Where is the bottom?!
Since January 2022 the gif above is probably an accurate depiction of your equity and cryptocurrency portfolio. Prices have been plummeting with the occasional relief rally only to be beaten down.
There has been an asset class which seems to be immune to the effects of the other markets and on the contrary been rising almost feverishly, can you guess what that asset class might be?
Hold that thought we'll get to that later in the blog.
Let up address the elephant in the room that will impact all investors and even normies across the board.
INFLATION!
The latest United States CPI came in at a whopping 8.6% highest in 40 years, damn.
In our lovely sunny country of Singapore unfortunately its not just the weather that has been increasing relentlessly but our inflation as well.
MAS core inflation has risen from 1.7% to 2.3% - a 35.2% increase!
CPI-all items inflation has risen from 3.7% to 4.2% - a 13.5% increase!
Yes, it isn't just your chicken prices that has been increasing..
This has been a cause of worry for many analysts and has led to the FED trimming down their quantitative easing policies. There has been rumours of quantitative tightening where the FED tighten its balance sheet and even the draconian method of Paul Volcker of increasing interest rates to crazy high has been discussed.
Basically, no more free mulah.
Which means business has to trim their employees -> lower retail spending power -> companies profitability gets affected -> back to trim employees.
The vicious cycle continues until most companies are undervalued and the government steps in to bolster the economy through monetary polices again.
Now now, the meat of the issue I'm sure most readers will be here for is, what should I do with my portfolio?
I am no financial advisor nor should any of these constitute to financial advise, please take note! My portfolios has also taken a significant hit, with Crypto down almost 50% for its highs. So yeah, I don't want to just sell you the rosy picture of my gains and not share my losses.
I'm just blessed to have gotten in to Bitcoin and Ethereum at lower prices then what they are today. However, Solana is underwater. Probably any youtuber or influencers are not as profitable as they were in 2021 should they choose to reveal it or not.
Again, the answer to the question posed above is very simple but hard to execute - build up a cash reserve and Dollar Cost Averaging into quality names.
I believe I have shared in my telegram quite awhile back that I have trimmed away all my low confidence assets.
Some of these were VeChain, Cardarno, Illuvium, Square, Datadog and a few others.
My concentration of Crypto has been for quite awhile Bitcoin, Ethereum and Solana.
Equities - Tesla, Meta and Palantir
Unfortunately, when it comes to investing there is an element which we are unable to control and people have to learn to accept that. There is no way you can foresee everything that will happen and that could translate to great riches or a job at macdonalds.
But I would argue that goes for all aspects of life, there is always an element of uncertainty. Even landing a job with a 6 figure pay, who knows if you'll be able to assimilate into the company culture or market conditions that could end up with you quitting or retrenched?
What we can do is lower the risks. Before investing always do due diligence on the asset you are investing in, not just cause someone said so.
For example, rewind back to Nov 2022 we are having a chat.
I share with you my great conviction in Bitcoin and my belief that it is the ultimate investment in my portfolio risk to reward wise. I could tell you today all the benefits of Bitcoin, its immutability, transparency, decentralisation, the network effect it has and its role in the future economy.
You were convinced by me to allocate some money into Bitcoin. Now you are down 33%. That could be 2,3 or 4 years of savings that you have "loss", depending how much you've put in. The scary part now is that you have a chance of more losses! You start searching youtube and google, "could bitcoin go to $0" and famed investor Warren Buffet and Charlie Munger pops up on your search. You hear their theories and curse that damn Daniel for asking you to invest in Bitcoin and you Sell Out.
Bitcoin goes down a further 50%! You pat yourself on the back and send me a message "so Daniel, bitcoin wen moon?"
Fast forward to 2025, bitcoin is now 6 figures.
This scenario is purely speculative but what I'm trying to get at is this, you can never get the conviction to hold an asset through its bearish phase if you don't do your own research to understand it.
In my personal opinion investors are getting numb to the inflation news and we are in a phase in the bear market where bad news do still cause the markets to drop but their impact is weakening.
To answer the title of this blog.
It has mostly been the case for stock and crypto markets, when the outlook is the most bleak and fears are most rampant we find the bottom. Look back in March 2020, it was when fears of a depression were floating around where we saw a bottom and strong recovery.
So if you are here for a date on the bottom, I'm sorry I don't have that for you. What I've been doing is buying in small portions whenever my favourite names dip, with money that I don't need for 3 years.
Let us move on to the magical asset class that against all odds have been performing ridiculously well, did you guess it right?
Its Singapore Properties!
With news of HDB in OCR selling for over $1,000,000! Piccadilly Grand, Liv@MB selling 70% on launch date and the upcoming star AMO residence.
Should you be buying into this hype right now? My answer is an underwhelming yes and no. Sorry.
Let us discuss why.
We'll start with the cons of buying into the hype right now, as much as it will hurt my income :(
Prices are overvalued, they having been putting in highs after highs consecutively for months on end
The rush to buy and hype generated is typical trend behaviours of tops in the market
The government has an mandate to make housing affordable for all Singaporeans, we can see them follow through on cooling measures introduced recently
The stocks and crypto markets has fallen in bear market territories, property being less liquid tends to follow suit but at a lagging pace
HDB to launch 23,000 new BTO flats to meet demand in 2022 & 2023, higher supply contributes to fulfilling demands and hence lowering prices
So if you are someone today looking to invest for capital gains I would speculate it would not be the best time to buy into the market.
However, if you are holding a property that has seen significant appreciation in price over the last few years you should be looking to take those profits!
There are also still plenty of reasons that someone might consider buying a property today. We'll discuss some of them:
You have time and holding power, from the chart above you'll see that properties especially those in Singapore trend higher over time. If you are going for a new launch or BTO you'll have to wait for the development to finish construction anyway and if you are planning to stay there your exit could be 6 - 10 years from today. I can say with a high degree of confidence that your property has a huge probability of being worth more then you'll purchase it for. Of cause, provided you get the right one. Hint hint, contact me.
You want to downgrade! This will be a perfect opportunity, right now! Selling at a high cashing in that sweet profit and buying something of lower quantum to stay in right now makes perfect sense.
The government has recently introduced the PLH model, which we speculate to be a beta test for a larger roll out. If you are in a position which requires housing do go for it! Because we'll never know when new cooling measures are introduced to diminish the profits home owners are seeing today.
As always Singapore is but a tiny country with low land space it only makes perfect sense to own a property regardless of the timing and with inflation so high we are confident prices will only keep increasing.
So if you are in any of the scenarios above or would like to plan out your property journey do reach out and contact me at 8921 5582, we'll get coffee!