Do US indices affect STI?

Saturday, 2 January 2016 13:42

Posted by owq market 0 comments

Well, it's a popular notion on HWZ forums that STI follows the US stock market, and people like to predict the STI movement based on the last closing of the US indices. So I tested that with data from Yahoo Finance ranging from Dec 2010 to Dec 2015, using Spearman's correlation between ES3 and a number of indices.

Name	Symbol	Spearman Correlation
Lyxor AsiaIT US$	NF4.SI	0.948438693
Lyxor World US$	H1P.SI	0.922792769
LYXOR Asia EX US$	G1K.SI	0.914623755
Lyxor AsiaCS US$	NF6.SI	0.902705567
Lyxor HSI US$	A9B.SI	0.879719834
Lyxor USDJIA US$	JC6.SI	0.870809236
Lyxor Asia US$	P60.SI	0.846190831
Lyxor Japan US$	CW4.SI	0.836158667
Lyxor Nasdaq US$	H1Q.SI	0.787960823
Lyxor Europe US$	JC5.SI	0.762374024
Lyxor AsiaRE US$	MT7.SI	0.75007067
Lyxor Taiwan US$	A9A.SI	0.733011747
Lyxor ThaiSET US$	P2P.SI	0.638932037
Lyxor MSIndia US$	G1N.SI	0.605130262
Lyxor ChinaH US$	P58.SI	0.528158153
Lyxor MAL US$	G1M.SI	0.487952323
Lyxor Korea US$	AO9.SI	0.418580403
Lyxor EM Mkt US$	H1N.SI	0.27739576
Lyxor Indonesia US$	P2Q.SI	0.232005556
Lyxor LATAM US$	H1O.SI	-0.450758975
Lyxor Russia US$	JC7.SI	-0.547590704
Lyxor Cmdty US$	A0W.SI	-0.657178453
Lyxor CRBxEny US$	G1O.SI	-0.665450671

So seems that the correlation with Nasdaq is 0.788, which is pretty high. Note some limitations: 1. no adjustments for currency, 2. Lyxor ETFs are not that liquid here, 3. Short timeframe.

Facing my first correction

Tuesday, 8 September 2015 22:28

Posted by owq market 0 comments

It's been about a year or so since I started punting the stock market. I've heard horror stories about the great financial crisis. Bear markets. Corrections. This is my first test and I'm glad to say that I've passed it. I took the chance to rebalance my portfolio and sell some stocks to see whether I can hit the sell button in a market that's going down. I finally sold the STI ETF, which is a big chunk of my portfolio and one of my maiden acquisitions, to buy UOB which took a big hit and is now almost book value.

I think reading many books about value investing helped. As the stocks fell, the stocks just became so much attractive that it was hard not to buy them. Dividend yields rocketed. The margin of safety became wider. And I wished I had more cash to buy stuff.

There were people on the forums calling a bear market and expecting the fall to continue, extrapolating the down trend. People were asking if they should sell now and buy lower. I was not unaffected, for I decided to sell my Keppel Corp. In the end, it became an anxious game to try to sell it lower that I ended up buying it back at a big of a higher price.

Still, I think I survived. I don't know how I will feel if the market goes down even further, but I think I'll continue to buy.

Sometimes stocks go down for no real reason

Saturday, 9 May 2015 17:44

Posted by owq market 0 comments

Been trading Sino Grandness and Yuuzoo recently. These stocks went down for no real reason at all. Other than some news. I bought SinoG at 50 cents, and it dropped all the way to 23 cents. Seeing no big change to the fundamentals, I averaged all the way down too. These 2 stocks seem to have a lot of speculators involved. If they are willing to sell down all the way, this means they didn't buy the stock after doing due diligence. Either that, or there's some bad insider info which I don't know about. Well, we'll wait and see. Assuming the fundamentals are sound, there's a good margin of safety in the price I bought.

Look at NeraTel, though. Even after announcing news that seems to be bad on the surface, it didn't drop much. It mainly dropped because of the ex-dividend. Looks like their investors have more confidence. (Or... maybe it didn't drop yet... Hoping it drops so I can buy it.)

Stocks and Hamburgers

Friday, 14 November 2014 22:05

Posted by owq market 0 comments

A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices?

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. They rejoice because prices have rose for the ‘hamburgers’ they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

Excerpt from ValueEdge's Investor's Handbook
http://www.value-edge.com/investors-handbook-beginners-guide-to-value-investing/ 

These words really flicked a switch in my head. They make so much sense. Buy low and sell high!

P.S. Got to know about that handbook from http://www.my15hourworkweek.com/2014/11/14/weekend-reading-for-novice-investors/. So good.