encik wan - Trading Developer on Global Investment and Technical Analysis

Encikwan Asset Allocation Review (WanAA Review)

Objective

Main objective of WanAA Review is to review global asset allocation of a portfolio at the beginning of each month. Adjustment is mostly based on price movement (technical analysis) with support from economic data (fundamental analysis), and a bit of personal judgement. There will be no investment style constraint and asset class constraint. This public asset allocation review is for use of encikwan only and is not investment advice for public.

Background

After 2008 global financial crisis, many investors including me are wondering whether we can depend on past investment wisdom that has been evolved for the past 200 years for the next 20 years? The answer is yes and no. Yes, buy low and sell high is still investment mantra. Greed an fear is still with most of us as some of us do not learn from history. However ‘old’ investment wisdom like buy-and-hold investment strategy is increasingly under attack, e.g. attack #1, attack #2. This is more acute especially during sideway and down market. Main reason for the confusion is we are not sure what will work in the future, e.g. has the market changed for the long-term or it is a short-term aberration? Another investment wisdom under attack is diversifiction through global investment .

Conclusions

1. In view of increasing market volatility, I need to go back to basics of investment analysis : costs, profits/benefits, time, discount rate, risk.
2. Investment discipline, e.g. do no convert short-term trade to long-term investment is more important as mistake will be viewed under microscope in sideway or volatile market.

Portfolio information

1. Investment style : n/a
2. Investable universe : all legal investment instruments in Singapore
3. Trading restrictions : buy or sell only in first 7 days of a month to encourage medium-term/long-term investment
4. Launch period : September 2011
5. Fees : no fees (DIY) except investment transaction fees, e.g. commission fees
6. Portfolio size : 20,000 SGD
7. Disclosure : no direct/indirect financial incentive from financial product providers
8. Risk appetite : able to tolerate 20% loss for a single investment, but not more than 10% loss for whole portfolio
9. Client : encikwan

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