[PloutosNX]

Hello Jerome,

So this excellent sentence was from you! Very last participant 😉

Anonymity is not what it used to be :-P. You were able to end your survey with a sentence that stuck with you 🙂. I made at least one spelling mistake… (the key and not the key)

The ETF for the S&P is the traditional SPY, the most used in the world. It costs next to nothing and is hyper liquid. If you can't short it, then buy SH.

I don't think I have the skills to "short" a normal ETF yet... I thought you had to use a derivative (ETF SH). I think you need a "margin" account with IBKR for this and not the "cash" version. If you have the courage to start explaining, I'm interested, even if I don't think I'll be diving into that waters any time soon.

You are right. Trend following is TA and as you know I am not a fan of the latter. It is indeed a good way to lose money.

However, several renowned authors, who in any case cannot be classified among the gurus of TA, have proven that trend strategies can work. I am thinking for example of Jeremy Siegel in his bible Investing in Long-Term Stocks (https://www.dividendes.ch/lectures/), James O'Shaughnessy in What works on Wall Street (excellent work) and the various research of Mebane Faber. See also my series on diversification (https://www.dividendes.ch/2017/08/comment-diversifier-son-portefeuille-pour-se-prevenir-des-risques-de-marche-120/).

I use these trend-following in my asset allocation primarily to know if we can buy or if it is better to wait for a more favorable moment because the market is still bearish. This certainly does not allow you to work miracles in terms of performance, but it helps to reduce the volatility of the portfolio, especially if it is associated with a capital protection strategy (see tutorial).

I haven't had time to read Jeremy Siegel's book yet, but it seems to me that using AT wisely in addition to AF allows you to get into position better.
I will reread your series on diversification

More specifically to your question, I also have a small line of alternative strategies in this allocation that actually goes a little further by shorting the market, but only when it is both very expensive and in a bearish phase. I consider this position more as a kind of hedge than speculation.

Mebane Faber uses simple 200-day MAs for all assets. After several backtests, I had the best results with simple MAs with durations that vary somewhat depending on the assets. In addition, I convert the assets to CHF before calculating the MAs. For SPY I therefore use 224 days.

This is what I have seen with the MM200 in days or the MM9/MM10 in months, they allow you to protect yourself from a market fall, but not a sudden fall (when you are "LONG")... there is also the opposite effect which says to get out when it is best to stay. I am still thinking about what other indicator we can associate it with to have a better trend follow-up by filtering out bad signals (finding and using non-correlated but relevant information). What software do you use to convert asset prices into CHF? I don't think you do this manually or is that the case?

On this subject I came across the link several times where you proposed a Premium indicator that is no longer active. Will it soon fall into the public domain after a certain number of years? 😉 I am curious to know what mix of signals you used to create this indicator. My goal would not be to use it, but to understand the approach and compare it to what I have already tried. I will repeat myself, but collective intelligence allows you to do much more than alone. If I compare it to my favorite field which is Hardware and Software development, I have always analyzed and studied what others were doing in order to be able to improve my projects and question whether the way I use was suitable and the best or not and that is how I was able to develop more in-depth skills quickly. My work has been made public under a free license in order to protect and prevent anyone from appropriating my work, but which leaves the possibility of improving and studying it.

For UBS, please read my analysis, everything is said there. (under articles/analyses or via the search bar)

I should have thought of that before asking this question! Sorry for my lack of diligence in reading all your analyses.
But this allows me to bounce back, because when you wrote this analysis the UBS action was at least from October 2018 between 16.46CHF – 17.6CHF and today (July 2019) between 11CHF – 12.2CHF, but if we look at the graph for an AT we have been in a descending market since 2015.
The valuation is therefore better with a PER of 9 and a yield of 6.1%, but the problem remains identical to your analysis of October 2018 (debt, free cash flow, etc.). I am therefore doubtful, one way tells me yes and the other to stay away for the moment.

For screeners, this would probably deserve an article… You just have to give me a little time 😉

Very gladly and why not inaugurate with a "live video"? Even if I am, like you, rather in favor of written articles. I look forward to reading you about screeners.

Kind regards,
Xavier

[PloutosNX]

Hello Jerome,

I hope you are well. Sorry for not being more present and taking too long to respond.
I did the poll just this morning! If you allow me I will open a new topic to be able to give an opinion on certain points that you raise.

The more I advance in my research and understanding of the markets, stock valuations, dividends, etc., the more questions I have!

Referring to one of your articles, you talk about using a SHORT position on the S&P500 when the momentum is negative. Which ETF do you use to make the SHORT and with what momentum value? Do you use a weighted value with a higher share based on time (eg 6-3-1 month at 20-30-50%)?
This is similar to technical analysis and I remember reading that it was the best way to lose... am I to understand that in some cases you make exceptions and that TA is a good complement to the fundamental analysis and stock picking that you generally do?

I am currently still deepening my knowledge without taking action.

I have continued my research on stock valuation ratios, but I remain stuck on how to find, select and define which stock to put in a portfolio.

Would you be willing to show how you go about finding an interesting stock using "financial times" or "quant investing"?

I also read that you talk about the banking sector and that some valuations are interesting, but if we take UBS as an example, the stock is at a low price (compared to 2007) and the dividends are high. Is it a good investment? Or the pressure it is under internationally and the penalties it pays would not be a very negative factor?

Good day,
Xavier

PS: I might open other topics to avoid continuing to load this one and it becoming a "dog".

[PloutosNX]

Hello Jerome,

Of course, the advantage with the IBAN is the payment in 1 day! I am happy to have been able to bring something to the site!

I thought you were using a screener, but with which platform or do you have several? I haven't found one that allows enough flexibility of use, but maybe I haven't looked in the right place.

I'm going to look at these two ratios, Shiller PE and P/B. I had started looking at the PE, but it seems to me that it's very difficult to find this type of opportunity in a market that is fairly liquid.
Would you have any reading to recommend to me regarding the explanation of ratios and finding the most attractive markets? I am currently with Benjamin Graham's book and I have not yet been able to immerse myself in Jeremy Siegel's.

Good day,
Xavier

[PloutosNX]

Good morning,

Here I am again with some answers or additional information.

If we come back to the questions concerning IBKR, it is possible and simple to send CHF directly to their account with a Swiss IBAN and everything works perfectly.
It is also possible to transfer CHF, EUR or USD to accounts in Switzerland, you just have to set this up correctly at IBKR. The advantage of converting funds with IBKR is that the fees are very low (around 2USD up to around 100k), we are far from the 1%-2% of our banks for fees. You just have to be careful to use FXCONV and not IDEALPRO when buying/selling the currency.

I have also taken the opportunity to read some of the books you recommended on investing and this has led me to new thoughts and questions.

I'm starting to understand the advantage of dividend growth stocks, as well as so-called aristocrat stocks, over simple ETFs and your top down approach (indices -> stocks).

But how do you define that a market/index is "too expensive"? Because today I find them all very very high.

Regarding the search for opportunities for dividend growth stocks, what tools do you use? I don't think you go through every report of every company in existence or even part of an index to find them?

Good day,
Xavier

[PloutosNX]

Hello Jeromes,

Thanks for the advice.

My idea with graphical analysis was mainly to be able to detect in which phase of a cycle we are and to be able to find an interesting entry or exit.

I don't know Jeremy Siegel's book, but I'm going to order it to read it and do the same with Benjamin Graham's which has been catching my eye for a long time.

Even if at the beginning I will be content to diversify with simple ETFs.

On this subject, I have a little problem understanding your asset allocation. If I understand you correctly, you invest in dividend-growing stocks, but in your monthly allocation table, these are references to indices, so you use ETFs or did I miss something?

Have a nice weekend,

Xavier

[PloutosNX]

Hello Jerome,

Fundamental analysis will of course also arrive, don't worry! But first I will continue with technical analysis, to better understand the patterns.
Time is an important factor, but understanding the issues, principle and knowing where you stand is something essential for me. I think I read that your strategy with your indicator and signals took you 1 year to implement and test, so you also always think before doing something and you don't jump in blindly, that's one of the reasons why I appreciate your site and reading you.

The average annual return is over a period of several decades, but I agree with you, that today with a world index, S&P500 is more towards 5-7% with inflation.

I think I didn't describe it well, because I don't plan to go back to CHF with what would be converted on IBKR, but to stay in the currency of the index, action that was used.

I also thought in my strategy to invest directly in Switzerland listed in CHF in order to ensure diversification.

Of course I don't have to buy every month, but after a lot of research, backtesting and other analysis I come to the conclusion that it's the best way.
Here we are of course only talking about the money that will be invested "automatically" monthly. I have not yet mentioned my strategy for entering into a position with the capital already available... but to keep it simple in this case, my reading will be done over 6-36 months, to be defined when everything is in place depending on the current situation.

Thank you for all your comments, clarifications and help. I will be able to continue my research in order to find the best solution.

Have a nice end of the day,
Xavier

[PloutosNX]

Hello Jerome,

It is certain that some questions are still impossible to answer, but these discussions are very interesting, because even by deviating from the main subject, each person's experience allows us to learn and to enrich ourselves with other experiences or ideas that we would not have had by remaining alone.

I am far from being a pensioner yet! I have barely reached half of retirement age! But I might as well prepare as soon as possible, because here time is the determining factor and also the ability to follow one's strategy.

I will already answer a general question regarding the loss, I have already experienced this a few years ago, it was even more than 25% and on a substantial amount, but I did not move, I simply waited. What I regret today with this experience is to have bought in one transaction and not with a smoothing over several months. This is the experience that I learned, hence my idea of strategy today.

I will try to explain my current reasoning. It has changed since the beginning compared to our first discussions. Now my goal is to have the largest part of my assets on Swiss soil, this to avoid problems that may arise with other countries and new regulations.

I know that the past does not predict the future, but in the long term and if we analyze in a purely mathematical way, we know that the stocks had a return of 3.5%.

If we take a simple example and try to be as realistic as possible with Postfinance, if you invest 500CHF per month in an S&P500 ETF in USD. There will be a percentage for the exchange, looking at yesterday's rate offered at Postfinance (https://www.postfinance.ch/fr/particuliers/assistance/outils-calculateurs/calculateur-monnaie.html) and the interbank stock exchange zone (https://www.zonebourse.com/SWISS-FRANC-US-DOLLAR–2389514/?type_recherche=rapide&mots=chf_usd), we have for amounts less than 50kCHF a value of 1.4% (and for amounts up to 250k it is 0.9%).
Then there is the purchase of the ETF, for an American place it is 25USD up to 1000USD (so min 2.5%, friends with 5000CHF or 500USD it is 5%), so for my 500CHF of departure it makes 1.4% + 5%, we are at 6.4% which is 2 times the average value of the return of the shares on the very long term or if we look at the S&P500 on the last 6-10 years, we have not gained or lost anything and therefore we start to gain after 1 year, this of course without the resale and the conversion in CHF. It would therefore be necessary to wait 2 years to be at a zero balance sheet in the case where the markets are strongly bullish.

I hope I haven't lost you along the way and that my reasoning is correct, otherwise I would be happy to have been wrong!

If we now take the same example with our 500CHF invested every month, but we use IBKR and we repatriate these assets once a year to Postfinance to have our capital in Switzerland. There I think you understand my questions concerning the chain of sending money in CHF on IBKR (with a good IBAN), then the conversion into physical fiduciary currency and not "virtual" and then the return (or sending from IBKR) of USD to Postfinance and a USD account.
Here are the costs for this second reasoning:

– CHF account -> IBAN IBKR in CHF 0.-
– Conversion 500CHF to USD approximately 1USD
– Purchase of the S&P500 ETF very low (around 1USD)

Do this every month for 1 year, you then get around 6000USD (you then have to also remove the IBKR fees of 120USD annually, but as for Postfinance I did not take them into account, we do the same here)

– Sale of the ETF 6000USD (or more if the year was good) fees also low (10USD)
– Transfer from IBKR to USD account in Switzerland IBKR fees 0.- (free once a month), then you have to see what for example Postfinance charges you to receive foreign currencies on a foreign currency account
– Purchase of the same ETF S&P500 at Postfinance 40USD for an amount between 5k and 10k, therefore between 0.8% and 0.4%.
I think that all in all the real value will be 0.6% to 1%, against 6.4% and this is only for the purchase, we are not talking about reselling and then living with the gains.

I agree with you that these costs of 6.4% (or 13% if we calculate the resale) can be considered as zero in the long term, but this is not negligible and I do not think that the time or energy to do the second solution is so great compared to the profitability.

I look forward to reading you and having your opinion on this. I hope I am not mistaken in my reasoning, but as already said, if this is the case and the costs are lower it would be really good news!

Have a nice weekend,
Xavier

PS: I don't focus on costs alone, but for me I need an overall vision and to be sure before launching, because if it is not profitable and especially if there is a hesitation to exit at a sharp drop, because the costs incurred would be greater than the losses or worse, everything would accumulate more than significantly, it would be better to stay in cash in a savings account.

 

[PloutosNX]

Good evening Jerome,

Regarding the first "problem" for me is not to save, but to avoid actually having a credit (or a loan) on funds. My goal is to really convert and own this fiduciary value. I don't think I talked about limit orders on forex (besides this doesn't really speak to me, I must have said something that makes you think of it, but that was not my intention, I am too novice for this.)
So you answered my question with just the "normal" cached account and using FXconv.

Thank you for the answers to the questions. I will try to argue why they came, so that you understand my vision better.

1) My goal was to be able to transfer funds in a foreign currency (USD or EUR) from IBKR in order to avoid having to make several round trips with CHF.

2) Having lived through another bank (which is nevertheless known to be low in these fees), these were 0.75 %, so if we take the case of a round trip 1.5 % and it was also for fairly large amounts (>50k), otherwise it is 1.5 %.
I think you now understand my request better and also the first question. I will have to look at the possibilities that Postfinance offers for accounts in EUR and USD in addition to CHF. My goal is not to bother saving a few francs, but these percents in the end give a significant difference, that's why I wanted to know if it is possible to make transfers to these Postfinance e-trading accounts and also with IBKR.
I think I've put my finger on a point that you will certainly look at in order to optimize even better.

3) It was just a question of whether or not it was interesting to have it. I never had one.
need for the moment with max 1 fund at a time.

There's a sentence you said that I'm picking up on: "It's always good to take, but if you worry about it, you're going to overlook bigger problems."
Do you have anything specific in mind? Do you have any information to share on what to watch out for?

I still have a bit of research work to do before I really get started.

Have a nice evening,
Xavier

[PloutosNX]

Hello Jerome,

Thank you for taking the time to answer my questions and comments and sorry for the response time!

It is true that it may not be ideal to put so much money into IBKR from the start.

I didn't have time to look at the app in more detail, but I found an answer regarding "real" and "virtual" FX on this link ( https://forum.mustachianpost.com/t/interactive-brokers-for-dummies/447/10 →Search for "Virtual"). This would be a bug at IBKR as an explanation regarding real and virtual funds. Maybe this information will be useful to others as well.

I have two questions regarding the Postfinance account and their e-trading, maybe with your experience you can answer me.
1) I read that it opens CHF/EUR/USD accounts directly with an e-trading account, but can these accounts be used to receive and send funds in their currency from other banks/brokers or are they "just internal Postfinance deposits"?

2) What is the currency conversion rate that Postfinance uses? My question is more precisely what is the margin that they take on the interbank rate? I have not been able to find this answer on their site, maybe you have already encountered it.

3) A third one comes to mind, do you use their e-trading tax statement or is there another way to not have to order it?

Now as they say, all that's left is to get started! I'm already going to open an account at Postfinance and then at IBKR and at the same time set up a simple investment strategy (based on a few ETFs). I'll keep you posted.

Have a nice weekend,
Xavier

[PloutosNX]

Hello Jerome,

Thank you for taking the time to answer my questions.

I had already read and reread the post on brokerage fees and that's why I wanted to go with IBKR.

I will take note of your first advice and have two financial intermediaries, including one in Switzerland which will certainly be Postfinance (my wife will be happy that will make yet another account!). Concerning Migros I know well their uncapped custody rights… I have already looked elsewhere, but it is either even more expensive, or it is not possible to have the products/funds.

My comment about the US account is that I recently opened an account at a new bank and the multiple choice question was required. I don't know what the consequences would have been if I had to check the affirmative cross.

My idea of sending in CHF and not in USD or EUR is mainly to avoid the often quite high conversion fees added to the interbank rate.

I will try to take different answers to talk about it again if you allow me.

1) The fees of 10$ per month at IBKR are really low I think, especially since it is without buying/selling action. The perverse effect of the 100k is the negative rate if you are in CHF and my goal was not to convert everything at once, but to do it regularly to also smooth the exchange rate in the event of a large variation (it is rare, but we have already had the EUR-CHF example)

2) The smartphone app is even worse I think! I tried it too and I didn't find one more pleasant/simple than the other.

3) Thanks for the link to the article on choosing an IBKR account. If I understand correctly, equal to the value that I load when I register (so greater than 25k or 100k for a Margin Portfolio), I could choose to have only a cash account with 100k (but modifiable later if I understand correctly).

4) I tried to buy/sell Forex positions, but I managed to get strange positions called "(FX Portfolio - Virtual FX Position)" and nothing in "Market Value - Real FX Balance", so here is my question regarding the two options (IDEALPRO or FXCONV) and the correct method to use them and have real fiat currencies.

But as you say, practice makes perfect, however I prefer to inform myself and understand everything, or as much as possible, before undertaking anything.

I will certainly come back with other questions, but in the meantime I will continue to document myself on the different solutions. Postfinance seems to me to be a good alternative to have a large part in Switzerland, but compared to the monthly contributions and purchases that I plan to make, I wonder if Strateo (also based in Switzerland) would not be better, even if in buy & hold, the fees are not the most important, they still play a role.

Thank you for reading and I look forward to reading you too,

Xavier

[PloutosNX]

Hello Jerome,

Thank you for this remark and you put your finger on a point that I had not yet considered.

I think you are right about the risk, however there are nuances and some ETFs are certainly better and safer than others. I need to analyze these different points.

Of course diversification is the best solution, however I am not yet trained (and comfortable/confident) enough to do it.

My idea is to start with this ETF "ishares core msci word" and define other ETFs or actions for the future.

Good day,
Xavier

[PloutosNX]

Hello Jerome,

Thank you for this welcome message.

I am well aware that ETFs are not less risky than stocks, their only advantage is to have a range of stocks directly in one package. But as you say, this allows you to become more familiar and then perhaps move on to stocks.

Regarding their cost, I find it reasonable (between 0.1-0.3%), but what you have to look at is how they are managed, here is the link to a very interesting article https://www.investir.ch/article/ameliorer-la-performance-du-sp-500/ .

Looking forward to reading you and being able to share on this subject with other people.

Xavier

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