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

Portfolio & Dividend Update : 28 Dec 2024

Image
2024 is about to end in a few days,  it was a rollercoaster year of market swings like a yoyo—up one moment, down the next. My portfolio value also had the same fate with the value up by +23% at one time and down to -2% at another point, and ended up with +16.5% as of 28th Dec 2024. Volatility ruled as global uncertainties and shifting sentiments tested investors' ability in portfolio management. Yet, amidst the turbulence, opportunities emerged for value-seekers to capitalize on irrational market moves. Let’s dissect how these dynamics shaped my portfolio performance and strategy this year. The Singapore Straits Times Index (STI) saw a mixed performance YTD 2024, reflecting the broader market volatility. Starting the year on a positive note, it faced sharp corrections mid-year due to global recession fears and geopolitical uncertainties. It recovered strongly in 2nd half ( up by almost +13.2%), ending with a gain of around 16.4% YTD with a strong performance from 3 Big Banks, ...
Read more

A Misconception About Investing Risk and Market Volatility

Image
  Volatility ≠ Risk When it comes to investing, there’s a big misconception that volatility equals risk. It’s something you hear all the time in the financial world—news headlines flash with “market volatility,” analysts fret over fluctuating stock prices. Many investors start to panic the moment they see red on their portfolios. But for those of us who take a long-term, value-focused approach, we know that volatility is not something to fear. In fact, volatility is our friend. Remember as I always mentioned: Crisis = Danger + Opportunities 危机 = 危险 + 机会   What Is Volatility, Really? Volatility is basically how much and how quickly the price of a stock or asset moves up and down over a given period. It’s typically measured by the standard deviation of returns—yes, all that maths stuff you might have learned in finance class. But don’t get too caught up in technical terms. Volatility just means the price is bouncing around more than usual. Now, many see thi...
Read more

Portfolio & Dividend Update : 4th Aug 2024

Image
 Wow! Time flies as my last blog post has been almost 6 months. As we reach the midpoint of 2024, the stock market presents a mixed bag of opportunities and challenges. The landscape has evolved significantly since the beginning of the year, reflecting a complex interplay of economic indicators, geopolitical events, and corporate earnings. Investors are navigating a market that is both promising and unpredictable , shaped by ongoing adjustments in monetary policy, fluctuating inflation rates, and shifting global dynamics. The first half of 2024 has seen notable volatility in the stock market. After a strong start, equities have experienced fluctuations due to a variety of factors. The market has been moving like a pendulum swing since early of the year and we have started to see some pullback in the last two weeks due to economic uncertainty. I guess the market is just trying to find an excuse (weaker job data/ PMI / consumer confidence) to have such a correction, which I think ...
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 co...
Read more

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,...
Read more