The Investing Year Ahead

[swissie]

59 minutes ago, ozimoron said:

 

I'd go with Lulu's. YOLO. Right now, what doesn't look pricey is oil. Pullbacks from it's current price of 0.77 look like a gift. I think the ME issue won't go away anytime soon.

I take this as an order, I will go with "Lulu". If it doesn't work I can blame you.

OIL: The Saudies have kicked off a big Infrastructure Program. They need  90$ / Barrel to stem it.

Oil is solid. Otherwise Warren Buffet would not have increased his stake in 2 major oil producers recently.

[retarius]

On 2/17/2024 at 5:13 PM, Mike Lister said:

Interesting article (no pictures)

 

https://www.thebalancemoney.com/us-gdp-by-year-3305543

 

Year	Nominal GDP (trillions)	Real GDP (trillions)	GDP Growth Rate	Events Affecting GDP
1929	$0.105	$1.109	NA	Depression began
1930	$0.092	$1.015	-8.5%	Smoot-Hawley
1931	$0.077	$0.950	-6.4%	Dust Bowl
1932	$0.060	$0.828	-12.9%	Hoover tax hikes
1933	$0.057	$0.817	-1.2%	New Deal
1934	$0.067	$0.906	10.8%	U.S. debt rose
1935	$0.074	$0.986	8.9%	Social Security
1936	$0.085	$1.113	12.9%	FDR tax hikes
1937	$0.093	$1.170	5.1%	Depression returned
1938	$0.087	$1.132	-3.3%	Depression ended
1939	$0.093	$1.222	8.0%	WWII, Dust Bowl ended
1940	$0.103	$1.330	8.8%	Defense increased
1941	$0.129	$1.566	17.7%	Pearl Harbor
1942	$0.166	$1.862	18.9%
1943	$0.203	$2.178	17.0%	Defense spending tripled
1944	$0.224	$2.352	8.0%	Bretton Woods
1945	$0.228	$2.329	-1.0%	WWII ended, recession
1946	$0.228	$2.058	-11.6%	Truman budget cuts
1947	$0.250	$2.035	-1.1%	Cold War began
1948	$0.275	$2.119	4.1%	Recession
1949	$0.273	$2.107	-0.6%	NATO, Fair Deal
1950	$0.300	$2.290	8.7%	Korean War
1951	$0.347	$2.474	8.0%
1952	$0.367	$2.575	4.1%
1953	$0.389	$2.696	4.7%	War ended, recession
1954	$0.391	$2.680	-0.6%	Dow returned to 1929 high
1955	$0.426	$2.871	7.1%
1956	$0.449	$2.932	2.1%
1957	$0.474	$2.994	2.1%	Recession
1958	$0.481	$2.972	-0.7%	Recession ended
1959	$0.522	$3.178	6.9%	Fed raised rates
1960	$0.542	$3.260	2.6%	Recession
1961	$0.562	$3.344	2.6%	JFK ended recession
1962	$0.604	$3.548	6.1%
1963	$0.638	$3.703	4.4%
1964	$0.685	$3.916	5.8%	LBJ's Medicare, Medicaid
1965	$0.742	$4.171	6.5%
1966	$0.813	$4.446	6.6%	Vietnam War
1967	$0.860	$4.568	2.7%
1968	$0.941	$4.792	4.9%	Moon landing
1969	$1.018	$4.942	3.1%	Nixon took office
1970	$1.073	$4.951	0.2%	Recession
1971	$1.165	$5.114	3.3%	Wage-price controls
1972	$1.279	$5.383	5.3%	Stagflation
1973	$1.425	$5.687	5.6%	End of gold standard
1974	$1.545	$5.657	-0.5%	Watergate
1975	$1.685	$5.645	-0.2%	Recession ended
1976	$1.873	$5.949	5.4%	Fed lowered rates
1977	$2.082	$6.224	4.6%
1978	$2.352	$6.569	5.5%	Fed's 20% rate hike ended inflation
1979	$2.627	$6.777	3.2%	Recession
1980	$2.857	$6.759	-0.3%
1981	$3.207	$6.931	2.5%	Reagan tax cuts
1982	$3.344	$6.806	-1.8%	Recession ended
1983	$3.634	$7.118	4.6%	Tax hike and defense spending
1984	$4.038	$7.633	7.2%
1985	$4.339	$7.951	4.2%
1986	$4.580	$8.226	3.5%	Tax cut
1987	$4.855	$8.511	3.5%	Black Monday
1988	$5.236	$8.867	4.2%	Fed raised rates
1989	$5.642	$9.192	3.7%	S&L Crisis
1990	$5.963	$9.366	1.9%	Recession
1991	$6.158	$9.355	-0.1%
1992	$6.520	$9.685	3.5%	NAFTA drafted
1993	$6.859	$9.952	2.8%	Balanced Budget Act
1994	$7.287	$10.352	4.0%
1995	$7.640	$10.630	2.7%	Fed raised rates
1996	$8.073	$11.031	3.8%	Welfare reform
1997	$8.578	$11.522	4.4%
1998	$9.063	$12.038	4.5%	LTCM crisis
1999	$9.631	$12.611	4.8%	Repeal of Glass-Steagall
2000	$10.252	$13.131	4.1%	Tech bubble burst
2001	$10.582	$13.262	1.0%	9/11 attacks
2002	$10.936	$13.493	1.7%	War on Terror
2003	$11.458	$13.879	2.9%	Iraq War, JGTRRA
2004	$12.214	$14.406	3.8%
2005	$13.037	$14.913	3.5%	Katrina, Bankruptcy Act
2006	$13.815	$15.338	2.9%	Fed raised rates
2007	$14.452	$15.626	1.9%	Bank crisis
2008	$14.713	$15.605	-0.1%	Financial Crisis
2009	$14.449	$15.209	-2.5%	Stimulus Act
2010	$14.992	$15.599	2.6%	ACA, Dodd-Frank
2011	$15.543	$15.841	1.6%	Japan earthquake
2012	$16.197	$16.197	2.2%	Fiscal cliff
2013	$16.785	$16.495	1.8%	Sequestration
2014	$17.527	$16.912	2.5%	QE ends
2015	$18.238	$17.432	3.1%	TPP, Iran deal
2016	$18.745	$17.731	1.7%	Presidential race
2017	$19.543	$18.144	2.3%	Tax Cuts & Jobs Act (TCJA)
2018	$20.612	$18.688	3.0%	Deficit spending
2019	$21,433	$19,092	2.2%	Trade war
2020	$20,893	$18,384	-3.4%	Covid-19 pandemic
2021	$22,996	$19,427	5.7%	Covid-19 vaccine

Intersting....I'm always interested about real vs nominal GDP. Eyeballing the numbers, the GDP growth rates here seem to be based on the real GDP growth. Often it is never stated and I think since GDP growth figures are released long before inflation numbers are known, that GDP growth is often based on nominal growth.

\Do you know if this list true?

You can see the impact of war (WW2) on the the GDP growth...staggering. Maybe that's also the reason for US's current favourable (vs other G7 countries) GDP growth. 

[retarius]

10 minutes ago, khunjake said:

I attempted to open up a new topic focusing just on the US stock market but it was promptly closed and trashed. This will be my last post on ThaiVisa / ASEANnow as a result of overzealous moderation. Signing off and out. Member since 2008……..

 

Thanks....I wondered what happened when your post was moved? It was last in the move it seems. I tried to respond to your post....but wrote the response,  while the forum was being moved and my post was lost....

[Yellowtail]

26 minutes ago, khunjake said:

I attempted to open up a new topic focusing just on the US stock market but it was promptly closed and trashed. This will be my last post on ThaiVisa / ASEANnow as a result of overzealous moderation. Signing off and out. Member since 2008……..

 

 

With an average post frequency of twelve days since 2008 you will be sorely missed. Go with God brother, write if you find work.  

[Mike Lister]

20 minutes ago, retarius said:

Thanks....I wondered what happened when your post was moved? It was last in the move it seems. I tried to respond to your post....but wrote the response,  while the forum was being moved and my post was lost....

 

2 minutes ago, Yellowtail said:

 

With an average post frequency of twelve days since 2008 you will be sorely missed. Go with God brother, write if you find work.  

I closed the thread but left a link pointing to here, thinking that the forum doesn't need two threads on the same subject. If the OP or anyone else was unhappy with that decision, they could easily have written to explain why and perhaps the thread could have been reinstated. But they didn't, so I didn't, so it wasn't. 

 

Moving on.

[retarius]

5 hours ago, Mike Lister said:

 

I closed the thread but left a link pointing to here, thinking that the forum doesn't need two threads on the same subject. If the OP or anyone else was unhappy with that decision, they could easily have written to explain why and perhaps the thread could have been reinstated. But they didn't, so I didn't, so it wasn't. 

 

Moving on.

I agree.....I don't remember seeing a link, but I assumed, incorrectly, that my post would be sent here automatically. 

[Mike Lister]

9 minutes ago, retarius said:

I agree.....I don't remember seeing a link, but I assumed, incorrectly, that my post would be sent here automatically. 

No, you have to click on the link then post here, sorry.

[paddypower]

Yes, silly me, indeed.  my investment strategy is to invest Thai 100%; no capital gains tax here.  Excluding investment property, my Portfolio is approx 90% for dividend income and 10% for small cap equities. I have a good track record, cashing in dividend earning stocks for short term investment in IPO's The comment I made was in reference to one '550k hit' that I took,. In that incident, my broker (& others) did not disclose the lack of transparency in their research notes. The IPO was BTG, at 40 baht.. Research notes given to me privately by my broker's research department valued it at ranges between 50-64 baht. so i plowed 3 mill in to the IPO. Unfortunately, I did not keep that email attachment. Later, after the IPO flopped, the research notes changed, with an addendum, disclaiming responsibility and disclosing that the research/valuation was prepared by the company and not by the researcher dept.

Yep, I i thought about suing. Then, this being Thailand, I dropped the idea,  trashed my records. A lesson learned - the only time I did not do my own DD,, instead getting lazy and relying on what I thought was an independent source.

[PoorSucker]

So I transfered some cash to my Bangkok Bank for my retirement fund.

Still intending to work ten more years with WP, so how to invest my cash best using Bangkok Bank

[swissie]

On 3/13/2024 at 2:37 PM, PoorSucker said:

So I transfered some cash to my Bangkok Bank for my retirement fund.

Still intending to work ten more years with WP, so how to invest my cash best using Bangkok Bank

I venture to guess, that you are an inexperianced investor. You need to do some homework before entrusting your money to someone. You must not only do your investment dealings by way of "Bangkok Bank". Bankok Bank is strong concerning Thailand, but has "weak connections" when it comes to "international investing". For every financial transaction, they charge a relatively high commission.

- I have 2 stepdaughters, working for "Bangkok Bank". They assure me, that they will recommend investments that give them the highest personal "commission". Under these circumstances, their "advice" is questionable.

Better to establish an investment-account with a international broker (Charles Schwab, for example). Low cost and good advice.

Above all: As an inexperianced investor, shy away from people that approach you with promesses of 10 to 20% "guaranteed" annual returns. Those are scams, without exeption. Those sceamsters will realise within 5 minutes, that you are an inexperianced investor, having found another "prey".

 

[Mike Lister]

The JPM quarterly asset allocation report was spot on this quarter so I did well, slightly overweight Japan and equities, underweight Europe and EM. 

 

Going into the next quarter: I'm likely to slightly increase equities across the board, especially Japan, and balance that out with the M&G Short Term Corporate Bond Index. I'm still holding a lot in Money Markets but that's ok. This week the Fed speaks, markets now look for rate reductions later rather than sooner, mid year seems right to begin that.

 

https://www.morningstar.com/markets/when-will-fed-start-cutting-interest-rates

 

https://am.jpmorgan.com/us/en/asset-management/adv/insights/portfolio-insights/asset-class-views/asset-allocation/

[Mike Lister]

Here's one for the collective minds to try and solve:

 

Japanese investment in Thailand is massive. One problem however is that the car companies especially, do not repatriate their earnings and instead leave the money inside Thailand. Now, with BOJ starting to tweak fiscal policy and play around with yield curves, it looks like the YEN will strengthen and that in country opportunities may see those earnings repatriated. That means selling THB for YEN or perhaps even USD, along with the associated impact. If anyone has any data or views on this, I for one will be interested to see and hear it.

[Mike Lister]

I've always liked the 60/40 approach and now, following a hit in 2022, faith is being restored. Coincidently, I'm currently 59/41 as we speak:

 

https://markets.businessinsider.com/news/etf/60-40-portfolio-bounces-back-from-2022-slump-is-it-the-right-investment-strategy-for-2024-1032930011

[swissie]

Eurika and a triple halleluya! The sky is the limit!

Because:
- Everybody (including his uncle) is now convinced that a global "soft landing" is assured.
- The war against inflation is won. Therefore Interest rates "must" come down.
-  Profits of companies raising.
- The Vix (volatility index) near the lows. (Nobody fearing any major setbacks). Simultainly "capital protection derivates" are in low demand. Clearly indicating to everybody (including his uncle) that the sky is the limit and there is little "downward-risk" anymore.
--------------------
But, there are a few things that could eventually spoil the party:

- The inflationary driven profit margins of companies could come to a halt. As not truly supported by productivity increases.
- The "economic growth" has not benefitted the "middle class". Where does the future money come from to support economic growth when the middle class has no more the money to support "economic growth"? Disposonable income for the Middle-Class constantly declining in the "western world".
- The US, still the economic powerhouse it seems. It may be subject to re-evaluation, once the world realises that the second largest annual budget outlay is the servicing of the national dept.  (servicing dept means only paying for interest).
- A bit worriesome that a single company can guide the world into a AI new age, just because their "chips" can do what all other Chip-Manufacurers appearantly can not do.

Never mind all this. As long as everybody (including his uncle) is convinced that the sky is the limit, might as well enjoy the ride. Problem is, if somebody cries "fire", the fire-exits will be clogged in no time at all. I myself stay close to the fire exit.

 

[swissie]

Hi Mike Lister! A while ago, I suggested to add a sub forum "investements" in ASEAN NOW. You volunteered to moderate. Thanks.

But is has become appearant that a seperate "investement-forum" is not justified. I conclude that well funded Farangs have their sources of "investement-interactions/advice" already established somewhere else.

In this forum here, the main concern of contributors seem to be "how to import/export money from Thailand at the lowest cost".  Perfectly OK.

[Mike Lister]

14 minutes ago, swissie said:

Hi Mike Lister! A while ago, I suggested to add a sub forum "investements" in ASEAN NOW. You volunteered to moderate. Thanks.

But is has become appearant that a seperate "investement-forum" is not justified. I conclude that well funded Farangs have their sources of "investement-interactions/advice" already established somewhere else.

In this forum here, the main concern of contributors seem to be "how to import/export money from Thailand at the lowest cost".  Perfectly OK.

The younger set have their inheritances and are less concerned about long term investing, they have plenty of money........today! And if the worst should happen, they'll simply buy an ETF or two. 🙂

 

Like you, I also am stood near the fire exit, although I did recently decide to remove my asbestos fire suit and I've returned some of the fire extinguishers to the rack.

 

 

 

 

 

[swissie]

17 minutes ago, Mike Lister said:

The younger set have their inheritances and are less concerned about long term investing, they have plenty of money........today! And if the worst should happen, they'll simply buy an ETF or two. 🙂

 

Like you, I also am stood near the fire exit, although I did recently decide to remove my asbestos fire suit and I've returned some of the fire extinguishers to the rack.

 

 

 

 

 

So good to hear that you stay close to the fire-exit. Especially since aspestos fire suits and fire extinuishers "made in China" tend to underperform. Same as the Chinese Governement trying to "rejuvenate" the Chinese "Export Miracle" once more.

[Mike Lister]

1 hour ago, swissie said:

Eurika and a triple halleluya! The sky is the limit!

Because:
- Everybody (including his uncle) is now convinced that a global "soft landing" is assured.
- The war against inflation is won. Therefore Interest rates "must" come down.
-  Profits of companies raising.
- The Vix (volatility index) near the lows. (Nobody fearing any major setbacks). Simultainly "capital protection derivates" are in low demand. Clearly indicating to everybody (including his uncle) that the sky is the limit and there is little "downward-risk" anymore.
--------------------
But, there are a few things that could eventually spoil the party:

- The inflationary driven profit margins of companies could come to a halt. As not truly supported by productivity increases.
- The "economic growth" has not benefitted the "middle class". Where does the future money come from to support economic growth when the middle class has no more the money to support "economic growth"? Disposonable income for the Middle-Class constantly declining in the "western world".
- The US, still the economic powerhouse it seems. It may be subject to re-evaluation, once the world realises that the second largest annual budget outlay is the servicing of the national dept.  (servicing dept means only paying for interest).
- A bit worriesome that a single company can guide the world into a AI new age, just because their "chips" can do what all other Chip-Manufacurers appearantly can not do.

Never mind all this. As long as everybody (including his uncle) is convinced that the sky is the limit, might as well enjoy the ride. Problem is, if somebody cries "fire", the fire-exits will be clogged in no time at all. I myself stay close to the fire exit.

 

Goldmans previously increased their estimate for the S&P, up to 5,200 but have now said that 6,000 is possible on the back of mega caps growth. I find this troubling for several reasons, especially in an already froth filled market, some of the increases graphs are almost vertical and simply not sustainable. "Be fearful when others are greedy", is what he said, hmmm! One of my bellwethers is the amount of uninvested cash that is held by trusted fund managers, my favorite at JPM is down from 24% to 18% which is still remarkably high for an investment fund. Yet, as you say, the VIX is sat around its 30 year low, between 12 and 13. 

 

The rule of 20 says that the sum of the P/E ratio, plus inflation, should be equal to or less than 20, in order to represent fair value or better, anything more than 20 means it's over valued. The average P/E of my holdings is 14, let's hope inflation stays down!   

 

Lastly, if middle class spending power is in decline now, things are going to get a lot worse as soon as some brave politician raises taxes to pay deficits, borrowings and provide funding for future social security schemes......ouch!  

 

 

 

[Mike Lister]

delete

Edited March 25 by Mike Lister

[Mike Lister]

US Money Supply Growth went negative five times since the 1800's. On the first four occasions, 1870's, 1893, 1921, 1929, markets crashed and took years to recover, the losses were massive. 

 

The fifth occasion is right now.

 

 

[Mike Lister]

Cocoa now more expensive than copper, per ton.

 

Maybe a new indicator, Mr Cocoa?

 

https://theedgemalaysia.com/node/705934?utm_source=Newswav&utm_medium=Website

[Mike Lister]

I've just been reading the year end estimates by the global banks for the S&P and it makes for dismal reading. The consensus is that it will end around 5,200 which is just below its present level, JPM even forecast a fall to 4,700. It almost seems worthwhile to get out of US equities now, go into bonds and take a break for the rest of the year.

 

https://www.reuters.com/markets/us/sp-500-end-2024-with-small-gain-after-strong-2023-2024-02-22/

[swissie]

On 3/26/2024 at 4:00 AM, Mike Lister said:

Cocoa now more expensive than copper, per ton.

 

Maybe a new indicator, Mr Cocoa?

 

https://theedgemalaysia.com/node/705934?utm_source=Newswav&utm_medium=Website

IMO Dr. Copper has lost a great deal of relevance concerning "the fever curve" of the world economy. Too much depends on whats happening in China. Worldwide Copper stocks fluctuate wildly on a monthly basis. = roller coaster.

The narrative of the "electrification of the world" is still intact, but this is a long term process, not helping Copper much in the short to mid term.
If Cocoa should become a new economic indicator, I will stop investing altogether and I will store my assets under the matress.

 

[swissie]

5 hours ago, Mike Lister said:

I've just been reading the year end estimates by the global banks for the S&P and it makes for dismal reading. The consensus is that it will end around 5,200 which is just below its present level, JPM even forecast a fall to 4,700. It almost seems worthwhile to get out of US equities now, go into bonds and take a break for the rest of the year.

 

https://www.reuters.com/markets/us/sp-500-end-2024-with-small-gain-after-strong-2023-2024-02-22/

Hard to find anyone that isen't "bullish" these days. All very well supported by increasing profits and increasing dividends is the consensus. Fine!

About half of investement decisions are made by "gut feelings" (psychologie). What if investors "feel" that after such a good bull-run, some profits should be realised? Our Mike Lister is not the only one thinking along those lines. Most bull markets stall out before the fundamentals would justify increased selling. (Psychology: Enough is enough, I want to see some tangible cash and can always re-enter the markets after "a little correction").

Bull Markets can only continue if investors refuse to sell AND new money enters the markets. Those 2 factors must not necessarily reflect the state of the Economy, short term.

But lo and behold, seldom have "fundamentals" supported a bull-market like we experience it currently (inflation down, interest rates on the way down, profits rising). Investors paradise!

When it comes to "paradise", I advice caution. After all, God closed the Jerusalem Stock Exchange for Adam and Eve for 2000 years, just when they thought that the party would never end.

 

[Yellowtail]

18 hours ago, Mike Lister said:

I've just been reading the year end estimates by the global banks for the S&P and it makes for dismal reading. The consensus is that it will end around 5,200 which is just below its present level, JPM even forecast a fall to 4,700. It almost seems worthwhile to get out of US equities now, go into bonds and take a break for the rest of the year.

 

https://www.reuters.com/markets/us/sp-500-end-2024-with-small-gain-after-strong-2023-2024-02-22/

It always "almost" seems worthwhile to get out of equities now. 😏

 

I'm about 10% cash, 10% gold 10% real estate (which includes my CS home) and 70% equities. 

 

I'll stay the course at least until October. 

 

 

[Mike Lister]

On 4/1/2024 at 10:24 AM, Yellowtail said:

It always "almost" seems worthwhile to get out of equities now. 😏

 

I'm about 10% cash, 10% gold 10% real estate (which includes my CS home) and 70% equities. 

 

I'll stay the course at least until October. 

 

 

It looks like that's the thing to do, Capital Economics makes a very sound case that the S&P might reach 6,200. 

 

The latest jobs report was a whopping 50% over estimates! That pushed expectations for a rate cut back substantially. But the case is now being made for higher asset prices, regardless of interest cuts and bond yields seem to support that since yields have now increased. Rates remaining higher for longer seems to be the theme and oil has joined that party, it's now over $86. Things that concern me are:

 

- the difference in values between the US markets and overseas is getting even wider

- higher oil prices don't impact the US but they cause great damage in other economies which combined with a stronger USD, puts EM at risk.

- the above will hurt the Thai economy, equally as badly. Expect higher fuel costs to impact long haul tourist numbers. 

 

 

 

 

[Mike Lister]

I have too much money sat in Money Markets and want to put some into a short term bond fund, the problem is I can't buy the excellent L&G fund that I want to buy because HL doesn't list it. VG Short Term Global Bond Index was on my list but upon checking  recently, it doesn't look that entertaining. Has anyone come across anything lately, must be investment grade with average duration <3years?

Edited April 11 by Mike Lister

[Yellowtail]

47 minutes ago, Mike Lister said:

I have too much money sat in Money Markets and want to put some into a short term bond fund, the problem is I can't buy the excellent L&G fund that I want to buy because HL doesn't list it. VG Short Term Global Bond Index was on my list but upon checking  recently, it doesn't look that entertaining. Has anyone come across anything lately, must be investment grade with average duration <3years?

I do not, but what is "...the excellent L&G fund that..." you wanted to buy? 😉

[Mike Lister]

4 minutes ago, Yellowtail said:

I do not, but what is "...the excellent L&G fund that..." you wanted to buy? 😉

https://markets.ft.com/data/funds/tearsheet/summary?s=LU1000843505:GBP

[Mike Lister]

23 minutes ago, Yellowtail said:

I do not, but what is "...the excellent L&G fund that..." you wanted to buy? 😉

L&G also has a small but very well performing strategic bond fund that I like and has returned 10% in about 9 months. The duration is around 3.5 years but the average credit quality level is lower and averages BBB/BB. Still, it's not into junk territory so I'm happy with the bet. 

 

https://markets.ft.com/data/funds/tearsheet/ratings?s=GB00B1TWMY10:GBP