Tuesday, 9 July 2019

Signs of market downturn coming?

Global banks are often the front-runners for a market downturn (e.g. bad debts, poor loan repayment, staff retrenchment, etc). Over the past 2 days, three news caught my eye:
  • Deutsche Bank staff sent home as 18,000 job cuts begin (The Guardian, CNBC, 8 & 9 Jul 2019)
  • Yield on the benchmark 30-year US Treasury bond briefly dipped below 2.5%, yielding less than the Federal Reserve’s short-term federal fund rate (CNN, 8 Jul 2019)
  • Temasek Holdings one-year return for shareholders came in at 1.49%, down from 12.19% in the previous financial year (Straits Times, 9 Jul 2019)

The warning signs of a global market downturn have grown even stronger. For the past 2 years, our Singapore leaders have been warning the people to be more conservative through policies such as property cooling measures and public speeches. 

Even if a market downturn is more likely now, it is still impossible to time when it would actually take place. My best guess is to be around the U.S. Presidential mid-term election period (Oct-Nov 2020 time-frame). But surely many people out there would also share similar thoughts. So how accurate would this guess be? 

Instead of timing the market, my wife and I decided to diversify our investment portfolio from stocks. We considered buying currency, gold, bonds or simply build up our investment war-chest. For gold, we were doubtful if the returns were worthwhile as the US$ would likely weaken when global economy tanks. For corporate bonds, most bond returns seems unattractive with its risks. In the end, we chose to buy currency - RMB Yuan. We will elaborate more on our decision in our next post.

Do you think that a market downturn is coming soon? Feel free to share your thoughts!



  1. The bull has been on the run for around 10 years with a couple of hiccups towards the end of 2018 and recently in May/June 2019. The bear has to come sooner or later and I have been asking myself how I can make the best use of this opportunity to invest even more! I am an aggressive investor in US stocks.

    I would continue to stay invested instead of panick sell. I am building up my warchest waiting for the day to buy even more.

    On a last note, financial experters have been trying to guess when the bear will come. They have not correctly guessed so.....

    Dont panick sell. Stay invested. Build up cash to buy

  2. Thanks for your comment. Agree that no one can ever guess when the bear will really come. Building up cash war-chest to buy in instead of selling is a good approach to stay disciple and keep investing. My view is that we could also re-adjust our investment portfolio if we think that there are alternatives. Whatever we do, most importantly is to stay discipline to an approach that we are comfortable with. All the best to you and hope to exchange more views here!

  3. I'm looking into opening a portfolio based on growth and equity.Is it a good time to start investments as markets are sluggish all over.. What other forms of investment would you suggest with decent returns

  4. It will really depend on your market outlook, investment style and how experienced you are with the investment vehicle. For example, I will ask myself if I think the market would most probably head upwards in the next 2 to 3 years and whether I have the holding power to weather through if it goes rock bottom instead? Am I an aggressive or passive defensive investor - Prefer to stick with my own style unless I am determined to change it.. :)

    I believe in investing in areas that I have good knowledge in. For me it will be stocks. My view is that REITs typically thrive in low interest rate climate but most of them have gone above fair value now. Banks could still be interesting to consider, depending on your outlook.