STE's Stocks Investing Journey

Congrats !! for those invested in Keppel DC REIT as share price shoot up to $2.13 as of closing on last Friday. It's about +21% increased vs price prior to asset acquisition and equity fund rising announcement on 16th Sep 2019. I am not so sure if the new acquisition will give a DPU boost by more than 21%, else why there is a sudden change in perception or valuation for such asset class REITs after the announcement. Keppel DC Reit to raise $473.8m to partially fund data centre acquisitions   <source:straitstimes.com> F.O.M.O? T.I.N.A ? or The Sky's The Limit? By looking at the pace and % of the price increases, I think there is some kind of  " euphoria "  for the stock at this moment. Same as previous case on Capital Commercial Reit , we will still need to stick to fundamental valuation for REITs as the growth and revenue are not like those " tech stocks " that it could be " exponential " to some extent. May ...

This is probably one of the hottest topics where you can see and read from all over the business news headlines in the last two weeks. What is “ Inverted Yield Curve “ and why is it so important that draw so much attention from financial strategist/economist/investors/fund managers all over the world. Discussing, pondering and arguing about the impact and direction of the economy due to this so-called “ Inverted Yield Curve”, relentlessly.

Animal spirits  is the term  John Maynard Keynes  used in his 1936 book  The General Theory of Employment, Interest and Money  to describe the  instincts ,  proclivities  and  emotions  that ostensibly influence and guide  human behavior , and which can be measured in terms of, for example,  consumer confidence . It has since been argued that  trust  is also included in or produced by "animal spirits". image credit to en.wikipedia.org Even apart from the instability due to speculation , there is the instability due to the c haracteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic.  Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits—...

<Image Credit:Investopedia.com> It has been quite sometimes since my last update of the “ Regression Chart “ for STI and world major indexes. After seeing the chart with the latest data, I realized that no wonder everyone seems happy on the ROI of their portfolio and bullish about the market recently as STI hit above 3200 level. Here you go….

<Image credit to CNBC.com> So, it is final that FED increased interest rate by 25 basis points on last Wednesday and you could easily find news and comments on the impact of stocks and economy with this rate hike.  But at least the rate hike is seen as a  vote of confidence in the US economy which has witness increasing inflation and job growth and of course the market react positively on this. Our immediate thinking will be, of course, the cost of borrowing will increase as the bank will price in higher loan rate and this lead me to think further that will bank be benefited with higher loan cost eventually. Meantime, some analyst are more cautious on that because our banks are facing loan crisis from O&G sector hence may not be so sanguine on bank’s future earning.

<Image Credit to Zerohedge.com> I think it is time for me to update the world major stock market’s valuation by “   Regression to the Mean  ”  after DJ exceeded 21,000 marks in such a short period after hitting 20K level. Always remembered that “ Reversion to mean “ is just a “ statistical phenomena “ and it may take much longer time to “reverting to mean” if the market is in bubble or irrational stage.   As renowned economist John Maynard Keynes famously commented, “ The market can stay irrational longer than you can stay solvent. ”

<from my bookshelf > The behaviour of the stock market is inherently so complex that no single variable can predict how the market is going to behave next or what would be its future returns - at least not on a regular and consistent   basis.  Market swing like a pendulum from optimistic to pessimistic and occasionally overshooting which resulted in a panic situation. In the long-run, corporate earnings and dividends have provided a steady underlying stock market return. 

image credit to AZ Quotes.com John M Keynes may be famous for his metaphors of using “ Beauty Contest “ to explain and describe the investors' perception which caused the price fluctuation in the stock market  and “ Musical Chair “ of how investors speculate in the market. You may find these two interesting metaphors here ( Keynes on Beauty Contest ) and here ( Keynes on Musical Chair ) if you have never heard about it.