one year T bill yield is up to 4.8% and my finger is hovering over the "Buy now"  button at my  Charles  Schwab account. 

  

I know that feeling only too well, you are certainly not alone. The yield curve is still inverted and whilst accepted wisdom is to go long dated bonds in a falling rate environment, short term bonds are winning the game. For the first time I am holding both long and short term global bonds, just trying to cover the bases, how crazy is that.

[Yellowtail]

8 hours ago, spidermike007 said:

 

I totally agree those are all very relevant points to be taken into consideration. I think the debt maybe the largest threat. Lister mentions the debt at 34 trillion for the US, but that's official and fictitious. Anybody with a good memory will recall that Cheney had Congress pass a resolution that allowed the entire Iraqi and Afghani campaign to be conducted off the books and that's likely at least an additional 10 trillion dollars in debt. Who knows how much other debt is hidden, I think it's probably closer to 47 trillion. 

 

Then there's the possibility of a major correction, many of us think the stock markets are grossly overvalued, many of us think real estate is grossly overvalued, and there are a lot of variables that could cause a major correction to happen. Once it starts can it be stopped? I don't know the time frame but I see the Dow dropping to as low as 3,500 perhaps within the next few years. 

I recently hears that the unfunded liabilities put it more at (I think) over 70 million. 

[Yellowtail]

21 minutes ago, Mike Lister said:

I know that feeling only too well, you are certainly not alone. The yield curve is still inverted and whilst accepted wisdom is to go long dated bonds in a falling rate environment, short term bonds are winning the game. For the first time I am holding both long and short term global bonds, just trying to cover the bases, how crazy is that.

I say be safe with what you need conservatively and "play" with the rest.

[swissie]

On 1/19/2024 at 9:56 PM, Mike Lister said:

The S&P reaching new highs reminds that, "markets can stay irrational, longer than you can stay solvent"!

 

Meanwhile China suffers a continued USD 6 trill+ rout hence the spread becomes even more massive.

Plus debt ratio compared to GDP is around 140. In strong competition to Italy. But betting agaist the worlds most "vigorous" economy?

[swissie]

On 1/19/2024 at 5:28 PM, spidermike007 said:

 

I totally agree those are all very relevant points to be taken into consideration. I think the debt maybe the largest threat. Lister mentions the debt at 34 trillion for the US, but that's official and fictitious. Anybody with a good memory will recall that Cheney had Congress pass a resolution that allowed the entire Iraqi and Afghani campaign to be conducted off the books and that's likely at least an additional 10 trillion dollars in debt. Who knows how much other debt is hidden, I think it's probably closer to 47 trillion. 

 

Then there's the possibility of a major correction, many of us think the stock markets are grossly overvalued, many of us think real estate is grossly overvalued, and there are a lot of variables that could cause a major correction to happen. Once it starts can it be stopped? I don't know the time frame but I see the Dow dropping to as low as 3,500 perhaps within the next few years. 

Yeah, let's talk about dept.

There is a very internationally respected Newspaper in Switzerland (founded in 1780). They do not publish any fake news.

In a recent article they calculated, that if the global mountain of debt would have to be paid back, then every human being on this world wold have to work for absolutely free for the duration of 3 years. 

[swissie]

On 1/17/2024 at 12:17 AM, Mike Lister said:

The Baltic Exchange has both Dry, Wet and Gas freight market information but things get messy having to cross reference several indices, Thus far there's nothing as convenient as Dr Copper.

 

https://www.balticexchange.com/en/data-services/market-information0/indices.html

As far as searching for "simplyfied indicators". There is always the very old "Dow Theory".

= Dow Industrial and Dow Transportation should move in tandem. While the Industrial has made new highs, the Transportation HAS NOT. Ooups?

- With the help of my Romanian Gypsy clairvoyant I am working on a new index that combines the Dow Theory, the Baltic Dry Index and Dr. Copper.

EUREKA ! This is it. I will get filthy rich. I am so confident, that I have already ordered a new yacht.

 

[spidermike007]

39 minutes ago, swissie said:

Yeah, let's talk about dept.

There is a very internationally respected Newspaper in Switzerland (founded in 1780). They do not publish any fake news.

In a recent article they calculated, that if the global mountain of debt would have to be paid back, then every human being on this world wold have to work for absolutely free for the duration of 3 years. 

What's really astonishing to me is the number of economists and traders who really don't take the debt into account, they just figure it's part of the deal, and it's not really going to affect anything at any point in time.

 

I think it's going to cause the whole house of cards to come crashing down at some point. 

[swissie]

1 hour ago, spidermike007 said:

What's really astonishing to me is the number of economists and traders who really don't take the debt into account, they just figure it's part of the deal, and it's not really going to affect anything at any point in time.

 

I think it's going to cause the whole house of cards to come crashing down at some point. 

Well, it's like the guy that jumped off the 15th floor. On the way down, having passed the 7th floor, saying to himself: "So far, so good".

On a more serious note: Ever since WW2 the "global money supply" was increased by the central banks (money supply means "credit" at the end of the day). Thus fuelling "Economic Growth". Without "growth of money" no more "economic growth".

The junkie around the corner needs ever increasing amounts of heroin to keep him going. The Heroin of the world economy is called cheap (paper) Money.

[Mike Lister]

2 hours ago, spidermike007 said:

What's really astonishing to me is the number of economists and traders who really don't take the debt into account, they just figure it's part of the deal, and it's not really going to affect anything at any point in time.

 

I think it's going to cause the whole house of cards to come crashing down at some point. 

I remember Naam, years ago saying that the way to solve the debt problem was to inflate it away,..... it's one answer and quite workable.

[spidermike007]

7 minutes ago, Mike Lister said:

I remember Naam, years ago saying that the way to solve the debt problem was to inflate it away,..... it's one answer and quite workable.

I remember Naam. Met her in a bar on Soi 22. Lovely gal. She loved money and she had no issues with debt. Just like America. 

[Yellowtail]

4 hours ago, Mike Lister said:

I remember Naam, years ago saying that the way to solve the debt problem was to inflate it away,..... it's one answer and quite workable.

Worked for Germany 

[Mike Lister]

"Hong Kong stocks are at a 36% discount, showing the degree to which China is undervalued currently and yet again, broadening even further the divide with the West".

 

The strategists at Morgan Stanley are some of the biggest bears on Wall Street, Mike Wilson said recently:

 

"However, it also implies that a slowing economy does not necessarily mean a sluggish stock market. The outlook for 2024 is therefore one of extremes. Strategists at Morgan Stanley reckon the MSCI China Index could rise by as much as 23% or fall by as much as 36% in the next 12 months".

 

If that sounds like both having your cake and eating it, you'd normally be right. Except for Mike Wilson that 's very positive commentary, Wilson and Pritchard Evans could keep the Samaritans in business year round!

 

As Warren says, "be hungry when others are fearful". It's a buying opportunity, who will be brave enough I wonder.  :)

 

I think that a fund which includes China but also some Developed Asia, could be a fair bet right around now, but that's just me.