Someone left a comment on one of the blog posts here and asked what my investment strategy would be, so here's an outline of my current investment thinking.
Long-term Fundamentals
The longer term issues that underpin my investment thinking are:
- Peak oil
- Resource scarcity
- Sovereign debt problems in US, EU, Japan
- Instability in the Middle East
- Possible instability in China
- Collapse of the USD-based global currency system
- Possible global depression
Because of these issues, I tend to think that the Warren Buffett style of investing will no longer work. Notice that his track record has been rather poor in the past decade: Wells Fargo needed a US Federal government bailout. Citibank's liabilities far exceed its assets if they were marked to market.
Where possible, I will put my money in things which will appreciate in value should any of the aforementioned issues come to the fore. Given a more expansive idea of what constitutes investments for me, even buying additional bags of rice for storage (during sales) can be an investment in an environment where food prices are going up steadily.
Short-term Challenges
The biggest short-term issue is US Federal Reserve policy, namely whether or not it will continue to 'print money' and debase the USD against everything else. Overnight US markets have been very quiet, reflecting a wait-and-see attitude. If there is any hint of tightening, I think a lot of markets will come off. Hopefully things become clearer once the Fed policy signals become known.
The forces of debt deflation continue to be met with global central bank efforts to re-inflate the system, thus causing a lot of cross-currents which make investing a challenge for many people.
Some Other Thoughts
These are some other things that colour my investment thinking:
- Real estate in Singapore is currently priced as if nothing bad will ever happen to the global economy or our own.
- Singaporeans are over-leveraged due to expensive housing.
- CPFIS policies need to be updated. They still reflect a pre-2000 view of the investment universe. Unless they are revised to reflect the new reality, there will be a retirement funding crisis down the road.
- Unless you have more than S$1 million to invest, you are very, very likely to get poor investment advice from the professionals. Most of the financial advisors who are in the 'retail market' serving poorer customers (I am such a customer) are, in my view, not equipped to handle the complexity that we are now experiencing. As such, I think expending effort to take control of your own investments is the way to go.
Current Portfolio
Some of the things I currently hold:
- Gold and silver
- Mining shares
I am looking to get into positions in energy once the uncertainty over US Fed policy has abated to some extent.
Finally, the most important 'asset class' for the future - trusted friends and family. This may be the most undervalued 'asset class' in Singapore right now.
Pardon the lack of fluency and organisation in this piece. :-)
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