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WHAT A WONDERFUL WORLD – OR IS IT?

By Gabriel Yap

WHAT A WONDERFUL WORLD – OR IS IT?

“Sell in May and Go Away” – those who did this year would have been sidelined to become anguish and angry investors as markets continued to hit record highs – the Dow climbed to 21,000 while our local FTSTI scaled to 3,210, up a nice 330 points or 11.45% since the beginning of the year.

If you had just completed trekking the 650 km Great Australian Alps Walk from Mount Baw Baw National Park in Victoria, through to Kosciuszko to Namadgi National Park in Canberra in the past month (it took me a month to track that when I first moved to Australia to smell the roses) and looked at both indices, you would have thought that the month of May had passed without much fanfare.

But May was really quite the opposite.

You probably would not have known that President Donald Trump made history by sacking his FBI Director James Comey. As severe though the implications of such actions, the markets hardly reacted.

If you then looked to the VIX index, a key indicator of market volatility, you would not have been mistaken to conclude that May was the calmest month so far this year as the VIX sank to below 10 an unbelievable level, last seen in 1993!

You would probably have thought what you currently lived in Louis Armstrong’s “What a Wonderful World “. As the lyrics go –

“I see trees of green, red roses too
I see them bloom for me and you
And I think to myself what a wonderful world”

The historic-low VIX would have implied a wonderful world, never mind the North Korean missile threats, the terrorists attacks at Manchester and the uncertainty of the French elections.

Again, if you had looked at the 10-year treasuries for guidance, you would have concluded that

“I see skies of blue and clouds of white
The bright blessed day, the dark sacred night
And I think to myself what a wonderful world”

as the US 10-year treasuries fell to a 2nd lowest low in the past 6 months at 2.22% on 17th May.

Would be introspective to conclude that such low VIX and 10-year treasuries indicative of investors current dangerously complacent behavior? As a smart investor, you should be cognizant that in the current decade, we have had at least one correction of average -12% every year. However, we have now gone 18 months without a correction. How does one prepare for a correction and prevent being sucked in the current pandemonium? We prepare you for such eventuality - Do sign up for my next investment class at https://www.eventbrite.com/e/create-a-correction-proof-portfolio-with-reits-tickets-34928440907

Only if you have prepared well to take advantage of a correction can you confidently sing

“I hear babies cry and I watch them grow
They’ll learn much more than I’ll ever know
And I think to myself what a wonderful world
Yes, I think to myself what a wonderful world”

My Baby daughter

My baby daughter celebrates 2 months this month and I certainly know I live in a wonderful world – join me.

Gabriel Yap
Gabriel Yap

Mr Gabriel Yap was an eminent stockbroker and investment banker who retired in 2009 to devote himself to philanthrophy. He is well-known as the Investment Guru, having being regularly interviewed in the news media like Channel News Asia, Bloomberg TV, CNBC, Mediacorp Radio. Together with the famous Fortune Times, Mr Yap hosted the inaugural Asian REITS Awards 2016 in Singapore. Mr Yap was both Chairman of The Future of REITS Forum as well as Chairman of the Fortune Times Asian REITS Awards 2016 Judging Committee comprising of the leading CEOs, deal makers and who’s who in the Asian REIT sector.

Mr Gabriel Yap has lectured for almost 30 years – He has lectured at the famous Asian Development Bank, Monetary Authority of Singapore, Institute of Banking & Finance, SGX, ASME, SIAS and Share Investors. He has also trained the Top Producers at major insurance companies and banks. He has also trained students for the grueling CFA course and has lectured and delivered academic papers internationally.

Mr Gabriel Yap has also sat in the EXCO of the 13th Association of Small & Medium Enterprises, ASME. Mr Yap has also served in the EXCO of SIAS.