Asset Allocation 01 (Jun 09 - Jul 13)

Re: Asset Allocation 01 (Jun 09 - Feb 13)

Postby winston » Sun Jan 20, 2013 7:11 am

Flow from Bonds to Equities

Perhaps the strongest support for equities will come from the flow of cash from fixed income funds to stocks.

The recent piling into stock funds -- $11.3 billion in the past two weeks, the most since 2000 -- indicates a riskier approach to investing from retail investors looking for yield.

"From a yield perspective, a lot of stocks still yield a great deal of money and so it is very easy to see why money is pouring into the stock market," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

"You are just not going to see people put a lot of money to work in a 10-year Treasury that yields 1.8 percent."

Source: Reuters
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Re: Asset Allocation 01 (Jun 09 - Feb 13)

Postby winston » Sun Feb 03, 2013 9:24 am

As of Feb 03, 2013


Equities: 21% ( Dividend Stocks 10% )
Comment: A bit too low if the rally continues but you dont want to be buying high and hoping for a bigger fool to buy higher from you. To increase Dividend stocks whenever there's a dip.


AUD Cash: 24%
Comment: The risk-on trade is still on and I need to diversify away from the SGD


MYR Cash: 9%

Comment: The coming General Election is a concern. Foreign Money is leaving for the time being. Just before CNY is not a good time to buy the MYR.


Gold & Gold Stocks: 12% ( Gold Stocks: 5% )
Comment: I'm expecting the various Central Banks to continue buying gold.


Puts & Inverse ETFs: 0% ( no set-up yet )
Comment: You dont want to be too early to the party. No fear now so it's too early. The money to be made here is in the middle of the plunge, not the beginning. So there's plenty of time to wait for that set-up.
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Re: Asset Allocation 01 (Jun 09 - Feb 13)

Postby winston » Sun Feb 10, 2013 8:47 am

As of Feb 10, 2013

Equities: 30% from 21% on Feb 03; ( Dividend Stocks 13% from 10% on Feb 03 )

Comment: Increased Equities exposure on the dip this week, on expectation that the market could grind higher. However, It's also a Trading market so I may realize some small profits, if it actually does move higher next week.


AUD Cash: 25% from 24% on Feb 03

MYR Cash: 9%

Gold & Gold Stocks: 12% ( Gold Stocks: 5% )

Puts & Inverse ETFs: 0% ( no set-up yet )
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Re: Asset Allocation 01 (Jun 09 - Feb 13)

Postby winston » Mon Feb 11, 2013 7:43 am

While training a group of investment consultants some time back, I received some questions on Asset Allocation:-

Someone wanted to see the data on the performance of the various classes over the years. Another person, was interested in Commodities. Another one, only believes in bonds. Etc Etc ...

Basically, this was my reply:-
"The "experts" say that "Asset Allocation" is the most important thing that you should try to get correct. However, those "experts" cannot tell you, on how to get your Asset Allocation correct ".


Makes sense ?

What's the point of telling me something that I cannot put to use straight away ?

It's just like telling me that I should "Buy Low, Sell High". But you dont say what's low and what's high.

Or how to have a "feel" of what's low and what's high ? Or knowing the risk of buying something low ( because it can drop to zero ). Or that after selling at high, it can go much higher, if your assumptions were wrong in the first place.
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Re: Asset Allocation 01 (Jun 09 - Feb 13)

Postby winston » Thu Feb 14, 2013 6:39 am

For the sake of stability, an average investor should divide his investment in stocks, fixed-income or high-dividend payout shares and cash in the following proportion (by percent): 40:40:20.

Those who want to take more risk can go for 50:30:20.

For conservative investors, probably 30:50:20 is the right mix.


Source: Dr Check, The Standard HK
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Re: Asset Allocation 01 (Jun 09 - Feb 13)

Postby winston » Sat Mar 02, 2013 8:55 pm

As of March 02, 2013


Equities: 20% from 30% on Feb 10; ( Dividend Stocks 13% )
Comment: Not comfortable with the current volatility so I have taken some small profits

AUD Cash: 24%

MYR Cash: 9%

Gold & Gold Stocks: 12% ( Gold Stocks: 5% )

Puts & Inverse ETFs: 0% ( no set-up yet )
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Re: Asset Allocation 01 (Jun 09 - Apr 13)

Postby winston » Tue Mar 26, 2013 8:19 pm

Global Asset Allocation

– Despite the recent wave of risk aversion following developments in Cyprus, we remain medium term risk-asset bulls.

– We still like equities and are overweight the US on economic/ earnings outperformance. We also like markets where easy money and FX weakness is not yet priced in (e.g. UK). Equities likely outperform credit/ rates over 2013.

We remain underweight government bonds and commodities and to balance our allocation we keep cash at overweight.


Citi Strategy Views by Asset Class

– Equities — Some investors are nervous that recent gains are mainly liquidity driven. We are less concerned, and expect further gains to year-end.

– Credit — Fundamentals have deteriorated and corporate leverage is increasing, making a poor argument to buy in now. Equities offer better risk/reward.

– Rates — Higher yields forecast over 12m with the US leading the sell-off. Germany and EM local rates outperform.

– Commodities — Excess supply and weak demand are taking their toll on commodity markets. We think the super-cycle is over. Oil underperforms in 2013.

– Foreign Exchange — Macro correlations are changing and we see USD strength despite strong risk appetite. JPY and GBP underperform.

Source: Citi
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Re: Asset Allocation 01 (Jun 09 - Apr 13)

Postby winston » Sun Apr 07, 2013 6:14 am

As of April 07, 2013

Equities: 20% ( Dividend Stocks 12% )
Comment: Not comfortable with the current volatility so I'm still in Cash

AUD Cash: 24%

MYR Cash: 10% ( increased from 9% )
Comment: The GE is a concern. What happens if PKR does win ?

Gold & Gold Stocks: 11% ( Gold Stocks: 5% )
Comment: Getting close to that blow-out plunge; Time to watch and wait for the right time to buy

Puts & Inverse ETFs: 0% ( no set-up yet )
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Re: Asset Allocation 01 (Jun 09 - Apr 13)

Postby winston » Sat May 04, 2013 6:47 am

Forget The 60/40 Rule, Portfolio Construction Is A Better Recipe For Success by Peter Andersen

http://www.forbes.com/sites/investor/20 ... r-success/
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Re: Asset Allocation 01 (Jun 09 - Jul 13)

Postby winston » Fri May 24, 2013 8:11 pm

How I Allocate My Own Money By Jeff Clark

Most traders are conservative with their money.

That statement flies in the face of the Hollywood image of stock-market junkies… Those gamblers are always screaming at the top of their lungs on the trading floor and waving their order slips, alternating between shots of whiskey and gulps of Pepto Bismol.

Yes, there are days when that Hollywood image rings true. There are days when traders have to be aggressive. For the most part, though, the smart traders are conservative.

My own portfolio, for example, is quite simple…

For my personal portfolio, I take 85%-90% of my investable cash and seek out low-risk, value investments – where there's not much risk, or the risk is at least hedged, and I can still earn a decent return. Then I take the other 10%-15% and use it to trade options, and try to add a little extra "pop" to an otherwise conservative portfolio.

The idea here is to earn enough on the conservative part of the portfolio to completely fund the option trades.

If I have a bad year trading options, my other investments make up for it, and I don't lose any ground. On the other hand, if I do well with the option side of my portfolio, it supercharges my total return for the year.

I don't care about how good or bad the broad stock market is doing. And I don't get caught up in trying to chase returns or worrying that I'm missing out on big gains by not owning the hottest stocks on the street.

All I want to do is earn a decent amount on my money and end each year in the plus column.

I first wrote about one version of this strategy back in May 2008 – just before the stock market cratered. While most investors lost money back then, 2008 was the best year of my trading career. I didn't take on crazy risks to do that. I simply stuck with my strategy of keeping 85%-90% of my money in conservative investments and risking up to 15% in option trades.

Here are a few other rules I follow…

Be willing to hold cash: You don't have to be 100% invested all the time. In fact, you shouldn't be. When there aren't many low-risk, value investments available, sit in cash and be patient. You will get a chance to put that cash to work.

Right now, after such a strong, one-way move higher in the market, there aren't many value areas in which to invest. My own account is nearly 80% in cash at the moment. And yes, I'll admit I've missed out completely on the last 80-point gain in the S&P 500.

But my focus is on avoiding risk. I'm not trying to make as much as possible. I'm trying to avoid losing. So I don't mind sitting on the sidelines when things look a bit frothy – as they do right now. I'll put the money to work when we get a pullback and some of the air comes out of the risk bubble.

Be a contrarian: Buying "out of favor" stocks is far easier said than done. It is human nature to want to own what everyone else is talking about at the cocktail parties. But it's more profitable to buy the stuff they laugh at. The bargains are in the stock market's "humor section."

Right now, it's hard to find a more contrarian trade than the gold stocks. They're cheap and they're unloved. I'm nibbling on the mining stocks right now. In fact, of the 20% or so of my account that is invested currently, most of that is in mining stocks. And I've been collecting a nice income off of them by selling covered calls.

NEVER buy stocks on margin: Borrowing money to buy stocks is stupid. Yes, it can feel smart for a little while when the market is moving up. Eventually, though, debt will wipe out your account.

I'm not talking about the type of debt traders sometimes use as a convenience, since they have the money to back it up if necessary. I'm talking about the debt that leverages your account and allows you to be more than 100% invested. That sort of debt will always come back to harm you – often right at the absolute bottom of the stock market – when your brokerage firm starts liquidating your account in order to cover the debt.

Be willing to venture outside of the stock market, if that's where the opportunities are: A few years ago, when the municipal bond market got slammed on bankruptcy fears, I followed the advice of my friend and fellow S&A analyst Doc Eifrig and bought municipal bonds at significant discounts to par value.

I was able to lock in a nearly 6% annual tax-free yield, and I earned about 20% in capital gains as the muni-bond market recovered. A 6% yield may not sound all that sexy. But it was tax-free and low-risk.

Successful traders aren't gamblers, and we don't take on a lot of risk. We like to be liquid, so we do move in and out of positions frequently. That's what makes us "traders." For the most part, though, we're quite a conservative bunch. We have to be… especially if we plan on sticking around a while.


Source: Growth Stock Wire
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