For those who missed the seminar ‘The Key to Investing: Planning and Strategizing’, here are 5 takeaways I gained from the session conducted on 9 July 2018.
1) Who would find this seminar useful?
3 types of investors who would find this seminar useful:
- Those who underperform despite a bull market. For the past 20 months since Trump’s win, there has been a bull run in the US and other markets.
- New Investors who want to start investing in the right footing.
- Passive investors whose strategy is to buy and hold but who Kon How feel should understand that the current market is different and where necessary, they should take profit first and then reinvest their money.
2) What is the next crisis?
No one knows what would be causing the next crisis? Is it the ongoing trade war? Is it the rising interest rates?
Kon How explains that instead of just doing micro-analysis, for example, just looking at a particular stock and doing analysis, investors should also perform ‘macro-analysis’, ie look at the big picture.
Kon How cautioned that if the macro environment is not conducive, although one should still invest, it might not be advisable to invest heavily.
3) Why we in Singapore should care about the trade war?
When there is a trade war, costs of business will increase. For example, raw materials are needed in the manufacturing of products and some of the raw materials could be imported and tariffs will increase the cost of these materials. Rising production costs would likely be passed on to consumers with higher product prices. This will cause inflation.
To curb inflation, central bank will likely increase interest rates further. If Fed further increases interest rates, Singapore and other countries would likely have to follow.
For Singapore, there was a rise in stamp duties on 5 July 2016 to curb speculative demand for properties. Kon How explained that this is because the Singapore government understands a property investor’s ability to repay his loans will be affected when interest rates rises.
Kon How feel that it is no coincidence that the property cooling measures came a day before the trade war officially started on 6 July 2018. The Singapore government likely want to prevent investors from being too heavily leveraged in a rising interest rates environment.
4) How to invest in a rising interest rate environment?
Kon How advised that we still need to continue to invest in a rising interest rates environment. However, it would be safer to choose companies with low gearing.
5) How to make use of technical charts?
When looking at technicals, Kon How believes that markets move for a reason, especially if there are significant moves.
Charting or technical analysis show the human emotional behavioural of greed and fear. However, investors who choose technical analysis need to know that charts do not predict the future. We study the charts from past to now only to form a probability of what is likely to happen next. There is no guarantee.
Kon How shared that he uses technical analysis to form an opinion of the probability of what is going to happen next. When trading, he uses just technical analysis. However, he uses both fundamental analysis and technical analysis when investing.
