ˈkalɪbreɪt/ verb: “carefully assess, set, or adjust (something abstract)”

“Investing is not black or white, in or out, risky or safe. The key word is “calibrate”. The amount you have invested, your allocation of capital among the various possibilities, and the riskiness of things you own all should be calibrated along a continuum that runs from aggressive to defensive.”
 – Memo from Howard Marks of Oaktree Capital Management dated 7th September 2017

There is a growing consensus among global money managers that equity market valuations are high. Goldman Sachs (GS) in its “Bear Necessities” report of 16th September 2017 is the latest to highlight rising risks of a significant equity market correction. According to GS’ proprietary Bear Market Indicator, there is now a 67% chance of an imminent 20% to 50% correction. This indicator has only twice previously been at this level – just before the dot com bubble and the Great Financial Crisis of 2008. The report however, concludes that the presence of potential mitigating factors means that an extended period of low returns is more likely than an imminent bear market for stocks.

The bottom line is no one knows when or what will stop current investor optimism; only that caution is warranted. Indeed, caution has underscored our continued allocation to public listed stocks this past year. We continually ask ourselves “What can go wrong?’ and attempt to address this by:

  • adopting a disciplined portfolio re-balancing process to prepare for market adjustments/corrections; and
  • seeking opportunities in special niche (thematic) investments and private equity to diversify away from the risk of owning public-listed stocks

We expect low investment returns to persist. Having zero allocation to riskier assets and staying in cash result in almost zero returns. To borrow a phrase from Steve Blumenthal of CMG Capital Management Group, we prefer to adopt a “participate and protect” strategic approach to investing.

Moving forward, we will expand our market commentary to include highlights of our approach to asset allocation. In addition, we initiate coverage of the portfolios that we carry on iAdvisor, our digital investing platform. To this end, we start by showing the YoY performance of the top 5 portfolios that we carry on iAdvisor:

Four of these portfolios are currently represented in our risk-based asset allocation models and have contributed meaningfully to annualized returns.

For balance, the bottom 5 portfolios on iAdvisor are:

Commentary and performance updates for our iAdvisor portfolios will be provided on a regular basis.

© Jachin Capital Pte Ltd

UEN: 201419754M

The contents of this document are for information only and is taken or compiled from sources that we, Jachin Capital Pte Ltd, believe to be reliable. To the maximum extent permitted by law, we do not make any representation or warranty (express or implied) that this information is accurate, timely or complete and it should not be relied upon as such. Opinions expressed are our current opinions as at the date of this document only and are subject to change without notice. We endeavour to update on a reasonable basis the information discussed but regulatory, compliance or other reasons may prevent us from doing so. The publication and distribution of this document is not and does not imply any form of endorsement of any person, entity, service or product described or appearing here. This is not and does not constitute or form an offer to buy or sell nor the solicitation of an offer to buy or sell any security or financial instrument nor to participate in any particular trading or investment strategy. We are not soliciting any action based on this document. The information, services and products described or appearing here are intended only for Accredited Investors (as currently defined in the Securities and Futures Act) and are not intended for nor targeted at the public in any specific jurisdiction. This information does not take into account the particular investment objectives, financial situations or needs of individual investors. Investors should seek independent financial, tax or legal advice or make independent investigations as considered necessary or appropriate before making an investment decision. Investments involve risk. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment instrument.

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