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Capitalizing on Market Volatility: War Chest dipped below Critical Point!

Posted on by careyourpresent

Recently, the treasury yields have been increasing. Yield increase means higher cost for businesses who borrows (many businesses do borrow), which indirectly means bad for equities. The risk-free rate for 10 years US treasuries has reached 4.8% this week which spooked out many investors, especially REITs Investors!

Cut loss and wait time

To many people and what many have posted online – the interest rate is high; Reits DPU dropping; hence, Reit Price drops. The risk-free premium is getting narrower for the highly leveraged REITs, since the 10 years treasuries are 4.8% now. The risk is high, better don’t buy. It’s better to wait till interest rate cut, situation gets better, price goes up then buy.

Stock market is the only weird place where people rush to exit when there are sales but rushes to enter when the prices are getting more expensive! Isn’t this weird? Do you do this when your favorite items are on sales in the supermarket?

Photo by Dongki Koh on Unsplash

My Actions

These few weeks I have spent small amount of my war chest to do shopping and finally my War Chest dipped below Critical Point! My war chest is now below 50%, at 49.68% now! I have shared my live buys in Twitter, for those interested, can follow and exchange ideas there 🙂

Market Risk

Likely the weeks coming there will be even greater volatility going ahead.

If it down more, I will use more war chest to only buy good companies. If it up more, I may sell some of the recent buy to take profits. The risk is still relatively high for equities now such that it may go down much further, but timing the market is impossible. We could only roughly know what’s the macros are heading, plan your portfolio allocation and buy only good companies.

Japanese Interest Rate

Many people only look at US interest rates.

Don’t forget about Japanese Interest Rate. 10-year Japanese Government Bond Yield has hit a new decade high at 0.80%. BOJ may not be able to maintain their yield curve control or QE any further. Eventually 1% or higher rate will reach sooner than you think.

The chance for the massive decline in global world liquidity due to dwindling yen carry trade is getting higher. Many highly leveraged companies (especially those who are swimming naked) running into issues will be getting higher each day. Imagine the massive pull out of billions of global foreign investments… what will happen?

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Money just buy you the chance of freedom but can’t buy back time. In life, there is no reset button. Time is limited but money is not.

When you are young and working, you exchange time for money. When you are old, you can have lots of money but you can’t buy time back, especially the things that you have missed (your strong health, time with young child) while busying striking out in career.

Your kids grew up and they no longer need you to accompany them. They no longer want to sit on your lap to share/do things with you…all these time you spent in your 9 to 6 or even longer cubicles…can the money that you have earned by you back these?

We always thought we have more time with our old parents, but we are wrong. Time with them is ticking away every day. One day it will suddenly be gone. There is no regret medicine, no reset in time. Gone is gone and cannot come back. No matter you are billionaires or millionaires, you cannot reset this.

We always thought that we have more time with our spouse every day, but we are wrong. One day they will be gone too. When you read this, please go tell your spouse that you love him/her and he or she is the best thing that you ever had in your life.

Love your life daily. You have one less day with your spouse, parents, children and yourself. Time is ticking away.

Focusing Careyourpresent & living a fulfilling life by supercharging your mind & investment/online income. Careyourpresent Series focus on things that one MUST know in their Life.

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Category: Investment and Finance

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