“No Horse Run” in 2014 – What to invest?
I have been very consistent in the last 35 years. Whenever I was asked what was the best investment to buy – my answer was always “nobody knows”?
However, I shall do what I have never done before – now that almost everybody have made their predictions about what investments should perform well this year – have a go at the “guessing game” too!
Easier to guess what not to invest?
Firstly, I think it is arguably easier to guess what investments may not perform well, rather than what should do well?
So, don’t buy Singapore property.
No reasons given?
I shall also not attempt to give the reasons why I think an investment should do well or is not expected to – because the problem with analysts’ reports may be that most studies have shown that they are often more wrong than right.
And one possible reason may be that we all go to the same universities, study the same text books, are taught by the same professors, study the same theories – and then try to beat one another in what is essentially a zero-sum game.
What may compound the problem further is that we try to rationalise our predictions (guesses) by giving reasons that form the basis of our remarks.
So, as it happens so often – we write beautiful reports full of justifications to convince our audience and peers. Perhaps we may tend to focus too much on writing what is reasonably acceptable, logical and in tune with market sentiments, rather than our gut-feel.
What to invest?
Buy commodities and global properties.
No reasons will be given as I have explained above.
A statistical note?
But just a statistical note – they have gone down quite a lot for quite a long time already.
For example, the Dow Jones-UBS Commodity Index (^DJC) is about 40 per down from about five years ago; and the SPDR Dow Jones Global Real Estate (RWO) is about 20 per cent down from about five years ago.
Buy Gold – for example, the SPDR Gold Shares (GLD) is about 30 per cent down after about 2 and a half years.
Buy Emerging Markets Bonds – for example, the iShares JPMorgan USD Emerg Markets Bond (EMB) is about 10 per cent down after about one and a half years.
Buy China equities – for example the SSE Composite Index is about 60 per cent down after about five and a half years.
“No Horse Run”?
Finally, just in case you may be wondering why I call this a “No Horse Run” year? – There are so many asset classes that are still down quite a lot for quite a long time – which is arguably quite rare.