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Frankie Aufhauser-Rappaport

Asked on 06 Feb 2020

What is YOUR general investing philosophy/strategy?

What's the belief that underlies your investing strategy? Mine's in the answers below!

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport
Top Contributor

Top Contributor (Feb)

Level 8. Wizard
Updated on 17 Feb 2020

Blueprint 909

My private investing philosophy.

DISCLAIMER: Complete losses possible with any strategy. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this piece constitutes a solicitation, recommendation, endorsement, or offer by me.

https://m.youtube.com/watch?v=cpbbuaIA3Ds

https://sias.org.sg/wp-content/uploads/pdf/SIAS_3_Dimension_Guide_Book_To_Investing.pdf

Baseline:

-to be completely free of debt

-to have emergency funds available anytime for several months (6-12 mo)

-to NEVER invest into the following (rationale: too risky and/or fees too high and/or too inefficient):

Unit Trusts (mutual funds), single stocks (though most of us hold some), options, bonds, structured products/derivatives, CFDs (contracts for difference), ETNs, commodities, currencies, cryptocurrencies, actively managed or „smart“ ETFs, leveraged/inverse ETFs

https://m.youtube.com/watch?v=D7ETn56GWHQ

-when investing seriously the invested funds should be left untouched for at least 5-10 years

https://www.youtube.com/watch?v=UYE-kn5GR_0

… not much remains:

-priority: passive (in the good sense!) stock index ETFs & REIT ETFs

-physical gold (5-10% of assets, current times substitute for bonds as a means for stability, if any)

-property (via REIT ETFs or even property of one's own)

-to spend money for things one likes, though one better live healthy and eco-/animal-friendly. The material world rarely gives longstanding deep satisfaction.

https://www.youtube.com/watch?v=pPTHem2iu0A

-to donate

https://www.youtube.com/watch?v=mPGv8L3a_sY

https://www.youtube.com/watch?v=xyqfHZjaRy8

https://m.youtube.com/watch?v=PoPL7BExSQU

Platforms:

-for ETFs: safe & cheap online broker (TD Ameritrade, Charles Schwab, POEMS, Saxo)

notice: U.S. based brokers withold 15% + 15% witholding taxes from dividends, of those only 1 x 15% can be avoided to be subtracted by filling in form W-8 BEN every 3 years.

https://m.youtube.com/watch?v=l0zaebtU-CA

-for physical gold: safe & cheap dealer (not a bank, they charge high fees up to 2%)

ETF infos:

https://www.etf.com/etfanalytics/etf-finder

https://www.justetf.com/uk/find-etf.html

https://www2.sgx.com/securities/etf-screener

https://www.hkex.com.hk/Market-Data/Securities-Prices/Exchange-Traded-Products?sc_lang=en

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=vt&insttype=&time=8&freq=1

https://dollarsandsense.sg/how-paying-1-in-investment-fees-could-mean-giving-up-to-13-of-your-wealth/

ETFs general selection criteria:

-only passive stock index ETFs or REIT ETFs (no bond ETFs etc.)

(For the stock market there is good evidence by studies, that active managers cannot beat the market robustly over longer periods.)

https://assetbuilder.com/knowledge-center/articles/why-it-keeps-looking-worse-for-actively-managed-funds

https://en.wikipedia.org/wiki/BillMiller(investor)#Investment_philosophy

https://www.youtube.com/watch?v=pHNbHn3i9S4

-assets under management (AUM) should be high (more than 100 mio USD)

-total expense ratio (TER = annual fees) should be lowest possible (ideally less than 0.30%)

-the indexes should be replicated physically, not by SWAPs

-the ETF should ideally not lend stocks to other parties

-proven track record (excellent past longterm performance, ideally for already 5-10 years)

Techniques:

-to diversify (countries, asset classes, sectors) to mitigate risks (most ETFs are already well diversified), don't succumb to home bias.

Chart: 10 year performance singaporean STI ETF (ES3) versus U.S. S&P 500 index

-to not buy&sell, but buy&hold ultra-longterm instead

-to not (!) rebalance, letting winners run, most of the time

https://www.youtube.com/watch?v=tguu4m38U78

-to not panic when the markets are going down, the crashes will come, be patient then and don't sell, after few years the markets in the past recovered completely most of the time (see ultra-longterm chart of SP500 with big crashes visible ... but negligible for the longterm investor)

ETF Strategies:

https://m.youtube.com/watch?v=qWG2dsXV5HI

#1 single ETF strategy

MSCI World (VT)

still tilted much towards U.S. companies

#2 single ETF strategy with more upside potential and possibly more risk

SP500 (VOO, IVV)

#3 ‘balanced‘ global ETF strategy

50% SP500 (VOO, IVV)

50% MSCI World ex-USA (VEU, VXUS, IXUS)

#4 focused ‘leader countries‘ ETF strategy

40% SP500 (VOO, IVV)

20% China (PGJ, GXC)

10% S-REIT ETFs Singapore (Lion-Phillip S-REIT)

10% Switzerland (DBXS, EWL)

10% Sweden (OMXS, EWD)

5% Germany (OXDA/DBXD, EWG)

5% Japan (EWJ, EUNN/IJPA/SJPA)

#5 interesting ETFs with higher risk but past good performance (sector funds must be classified as risky because of less diversification and high volatility)

U.S. Technology:

VGT

QQQ (not pure tech ETF)

Subsector Technology:

FDN

SOXX

SKYY

China Technology:

CQQQ

Biotechnology:

XBI

FBT

IBB

ARKG (caveat: risky & actively managed)

Medtech:

IHI

Non-Singapore-REIT ETFs:

VNQ

IQQP/IPRP

.

Exceptional Nordic Technology focus Unit Trust (no ETF, actively managed, risky, not cheap):

Core Ny Teknik (Sweden) https://www.youtube.com/watch?v=1C7DyWdky_Y

.https://www.youtube.com/watch?v=115HvpEgLow

.

.

Disclaimer: Think for Yourself.

https://m.youtube.com/watch?v=vtx5NTxebJk

All private opinions, total losses possible with any strategy.

DISCLAIMER: The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this piece constitutes a solicitation, recommendation, endorsement, or offer by me.

Walter Benjamin: "... The storm irresistibly propels him into the future to which his back is turned, while the pile of debris before him grows skyward. This storm is what we call progress."

​​​

2 comments

👍 3
Madeline Chow

14 Feb 2020

This is so helpful 👍
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

14 Feb 2020

Thank You, dear Madeline. This is at least what worked best the last decade. About the future we all don't know. Maybe China superates the U.S. sometime. But I feel that cheap and diversified (ETFs) ultra-longterm Buy&Hold in U.S. (and China) technology should remain here to stay.
Karan Malhotra
Karan Malhotra
Level 5. Genius
Answered on 27 Feb 2020

There are some great answers here, so I'll just link to this:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3415739

Abstract:

compound returns to nearly 62,000 global common stocks during the 1990 to 2018 period, documenting that the majority, 56% of US stocks and 61% of non-US stocks, under perform one-month US Treasury bills over the full sample. Focusing on aggregate shareholder wealth creation measured in US dollars, we find that the top-performing 1.3% of firms account for the $US 44.7 trillion in global stock market wealth creation from 1990 to 2018. Outside the US, less than one percent of firms account for the $US 16.0 trillion in net wealth creation.

Almost all the gains come from about 1.3% of stocks, so be careful what strategy you choose!

A

1 comment

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

27 Feb 2020

Ok, thanks for input, dear Karan, very interesting, so much dead weight... So the longterm 'successful' SP500 is biased of course, composing of the better companies. I calculate for that period an SP500 price performance of about 6-7%. So, at least in the past, an SP500 passive ETF was no bad choice, I hope then also for the future ... thank You!!!
MT2020
MT2020
Level 7. Grand Master
Answered on 25 Feb 2020

Personally, my investment strategy will be to invest in Singapore blue chips companies who pays dividends consistently every year. I do not like to invest in ETFs as i do not have control over my portfolio. All the dividends gained will be reinvested in counters to compound over the years.

1 comment

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

25 Feb 2020

Https://api.wsj.net/api/kaavio/charts/big.chart?nosettings=1&symb=voo&uf=0&type=2&size=4&sid=5411711&style=330&freq=1&rand=778899765&compidx=aaaaa%3a0&comp=sg%3as58+sg%3aa17u+sg%3ah78+sg%3au11+sg%3at39+sg%3am44u+sg%3ad05+sg%3ad01+sg%3az74+sg%3abn4+sg%3ac6l+sg%3ay92+sg%3an2Iu+sg%3ag13&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=635&width=1045&mocktick=1
AD
Awk D
Level 3. Wonderkid
Answered on 25 Feb 2020
  • Invest in yourself (can invest by doing better in your career, can invest on knowledge for investing asset.

  • use the cash to invest in something you believe (for non professional, investment is only a part of your life. Don't let it rule your life. ) Such as high yield and stable REIT. Blue chip stocks.

  • use other asset to invest, such as your CPF and house. I am comfortable to top up CPF for minimum 4% annual interest. For housing, invest with your limit, my belief is that housing is always for use first not really for speculation. But as house is quite a sizeable amount to spend / invest. So choose a house that is comfortable and mitigate the inflation of CPI.

1 comment

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

25 Feb 2020

Exactly, thank you!

Step 1: Build Cashflow

Step 2: Invest Cashflow into Cashflow Generating Assets

Step 3: Protect and Insure Assets

Step 4 : Repeat Step 1-3

A tree is an asset, the root's of the tree will determine whether the tree will survive. And I see the tree's roots as cashflow, which is the fundamental basis for a strong financial philosphy.

Click here to find out more about me!

1 comment

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

14 Feb 2020

Thank You Aaron, yes a like a living organism and then the sun and the air also help the tree keep growing

Dividend Stocks and Dividend growth stocks

One for income and another for income and capital appreciation.

I make videos about interesting stuff at youtube here​​​

2 comments

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

11 Feb 2020

Hi, dear Ernest, yes if you keep uptodate with company news and reports and are very educated surely a viable option. i also hold still tech stocks like INTC, ORCL, AKAM since the nineties, they are quite successful but I feel Tech dominant ETFs (f.ex. VGT, QQQ) are more successful as also more diversified and something like fire-and-forget for longterm investment ( I could be wrong though ...)
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

11 Feb 2020

Thank You! for the interesting link