U.S. stock futures pointed Thursday night to more losses after the major indexes suffered a tumble that sent them more than 10% below their record highs.
Dow Jones Industrial Average futures were up 16 points, but indicated a loss of more than 150 points at Friday’s open. S&P 500 and Nasdaq 100 futures also pointed to a lower open on Friday.
The Dow plummeted nearly 1,200 points on Thursday — its biggest one-day point drop ever — as worries over the coronavirus possibly spreading sent stocks spiraling lower. The 30-stock average closed in correction territory along with the S&P 500 and Nasdaq Composite.
The Dow had closed at a record high on Feb. 12. It only took the S&P 500 six days to fall from an all-time high into correction levels, marking the broad index’s fastest drop of that magnitude. “People have been so preconditioned to buy the dip and to always expect the market to recover that people can get smacked around with moves like this,” said Patrick Hennessy, head trader at IPS Strategic Capital. “No one knows how this thing ends.” Thursday’s declines also put the Dow and S&P 500 down more than 10.5% each for the week, on pace for their worst weekly performance since 2008.
The sharp drop came after California Gov. Gavin Newsom said the state is monitoring 8,400 people for coronavirus. Meanwhile, the CDC confirmed on Wednesday evening the first U.S. coronavirus case of unknown origin in Northern California, indicating possible “community spread” of the disease.
The number of confirmed coronavirus cases outside of China has also jumped. In South Korea, more than 1,700 cases have been confirmed along with over 600 in Italy.
“The timing of this was just the worst with respect to investor sentiment being elevated,” said Doug Ramsey, chief investment officer at The Leuthold Group. “I’m not sure that the market has really priced in the potential economic impact of this.”
Concerns over the coronavirus have also led several companies to issue earnings and revenue warnings. Microsoft said Wednesday one of its key divisions may not meet the company’s previous revenue guidance. PayPal also warned about its outlook on Thursday.
Goldman Sachs’ David Kostin warned U.S. companies will see no earnings growth this year. “Our reduced proﬁt forecasts reﬂect the severe decline in Chinese economic activity in 1Q, lower end-demand for US exporters, disruption to the supply chain for many US ﬁrms, a slowdown in US economic activity, and elevated business uncertainty,” said Kostin, the bank’s chief U.S. equity strategist.
Monday, 26 August 2019 Read? STI : Swee swee rebound??? COVID-19. STI not so scary??? Trump’s comments and Microsoft’s warning came after the Dow fell more than 100 points on Wednesday, adding to its massive decline for this week. Through Wednesday’s close, the Dow has lost more than 2,000 points this week. The 30-stock average is also on pace for its worst percentage-point weekly performance since 2008, down 7% over that time. The Dow has also fallen more than 8% from its record high set earlier this month.
The Power of Retained Earnings In 1924, Edgar Lawrence Smith, an obscure economist and financial advisor, wrote Common Stocks as Long Term Investments, a slim book that changed the investment world. Indeed, writing the book changed Smith himself, forcing him to reassess his own investment beliefs. Going in, he planned to argue that stocks would perform better than bonds during inflationary periods and that bonds would deliver superior returns during deflationary times. That seemed sensible enough. But Smith was in for a shock. His book began, therefore, with a confession: “These studies are the record of a failure – the failure of facts to sustain a preconceived theory.” Luckily for investors, that failure led Smith to think more deeply about how stocks should be evaluated. For the crux of Smith’s insight, I will quote an early reviewer of his book, none other than John Maynard Keynes: “I have kept until last what is perhaps Mr. Smith’s most important, and is certainly his most novel, point. Well-managed industrial companies do not, as a rule, distribute to the shareholders the whole of their earned profits. In good years, if not in all years, they retain a part of their profits and put them back into the business. Thus there is an element of compound interest (Keynes’ italics) operating in favour of a sound industrial investment. Over a period of years, the real value of the property of a sound industrial is increasing at compound interest, quite apart from the dividends paid out to the shareholders.” And with that sprinkling of holy water, Smith was no longer obscure. It’s difficult to understand why retained earnings were unappreciated by investors before Smith’s book was published. After all, it was no secret that mind-boggling wealth had earlier been amassed by such titans as Carnegie, Rockefeller and Ford, all of whom had retained a huge portion of their business earnings to fund growth and produce ever-greater profits. Throughout America, also, there had long been small-time capitalists who became rich following the same playbook . Nevertheless, when business ownership was sliced into small pieces – “stocks” – buyers in the pre-Smith years usually thought of their shares as a short-term gamble on market movements. Even at their best, stocks were considered speculations. Gentlemen preferred bonds. Though investors were slow to wise up, the math of retaining and reinvesting earnings is now well understood. Today, school children learn what Keynes termed “novel”: combining savings with compound interest works wonders. ************ At Berkshire, Charlie and I have long focused on using retained earnings advantageously. Sometimes this job has been easy – at other times, more than difficult, particularly when we began working with huge and ever growing sums of money. In our deployment of the funds we retain, we first seek to invest in the many and diverse businesses we already own. During the past decade, Berkshire’s depreciation charges have aggregated $65 billion whereas the company’s internal investments in property, plant and equipment have totaled $121 billion. Reinvestment in productive operational assets will forever remain our top priority. In addition, we constantly seek to buy new businesses that meet three criteria. First, they must earn good returns on the net tangible capital required in their operation. Second, they must be run by able and honest managers. Finally, they must be available at a sensible price. When we spot such businesses, our preference would be to buy 100% of them. But the opportunities to make major acquisitions possessing our required attributes are rare. Far more often, a fickle stock market serves up opportunities for us to buy large, but non-controlling, positions in publicly-traded companies that meet our standards. Whichever way we go – controlled companies or only a major stake by way of the stock market – Berkshire’s financial results from the commitment will in large part be determined by the future earnings of the business we have purchased. Nonetheless, there is between the two investment approaches a hugely important accounting difference, essential for you to understand.In our controlled companies, (defined as those in which Berkshire owns more than 50% of the shares), the earnings of each business flow directly into the operating earnings that we report to you. What you see is what you get. In the non-controlled companies, in which we own marketable stocks, only the dividends that Berkshire receives are recorded in the operating earnings we report. The retained earnings? They’re working hard and creating much added value, but not in a way that deposits those gains directly into Berkshire’s reported earnings. Read? The letter - Berkshire Hathaway Inc.
MEDIAN HOUSEHOLD INCOME ROSE The SingStat report also said median household income from work among resident employed households - households headed by a Singapore citizen or permanent resident and at least one working member - grew 1 per cent in real terms, from S$9,293 in 2018 to S$9,425 last year. Household income from work refers to the sum of income from employment and business - including employer Central Provident Fund (CPF) contributions - received by all working members of the household. ------------ Median income incl all CPF in Jun 2019 survey is $4,563 Median household income in 2019 is $9,293 We may use the above number as guide for our retirement income planning. How much is enough to live comfortably in Singapore WITHOUT squeezing ourselves too much by bench-marking to Median income level. Median income after CPF is about $4K Median household income after CPF is $8.2K Monthly "passive" income per person of $4K should be okay!
In Singapore, our financial assets for retirement income and assets draw-down can be from saving, lending (bonds), investment and CPF One data point from Uncle8888 His lifetime of 39 years of earned income as full-time employee and concurrently 20 years as retail investor in local SGX trying to build more wealth through the stock market.
The Ordinary Wage (OW) Ceiling limits the amount of OW that would attract CPF contributions. The OW Ceiling is capped at $6,000 currently. For example, if an employee’s OW for a calendar month is $6,500, his CPF contribution would be computed based on an OW of $6,000; CPF contribution is not required on the remaining $500. Read? CPF Contribution and Allocation Rates
Median Income in Singapore Read? Income growth slows in Singapore; median salary now above S$4,500: MOM report Read? Summary Table: Income The nominal median income of Singapore residents on full-time employment increased this year to S$4,563 from the S$4,437 recorded in 2018, the Ministry of Manpower (MOM) report said. How big is our CPFIS as war chest for market timing for the next few STI crashes? Assuming $6K monthly CPF cap and 2 months bonus i.e. total 14 months of CPF OA and 35% of CPFOA to grow CPFIS as war chest.
From the numbers, it seen that most of us may not have high 6 digits in CPFIS as war chest. So what is the other strategy to deploy our CPFIS fund into the SGX other than investing in managed fund as retail investor? Read? Relating to CPFIS
Number doesn't lie! As each passing year deeper into the land of decummulation during retirement; the volatility impact across market cycles to his investment is naturally reduced! Since it is naturally reduced year on year; what is there to worry about volatility! Right?
He retired at 65. He suffered stroke at 67. Now, he is 69! After more than one year of painful and tearful struggle on stroke rehabilitation; he finally able to walk steady without his walking stick! Now, everyday; he enjoys his walk and drinking plenty of water! Life after retirement
After his retirement at 65; he has plenty of spare time and what did he do to past time? More spare time means he has more time for smoking and also more time for drinking beer while watching endless TV and videos. He said that this is how he ended up with stroke - more time for smoking and drinking after retirement!
Ha ha! Something that is still of common interests that talk about even after retirement! Ex-boss asked him how is the market going forward? This time; he wanted to park some retirement fund into stocks for second stream of "passive" income on top of his rental income. He bought SIA on Friday and asked okay or not? Told him that Uncle8888 also tracked SIA and told him SIA low at SARS and Sep 11. SIA has survived SARS and Sep 11. He smiled and said he has planned to Average In! He also mentioned Kep Corp and Temasek "taking over". When Uncle8888 mentioned his Kep Corp position and yield since 2001; he surprised out with a loud Wah! Read? Why I Don't Average Down?
Finally; after 20 years across market cycles; Uncle8888 realized this practical and realistic way to make his investment portfolio more defensive. Hee hee! When he started spending his passive income; his investment portfolio investment is becoming more defensive.
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