Time Stamps

Introduction 0:00

Understanding market bubbles and their history 5:57

Bullish market sentiment towards bubble direction 10:58

Rational bubbles and irrational bubbles. Which one are we? 12:31

Largest outflows from tech funds 19:47

Long-term market performance and trends: why timing the market is a terrible idea 23:35

Where are the remaining opportunities in market bubbles? 29:07

Returning growth and rising wages lead to inflation pressures and rate hikes 32:55

The costs of trying to time the market 37:43

QnA: If I invest at a high now and the bubble bursts, what will happen to my funds in Endowus ? How long will the funds be profitable while dollar cost averaging? 42:24

QnA: What is your view on inflation? Are we entering a long cycle of higher inflation rates? Is it still worth holding fixed income assets? 44:10

QnA: What does Endowus has in place that is better than other competitors such as stashaway and syfe ? 49:00

QnA: In terms of PE ratio, jack bogle has famously said that the inflated PE ratio is unsustainable and he has been wrong for many many years. Is this a bubble? 56:46

QnA: What is causing the huge outflow of tech stocks? Do you think they will rebound? 1:02:55

Excerpts from the Webinar

Bullish market sentiment towards bubble direction 10:58

If you look at this study by Bank of America Global Investment Strategy, it shows that the Bull and Bear Indicator is only at 6.9, which is high but not as high as it was in January 2020 at 7.2. Because of this, the sentiment towards a market bubble has been quite positive but not definitive.

The fear and greed index from CNN, which measures how fear and greed can influence investors over time, has shown that we are currently not facing excessive levels of emotion. For example, in March 2020 investors were feeling extremely fearful whereas at the end of 2020 investors were feeling extremely greedy and optimistic, since then it has maintained at a steady level between 60 - 70%.

Where are the remaining opportunities in market bubbles? 29:07

We have seen some interesting flows in the equity market, for example there have been major outflows from the technology sector and inflows into the energy and the materials sectors. Another interesting shift in the equity market is how the commodities sector has had a massive rebound this year, a phenomenon we have not seen since 2002. Moving forward however, it is very difficult to predict which sector will become the next winner, all we know is that these volatile changes will continue to happen.

One thing that has been the talk of the town in the equity market is that the value factor is really coming back. After many years of underperforming, we finally saw value outperform growth. Yet, this is not surprising because if you were to take the average in performance overtime, value has been proven to perform better than growth. This is important to note because if you are looking for trade and investment opportunities I don’t think that short value trade would work anymore.

QnA: If I invest at a high now and the bubble bursts, what will happen to my funds in Endowus ? How long will the funds be profitable while dollar cost averaging? 42:24

It really depends on the market and time, for instance if you were to look at the market bubble of 2018, markets fell 20% and recovered at a very slow rate. In comparison, the market bubble of March 2020, markets had fallen 30% and rebounded so fast that asset classes ended up positive in the double digits by the year's end.

It is really important to understand that if the bubble bursts and if the market does fall, it will recover and reach an all-time high in the future. Just as it did during the Dot-com crash in the 1990s and during the Global Covid-19 Pandemic last year. You have to look at the big picture and look at the long term with your investments.

QnA: What is your view on inflation? Are we entering a long cycle of higher inflation rates? Is it still worth holding fixed income assets? 44:10

In the case of inflation, the common belief is that it will head towards a transitory and cyclical trend. We might see higher inflation than in the recent past but that is because inflation rates in recent years have been abnormal. In 2009 we saw massive deflation with households and balance sheets of companies being significantly damaged, therefore inflation rates were then held artificially low.

It is important to understand that the proliferation of technology has also led to disinflationary pressures during this decade. For example, how Netflix led to the decline of people renting/buying DVDs and how Amazon led to lower retail prices. These technologies and digital platforms are lowering costs and causing artificial disinflationary pressures. However, such pressures might dissipate soon because of the massive supply shocks that are happening throughout the market which is causing an imbalance between supply and demand.

Over the past year, central banks have been printing more money, and governments are handing out Covid cheques and subsidies. The recent tech correction and cryptocurrency plunge has sent jitters into the market — has the bubble finally burst? And is the access to free money from the government and banks finally going to stop?

In this session, join Sam Rhee as he covers the following topics

  1. Current liquidity in the debt markets
  2. Update on bubble around tech stocks and cryptocurrency
  3. Risk of overweight in the Singapore markets
  4. Is Endowus portfolios built to insulate against such volatility?

About the Speaker

Samuel Rhee

As the Chief Investment Officer & Chairman of Endowus, Sam is responsible for the asset allocation and investment solutions. He heads the Investment Committee and enables holistic portfolios for every investor. He is one of the founding partners of Endowus and joined the fledgling startup to democratize wealth and disrupt the existing incumbents to change the way investing is done in Singapore. Endowus is now the first and only digital adviser for CPF, SRS and cash savings.

As the former Chief Executive Officer and Chief Investment Officer at Morgan Stanley Investment Management in Asia, Sam has over 26 years of investment experience, managing investment portfolios in the tens of billions, while working with the largest financial institutions in the world.

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