Skip to main content

Money Management plus Method - I

My old guide for equity holding %:

Straits Time index Tier% Equity holding %
above 3800 90 <10 td="">
3600 80 20
3400 7030
3200 60 40
3000 50 50
2800 40 60
2600 30 70
2400 20 80
2200 10 90
1800 0 100
below 1600
impossible?


This is an 'off-loading' concept - meaning that when the stock market gets over-heated, we retrieve back part of our capital as war chest and wait for suitable opportunities, eg. when STI drops, to build our position again in equities.

We can use that in conjunction with Technical Analysis rather than blindly 'catching falling knife' when there is a market downturn.

My revised % in a bigger bear market:

STI level Warchest deployment %
above 3500 0
3000 10
2300-2500 25
2000-2200 50
below 1800100

You can adjust the % upward or downward according to your comfort deployment level.



 To put things into perspective, we can see from the above chart the various low and high points of STI, Mini bears are drops that went below 3000.

In 2009, at the bottom-most of a post Lehman crisis market, STI reached 1500. This is a point that has not been re-tested in 10 years. Yet, we have not yet reached the peak of the STI that was form before the Lehman crisis in 2007. We can observe that in the past 8 years, STI has been dancing in a frame-like range without any real breakout unlike the S&P500. Simple reason being that those listed companies under SGX lack the kind of growth power and market capital that S&P500 companies have (such as the FAANG stocks). We are also not in direct benefit of quantitative easing and get mostly the spill-over effects, or at times just mirroring the broad market economy.

Perhaps next time I will make another table with reference to S&P500.

Related post: https://rainbowcoin.blogspot.com/2018/09/still-in-secular-bull-market.html

 -----------------------

Here are a couple of methods of Asset Allocation:
  1. Strategic asset allocation calls for setting target allocations and then periodically re-balancing the portfolio back to those targets as investment returns skew the original asset allocation percentages. The concept is akin to a "buy and hold" strategy, rather than an active trading approach.
  2. Tactical asset allocation (TAA) is a dynamic investment strategy that actively adjusts a portfolio's asset allocation. The goal of a TAA strategy is to improve the risk-adjusted returns of passive management investing.
There are more, if you are interested you can check this out https://www.investopedia.com/articles/stocks/07/allocate_assets.asp
or get your hands on 'The little book that saves your assets' by David M. Darst.

I discovered an interesting blog here which also briefly mentioned the concepts.


Now there's Money, there's Method. The next big obstacle to tackle is Mind.

***
Labels:

Comments

Post a Comment

Popular posts from this blog

Reflections for year 2024

2024 has been a relatively peaceful year. So peaceful that I have read countless novels and other books, met my sports buddies almost every weekend and picked up horticulture. Physical and mental health As we say, health is wealth. I have stuck fairly consistently with my exercise regime and tried to include more fruits and vegetables in my meals (although I eat out more and cook less these days). My weight, BP and cholesterol levels are doing ok. For those 40 years and above, remember to get your  subsidized health screenings from the government . Working less and meeting up with friends more contributed to an improved mental health. I see that the government has stepped up on initiatives in the community but work place initiatives from employers still seemed lackluster, especially for those who can't WFH and need to commit 44 hours or more a week at frontline work. I have also started a Gratitude journey to celebrate all my little life milestones. Financials Investment wise ...
Post a Comment
Read more

The best credit card for my house reno & prep

As updated in my previous post, I have finally bought my own place solo. For the past few months I have been busy coordinating with various contractors and vendors for my house renovation. As I am still on flexi work schedule, I decided to be my own ID. With only a simple renovation in mind, I set my reno budget as 20k (aircon & fixtures inclusive). The renovation process and acting as my own ID were not as easy as I thought. It took me about a month to gather and compare quotations from different contractors and another few weeks to finalize all the things that I need my chosen contractor to do. I eventually settled for a main contractor who specializes in carpentry work but also provides painting, tiling and electrical services. I have grossly underestimated the amount of defects that need fixing for this resale flat. Fortunately, the floor tiles and some of the existing built-ins are still in good condition so I kept them, otherwise I would have burst my budget. The first issue ...
Post a Comment
Read more

Shit happens and I lost my low-hanging fruits

My SAYE account has just hit its 25th month anniversary which is also the "month of maturity". Anticipating to get the 3.5% bonus interest for all these months of saving, I was shocked to see only $17+ cash gift credited as opposed to a few hundred dollars. I was about to send a message to query the bank what caused this interest plummet versus what I got in the 13th month when I came across a debit transaction in my account history (GASP!). To my oblivion and horror, I have accidentally selected my SAYE account to transfer $50 to a joint account to foot some bill in one of the months last year. Here's the terms and conditions for those who are not familiar with the SAYE account of POSB. "To receive the additional 3.5% p.a. Cash Gift Interest, ensure that you do not make any withdrawal from your POSB SAYE account." "If a withdrawal is made in the month, this will result in the previously accumulated additional 3.5% p.a. interest to be forfeited." Damn....
Post a Comment
Read more