Sunday, 22 March 2020

Why Buy Gold and Silver during Crisis?

Using SPDR Gold Shares (GLD) as reference to Gold price.

In 2008, Gold shares peak at $98 on 3 Sep 2008.
On 15 Sep 2008, Lehman Brothers collapse.
And in the next one month, Gold shares plunged to 2008 low at $71 on 26 Oct 2008.
This is more than 30% drop within 1-2 month.

Then come the cutting of interest rate and the Quantitative Easing (QE).
Thereafter Gold share price never look back for the next more than 2 years.
It rallied 250% up to Aug 2011 peaking at $183.

3 Sep 2008 - $98
26 Oct 2008 - $71 (~30% drop)
28 Aug 2011 - $183 (>250% rise)
22 Nov 2015 - $101 (80% drop)
3 Jan 2020 - $157 (>50% rise)






Sources: Yahoo finance.

Silver using iShares Silver chart as reference, is even more crazy, rallying from below $10 to $>46 on Apr 2011. That is a whopping >450% rise!

What already happened

17 Mar – Trump announced plan to send US$1,000 to every American, part of a US$1 trillion (S$1.43 trillion) emergency stimulus package (S$1.43 trillion) to contain the economic hit from the coronavirus.

18 Mar - ECB unveils €750 billion stimulus against coronavirus. The programme will come on top of the €120 billion of additional asset purchases announced by a week before.

The rest of the global also announcing stimulus via reducing rates and reserve ratio. Almost the whole world will start stimulating.

But you may wonder how come government so rich huh? Got so much money to send to people meh? The answer is printing money and more printing via bond purchases.

Conclusion

May expect Gold and silver price to tumble 20-30% in the next 1-2 months or so until Apr-May period.

Then as the global government start to roll out more and more stimulus, precious metal prices will start to rise and probably peak in the next 1-2 or within 3 years. Government of today will never allow an economy to crumble without stimulus.
  
Of course, predictions will never be accurate.

Hence need also accumulate stocks now, because it is cheap now. Preferably Blue Chips and stocks with huge cash reserves. If price of precious metals never rise, but stocks will rise unless a Great Depression in the corner. 

If Great Depression, then no choice. But you can survive by keeping also one year expenses of cash. If cash runs out, then too bad, you have to start selling precious metals, then finally stocks. 

Above all, make sure your company will not retrench you, when you dish out your cash on the decreasing stock price. If your company  or business is already shaky, with a very weak cash position, then you have to exhibit prudence and wisdom when buying into stocks.

I am more lucky in this aspect, as I have direct access in my company’s bank account knowing our real time financial situation. If you do not have, make sure you keep your ears open and keeping close to your finance controller.

Saturday, 21 March 2020

Stocks on Watchlist

Below stocks on watchlist. Bracket is showing min price / max price for last 15 years followed by  current price recently. 

REITS 
  • SPH reit ($0.9 Jan 16 / 1.15 Nov 19) - $0.695 
  • CapitaChina ($0.47 Nov 09 / 2.16 Nov 07) - $0.965
  • Keppel DC Reit ($0.95 Dec 14 / 2.53 Mar 20) - $1.77
  • Suntec ($0.53 Mar 09 / 2.25 Jan 18) - $1.14 
  • Starhill Global -($0.32 Mar 09 / 0.96 Apr 13) - $0.405 

Data Reit, SG-AU reit, China Reit = 3 stocks 

ETF
  • STI ETF ($1.6 Feb 09 / 3.6 Jan 18) -$2.34 
  • Gold ETF ($42 Jan 05 / $183 Aug 11) - $143

STOCKS 
  • DBS ($9.4 Nov 18 / 30 Apr 18) - $17.5
  • UOB ($8.8 Mar 09 / 29.7 May 18) - $18.35
  • OCBC ($4 Mar 09 / 13.7 Apr 18) - $8.1
  • Singtel ($2 Oct 08 / 4.4 May 15) - $2.38
  • Keppel Corp ($3.7 Jan 09 / 12.6 Sep 07) - $4.9
  • Raffles Med ($0.2 Dec 09 / 1.6 Jun 15) - $0.805
  • ThaiBev ($0.17 Mar 09 / 1.0 Oct 16) - $0.51 

Bank, Telco, Conglomerate, Hospital, F&B = 5 stocks

BONDS
  • ABF SG BOND 
  • FCT3.65
OIL
  • Exxon Mobil ($66.0 Apr 09, 56.0 Jul 10 / 103 Jul 14) - $32.74 

Friday, 20 March 2020

Crisis wipe out your winnings? Be wise rather than clever!

Due to the school Holidays, I took leave for a few days to be with all my kids. Initial plan is to go several places for excursions and go to nice restaurants, but due to the Covid-19 outbreak, we decide to stay at home. Health above everything! End of the day, the priority is to be with the kids. Hence, “where” is not so important. It is so heart-warming and joyful to see them playing together filling the house with laughers. But it can be also frustrating with a totally messy house and lots of whining when they do their snatching of toys. 

Two important takeaways:

1) Priority – Although not according to plan, but when we take leave, the priority is to be with kids, and we achieve this priority.  

2) Ups and Downs – even when priority is met, it will never be always smooth sailing. There will always be up and down, be it in life or in stock market. We have to face it with preparations and the right action with a positive attitude. 

I always said, "If you are doing good, do not be too proud and help those who are not doing well; if you are doing badly, do not be too sad and stay positive. Help will come without you even thinking.  Be patient!"

Bible Genesis 41: Joseph interpreted Pharaoh’s dream

In the Bible Genesis Chapter 41; The Egypt King Pharaoh has a dream of 7 fine and well-fed fat cows being chased and eaten by 7 very poor, ugly and gaunt cows. In another dream, he also saw seven heads came up on one stalk, full and good. Then behold, seven heads withered, thin and destroyed by the east wind. The 7 thin heads then devoured the 7 good heads. So the dream was repeated to Pharaoh twice, because the thing is established by God, and God will make it happen shortly.

Joseph, the humble and Holy man of God, interpreted that both dreams have the same meaning. The 7 good cows or heads are 7 years of great plenty, and the 7 ugly and thin heads are 7 years of famine. And the plenty will be forgotten because the famine will deplete the land.

Crisis getting worst each time

Uncle blogger CW mentioned the last few BIG crashes took place 11 years each time. It is a very good analogy.
·       1987 Black Monday October crash.
·       1998 Asian Financial Crisis
·       2009 Great Financial Crisis
·       2020 Corona Virus Crisis
·       Xxxx Global currency Crisis?

More importantly to me is not how long between major crashes, but the magnitude of the crash and its impact become worse each time.

1987 crash impacted lesser countries. Mainly US and the more developed one and did not last too long. 1998 crash impacted a much larger population in Asia. 2009 GFC impacted all major global economies and is one of the worst since the great depression. This Covid-19 induced crash has now spread to almost all the countries in the world. The world cannot cope with this invisible enemy. Not just more lives will be lost, but more jobs will be lost.

The global economy does not look good. The governments intervened by introducing stimulus package to bail out companies. Where do you think the debt stricken US or EU are going to get the money to support the economies? Are the governments really that rich?

The answer: Print and Print and Print more money.

But interest rate is already so low, how to lower further? The next worst thing, will be helicopter money which will lead to Hyper-inflation! Covid-19 is scary and cause economies to crash. But if there is a global currency crisis, the entire global monetary system will collapse. It is then likely to lead to Great Depression 2.0 and the last thing we want, WW3.

Conclusion

It is naïve to think that you are a capable investor when the market is good, thinking that your portfolio will just slope upwards all the time, and how good your financial journey will be. Remembering that the Crisis will be like the Ugly cows that can eat up all your winnings once and for all.

A lot about investment is not just tangible analytical skills, but also the psychological part soft skills. This requires life-experience (or exposure) and lots of reading, which gives us wisdom. With wisdom, we will not be conceited, stay humble, be prepared and be patience for the long-term reward, which most lack. 

Above all, it is even more naïve to put all priority and time on the financial journey. Our life journey is more important. There are relationships and family to be established, friends to make, mountains to climb, rivers to walk etc. All of these requires wisdom and good health, which I believe derives from true righteous living and putting the trust and faith on the right thing!

In the Bible, Joseph suffered a great deal in the early part of his life. He was betrayed by his brothers and was sold as slave. Even when he did well as a servant, he was falsely accused by his master's wife and was put to jail. But all is not lost even when he was in jail. He continue to put faith in God, live righteously without sins and exudes exceptional wisdom. Joseph was release out of jail because God allowed him to rightly interpret the dream for Pharaoh. Eventually Joseph not only become the Prime Minister but also reconcile with his family by forgiving his brothers who sold him as slave. He also got married and led a wonderful life with his life experiences and wisdom. 

If you are clever, you make a lot of money. But if you are wise, you make the most out of life!