Ya, presently sitting on the fence swinging a leg on each side.
What I mean if there is a prolong recession, what will be the best way to invest?
Having following the threads here, I understand that most will be most happy with the low price for the stocks, looking at those trading near/below cash value, less than 0.5PB, dividend of >10%.
If things recovers quickly, things will be good.
But if economy continue to stay low, the cash started to burn up, the assets starts to devalue, dividend start to drop, while it is possible to pick up more at an even lower price, but $$$ will eventually run dry. That's why I am thinking if buying an index will be the best way? Especially so for those whose "fulltime" job is to manage their investments?
Investing in an index provides diversification not downside protection. It only protects against firm specific factors and not a prolonged recession. Investing in equities has always been for those who can afford to lose and have excess liquidity. In the event of a serious crash, unless you know exactly what you are doing and have a comfortable liquidity buffer, I would advice anyone to sell first, ask questions later and avoid bottom picking while recovery is unclear.
(16-10-2013, 04:04 PM)NTL Wrote: [ -> ]But if economy continue to stay low, the cash started to burn up, the assets starts to devalue, dividend start to drop, while it is possible to pick up more at an even lower price, but $$$ will eventually run dry.
in such a deflationary environment, bonds are ideal. The permanent portfolio approach is quite a simple yet effective way of ensuring the purchasing power of money i think.
Ya! The Permanent Portfolio... Hmmm....
So that would mean Singapore Govt Bonds.
I have liquidated my stocks over the past few days for a slight profit.
My portoflio only consists of SGS bonds now.
(16-10-2013, 05:06 PM)Dividend Hermit Wrote: [ -> ]I have liquidated my stocks over the past few days for a slight profit.
My portoflio only consists of SGS bonds now.
Stock market is for people who have minimised or even better taken out the time factor of money. That's it seems very simple but not really. You still have to pick the correct stocks or companies.
(16-10-2013, 05:06 PM)Dividend Hermit Wrote: [ -> ]I have liquidated my stocks over the past few days for a slight profit.
My portoflio only consists of SGS bonds now.
what if the markets continue to go higher for the next 12 months?
(16-10-2013, 05:06 PM)Dividend Hermit Wrote: [ -> ]I have liquidated my stocks over the past few days for a slight profit.
My portoflio only consists of SGS bonds now.
Don't you find SGS bonds very risky to interest rates movements?
Got the SGS at a slight discount and coupon rate quite okay (3.375%).
Another reason I sold my stocks is because I bought them at a high price (newbie mistake as I chase the tail). Now got chance to sell so I intend to re-enter at a much lower price in future.
So the question is back to, What if the price don't fall, but go up further?