Regression to Trend

 

Regression to Trend: Another Look at Long-Term Market Performance < source :https://www.advisorperspectives.com/>


"About the only certainty in the stock market is that, over the long haul, overperformance turns into underperformance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis (see footnote below) to the question.

Below is a chart of the S&P Composite stretching back to 1871 based on the real (inflation-adjusted) monthly average of daily closes. We're using a semi-log scale to equalize vertical distances for the same percentage change regardless of the index price range.

The regression trendline drawn through the data clarifies the secular pattern of variance from the trend — those multi-year periods when the market trades above and below trend. That regression slope, incidentally, represents an annualized growth rate of 1.88%."


<Image credit:advisorperspective.com>


Is the Stock Market Cheap? < source :https://www.advisorperspectives.com/>






Every dog has his day ! STI rebounded strongly in 1st Qtr 2021 and outperformed most of the regional index. 
With sectors rotation from growth (TECH ) to value stocks, STI can finally and proudly rebut those calling it as "Sick" Times Index. But since this is just 1st Qtr of 2021 and hope the momentum would continue throughout the year. 
For longer perspective, STI still moving below long term mean level and almost unchanged as of 11 years ago on 1 Apr 2011 at around 3172. If you are investing STI ETF for the past 11 years , your returns may be just the dividend yield of around 3+%, barely beat the inflation , may be.
Hopefully those cyclical and value stocks like Big 3 banks / Jardine C&C /HK Land / YZJ/ Wilmar/ Keppel Corp/SembCorp Ind etc will be able to help to lift the index to higher level in coming quarters , of course the companies will need to show better earning results with improving economic situation.

STI = +12.8% , HSI = +6.3%,NIKKEI225 = +8.9% , KOPSI = +10%, Taiwan Weighted Ind= +12.2% , FTSE KLSI= -2.6% , S&P500=+10% , NASDAQ = +7.9%



Overall FTSE ST REIT index is quite stable and moving along the mean level. I guess the hot topic for property and REIT last month was the privatization of property arm from Capital Land and separate it to a new entity to concentrate on asset management and holding of some REITs + hospitality asset.

Below is a more detail and better explanation on the whole restructuring process from FinancialHorse.com:

CapitaLand’s Restructuring / Privatization Explained – What is going on?

CapitaLand’s Restructuring – Is this bad for the CapitaLand / Ascendas REITs? (Part II)


I actually quite like the idea of CLIM which is similar to ARA Asset Management before it been privatized in 2017 where I made almost 30% overall including dividend in investing in ARA Asset Management. I guess the idea of separating the property development and asset management is what market ( or overall SG Inventors) wanted.
I think most of us ( SG investors) like to invest for income / dividend , the new CLIM will have assets like REITs which generate stable and recurring income and also a property management where the fees / income is more stable and predictable. Temasek just take out the property development units which the revenue/profit is more bumpy and given what the market wanted to have it i.e the CLIM type of biz model.
Although we know that the dividend yield for CLIM will be lower than REITs but as mentioned by the CFO, there will be "growth" factor in this company with some of the mature assets can be recycled into REITs and also hopefully the NAV for some of their PE fund will increase eventually.

Hence, I did some small adjustment to my portfolio in reducing % of my ARA LOGOS and split the fund into Capital Land & Ascendas Ind REIT. I have been eying and targeting REITs with DC biz for quite some times but since the valuation is high and I just wait for the opportunity to come. With recent pull backed on some of the DC biz REITs by almost -20% , I have decided  to switch.

STE and Mrs. have already registered with MOH for our Covid-19 vaccination and I hope more and more peoples will get their vaccine soon when  more vaccination centres to be opened by mid-April.

Protect yourself and your loved ones. Register to get vaccinated when it is your turn!

Hope we can be the next country like Israel .....  :D



Till next update , Cheers !!


STE













Comments

Post a Comment

Related Posts Plugin for WordPress, Blogger...

Labels

Show more

This Month's Top Blog Posts

2023 Portfolio & Dividend Update

Image
  A Rollercoaster Ride I know, Uncle was really late to have this 2023 performance review as we are already in February 2024 😊 . Pai-seh, I was busy with a family trip to Korea followed by a Cruise Trip onboard RCL. Also, during the school holidays, we went a few times short trips to Malaysia and back to my hometown. My younger daughter got her O Level result followed by searching and applying for JC. That’s why I have been delaying this update and dragging my feet to write this blog post. I think most of us had the same feeling that 2023 was a challenging yet dynamic period for investors, marked by a series of unpredictable events that significantly affected our returns. I have seen my portfolio up by more than 10% in the early part of the year and it dropped by more than -8 % at one time and recovered slightly better at the end of the year with +2.3% (including dividend). As an investor, navigating through such a volatile market requires adaptability, patience, resilience, and
Read more

Your IQ and ROI

Image
According to Warren Buffett "Investing is not a game where the guy with a 160 IQ beats the guy with a 130 IQ" and what Buffett says about what is necessary for investing successfully: Temperament is also important. Independent thinking, emotional stability, and a keen understanding of both human and institutional behaviour is vital to long-term investment success. I’ve seen a lot of very smart people who have lacked these virtues. Also, investing is simple, but not easy. It requires independent thinking and emotional intelligence more than IQ . When markets are tumbling and fall like no tomorrow, IQ is not going to help you to stay away from selling and buy even more at most bargaining prices.
Read more

Portfolio & Dividend Update : 3rd Qtr 2023

Image
  Higher For Longer   The Federal Reserve held interest rates steady in the recent FOMC meeting, while also indicating it still expects one more hike before the end of the year and fewer cuts than previously indicated next year. In addition to holding rates at relatively high levels, the Fed is continuing to reduce its bond holdings through the so-called QT , a process that has cut the central bank balance sheet by some $815 billion since June 2022 . The Fed is allowing up to $95 billion in proceeds from maturing bonds to roll off each month, rather than reinvesting them. The “ dot plot ” chart from the latest FOMC meeting showed a much higher and longer rate till 2026 and this has “spooked” the market, causing some reactions and pulling down of market indexes last week. “Chair Powell and the Fed sent an unambiguously hawkish higher-for-longer message at today’s FOMC meeting,” wrote Citigroup economist Andrew Hollenhorst. “The Fed is projecting inflation to steadily cool, while
Read more

Personal Finance is Really Personal (CPF / Insurance/ Housing /Saving /Investing etc)

Image
<Image credit to expatfinancialplanning.com> Personal finance is an interesting subject which is really “ Personal “ as there are many factors affecting a person or family’s finances – how much to keep as saving vs investing, to buy term or life insurance, to take up HDB loan or from private banks, to buy HBD or Condominium and of course the hottest topic of CPF ( to transfer our OA to SA or do a voluntary cash top-up into SA account)? Recently, my friends & famous financial bloggers ( Chris from Growing your tree of prosperity, Uncle CW8888 , SGBudgetBabe ) gathered together to give a talk about “ CPF Optimization for Retirement ( here )” You may find some of their thoughts and ideas ( here ): as you may see, there were different opinions and views about the issue even from the speakers and of course the attendants.
Read more

My “ Rojak & Kia-su ” Portfolio

Image
“ Scripophilist or Karung Guni “ image credit to reddit.com According to “ The Free Dictionary “ , Scripophilist is a person who collects expired or antique bond and stocks certificates. These certificates can be valuable to the study of economic history and often have value themselves as collectables.
Read more