Calling All Investment Gurus

Post by **Strong Eagle** » Sat, 20 Apr 2013 12:51 am

Gents (and Ladies, if you are out there)... I've been talking to a few people re investments and have heard many opinions, some completely 180 to others. Since I value the opinions of many on here, I toss out the following questions.

a) One fellow says that we are certain to have a major correction (aka 2008) in the stock market no later than July or maybe third quarter. Another person says, yes, there will be a correction but only 5 to 10 percent, and the market will be back past that by first quarter next year. Yet another says that so long as quantitative easing is in place, cheap money will keep stocks propped up. Which izzit in your esteemed opinions?

b) One fellow recommended an ETF of ETF's... Windhaven (http://www.schwab.com/public/schwab/inv ... xpxe4op6q0). I like ETF's... curious to know what you think about this investment strategy.

c) Yet another suggested an "alternative investments" portfolio... a mutual fund like collection of commodities, real estate, precious metals, M&A arbitrage, listed private equity, managed futures, and covered calls. Whereas the traditional "financial advisor" recommends allocations only in stocks, bonds, and cash, the other guy recommends a significant percentage of assets to be invested in alternative investments via an ETF or mutual funds. Thoughts on this?

d) The bonds that I hold right now (in a fund) are barely hovering at zero return. Seems like no matter which way the market moves, this fund isn't going to get any better... what's your view of bonds in these interesting times, taking into account quantitative easing, potential for another market crash, etc?

Many thanks.

JR8 · Post by **JR8** » Sat, 20 Apr 2013 2:47 am

Strong Eagle wrote:Gents (and Ladies, if you are out there)... I've been talking to a few people re investments and have heard many opinions, some completely 180 to others. Since I value the opinions of many on here, I toss out the following questions.

a) One fellow says that we are certain to have a major correction (aka 2008) in the stock market no later than July or maybe third quarter. Another person says, yes, there will be a correction but only 5 to 10 percent, and the market will be back past that by first quarter next year. Yet another says that so long as quantitative easing is in place, cheap money will keep stocks propped up. Which izzit in your esteemed opinions?

Did he say why he thinks that? Otherwise his opinion is worth no more than just that. I am reminded of an eloquent writer on the Fool/Property Markets forum, who had a fixation of the property market being doomed. He was clearly of a mature age, and highly eloquent, and he continued as a possessed doomsayer on a daily basis for years, and years: Whilst the market continued (and still continues) steadily rising. He went very quiet one day, and was never heard of again. This same fellow chased Marconi (dot.com) stock down from c200p all the way to 5p, doubling-up all the way down...

My philosophy (per the similar/prev discussion in Janaury) is that no one knows what will happen, not you, or me, or the 'experts'. So the way through this is to have a strategy where what happens short/medium term simply doesn't matter..
http://forum.singaporeexpats.com/ftopic92941.html
You never followed-up on the above. Maybe you've set your mind on needing to be more 'risk-on'? Be careful, is my advice.

Strong Eagle wrote:]]b) One fellow recommended an ETF of ETF's... Windhaven (http://www.schwab.com/public/schwab/inv ... xpxe4op6q0). I like ETF's... curious to know what you think about this investment strategy.

I prefer picking my own pretty intuitive bullet-proof portfolio, and saving on the fees that funds charge.

Strong Eagle wrote:c) Yet another suggested an "alternative investments" portfolio... a mutual fund like collection of commodities, real estate, precious metals, M&A arbitrage, listed private equity, managed futures, and covered calls. Whereas the traditional "financial advisor" recommends allocations only in stocks, bonds, and cash, the other guy recommends a significant percentage of assets to be invested in alternative investments via an ETF or mutual funds. Thoughts on this?

What are the competing rationales and strategies here? A whole bunch of that list would seem speculative (commodities, metals, M+A Arb, futures, options, covered calls etc etc). It is very high risk, even if you're an expert in all of those fields. If were you, 'Art of war', pick to fight your battles, on territory with which you are most familiar: Or prepare to fight with a handicap.

Strong Eagle wrote:d) The bonds that I hold right now (in a fund) are barely hovering at zero return. Seems like no matter which way the market moves, this fund isn't going to get any better... what's your view of bonds in these interesting times, taking into account quantitative easing, potential for another market crash, etc?
Many thanks.

Bond funds (IMHO) are for when you hit retirement, want to largely de-leverage risk, and instead have a steady and sure indexed income, and draw-down facility instead. Better yet, hold the bonds directly, rather than via some fee paying managed unit.

It's hard to say more without knowing your personal circumstances. If you have just a little time and inclination, it is not difficult to avoid stupid fund fees, and, beat the returns you'd get from a fund. But just one thought, since you're still in employment and young and fit enough to be gambolling around the back-roads of Indochina on a trail-bike, I have an impression that you might suit a more 'risk-on' strategy. Nothing mad at all, but perhaps something similar (as previously linked) to what I have, diversified blue-chip stocks + property.

earthfriendly · Post by **earthfriendly** » Sat, 20 Apr 2013 3:48 am

I don't crunch numbers but am more concept based. Be very diversified and go with quality companies. Get into a fund with plenty of diversification. I recently opened a small position with a Vanguard fund that invests in 3 different etfs....total US stock + international stock + bond. One needs to have some bond for diversification reason.

Narrow segments like commodities, metals, forex, single company stock or a spefic industry e.g. hi-tech, goldmining ........they are way too risky for most investors. I spoke out of experience. Although I would say healthcare has been doing very well for more than a decade and I don't see the trend reversing anytime soon.

One of the best deal in the US tax code is the $500k (married couple) capital gain exemption on sale of property. If certain criterias are met. And if you can stomach being a landlord. Me and hubby not doing it as we like to keep our lives simple.

earthfriendly · Post by **earthfriendly** » Sat, 20 Apr 2013 3:51 am

JR8 wrote:
I prefer picking my own pretty intuitive bullet-proof portfolio, and saving on the fees that funds charge.

Individual investor pay retail prices for the stocks whereas large mutual fund companies get some price break.

JR8 · Post by **JR8** » Sat, 20 Apr 2013 6:01 am

earthfriendly wrote:
JR8 wrote: I prefer picking my own pretty intuitive bullet-proof portfolio, and saving on the fees that funds charge.
Individual investor pay retail prices for the stocks whereas large mutual fund companies get some price break.

Edit to add: A reply! (Not sure what happened there...)

Any pricing differential you pay for small retail trades vs institutional size, is recouped within a few months by paying no upfront or ongoing fees* to the fund.

* If you buy a fund through a private client broker, he will earn a commission. He will often also earn a 'trailing commission' from the fund provider, that is, he'll earn a commission every year for as long as you continue to own it. This is one of the reasons you'll hear them talk about broker performance in terms of 'production' (sales, i.e. upfront fees), and assets under management (a measure of ongoing income stream). Banks love these trailing commissions, as they are a reliable income stream irrespective of what the markets do. So a broker is very directly and highly incentivised to sell you funds over plain-vanilla stocks etc

offshoreoildude · Post by **offshoreoildude** » Sat, 20 Apr 2013 9:06 am

My own strategy is diversification - even between banks and countries and real estate as I expect more and more banks, shares, markets etc to crater. I'm very poor at picking funds and stocks so I tend to shy away from them. I also save very hard - 12 to 17 years working life left so I need to.

I do kick myself for missing many, many good stock picks from apple to Intel to SLB.

JR8 · Post by **JR8** » Sat, 20 Apr 2013 3:27 pm

offshoreoildude wrote:My own strategy is diversification - even between banks and countries and real estate as I expect more and more banks, shares, markets etc to crater. I'm very poor at picking funds and stocks so I tend to shy away from them. I also save very hard - 12 to 17 years working life left so I need to.

I do kick myself for missing many, many good stock picks from apple to Intel to SLB.

Diversification is wise.
I'd be cautious of holding cash in bank above any insured limit.
A stock portfolio held via a broker is yours, they are simply your agent (if they go bust, you should be unaffected, barring some admin to sort it out).
I used to 'pick stocks' too. In retrospect I can see my technique meant I picked headline-commanding, popular stocks. Trouble is you end up chasing fashions, and they can provide drama on the downside too.
Now I follow a set of investment criteria (as discussed, from www.fool.co.uk) and as such the stocks pick themselves, rather than me them.

I've found that taking the 'me' out of stock-selection works so much better

stevedevan · Post by **stevedevan** » Fri, 17 May 2013 9:42 pm

Strong Eagle wrote:Gents (and Ladies, if you are out there)... I've been talking to a few people re investments and have heard many opinions, some completely 180 to others. Since I value the opinions of many on here, I toss out the following questions.

a) One fellow says that we are certain to have a major correction (aka 2008) in the stock market no later than July or maybe third quarter. Another person says, yes, there will be a correction but only 5 to 10 percent, and the market will be back past that by first quarter next year. Yet another says that so long as quantitative easing is in place, cheap money will keep stocks propped up. Which izzit in your esteemed opinions?

b) One fellow recommended an ETF of ETF's... Windhaven (http://www.schwab.com/public/schwab/inv ... xpxe4op6q0). I like ETF's... curious to know what you think about this investment strategy.

c) Yet another suggested an "alternative investments" portfolio... a mutual fund like collection of commodities, real estate, precious metals, M&A arbitrage, listed private equity, managed futures, and covered calls. Whereas the traditional "financial advisor" recommends allocations only in stocks, bonds, and cash, the other guy recommends a significant percentage of assets to be invested in alternative investments via an ETF or mutual funds. Thoughts on this?

d) The bonds that I hold right now (in a fund) are barely hovering at zero return. Seems like no matter which way the market moves, this fund isn't going to get any better... what's your view of bonds in these interesting times, taking into account quantitative easing, potential for another market crash, etc?

Many thanks.

Hi, I'm not pretending that I do not have a vested interest here, because I do. I am a Broker for alternative investments, some are of the type that you mention in your original post.

I am based in the UK, but believe that I believe that my investments may be of interest in Singapore and therefore I m trying to break into the market. So feel free to take any comments I made, with a pinch pf salt, but I ambeing honest with my answers.

a)

It sounds like a cop-out, but the issue in trying to understand what is going to happen in the future is so open to interpretation that individuals opinions are pretty worthless. Listen or read up on various "experts" and you will always get varying answers. It drives me mad. {Edited by moderator}

So, with respect, I hardly think getting opinions on future stock markets will be useful.

b)

These can be good as they are of generally low cost. My only concern is that they either follow an index, so that the collective investments are strictly controlled, which misses opportunity for growth, whilst reducing risk. Is that what you want? - or the decisions are made by experts in the individual fields. So as long as the expert makes correct decisions, you will be laughing. But, of course, trying to pick the right time to enter the market, and get back out again, is the real skill.

c)

----

My preference is for simple alternative investments that are removed from dependence on worldwide markets and conditions, rather than convoluted collective investments where performance is still reliant on "experts" and usually affected by outside factors.

{edited by moderator}

I have recently reduced my investment portfolio from 9 to 4 products. These 4 products I believe offer something for most people. You can choose between 1, 3, 5, 12yr and 24 yr terms with various exit strategies built in, guarantees, potential and diversity, but everything is clear.

d)

I am afraid I am not certain what type of bonds you hold. Are they Corporate Bonds in a fund such as a Unit Trust or are they Investment Bonds that has a selection of stock market equity funds, that may include Corporate Bond funds. I presume you mean the latter. If so then the stock market is, as I have already spoken about, so open to interpretation and opinion. It will depend on your length of term you are comfortable with, as ther is probably little doubt that equities will provide a positive over the long term of maybe 10 years. But in the short term, well - I am not a betting man. Equities do have one thing in their favour that is often neglected and that is that they have an inherent "inflation proof" effect, which could be very useful, if the economy picks up and inflation starts to rise.

If you have Corporate Bonds (effectively loans to Companies) then they often do better when equities dont and vice versa, but that is a VERY general view, as they will depend on the financial strength of the business and the collective decisions of the Fund Manager. The Corporate Bonds do not have any protection from infklation as the returns only reflect a collection of "fixed interest" payments the busineses are making to service the loans.

One further point is that any collective funds that have a successful Fund Manager will struggle to keep him there as he will often get a better offer running another Fund - and your investment will then be managed by someone else.

removed solicitation

JR8 · Post by **JR8** » Sat, 18 May 2013 12:27 am

This is just complete bollocks.

stevedevan · Post by **stevedevan** » Sat, 18 May 2013 12:52 am

JR8 wrote:This is just complete bollocks.

stevedevan · Post by **stevedevan** » Sat, 18 May 2013 12:59 am

JR8 wrote:This is just complete bollocks.

Well, you obviously have very forthright views, many of which concur with mine. At least have the good grace to explain why you think my post is complete bollocks. After all we are trying to help someone here, not have some sort of personal slanging match.

Wd40 · Post by **Wd40** » Sat, 18 May 2013 1:57 am

SE, I will tell you my take on it:

If you listen to analysts/advisors at any point of time, there are very very few that get it right. Even those who do get it right dont get it right all the time. I dont blame them, the markets are very complex these days and no matter how good the earnings of company is, something that happens somewhere in the world affects the stock markets.

I think the best thing to do is split your portfolio into the part which you can take risk and the part that you cannot. People say that when you are 30, you must put 60% in equities and 40% in bonds or something like that. I dont believe that. Its the individual perception. I have never put more than 30% into equities. Choose some good unit trusts/mutual funds that have good long time track record and put your money in them. Its far easier than tracking individual companies. ETFs are just like unit trusts/mutual funds, may be they dont cost as much.

There are some good bond funds out there that can give you 3-20% returns. Ofcourse the higher the returns it means its in junk bonds and higher the risk of default.

I am currently investing in this extremely safe short duration bond and making about 7% per annum.

http://www.fundsupermart.com/main/fundi ... ber=370124

You can have a look at other riskier products here:

http://www.fundsupermart.com/main/fundi ... Table.svdo

In the drop down for "Main Categories" select "Fixed Income".

This site is Singapore based, but I am sure you can US equivalent sites that let you invest in the same funds.

I like this site fundsupermart.com because of the amount of information they have. They even have model portfolios and you can see their track record is quite good:

https://secure.fundsupermart.com/main/i ... tfolio.tpl?

JR8 · Post by **JR8** » Sat, 18 May 2013 12:15 pm

stevedevan wrote: Well, you obviously have very forthright views, many of which concur with mine. At least have the good grace to explain why you think my post is complete bollocks. After all we are trying to help someone here, not have some sort of personal slanging match.

Because you are a credential-less stranger, on the other side of the world, breaking forum rules by spamming, and soliciting money from complete strangers over the internet.

Just about every alarm bell that could go off, is doing so, and it appears that you are the only one who cannot hear them.

I'm quite surprised your account here hasn't been torpedoed altogether - yet.

Post by **sundaymorningstaple** » Sat, 18 May 2013 1:46 pm

JR8, only because it's been heavily edited by at least two of the moderators. A re-occurence of soliciting WILL result in locking of the account.

moderator

stevedevan · Post by **stevedevan** » Sat, 18 May 2013 9:11 pm

First of all, to JR8, the original poster on this thread and the mods, I apologise for infringing the rules on this Forum. When I started to look on the Forum, I was intending just to watch and learn, but when I saw the Post, I just thought I had to reply and, if I am honest, I didnââ‚¬™t read the Rules absolutely through before posting. So I wholeheartedly apologise, and will do my best to ensure it doesnââ‚¬™t happen again.

However, can you see my problem? I have a long history in financial services, at several levels and, although I wouldnââ‚¬™t expect my thoughts or opinions to be accepted carte blanche, the OP was after some opinions from ââ‚¬Å“investment guruââ‚¬™sââ‚¬Â

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