I sense that a crash in global markets is imminent. Not a startling revelation, of course - lots of people are saying the same thing. Indeed, prices across asset classes and across the world are hitting record highs.
High does not mean unsustainable, however, and no one can say for sure that they know where the bubble is stretched too thin. As was sharply portrayed in The Big Short, markets can stay irrational far longer than anyone can stay solvent. The bubble may burst tomorrow, or it may burst in 5 years, or it may deflate slowly over several years - who knows?
Where will the contagion start? The unicorn tech bubble is one obvious possibility. Incredible valuations on companies that have made nothing but massive losses recall the dot.com bubble at the turn of the century. On the other hand, (1) most of the unicorns are not yet listed (although IPOs have happened/are in the works for a number of the biggest names), perhaps limiting their impact on public markets (2) most of them have significant revenues, unlike the dot.com companies which truly had no more than glossy slide decks, and (3) it is perfectly possible, as Amazon has shown, that profits do gush in at the end of a long tunnel where tech is concerned.
Anyway much has been written about tech unicorns and the possibility of a bubble. What I really think is a risk that has flown under the radar is the “automatic” or “mechanical” investment trend that has really exploded in the past decade. ETFs, regular savings plans, “roboinvestors”, Robin Hood, dollar-cost averaging - people are lapping these up like there is no tomorrow. The common theme of these investments is that people are mechanically putting money into equities, repeatedly and regularly, with little regard for the fundamental value of the underlying companies, driving their prices up. And prices running ahead of fundamentals is ingredient number one in any bubble.
It does sound counterintuitive that ordinary hardworking folk squirrelling money away for retirement or their kids’ university education are actually fuelling an irrational bubble. Furthermore, ETFs and the abovementioned regular savings plans are precisely meant to diversify and reduce risk. However, I would argue that the mechanical investment techniques recently encouraged by governments, financial bloggers, and banks is as irrational as any tulip or Beanie Baby craze.
People are treating ETFs as savings accounts - $100 a month, $1000 a month in SPY/IVV/VOO, or ES3 in the Singapore context. The returns are good, well over any savings interest rate and the inflation rate, and they happily continue putting money in. Everyone from students to working class folk are doing the same thing. On any investment forum, almost every day there’s someone asking “I’ve saved up $2000/$20,000/$200,000, where should I invest?” And the consensus answer is almost always “ETFs”. Just because the money is spread out over many different equities doesn’t mean it can’t be irrationally risky. The whole market can be a bubble (remember, ETFs ultimately hold the underlying, whether directly or by proxy).
I fear the effect this time could be as bad or worse than in the past. For the first time, huge numbers of ordinary retail investors could see their savings wiped out. Back in 2008 and in earlier crises, the man in the street was affected only insofar as jobs were at risk. This time, the effect of any crash would be compounded by panicked retail investors pulling out their money en masse, akin to a bank run. A “robot run”, if you will. Let’s see how things turn out.
Record excluding landed and DBSS: $1,168,000 (Oct 2018)
Blk 1D Cantonment Road (Pinnacle@Duxton)
40-42 floor
5-room
106 sqm
Lease started 2011
91 years remaining
Normal 5-room record (i.e. excluding landed, DBSS, and Pinnacle@Duxton) $1,100,000 (Jun 2018)
Blk 18C Holland Drive
38 floor
5-room
116 sqm
93 years remaining
Normal 4-room record (i.e. excluding landed, DBSS, Pinnacle@Duxton, and 5-room): $1,018,000 (Sep 2018)
Blk 10A Boon Tiong Road
34-35 floor
93 sqm
Lease started 2016
96 years remaining
Punggol record: $910,888 (Jan 2019)
Blk 269A Punggol Field (Punggol Sapphire loft)
16-18 floor
149 sqm loft
Lease started 2013
93 years remaining
Punggol non-loft record: $728,888 (Jan 2019) Blk 274C Punggol Place (Punggol Regalia) 13-15 floor
118 sqm
Lease started 2013
93 years remaining
Goodhart's law states that "when a measure becomes a target, it ceases to be a good measure". I am starting to wonder the adage is of some application in relation to exchange-traded funds (ETFs), particularly index funds. Index funds have become massively popular in recent years, accounting for, by some estimates, as much as 35 per cent of market capitalisation on certain markets. Certainly, increased participation in financial markets is not a bad thing, and increased equity valuations due to said increased participation is not necessarily a bad thing either. I fear, however, that a bubble is forming in relation to indexed stocks. Persons who buy ETFs are basically blindly buying a stock (actually, many stocks, but let's just focus on one stock within the fund for now) because it is indexed. A stock is indexed for various reasons, but generally it would be indexed because it is a well-capitalised company or a historically well-performing counter compared to its peers in the same sector and on the same exchange. If indexes were what they still used to be (a mere summary indicator of matters that can be otherwise researched), then there is no problem (because an investor in an indexed stock is buying a stock that has strong fundamentals that just happens to be indexed). But if the price of a stock is driven in large part ETF investors who value the stock because it is indexed, then the price of that stock becomes a feedback loop and, eventually, a bubble. That, I fear, is what is happening with the incredible rise of "robo" fund managers and passive investment plans that seem all the rage these days, where folks simply put in a fixed amount of money that is blindly invested into the same few big name blue chips. It started out as a great idea: "don't try to beat the market, just follow the market". But now ETFs have become so commonplace that they have become the market. To use an analogy, it is like following a crowd heading to, say, an event. All goes well if one person says, ah, looks like everyone is headed this way, this must be the right way. But if everyone is thinking the same thing, suddenly everyone is following everyone else, then at some point everyone ends up in the middle of nowhere wondering, "who's leading the way?"
The French verb "choper" (to grab) has, in some contexts, almost the same meaning as the Singlish verb "chope" (to reserve). For example, "il faut choper tes horaires préferées dans le planning pour la semaine prochaine" and "you must chope your preferred hours in the schedule for next week".
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The French proverb "Faute des grives, on mange des sardes" (If there are no thrushes, we eat sardines) is an expression used where one does not have exactly what is desired, but where there is an adequate and satisfactory substitute (thrushes being a bit of a delicacy in the south of France). There is no similar English proverb that comes to mind. "When life gives you lemons, make lemonade" is not quite the same, because it speaks of making the best of a "sour" or unpleasant situation, whereas the French proverb emphasises the adequacy of sardines.
However, the Hokkien saying "bo he hay ah ho" (没有鱼，虾也好, or if there is no fish, shrimp is just as good) perfectly mirrors the French expression. Perhaps the concept of accepting whatever is available, and using food to describe the concept, comes more naturally to cultures that up until quite recently fished and hunted their own food. I have in mind the Midi of France and Fujian.
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"Dockless bike sharing", which is actually bike rental, is ridiculous in its current form. The costs of the business weigh upon the public, while the profits are private. Public spaces (void decks, MRT stations, footpaths, parks) are clogged with the bicycles. LTA has had to set up and provide for more parking spaces for bicycles, due in no small part to these new bicycles, at the expense of the taxpayer. The police, again at the expense of the taxpayer, bears the burden of investigating and punishing vandals and thieves.
Would it be acceptable for H&M or Uniqlo, in saving rent and manpower costs, to place racks of their clothes at MRT stations, allow customers to check out clothes on their own, and then depend on the police to prevent theft? Use of public space by anyone other than members of the public passing through must be paid for, especially if it is use for private profit.
What are we but lalang stalks in the wind, tossing and twisting and snapping at nature's whim?
What am I but a father, a child raising another?
What can I do for you, my wife, my daughter, but tremble and cry?
The diarrhoea continued on Monday 3 July. Otherwise I felt fine. I took bus 19 to class. We had John Gilhooly's lectures. After class I went to collect my tickets to the RPO at Cadogan Hall, then went home. Dinner was at Itsu.
Sunday 2 July was a full day of rest and diarrhoea. I managed to do the laundry. Not much else. Dinner was at Yipin where I wrongly ordered a nasty plate of cold spinach in peanut butter.
Late on Friday night I followed up in double quick time on my conversation with the lady at the opera. She had told me about Shakespeare being performed at Stamford at an open air theatre in the summer. That same night I booked a ticket to watch Macbeth at Stamford. At the same time I booked a ticket to the Royal Philharmonic Orchestra for next Tuesday.
On Saturday morning I woke up feeling very tired but I left nonetheless for Kings Cross and then for Stamford, without any breakfast. There was a change of trains at Peterborough. Stamford was most pretty. I inquired first thing about the play at the Arts Centre and was told that the play would be at Tolethorpe Hall, a five minute drive away. Oh boy. One lady said it was a half hour walk away, while another guy said it was not walkable. Well I grabbed a sandwich from Tesco and walked anyway. It took an hour. The first part of the walk was suburbs and "Walmarts", the second was rolling countryside, and the last bit was the most difficult, on a narrow busy country road with no sidewalk.
Macbeth itself was fascinating. It is amazing how much effort goes into a Shakespeare production. But I was really tired and nodded off here and there. After the play I set off on the long walk back, then took the train back to London. By this time I was feeling a slight chill and went straight to bed without eating anything.
Friday 1 July was the day of the visit to the Office of the Parliamentary Counsel. I walked to school. The visit was enlightening. After the visit I followed the cabs back to school, then ate sushi from Tesco in the classroom. After that I went to the library to do the drafting exercise. I then walked back, took a short nap, then went out again for the Welsh National Opera at the Royal Opera House. The opera was a very new experience. I enjoyed it. I chatted with a lady from Grantham. I took the Tube back. For dinner I had something from Sainsbury's. I can't remember what.
