Isaac_top
Retired accountant Isaac Chin, 62, made his money from property and stock investing - and he and his wife travel frequently to enjoy diverse cultures in Europe and Asia. Photo courtesy of Isaac.



MANY PEOPLE were euphorically buying back into equities in the last 2-3 weeks, lured by an illusion that Europe and U.S could resolve their deep-seated economic malaise overnight.

The Singapore benchmark index rose from 2528.71 points on 6 Oct to 2905.72 points on Oct 28 last Friday for a total of 377 points.

However, after years of robust growth, the world economy is in total disarray. No amount of QE (quantitative easing) will resolve the imbalances in major economies.

Enormous collective political will power from the U.S. Europe, China and Japan is needed to avert the looming crisis which challenges the form of capitalism that has survived the 1929 Great Depression.

The developed economies today are mired in huge debt and the unemployment rate is stuck at the 9-10% level. Most Governments are running out of policies, fiscal, monetary or otherwise, to keep the economy going.

QE2 was a clear failure, creating high inflation in China and the rest of Asia. I think the world will enter into a prolonged period of stagflation as experienced by Japan in the last 20 years, often referred to as the 'lost decade'.

On a personal level, I have pulled out entirely from the equity market some 2 months ago and have no regrets.

I purchased properties aggressively in 2007 when real estate investment in Singapore was quiet and prices were much lower than they are today.

In anticipation of a property glut in 2-3 year's time,  I am now contemplating selling one of my properties.

citydev_trackrecord
City Developments stock reached a high of more than $17 in 2007 but today it is trading at just above $10.

Today, people are crazy chasing their dream homes or buying properties for investment.

But please note that in 2007, prices of Capitaland and City Developments reached a high of $7.13 and $17.90, respectively, and prices of these two respectable property counters are considerably depressed today.

The depressed prices of these 2 heavyweight property counters send a clear signal that the bull run of launched property prices must come to an end. I expect a meaningful correction when current building construction is completed and an over-supply occurs in 2014-15.

I also wish to highlight the wild swing in gold price - it fell more than 10% from the peak in Sept 2011.

The price of gold fell from US$1853 on 2 Sept to US$1627 on 30 Sept.  Around this time, the US$ strengthened abruptly to about S$1.30 from S$1.20.

This tells us that a in a crisis, investors may still prefer to put their monies in US Treasury Bills as a safe haven as an alternative to GOLD.

SGS 10-year notes hit a bottom with a yield 1.5% p.a. not long ago. I think the financial market can get worse before it gets better.


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Comments  

#15 Eileen Chan 2011-12-25 18:59
Thanks Isaac for your insight and advice. Have you started buying reits?
#14 isaac 2011-11-06 07:40
Deepa I will move back gradually into Equity when Sti drops to 2500. But I will not expect a sharp rebound from here anytime soon. The anemic economic
growth worldwide will last for a long time.
#13 Philip 2011-11-04 12:30
Hi Isaac
Thanks for sharing.
#12 isaac 2011-11-04 09:03
Hi Philip
I prefer these 3 Reits for their large capitalisation, asset quality liquidity.
#11 Philip 2011-11-03 12:27
Isaac,thanks for sharing your thoughts.
Very insightful and clear.
Just one question on REITS, noticed u prefer Ariet, CMT, Suntec,etc, why not Industrial REITS like AMP, Sabana, Cache? They offer 8-9% returns?
#10 isaac 2011-11-03 04:51
Kelly. u have done well too. Stay conservative.Ca n invest your extra cash in Areit, CMT, Suntec and some Spore corporate bonds to get an average 6% pa return. Keep fit with regular exercise,good diet,less stress.A happy, healthy lifestyle is what everybody wants as one ages.
#9 Kelly Tan 2011-11-02 18:04
Isaac, well done. May I have your views on my portfolio. I have 2 condos rented out, each one at 3k and 5.3k respectively. I bought them way back in 2002 and 2007 for 385k and 801k each. They are currently worth about 1.4m and 1.7m resp. I have an outstanding sum of 600k due to the banks on these 2 properties.
Currently I am staying in a landed property which I bought for 900k and is worth about 2.5m now. It is fully paid up.
I have also about 1m in the CPF which I can withdraw anytime I want as I am above 55. I feel that the interest at 2.5% is too low and I do not know whether I should take it out and invest.

I also have about 200k cash sitting in the bank earning pittance in interest.I have a share portfolio of 200k in Singapore and 700k RM invested in Malaysian equities.

What is your advice regarding my portfolio as I think I may have been too conservative.
#8 istupid 2011-11-02 07:35
Yes, my taxi driver also told me that stocks cannot buy sure die. If we have shoe shine boys, I bet they would have sold too.
#7 Tigermel 2011-11-02 07:22
Looks like a dead cat bounces this morning in SGX trading. Also think that wait for a steep fall below 2,500 pts will be a safer entrant.
#6 MacGyver 2011-11-02 03:40
Sell now and wait for 2500 and below. Unless you are an experienced trader, the next 3-6 months is not for you.
#5 istupid 2011-11-01 21:33
Konny, Isaac sold 2 months ago, STI traded between 2700 and 2910 from 23 August to 7 Sep. Assuming he sold at an average of 2800, you can still sell at about the same level if you think that he is right. Everyone including the bus drivers have sold. Only the ignorance are still holding on to shares at the moment.
#4 Konny 2011-11-01 19:50
Isaac, if only you tell us 2 months ago u are all cash and zero equities, then I'd applaud you. So tell us now, what are you doing with the cash on hand? sitting in the bank drawing negative interest income? And how to plan to deploy it? Pls tell us your fwd views instead.
#3 MacGyver 2011-11-01 17:58
I just bought a really nice house at fire-sale price. Less than S$700 psf for land area in Singapore. Really hard to come by... I see more fire-sales in 2012.
#2 MacGyver 2011-11-01 17:56
The Chinese said,"Aged Ginger is still the best." Isaac is obviously somebody who saw what has been unfolding in Europe.

Europe is doomed, in my humble opinion. We are going to have a few years of winter. Money can of course be made in winter. But it will be hard-earned money.
#1 Deepa 2011-11-01 06:04
Isaac, thanks for your views -- may I know what time frame do you have for considering getting back into equities? I know the euro zone issues are fast-moving and who knows, there could be major concrete achievements to solve this crisis in the near future. I wish you good luck
 

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