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(11-09-2022, 01:32 PM)weijian Wrote: What will happen, will never be clear. But what we want to happen, is never been clearer.
So when we tend to gravitate towards strong views on "what will happen", then we may actually be mixing it up with what we want to happen.
We have to differentiate between what we want to happen, VS what will happen.
Personally, I know I can't know what will happen. Also I can't really differentiate well between what will happen with what I want to happen.
Or one can simply adopt a long-term mindset and strategies that side-step the need to accurately predict what is going to happen (to macro and price action) in the next 6 - 12 months.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
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11-09-2022, 03:44 PM
Looking at history (is what AK always did) and nothing had changed.
I hate to say that "This time is different" but I really really think that this time is different. 
This time is different!
On one hand, I'm very mindful that we ought to look at longer term and continue to invest when the opportunities arrived (which I'm and had been doing). However, with "this time is different" attitude, I had cut down the speed of my purchase significantly.
Not saying I'm scare but I'm really trying to be careful this time as "this time is really different".
So, the question is what would be something that worth buying at this moment?
Should it be ETF, stocks, bonds (or equivalent fixed income), commodity, crypto, etc?
Different people would have different preference (or allocations), and at this moment, my #1 is ETF and #2 would be stocks.
In both cases, my buying criteria is definitely for long term aka next 10 - 20 years, the ETF/Stocks will definitely still exist. Will it do well? That would be secondary but it must exist.
I know that a lot of valuebuddies are buying stocks that give dividend every year and they are waiting for the dark cloud to be cleared. To me, dividend or not is not important. #1 is the stock must exist in 10-20years time with reasonably growth potential.
Wish me luck.
Meanwhile, hope all valuebuddies had a great holiday:
![[Image: mid-autumn-festival-hong-kong-mooncakes-...24x796.jpg]](https://1qghdw20tywd2qc5uw1w82ap-wpengine.netdna-ssl.com/wp-content/uploads/2022/08/mid-autumn-festival-hong-kong-mooncakes-2022-whats-on-1024x796.jpg)
https://www.sassymamahk.com/whats-on-mid...-families/
Gratitude.
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@BlueKelah
I respect that everyone has different background and life experiences based on where they grew up in history (example, someone who grew up in Great Depression/WW2 would be very different from a post WW2 boomer). Similarly in Asian context, those who had the AFC97/dotcom under their belts would think really different from a post GFC investor.
So there is absolutely nothing wrong to have different approaches. It is just that as a student of behavioral finance, I feel that behaviors are more consistent (and repetitive) than history, that is about it.
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Interesting thought point, Weijian. As new batch of investors, who invested post GFC, enters the market (13 years of cohort so far), they would only be aware of the upward trend in both property and stock market (due to QE effects).
The pre-2008 cycle where interest rates were at 4-5% would be a less remembered episode, much less the early 1980s where interest were at a 10-15% mark and Singapore resorted to cutting employer CPF to cushion off recession and retain companies.
History does not repeat but it rhymes. With the passing memory of the 1980s investors with the exception of Warren Buffett let's see how history goes in a few years from now
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Hi CY09,
In a way, many such "new" investors, unscathed by previous euphorias/crashes (ie. pre 2008), got swept away by the Great Tech Correction (GTC) of 2021-2022. Of course this is just a generalization and not all post 2008 investors got their hands burnt in the last 6 months.
On the other hand, I also observe a lot of "old hands" in the market, who got baptized by the various crashes in the past few decades, holding onto this strong belief that the next crash is always around the corner. In other words, post 2008/Nassim Taleb, many tend to believe that black swans are the norm.....until they are not. Of course, this is also a generalization and many pre 2008 investors continue to invest faithfully regardless of macro.
So, the market is made out of all these participants with different experiences and biases. Both have pros and cons. My personal opinion is that if I find myself having a strong opinion and especially when it defers from the market, I always try to invert and ask myself what am I missing that the market knows. The Market is normally right most of the time.
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Similar to what SoftBank did last year...buying call options and then pushing stock price up ....now reverse...
https://mobile.twitter.com/FedGuy12/stat...1921813507
https://mobile.twitter.com/TDANetwork/st...0383827968
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(11-09-2022, 07:19 PM)CY09 Wrote: Interesting thought point, Weijian. As new batch of investors, who invested post GFC, enters the market (13 years of cohort so far), they would only be aware of the upward trend in both property and stock market (due to QE effects).
The pre-2008 cycle where interest rates were at 4-5% would be a less remembered episode, much less the early 1980s where interest were at a 10-15% mark and Singapore resorted to cutting employer CPF to cushion off recession and retain companies.
History does not repeat but it rhymes. With the passing memory of the 1980s investors with the exception of Warren Buffett let's see how history goes in a few years from now
I am pretty sure a big overdue recession is about to hit very very soon. I remember FED hiked rates to 5.25% or something back in 2007 then pop the housing bubble and unemployment rate went up then start of 2008 greenspan start to to reduce rates as the recession start with negative GDP Growth. Stocks dropped like 20% gradually then bang September/October GFC hit they tumble like crazy then rebound a bit as fed drop rates to zero quickly end 2008 then tumble again till bottom in around march 2009 before a big recovery as QE1 from Nov2008 started to kick in.
This time FED is hiking into a 1H2022 recession. Plus doin a bit of QT since august and accelerating that this month. Next week rate rise will means fed funds rate 3% or more. So something likely to BREAK either starting now or in October.
We shall see. Hodl on tight!!
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One elephant in the room we have to consider is the reverse repo aka cash that banks have deposited with the Federal Reserve. There is US$2 trillion.
In times of crisis, the Fed can just cancel this reverse repo mechanism and return the banks US$2 trillion in cash. Even in a risk off environment, the banks will be compelled to put some of the US $2 trillion into risk assets to generate returns
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(14-09-2022, 11:22 PM)CY09 Wrote: One elephant in the room we have to consider is the reverse repo aka cash that banks have deposited with the Federal Reserve. There is US$2 trillion.
In times of crisis, the Fed can just cancel this reverse repo mechanism and return the banks US$2 trillion in cash. Even in a risk off environment, the banks will be compelled to put some of the US $2 trillion into risk assets to generate returns
If FED reduce RRP, it will cause increase in money supply which will then filter into inflation. Dont think the FED wanna do that at the moment, but maybe when there is a bad recession they will do it.
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Yes, this is why an overdue recession will be buffered by the RRP.
The moment Fed ends RRP, it creates a QE effect similar to COVID which can last for at least 1 year and that's before Biden comes out with his stimulus plan no 3 (the first 2 were COVID and student loan forgiveness)
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