Thoughts On Current Environment

It is quite expected of the government to come up with additional property cooling measures as i have said before that property is a public good and any additional meaningful upside in price will be capped. I must say that this recent measure of taxing foreigners the additional 10% stamp duty is a very good and well thought of move by the government. I applaud them and must say they are really responding well to the recent results of the general election. I feel that this move tackles both the issues of foreign competition and also the laments of the young generation of aspiring homeowners. Good Job. So how well will property fare in the coming years?

In my opinion, property will go down in prices and volume but i won't know by how much. Singaporeans have strong holding power from what i observe ( I used to say that property prices may also stagnate but no longer). They have their CPFs, so this is a plus point for property. On the other hand, recent data has shown that foreigners and PRs form a significant proportion of property transactions and since assets are ALWAYS priced at the margins, prices could swing to the south given an expected low transactional volume. All that is needed to really push property to nose dive will be accelerated retrenchments. The holding power of Singaporeans will make sure that property will not go too far south though.The devaluing of fiat currency will also help prop up property. 2013-2015 will be a good time to show-hand in property for investment given the supply and expected interest rate hikes.

Now about the equity markets. In my opinion, money has to flow somewhere. It either flows into stocks or flows into property or flows into Gold or flows into bonds or flows into currencies or flows into savings account. Money now has flowed into safe currencies like USD or Yen and savings account and to some extend flowed out of equity markets and the sing dollar. The reason why equity markets have not corrected massively is just because there is just too much money chasing limited assets. I still have not dipped my toes into the equity market again yet as i feel there is still some downside to go as i feel market confidence is still not yet totally broken.( 60% of my portfolio is currently in equities).  Having said that, some of my stocks in my watchlist has hit or broken their 52weeks low. I have also observed that many of my shares are still being shorted. I just cant wait to squeeze the short sellers, just not yet and im a small fry. haha. Will the harsh property cooling measures result in money flows to the equity market? It would be interesting. Now, i will just sit back and earn my fees from the short sellers and dividends.

Discipline to keep one's emotions at bay

Currently, my percentage of cash comprises 35% of my portfolio with 65% fully invested in equities. At present, my portfolio in terms of paper profits is still yielding a positive return even after the market sell down. ( I have not included the dividends i have received over time.) Having said that, i did consider liquidating some of my equities when the 50 EMA crossed the 200EMA from above but alas, i am not disciplined. I find difficulty in selling some of my equities after a sell down. It is emotional for me and i think i need to improve on this.

Having said that, another factor why im not selling is because my companies are still fundamentally strong and yielding at least 6% -7%dividends based on my buy price. When i include the lending fees which i receive when i let people short my shares through SGX, my returns are slightly more. I am not emotional when my shares drop 50% in value because of market risk . I dont mind as i will buy more but i get emotional when the companies i buy go fundamentally weaker resulting in share price decrease. I hate that.Really hate that.Furthermore, i dont know if QE3 will be annouced. If announced, equities could have a rally in the short to medium term.

This 35% cash that i have will be there to take advantage of any property correction or massive share price correction. Jackson hole speech is upon us. I hope that Ben Bernake doesnt do a QE3. I hate it when he said that interest rates will remain low till 2013 I hate it when governments impose short selling bans. I love it when Gold price goes up because i think its a bubble. I hate it when Moody's and Fitch dont downgrade US debt. Its not the time to get emotional...

AAAAAArrrghh, I am frustrated and i need inner peace. God please help.