Can everything go down?


#1

Hi everyone,

I just realised that there is almost no index that actually went up if we account for the last three months. How is that possible ? I would expect that at least gold would go up but it raised only to a moderate 3%.

Does this mean that the economy is moving slowly into cash ?

Any thoughts on this ?


#2

This is not entirely true, is it?

The market reshuffled mid/end October. Many emerging markets surged by more than 10% (but not all of them, which makes me question the idea of holding one aggregate EM ETF instead of individual markets).
Most developed markets move well in sync, but if you look outside of them, you’ll see many large moves in EM (South Africa 17% in 3 weeks, Indonesia 15%, South Korea 12%). My best investment has been Ishares MSCI Turkey (ITKY) up 32% since end of August. Brazil has seen a similar spectacular increase since the presidential elections there.

I’m now positioning myself for the trade deal with China. It’s a bet, but I think this will happen.

I know you shouldn’t time the market, but there may well be some good moments to do that.


#3

Thanks for your answer, this is interesting it actually highlights the diversification strength.

Just for curiosity, was it enough for you to compensate the losses? If yes you should have a lot of different ETFs positions at different countries I believe. Wouldn’t you loose a lot of money while rebalancing ?

I thought EM ETFs would be able to be balanced because they contained most EM countries but looking at the numbers now I believe they might not be…


#4

Yes, I managed to remain positive in October thanks to my extreme overweight on Turkey (considering it’s only something like 0.2% of world market cap according to MSCI). This is however easier done in a small portfolio. Would I put a $250k bet on Turkey? Probably not :slight_smile:

I decided to move over to Interactive Brokers because rebalancing wont cost much.

I intend to keep a core portfolio (75-80%) in pure index funds following the world market cap and around 20-25% “play money”.