Archieves

Archieves

"Take Baby Steps" - Stock Trading Advice

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Take Baby Steps

Investing in the stock market is not easy.

It is all about "time in the market" not "market timing". Anyone who has traded for themselves will have gone through the emotions of deciding when to sell a stock or to keep hold of it.

The whole point of a roboadviser is to remove these emotional triggers when trading. Instead, a roboadviser uses computer algorithms to understand the optimal time to enter or exit a trade. 

In most professions, you will always hear K.I.S.S. - Keep It Simple Stupid.

That is the point of the system that The Money Pouch is using to buy shares of ETFs (Exchange Traded Funds), which invests in index trackers which hold a basket of equities.

The system follows these concepts:

  • diversification
  • asset allocation
  • hedging with treasuries and/or gold ETFs
  • reinvesting dividends
  • momentum strategy
  • monthly rebalancing
  • macro outlook

Watch the Video

Now, kick back and watch the video. Enjoy!

 


Annualised Returns - The Money Pouch

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Annualised Returns - The Money Pouch Performance

Strategy  Since Launch 1-Month 3-Month 1-Year
Conservative 5.10 3.54 1.18 9.51
Balanced -3.82 -3.30 -6.36 7.96
Adventurous 14.26 7.87 4.49 16.21

So, after a choppy year with Trump trying to derail international trade with the US-China trade war and the US government shut down. the stock market still managed to battle through and our strategies have been roughly on target.

Our balanced strategy has underperformed, but we have tweaked all the strategies which will take effect in next month's rebalance, adding the ability to hold the bull USD ETF, so we can go to the greenback if necessary rather than treasuries or gold as a hedge. We have changed a couple of other very minor things, but the strategies remain similar. We are just performing small tweaks to add to performance in light of the current economic fundamentals.

The main economy and the stock market don't run hand in hand. However, usually the stock market is a leading indicator of the economy. You can read about the Granger causal relationship here. You saw some jitters at the end of 2018 and it could be an indicator of what is to follow. Typically, equities do better from October-May and then bonds & treasuries usually outperform. As Quantative Tightening has arrived, my guess is that this will be the case this year, although the Federal Reserve seems to have temporarily backed off from raising interest rates, which is good for the economy and stocks.

The State of the Global Economy

The statistics for the global economy don't look great thanks to the US-China trade war. This seems to be more of a move to stop China expanding quickly rather than anything else. So, the U.S. government is trying to choke China economically rather than militarily.

The trade war has lead to the Purchasing Managers Index (PMI) to drop in countries around the world.

Trump was trying to increase US exports and reduce Chinese imports, but the opposite is happening and the deficit swelled in December as you can see in the table below.
 

Released On 2/27/2019 8:30:00 AM For Dec, 2018

 

Consensus

Consensus Range

Actual

Balance

$-73.7 B

$-74.5 B to $-73.0 B

$-79.5 B

Exports % change

   

-2.8 %

Imports % change

   

2.4 %

Economic Headlines

Global Composite PMI Chart


source: tradingeconomics.com

Global PMI Activity

It doesn't look good for Japan, South Korea, Taiwan, Malaysia, Germany, Italy, Poland, Czech Republic, Turkey & Colombia.

source: https://www.bloomberg.com/graphics/global-pmi-tracker/ 

 

car sales risk

Hong Kong Growth Just Went into Negative Territory

 

hk gdp growth

Doesn't Look Good in the U.S. Either

us pmi

How to Trade These Markets

The best way to do this is with a rigorous investment trading strategy that assesses risk levels and can hedge your exposure to equities through diversification to safer assets such as treasuries, gold or cash.

You can read more about our investment strategies here.



By using this website, you accept our Terms of Use and Privacy Policy. As with all investments your capital is at risk and the value of your investments as well as the income derived from them can rise as well as fall. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. Historical results do not include the transaction and management fees. All securities involve risk and may result in loss. This site is provided for information purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any financial instruments. We do not provide financial advice to investors. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. The Money Pouch assumes no responsibility for the tax consequences or returns for any investor of any transaction.