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

When Readers Ask: “So What Should I Actually Do?”

Image
From time to time, I receive messages / questions like this: “Though it's interesting to know the shortcomings ( biases / behavioral finance) we may be facing, it doesn't really help noobs, or maybe even more seasoned investors, on what to do to avoid them. Does anyone have anything to share to expand on the things to do to become more disciplined, define exit strategy, things like that?” It’s a fair question. In fact, it’s probably one of the most honest questions an investor can ask. Because understanding behavioural finance is one thing. Applying it in real life, when markets are moving, headlines are loud, and your portfolio is flashing red or green , that’s a completely different game. And here’s the uncomfortable truth. There isn’t a clean, step-by-step formula you can follow and suddenly become “disciplined”. If there were, everyone would be doing it already.  Behavioural finance doesn’t sit neatly in a spreadsheet. You can’t model it like earnings growth or discount cas...
Read more

The Long Game: Why Staying Put Is the Hardest (and Smartest) Move In Investing

Image
It’s funny how, in the world of investing, doing nothing is often the most productive thing you can do . We’ve all been there, sitting in front of the screen, watching the red numbers tick down, feeling that itch in our fingers to "do something" to save our hard-earned capital. But if my three decades in the markets have taught me anything, it’s that the market is a master at shaking people out right before the real gains happen. When I look at the long-term charts of the S&P 500 or the total real market returns going back to the 1900s, the message is loud and clear: time is the ultimate filter. It filters out the noise, the politics, and the short-term panics. For a value investor, the goal isn't just to find an undervalued gem; it’s to have the stomach to hold it when everyone else is running for the exits. <Image Credit : redw Advisrors & CPAS > The Erosion of Cash and the Power of Real Assets If you look at the historical performance of different asset c...
Read more

The Invisible Hand That Actually Moves Your Portfolio: Money Supply vs. Assets Value

Image
For many of us who have spent years navigating the Singapore and regional markets, we often get bogged down by the "noise." We look at quarterly earnings, we obsess over whether a REIT's occupancy dropped by 1%, or if a company’s CEO had a bad day during an analyst call. But after decades of investing, I’ve realized there is a much bigger tide at play. It’s not just about the ships; it’s about the water level. In economics, we call this the M2 Money Supply . In plain talk, it’s just how much "stuff" is circulating in the system. When the taps are open, everything feels like a genius-level investment. When the taps close, even the best companies struggle to keep their heads above water. Let's peel back the layers on how this liquidity truly dictates the price of our assets. < Image credit:www.econovis.net> Why "Inflation" Isn't Always What You Think It Is When most people hear "inflation," they think about the price of chicken r...
Read more

MIT Lecture: Portfolio Management

Image
This lecture, delivered by Professor Jake Xia to   MIT OpenCourseWare class, provides a comprehensive and critical application-based perspective on portfolio management, moving beyond traditional theoretical frameworks to address the realities of investment and risk. <Ai Image > Executive Summary: Portfolio Management Beyond Theory This presentation offers a rigorous, application-focused deep dive into modern portfolio management, critically evaluating established theories and proposing practical, behavioral-based enhancements. The central challenge in investing is fundamentally a sizing problem : determining how much capital to allocate to any given investment, a decision dictated by clear objectives, time horizon, and loss tolerance. The lecture contrasts personal finance with institutional investing, highlighting the Endowment Model used by perpetual funds like MIT's. These institutions have a crucial nominal return target (e.g., 8%) to cover spending and inflation, ...
Read more

A Walk Down Memory Lane : 30 Years of Investing Lessons and Turning Points

Image
It’s hard to believe it’s been 30 years since I first dipped my toes into the world of investing. As I look back at the journey from a curious secondary school student to where I am today, I realized that investing isn't just about spreadsheets and stock tickers; it’s a lifelong lesson in patience, discipline, and understanding human nature. Humble Beginnings: The Grocery Shop "Library " My interest in the markets didn't start in a fancy office; it started because of poverty. Growing up, my family was poor. We couldn't afford a daily newspaper, which back then was the only source of financial news. I remember walking over to my neighbour’s grocery shop every day just to read their copy of the papers. Back in the late 80s, things were very different. We didn't have sleek mobile apps or instant news notifications; we had physical newspapers, teletext, and a lot of patience. Looking back, those 30 years have been a long, winding road, a mix of exhilarating highs,...
Read more