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Analysis:
I can almost hear the mumbling that I have committed the sin of leaving money idle. Before defending the decision to stay put at 100% cash, let’s review monthly charts of MSCI indices : US, Europe and Emerging market Asia.

MSCI indices (monthly) - US, Emerging market Asia, Europe (2011 Sep 30)

The downtrend has not been reverted. So I never catch a falling knife How about the argument of dollar cost averaging? This may work if I have a really long investment time frame, e.g. more than 10 years and there is fresh money into portfolio. However encikwan portfolio does meet both conditions. From the point of view of risk/reward ratio, the current entry point is also not attractive, e.g. 1:1 between short term resistance and suppor for MSCI US.

MSCI index (monthly) - US (2011 Sep 30)

So I ‘give up’ on equities, how about other asset classes?. From latest encikwan chart book, long term bonds are still overbought. Other bonds are around peaks of last 4 years. I do not buy at tops or chase performance. For SPDR Gold(GLD), iShares Silver(SLV) and PowerShares Agriculture(DBA), the lost during September 2011 is around 13.7%, 31% and 9.1% respectively. As I have said before, I do not catch falling knife even when I am bullish on these sectors for medium and long term. Stay tuned

Note : This is NOT investment advice. Details of asset allocation can be found here

Main reason to be bullish on USDSGD is possibility of global recession. Appreciation of USDSGD is demonstrated in 1997 and 2008. So far for 2011, it seems the same playbook is being used.

Reason to be bearish on USDSGD is US debt monetization. As long as depreciation of USD is orderly and there is no severe recession in Singapore, then Monetary Authority of Singapore is likely to keep the current 2011 monetary policy to use strong SGD to control inflation. Since US debt monetization is least painful for everyone comparing to US fiscal austerity, therefore it is more likely to see USDSGD at parity in the long run.

P.S In the short term, USDSGD may bounce back to 1.275 before end of 2011.

USDSGD 2000-2011

USDSGD 2008-2011