My model flashed a "SELL" for MSCI World Index last week. This is the first time since 2011 June that it happened. In 2011, we had a steep correction of global stocks from Sep to Dec 11. So I do respect my model.
S&P500 is on the brink of a SELL. The CAPE ratio is so high that the forecast returns for the next 5 years is around 2 - 3% on a real basis and 4 - 5% on a nominal basis.
I never fancied European stocks since the middle of 2014. The Eurostoxx 500 just rose a mere 8% since July 2014.
From June 2014, I favoured the HSCEI and it rose around 10% since mid 2014, tech sector rose by around 12%. It is less of a "BUY" now. Valuations are not at the cheapest.
The KOSPI and Energy sectors have flashed a "STRONG BUY" recently. I won't be buying aggressively since the overall MSCI World is flashing a SELL.
Emerging Market equities is a "BUY" so again, I'll be staggering my purchases. It has become cheap again after the recent sell down.
Asia balanced funds like Schroder Asian Income and First State Bridge is a strong BUY. I will continue to hold on to these positions.
Actually, contrary to most analysts' consensus views, bonds are a good buy. Europe, Asia, Emerging Market, China, India, Latin American bonds are STRONG BUYS. Many of these countries are suffering from deflationary pressures, which favours bonds over stocks.
I will be doing some rebalancing in Feb.
