Investing in HK

[RamblingMad]

Anyone else thinking about investing in Hong Kong? They’re in a recession, and their market is down almost 30%. Lots of fear.

 

[cvjw]

We let our advisor figure all that out

 

[MillauFr]

Are you trying to catch a falling knife?

 

[RamblingMad]

Are you trying to catch a falling knife?

All recessions are falling knives.

 

[MillauFr]

All recessions are falling knives.

Are you attempting to figure out when a good time is to invest? No one knows that. Timing the market is a fools errand.

 

[RamblingMad]

Are you attempting to figure out when a good time is to invest? No one knows that. Timing the market is a fools errand.

Not really. But there are bad times to invest in certain asset classes.

 

[MillauFr]

Not really. But there are bad times to invest in certain asset classes.

That statement hints that you are trying to time the market.

 

[RamblingMad]

That statement hints that you are trying to time the market.

Price matters regardless of timing.

 

[MillauFr]

Price matters regardless of timing.

But how do know if the price is high or low?

 

[gottalovepluto]

Heck no. Millions of people protesting with no end in sight? Imho “the protestors are going to get tired” is not an investment thesis. (Especially when the protestors fear for their lives if they ultimately lose.)

Look, nobody predicted these protests would become what they have, nobody predicted they would last this long, and as such nobody can say when they will end.

 

[gottalovepluto]

Price matters regardless of timing.

No. Seriously. So much no. If you screw up the timing you could end up waiting the rest of your life to see that “fair price”. Heck, if you screw up your timing really bad you could end up waiting your life just to see it at the price you bought it at.

 

[gottalovepluto]

Are you attempting to figure out when a good time is to invest? No one knows that. Timing the market is a fools errand.

HAHAHA and this OP is how a market is made

(Not be insulting to @MillauFr ! I definitely recognize them from around here and totally respect their opinion. I’m laughing at how totally opposite our investment methods are )

 

[RamblingMad]

But how do know if the price is high or low?

For the S&P 500 I simply compare against investment grade corporate bond yields. In 2018 corporate bonds paid far more than the earnings yield on the S&P 500. This shifted in 2019 when corporate bond yields plummeted. Since October 2019 the S&P 500 earnings yield has been better than investment grade corporate bond yields. But it's trading at 25x earnings. This is historically high, but interest rates are also historically low.

I'm not timing as much as I save nearly $100k a year, so I have to allocate it somewhere. I don't just blindly buy the S&P 500 regardless of price. I made that mistake in the late 1990s before switching to preferred to get me through the first decade of the 2000s.

With nominal GDP at best at 5% annualized and the S&P 500 at 25x earnings, I don't see how anyone can make more than 5% annualized over the next decade. I'm looking for alternative places to put cash. I'm already at my 10% allocation for REITs.

 

[MillauFr]

For the S&P 500 I simply compare against investment grade corporate bond yields. In 2018 corporate bonds paid far more than the earnings yield on the S&P 500. This shifted in 2019 when corporate bond yields plummeted. Since October 2019 the S&P 500 earnings yield has been better than investment grade corporate bond yields. But it's trading at 25x earnings. This is historically high, but interest rates are also historically low.

I'm not timing as much as I save nearly $100k a year, so I have to allocate it somewhere. I don't just blindly buy the S&P 500 regardless of price. I made that mistake in the late 1990s before switching to preferred to get me through the first decade of the 2000s.

With nominal GDP at best at 5% annualized and the S&P 500 at 25x earnings, I don't see how anyone can make more than 5% annualized over the next decade. I'm looking for alternative places to put cash. I'm already at my 10% allocation for REITs.

Sounds like you do have some decent thought process that goes into your decisions. Your first post made it sound like you were one of those investors who said X went down 30%. It must be a good time to buy X? Those types of people have no clue and are bound to lose money over the long term.

I actually do own a Asia ex Japan fund AAXJ. Not Hong Kong Specific but they do have a sizable chunk invested there.

 

[RamblingMad]

Sounds like you do have some decent thought process that goes into your decisions. Your first post made it sound like you were one of those investors who said X went down 30%. It must be a good time to buy X? Those types of people have no clue and are bound to lose money over the long term.

I actually do own a Asia ex Japan fund AAXJ. Not Hong Kong Specific but they do have a sizable chunk invested there.

I make a lot of mistakes, and I don't try to beat the market. I try to grow at a 10% rate. I'm not always successful.

I'm struggling with what to buy given the high valuations in the US. I don't like negative rates in Europe. And I don't particularly like the strong US dollar, which makes foreign investment more risky.

However, it blows my mind that HK has come down 30% since the protests began. I can't see this going on forever. I'm just thinking it through. I'm rolling over some treasuries this week.

 

[MillauFr]

I don't like negative rates in Europe.

You mean you aren't loading up on those German bonds which pay a negative interest rate? I still can't believe that one. You are paying the German government to store your money. I still can't figure out why people would do that?

 

[RamblingMad]

You mean you aren't loading up on those German bonds which pay a negative interest rate? I still can't believe that one. You are paying the German government to store your money. I still can't figure out why people would do that?

Let's say you're a typical consumer. And let's say you have about 5 thousand or less euros. You don't have a lot of options to invest, so you'll put it in the bank. Likewise, if you have a lot of money, you will start to hit the threshold for anything equivalent to FDIC insurance. In the US it's capped at $250k. If you have a couple of million, your risk free option is sovereign debt. Folks don't want to earn negative rates. They just don't have alternatives. And if you're a German, then you're savings rate is off the chart anyway. They're a country of savers.