Caveat Emptor

  Review of January The advent of the year of the Tiger  has been a mauling for stock and crypto investors as volatility spiked up. The inflation worries impacted the high valuation of stocks in Dec. The Federal Reserve signalling of the tapering of QE and the intent to increase interest rates to control inflation in Jan sent a rude awakening to investors whom focus at the narratives instead of the financial numbers, and sent a hit among the technology and growth labeled stocks. The various surprises of the earnings releases in Feb led to huge adjustments in the valuations of the winners in the Covid season. And now, the potential breakout of war between US and Russia over the independence of Ukraine led to sour sentiment especially if armed conflict breaks out between 2 nuclear powers. From a discounted cash flow perspective, the terminal cash flows / multiples of the companies with cash flows well into the future (growth orientated companies) will be more uncertain with the ...

Added TWR breakdown by market performance as my portfolio ventured outside SG Quantitative Measures Beta = 1.06, VaR = 12.60% Expected Shortfall = 19.57% TWR = 38.69%, XIRR = 7.90% End of Year review 2021 is an eventful year marked by huge market volatility in all asset classes. The surge in interest of retail trading / investment in US markets brought markets to speculative highs in loss making zero / minimal  revenue companies, and the announcing of the interest rate tapering brought stocks to more attractive valuations at year end. Momentum stocks / shitcoins / China crackdowns took turns dominating the headlines as the financial media (similar to Facebook) is incentivized to optimise for clicks and hype and not about solid fundamental changes in the underlying asset. A lot of unusual speculative quirks happened in the financial markets which forced me to reassess my basic assumptions about conventional financial wisdom.  Some memorable events that surfaced this year are i)...

  <Inflation is Transitory> To You, 10 Years From Now As I hit my 30th birthday at the month of November, I completed my CFA level 2 examination. This is the most challenging curriculum I have ever taken in my life. Despite my working experience and my Bachelor degree in Economics and Finance, the sheer difficulty and breadth of the content exceeded my expectations and sapped a lot of my time and mental energy for the past few months. I finally had time to do some introspection and reflect on my investment journey so far. The latest list of worries in the headlines are wide ranging. Inflation can be keenly observed from home prices, asset prices, delays in shipping resources / food supplies /eCommerce, and heightened transport and shipping costs which affects all areas of the economy. The Omicron covid variant is disputing the narrative of post covid economic recovery which sent the prices of recovery stocks tumbling. As I was skeptical of the narrative of forward looking m...

                        No matter how hard you practice, there is always someone in China better than you The Bewildering community of Reddit Reddit is one of the most rapidly growing social media platform that is partially owned by Tencent. Similar as to how Tiktok caught the world by storm, reddit <sub-forums and up-vote/down-vote mechanism> has one of the largest communities, most divisive sub-forums, and one of the most dominant social media platforms in the world that is not listed on the stock exchange. I noted an interesting trend whereby the network effects of being the largest social media forum has the potential to displace social media platforms like Facebook Groups and EDMW/HardwareZone. The dearth of frequency and quality of user posts in forums such as valuebuddies / Money Mind suggest a user migration to the larger platforms like r/singaporeFI, as the younger generation detest the idea of sharing ...

    Office setup of the Best Performing Fund Manager Wake me up when September ends September saw a flurry of market volatility as market participants discovered new reasons to worry about the stock market and economy. The September and October effect discussed in academic finance, whereby these are traditionally worst months for stock markets, seems like an interesting area to explore. Whether this market anomaly is a consequence of market structure, timing of earnings report release, or self-fulfilling philosophy by market participants, is unknown to me at this moment.  On the lighter side of things, news of hamsters and government officials beating the top fund managers become the meme of the month on reddit forums like WSB, and a nightmare for active fund managers. As the saying goes, if you can't beat them. join them.  China Market At China front, the tech crackdown is ongoing and expected to be continual until next year Feb 2022.  The speed and severity of...

  Everybody has a plan until they get punched in the face As the china central government continued their spree of popping up regulations in all areas of China economy (Minimum wages, living conditions for drivers, 996 working hours, gaming time for minors, wealth redistribution policies, Banning dancing  grannies , the list goes on), the steep decline in the HK/CN stock prices seem to be consolidating and taking a slight breather for now. Although I have stuck to the plan of disciplined averaging down from July till now, it is never easy to watch your favorite picks go cheaper as new rules are being drafted. It is never easy to stick to your convictions based on the research and thesis of the stocks you hold, and believe you are right amidst the market noise and chaos. Everybody has a plan until they get hit. Then, like a rat, they stop in fear and freeze.You can plan all you want, but you’re going to get hit – probably when you don’t expect it - and it’s going to hurt. ...

  Record breaking crash in Hang Seng history As the mainstream news are focused on the groundbreaking Tokyo Olympics records set by the best athletes in the world, the financial news are focused on the fastest crash in Hang Seng history, which exceeded the records set by the S&P 500 crash last year. As financial markets are increasingly driven by algorithmic trading by institutional investors, I think the trend of rapid and harrowing losses is starting to be an expected trend and not a <6 sigma event> popularized by conventional quant finance. A lot of the narrative in social media / forums seems to be to avoid the Chinese market at all costs and there is lot of retail selling among the paper hands, which prompted me to deep dive throughout the weekend to discern the noise from the facts. Between the choice of averaging up on the most expensive market reaching its All time High in US history VS buying into the crash in the All time Low in HK history, the choice is apparen...