Saturday, January 27, 2018

Rebalancing and The Crystal Ball

Most major index in US and Europe are at all time high from DJI, S&P, Nasdaq, FTSE, and DAX. In Asia itself, Nikkei, Hang Seng, KOSPI are no different. STI had not broken its all time high, but it managed to close slightly above 3600 a few days back.

Based on my pre-defined rebalancing rule, I need to reduce my equity allocation to between 30-40% when STI is trading between 3500-3750. Therefore I started selling some of my equity holding: VanEck Vectors Gold Miners UCITS ETF (+8.34%), Deutsche Bank (+41.61%), Hugo Boss (+68.05%),  Bayer Motoren WK (+37.62%), SIA (+10.70%), and Capitaland Commercial Trust (+55.3%). Their CAGR was between 6.92% and 48.7% with average holding period of about 1.5 years.

My equity allocation is now at 36.56%, with bonds/cash allocation at 63.44%. If STI goes further up closer towards 3750, I may have sell more. Of course, I don't know what future holds, but the most important thing is I have a plan and will stick with the plan when certain market level is reached or broken.

In the bible, Joseph received the favour from God and was given the revelation that there will be 7 years of plenty and 7 years of lack. He was also given the wisdom to manage Egypt's resources during the cycle. During the 7 years of lack, not only Joseph ensured King of Egypt didn't experience any lack, he also made him the richest person at that time. See, God is capable to preserve and bless even during the time of lack.

It is interesting that human always try to predict the future, though they know very well that they don't even know if they will still be alive the next day or not. I'm capturing all the crystal ball gazing in Jan 2018, so we can look back and learn how accurate some of these predictions were.

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