Negative sentiment – CASH

Market breadth has dipped to negative since 31Jul13, but we continues to ride the upside as long as the price action is still up…until today that is.

Index has now dipped lower than the previous day’s low…so time to exit, take profit on the current long position and stay cash…

cheers 🙂

sorry, have been extremely quiet now…massive hint on the “forbiddence” of social media communications….

Breadth turning up….so is interest rates… boo

These days rates are very low in our savings a/cs….hands up…how many of us here have grumbled …. “what…interest rates so low? …. so stupid! might as well put the money into investments!”

Ok i have to stop typing now…. my 2 hands are up….
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Ok im back.

So this explains the surge in interest recently (past 1yr or so) in S-Reits (Singapore REITS) and so many reits listings here … OUE and SPH eh? (Mandarin Hotel Orchard…Paragon, Clementi Mall etc….)

If interest rates starts to rise again (back in 1998….fixed deposits offers were at….5%!!!) more conservative investors may want to exit riskier products (stocks, REITS) and reach for much safer products (Government bonds etc) ….

And now…. we can see more advisories start to back off on REITs….

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Do take note on the “new” less “bullishness” in the REITs as SGS’s (singapore government securities….think the local version of US Treasury Bills) rates starts to rise…

The simplified rationale is this….SGS’s rates are considered “risk free”… you are almost 100% sure the singapore government will not default on it’s debt (yes, if you buy bonds, you are the “lender”…..)

So if this “risk free” rates rises….that means “free money” is getting more…..why should you risk your money on so called “secure and stable” products like REITS which gives out 5-8% rates…but comes with the risk of larger capital (stock price) swings?

So higher rates means more investors will tend to “flee” interest / dividends based products….

This is the point of view for the retail investors….of course the repercussion in rising interest rates is much wider…. on the macro level….

Businesses (or even you….I will come to that….) will find that increasingly, borrowing costs (financing that joint venture into…Myanmar? the hot thing now eh?) will rise as your business loan with perhaps 7% rate is now at 8%?

For us, perhaps that car loan, home loan, education loan with low interest rates of 2-5% may start to get to 3-6% instead….

This all may lead to lower economic activity (eg, lesser spending…by you and business) thus inadvertedly dragging down….gasp….the stock prices…. 🙂

Hope I have not frightened confused you :p

cheers

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On a brighter note…market breadth is turning up! hahha

Going long…soon.

cheers!

Personal Mail_5Apr – On Defensive

Hello,

Market sentiment for me has start to drfit downwards and looking negative. For both US and SG markets.

So most likely market will stay listless (either down or ranging) for the shorter term.

So it may be good to start looking to stay more to cash, reduce short term/speculative holdings (shorter than 1yr). Or try to consider more of longer term investments (longer than 1yr) with good dividend yields

Unfortunately, the pseudo portfolio presented in my email list to clients would most likely be incurring a small loss. With risk management in mind, losses will be under control 🙂

PMail 05Apr_On Defensive

However, the pseudo trade on STI made some money, based on a 100k capital… hehe

STI Port 08Apr

cheers