Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

Time for big Asian Crash?
Bill Fowler
Posted: 11 August 2017 10:45:27(UTC)
#1

Joined: 16/04/2017(UTC)
Posts: 10

Was thanked: 3 time(s) in 3 post(s)
Trump looked like he had a mess in his trousers when he was on the TV last night, so I suspect some very negative briefings going on. Plus 20 years since the last Asian blowout so are we heading for another big crash. All the fiscal stimulation that went into averting 2008 crash debris has also distorted the market and when you do that you build up an even bigger market fall when it all goes pop. Ultimately the market is the market.

Have been expecting a big Asian crash for a few years anyway, only reassured by the markets not having a wild bull run past previous highs but decided to cash in all my shares this morning, all at a nice profit... usually get these things wrong but interesting to see what happens next. They are in a SIPP and ISA so could have just sat back and let it go up and down but...
1 user thanked Bill Fowler for this post.
martin hargan on 17/08/2017(UTC)
Abstract Artist
Posted: 17 August 2017 16:53:23(UTC)
#2

Joined: 24/03/2016(UTC)
Posts: 14

Thanks: 61 times
Was thanked: 23 time(s) in 9 post(s)
You may find the following recently written article on Wealth Manager interesting then Bill.

Why we're only at start of powerful Asian bull market -
http://citywire.co.uk/we...-latest-news-test1-list

Admittedly it is by a portfolio manager, Angus Coupland, of CC Asia Alpha Fund but I for one agree with much that he says and hope that there is quite a way for Asia to go over the coming years.

6 users thanked Abstract Artist for this post.
Tim D on 17/08/2017(UTC), Keith Cobby on 17/08/2017(UTC), Freddy4Skin on 17/08/2017(UTC), Money Spider on 17/08/2017(UTC), Dian on 19/08/2017(UTC), c brown on 21/08/2017(UTC)
King Lodos
Posted: 17 August 2017 19:52:31(UTC)
#3

Joined: 05/01/2016(UTC)
Posts: 1,667

Thanks: 276 times
Was thanked: 2160 time(s) in 894 post(s)
If there wasn't the constant threat a crash, markets wouldn't trend up .. They'd already be fully valued for the next 5-odd years of expected earnings, and they'd just trend sideways with a bit of volatility .. Which is why they call it 'climbing the wall of worry'.

This is why economic growth has virtually no correlation with stock market returns: because it's usually already priced in .. It's the unexpected that moves markets – whether directly, through political events, or indirectly, through things like stimulus.

Prices have been telling me Asia's the market to be in most of this year – but I think as always, it's a case of finding a balance between maximising returns if the Asian bull market continues, and minimising damage if it crashes .. On the other hand, if you were investing for the long-term, being about 1/3rd Asia (maybe even 50%) isn't a bad bet, while prices are still generally cheaper than the US.
11 users thanked King Lodos for this post.
Freddy4Skin on 17/08/2017(UTC), S Dobbo on 17/08/2017(UTC), Martina on 17/08/2017(UTC), Will Morris on 17/08/2017(UTC), Jon Snow on 17/08/2017(UTC), Abstract Artist on 17/08/2017(UTC), Money Spider on 17/08/2017(UTC), Guest on 17/08/2017(UTC), martin hargan on 18/08/2017(UTC), Dian on 19/08/2017(UTC), c brown on 21/08/2017(UTC)
Jon Snow
Posted: 17 August 2017 20:45:57(UTC)
#4

Joined: 02/03/2014(UTC)
Posts: 1,056

Thanks: 738 times
Was thanked: 843 time(s) in 445 post(s)
And this from the manager of HFEL, one of my key holdings -

https://www.janushenders...enderson-far-east-income
12 users thanked Jon Snow for this post.
Abstract Artist on 17/08/2017(UTC), Money Spider on 17/08/2017(UTC), Mr Helpful on 18/08/2017(UTC), sandid3 on 18/08/2017(UTC), antigricer on 18/08/2017(UTC), Keith Cobby on 18/08/2017(UTC), Tim D on 18/08/2017(UTC), Mike L on 18/08/2017(UTC), dlp6666 on 18/08/2017(UTC), Dian on 19/08/2017(UTC), Sara G on 19/08/2017(UTC), c brown on 21/08/2017(UTC)
Bill Fowler
Posted: 18 August 2017 07:42:08(UTC)
#5

Joined: 16/04/2017(UTC)
Posts: 10

Was thanked: 3 time(s) in 3 post(s)
Since posting, have been in and out again at a small profit... greed overcoming sense probably. Do tend to agree there could be a nice Asian stock run before it goes bang and it is also good from getting out of Sterling point of view but still everything seems very edgy to me at the moment.
srg751
Posted: 18 August 2017 08:52:53(UTC)
#6

Joined: 10/08/2013(UTC)
Posts: 1,167

Thanks: 402 times
Was thanked: 1003 time(s) in 507 post(s)

Trustnet article on Asian funds including performance tables

https://m.trustnet.com/n...-topping-the-tables-on-(just-about)-every-metric/?utm_source=Trustnet%20Newsletters&utm_campaign=a933ab0a41-20170817_ec_trade8_17_2017&utm_medium=email&utm_term=0_2314bd04ee-a933ab0a41-76940769
1 user thanked srg751 for this post.
Dian on 21/08/2017(UTC)
Tim D
Posted: 18 August 2017 10:08:43(UTC)
#7

Joined: 07/06/2017(UTC)
Posts: 112

Thanks: 463 times
Was thanked: 134 time(s) in 64 post(s)
srg751;49919 wrote:

Trustnet article on Asian funds including performance tables
<thoroughly trashed URL omitted>


Try here instead.
1 user thanked Tim D for this post.
Dian on 21/08/2017(UTC)
Bill Fowler
Posted: 18 August 2017 10:50:40(UTC)
#8

Joined: 16/04/2017(UTC)
Posts: 10

Was thanked: 3 time(s) in 3 post(s)
the charts on that link seem to indicate a bit of a crash
Tim D
Posted: 18 August 2017 11:42:14(UTC)
#9

Joined: 07/06/2017(UTC)
Posts: 112

Thanks: 463 times
Was thanked: 134 time(s) in 64 post(s)
Bill Fowler;49924 wrote:
the charts on that link seem to indicate a bit of a crash


Bear in mind those charts are all 5 years to end of December 2016 so hardly relevant to any recent action. Looking at an up-to-date CPJ1 chart ( iShares Core MSCI Pacific ex-Japan Acc, GBP units) I can see there was indeed a peak in late October'16 (high ~9968) followed by a dip in December'16 (~9281) - down 7%... does that even qualify as "a bit of a crash" though??? I'd call it "normal volatility". Looking at what it's done subsequently on the up-to-date chart to today I see it's just making new highs last few days of ~10840 up almost 16% from that December'16 low.

Think there must be a glass half empty / half full thing goes on with charts... some people will go "OMG... look at all those crashes, drawdowns, and the next big one's clearly coming"... others will go "OMG look growth with lots of buy-the-dip opportunities...".
Dian
Posted: 19 August 2017 10:27:59(UTC)
#10

Joined: 09/10/2016(UTC)
Posts: 190

Thanks: 142 times
Was thanked: 58 time(s) in 44 post(s)
In my opinion, value stocks should outperform others. I prefer Asian domestic growth stocks like food stocks and financial stocks. Their growing population will create demand for food and financial services. As I mentioned before, I would like to go behind great value stocks and weak markets in previous years and months. They should become tomorrow's winners. In the short run, demand may shift toward consumer staples in a world of temporary political and geopolitical tensions.
Sara G
Posted: 19 August 2017 18:50:49(UTC)
#11

Joined: 07/05/2015(UTC)
Posts: 433

Thanks: 613 times
Was thanked: 660 time(s) in 275 post(s)
I'm considering topping up FAS as the discount is widening again. Also considering opening a position in HFEL as mentioned by Jon Snow above. Between them there is a decent yield and exposure to a range of cap sizes, plus HFEL is currently (and unusually) on a small discount.

Also topped up my Japan ETF last week when markets dipped due to the N Korea situation instead of rising on strong growth / employment figures.

I think the long term prospects for the region are strong enough to offset any temporary wobbles. If a crash does materialise, I'll be buying more.( I'm about 15% in Asia currently, plus 8% in Japan.)
6 users thanked Sara G for this post.
Tim D on 19/08/2017(UTC), Jon Snow on 19/08/2017(UTC), Dian on 20/08/2017(UTC), Jeff Liddiard on 20/08/2017(UTC), Keith Hilton on 20/08/2017(UTC), c brown on 21/08/2017(UTC)
Dian
Posted: 20 August 2017 01:05:22(UTC)
#12

Joined: 09/10/2016(UTC)
Posts: 190

Thanks: 142 times
Was thanked: 58 time(s) in 44 post(s)
There had been some profit taking in some Asian markets during fast eight weeks. Asian and pacific markets such as Japan, South Korea, Singapore, Pakistan, Sri-Lanka, Taiwan, and India dropped during fast month. Exceptions are New Zealand, Indonesia, Vietnam and Mongolia. They outperformed other markets in the region during past month. In short, there are cheap markets as well as expensive markets in the region.
1 user thanked Dian for this post.
Tim D on 20/08/2017(UTC)
Bestmate
Posted: 20 August 2017 16:04:33(UTC)
#13

Joined: 13/02/2012(UTC)
Posts: 7

Thanks: 3 times
Was thanked: 11 time(s) in 3 post(s)
@Bill Fowler

I think it depends greatly on your financial situation and the immediate choices available. I am a firm believer of buying and holding. Fortunately, I am not dependent on my investments, so if there is a crash, so what? Nothing is lost in real terms until you sell and looking back the vast majority of mistakes I have made, was in selling much too early.
Secondly, choices available.
So where do you put it, particularly if you do not need it to actually spend? Assuming you are diversified globally, where does it go? Bonds (overpriced and real bubble territory)? On deposit in cash (do me a favour)? If you are holding a significant cash sum on the side already in your trading account (as I am nearly 30% -( which has proved to be much too high looking back)), in readiness for the dip, correction or crash, and thereby poised to jump in when valuations have tanked, I ask again, what do you do with it? Timing the market is virtually impossible, certainly for the vast majority of us.
6 users thanked Bestmate for this post.
Freddy4Skin on 20/08/2017(UTC), Captain Slugwash on 20/08/2017(UTC), Jon Snow on 20/08/2017(UTC), Tim D on 20/08/2017(UTC), Alan Selwood on 21/08/2017(UTC), Dian on 21/08/2017(UTC)
King Lodos
Posted: 20 August 2017 17:07:52(UTC)
#14

Joined: 05/01/2016(UTC)
Posts: 1,667

Thanks: 276 times
Was thanked: 2160 time(s) in 894 post(s)
Warren Buffett has about 35% cash at the moment – which is not unusual for him, and hasn't stopped him beating the S&P500 over the long-term.

I think whether you time or not, you want to be able to buy when things get cheap – and being 100% stocks doesn't give you much more scope for that.

Buffett's a big critic of cash as an investment (totally unproductive), but conceptualises his cash holding in a different way: as a perpetual call option .. “Cash combined with courage in a crisis is priceless.”

Buffett also has about 10% in bonds, but sometimes goes up above 50% (e.g. during the Tech Crash).

I like to have about 1/3rd in cash .. While it limits absolute losses, it also means you can focus your investments .. Buffett, for example, can afford to have most of his portfolio in just 3 stocks .. I can afford to have huge overweights – e.g. I could have my whole portfolio Emerging Mkts and Private Equity .. It's what you could call "barbelling" – balance low risk and high risk, and avoid too much of the crowded middleground.

I do the same with bond duration at the moment .. 50:50 GAM Star Credit Opps (perpetual bonds) and Royal London Short Duration Credit, etc. (under 5 years) .. Avoiding the middle duration gives me a very smooth ride (but a high potential correlation with stocks).

2 users thanked King Lodos for this post.
Sara G on 20/08/2017(UTC), Dian on 21/08/2017(UTC)
Jon Snow
Posted: 20 August 2017 22:29:03(UTC)
#15

Joined: 02/03/2014(UTC)
Posts: 1,056

Thanks: 738 times
Was thanked: 843 time(s) in 445 post(s)
King Lodos;50025 wrote:
Warren Buffett has about 35% cash at the moment – which is not unusual for him, and hasn't stopped him beating the S&P500 over the long-term.

I think whether you time or not, you want to be able to buy when things get cheap – and being 100% stocks doesn't give you much more scope for that.

Buffett's a big critic of cash as an investment (totally unproductive), but conceptualises his cash holding in a different way: as a perpetual call option .. “Cash combined with courage in a crisis is priceless.”

Buffett also has about 10% in bonds, but sometimes goes up above 50% (e.g. during the Tech Crash).

I like to have about 1/3rd in cash .. While it limits absolute losses, it also means you can focus your investments .. Buffett, for example, can afford to have most of his portfolio in just 3 stocks .. I can afford to have huge overweights – e.g. I could have my whole portfolio Emerging Mkts and Private Equity .. It's what you could call "barbelling" – balance low risk and high risk, and avoid too much of the crowded middleground.

I do the same with bond duration at the moment .. 50:50 GAM Star Credit Opps (perpetual bonds) and Royal London Short Duration Credit, etc. (under 5 years) .. Avoiding the middle duration gives me a very smooth ride (but a high potential correlation with stocks).



How much does he have in Asia though?
King Lodos
Posted: 21 August 2017 05:20:57(UTC)
#16

Joined: 05/01/2016(UTC)
Posts: 1,667

Thanks: 276 times
Was thanked: 2160 time(s) in 894 post(s)
Jon Snow;50033 wrote:
How much does he have in Asia though?


From a very quick look on Gurufocus, it looks like the only foreign stock/s he holds is Lanxess AG (Germany), and possibly Sanofi (France) .. But you could say the kind of companies Buffett invests in are so global, it's fairly academic where their offices are.

Interesting to see Apple's now their 3rd largest holding (he never used to like Tech – but I've been saying it might be the new Consumer Staples .. the App Store's going to keep generating cash from thin air, I'd imagine, no matter how bad the economy gets .. To me, a very different prospect from Tech Stocks 20 years ago).

There is a Chinese Warren Buffett, called Lei Zhang .. Since he was given $20m to invest for Yale in 2005, he's compounded annual returns of 40% .. Very much a Buffett or Nick Train-style investor – very low portfolio turnover – hold lot of the companies I'm in today: Tencent, JD .. But shows there's much more money to be made taking approach to less efficient markets like China

3 users thanked King Lodos for this post.
Dian on 21/08/2017(UTC), Tim D on 21/08/2017(UTC), Jon Snow on 21/08/2017(UTC)
Dian
Posted: 21 August 2017 06:05:35(UTC)
#17

Joined: 09/10/2016(UTC)
Posts: 190

Thanks: 142 times
Was thanked: 58 time(s) in 44 post(s)
Quote:
King Lodos wrote

It's what you could call "barbelling" – balance low risk and high risk, and avoid too much of the crowded middleground.

But shows there's much more money to be made taking approach to less efficient markets like China


Can we call it as any combination of assets that can be counterbalanced on the investing bar?

Is it a way of thinking about risk management?

It can make use to construct a portfolio that both controls for losses and provides some level of exposure to the potential for outperformance.
+ Reply to discussion

Markets

Other markets