Monday 28 April 2014

Predicting The Next Market Crash Using Shiller P/E Ratio

An interesting topic to blog about when it come to searching different kinds of indicator to predict the next market crash. Well in this post, I intend to introduce another famous indicator used by many analysts...


What is Shiller P/E Ratio?
The Shiller P/E was invented by Prof. Robert Shiller of Yale University to measure the market's valuation.


How Shiller P/E Ratio is Calculated?



Why use Shiller P/E Ratio instead of normal P/E Ratio?

The Shiller P/E Ratio is deemed a more accurate indicator as it eliminates fluctuation of the ratio caused by the variation of profit margins during business cycles. 

Read more about P/E Ratio as an indicator HERE.

Why Normal P/E Ratio is an inaccurate indicator?
  • During economic expansions, companies have high profit margins and earnings. The P/E ratio then becomes artificially low due to higher earnings. 
  • During recessions, profit margins are low and earnings are low. Then the regular P/E ratio becomes higher
Case Study : 2008 Financial Crisis


The above graphical illustration contains the historical price of the S&P 500, values of Shiller P/E and values of Regular P/E from the 1st of June 2004 to 28th of April 2014.

Predicting the Peak and Impending Crash of 2008
At the peak of S&P 500 on Oct 8, 2007 as indicated by the red vertical line, the Shiller P/E value of 26.70 at that time was 61.8% above the its historical mean of 16.5. This was a clear indication that the market is at a boiling point. 

On the other hand, the Regular P/E value of 19.0 during the same period (which was close to the historical mean of 15.8) provided no clear signs that a crash was imminent. 

Predicting the Bottom and Recovery of 2008 Financial Crisis
Looking at the black vertical line in the above illustration, you can see that at the lowest point of the S&P 500, the Shiller P/E also indicate a value of 13.3 or -19.4% below the historical mean. The Shiller P/E clearly indicate that it was the right time for investors to return to the stock market. 

What's about present day? 
  • As of 28th April 2014, the Shiller P/E is at 25.10
  • Or 52.12% above the Average Mean of 16.5
  • Updated daily Shiller P/E can be found HERE
Is this a sign that the Stock Market is about to crash?
In my personal opinion, the above average Shiller P/E value serves as an early warning for investors investing in the equity market. Despite the high Shiller P/E value, I'm believe that the market is not about to crash just yet as other indicators are not pointing to that direction.

Never the less, all equity investors should start monitoring the major indicators closely as decide what's best for their investment. Perhaps it is a good time to take profit and diversifying your gains into other investment opportunities which are non-equity related?

Find out what other indicators to help you predict the next crash:
Cheers and Happy Investing!

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Sunday 20 April 2014

Private Retirement Scheme (PRS) Fund Performance as of 31st March 2014

Check out these PRS Funds performance from three Fund Houses (CIMB, Hwang and RHB). Source provided by Phillip Mutual Berhad.

Click to Enlarge

If you like to know more about PRS, feel free to check out these articles:




Also feel free to drop me an email at shanesee03@gmail.com if you have inquiries on PRS, Unit Trust Investing and/or Financial Planning!

Cheers and Happy Investing!



Thursday 17 April 2014

Top 10 Best Performing Unit Trust Funds As of 15th April 2014

It's been 8 weeks since my last review and I'm surprised to see certain funds performing better individually as compared to their peers. There's also certain categories have been generating decent returns over the past 8 weeks. Find out more....

And...if this is your first time reading this review, I would highly recommend that you read "A Guide Towards Understanding Unit Trust Performance Table" before proceeding. Seriously you should!


Review
Fund Category : Equity Malaysia
a) Top 10 Best Performing Fund for Category Equity Malaysia (click Image to Enlarge):


5 Years Annualised Ranked 1 (Overall) 
Phillip Master Equity Growth Fund (+27.62% per annum)

5 Years Annualised Ranked 1 (Non-Islamic) 
- Phillip Master Equity Growth Fund (+27.62% per annum)

5 Years Annualised Ranked 1 (Islamic Equity) 
- MAAKL-HDBS Flexi Fund (+22.02% per annum)

b) 8 Weeks Gain/Loss Ranking Table for Category Equity Malaysia Funds:

Fund Name
YTD as of
13th Feb 2014
YTD as of
15th Apr 2014
8 Weeks
Gain / Loss (%)
8 Weeks Gain/
Loss Rankings
Previous
4 Weeks Gain/Loss Rankings
Phillip Master Equity Growth Fund
-0.28
3.56
3.84
5
8
Kenanga Growth Fund
1.96
7.53
5.57
2
3
CIMB-Principal Wholesale Equity Fund
-0.66
7.06
7.72
1
7
MAAKL-HDBS Flexi Fund
-0.28
2.13
2.41
7
5
Kenanga Syariah Growth Fund
0.55
4.76
4.21
4
2
CIMB-Principal Equity Fund
-1.57
-0.44
1.13
8
4
Hwang AIIMAN Growth
0.23
4.93
4.7
3
7
CIMB-Principal Equity Fund 2
-0.22
2.62
2.84
6
1
MAAKL-CM Shariah Flexi Fund
Newcomer
7.82
N/A
N/A
N/A
RHB-OSK Malaysia DIVA Fund
Newcomer
2.97
N/A
N/A
N/A
AVERAGE 4 WEEKS GAIN/LOSS (%)
4.05
Best Performing Fund over 8 weeks period: 
Non Syariah : CIMB-Principal Wholesale Equity Fund (+7.72%)
Syariah : Hwang AIIMAN Growth Fund (+4.7%)

Worst Performing Fund 8 weeks period:
Non Syariah : CIMB-Principal Equity Fund (+1.13%)
Syariah : MAAKL-HDBS Flexi Fund (+2.41%)

c) Performance Comparison with the KLSE Index between 13 Feb 2014 to 15 April 2014


KLSE Index (%) Gain/Loss : +2.02%

Comparison With:
  • Average Top 10 Unit Trust Equity (%) Gain/Loss : +4.05% (Out performed the KLSE Index)
  • Non Syariah - CIMB-Principal Wholesale Equity Fund : +7.72% (Out performed the KLSE Index)
  • Syariah - Hwang AIIMAN Growth Fund : +4.7% (Out performed the KLSE Index)


Review
Fund Category : Asia excluding Japan
a) Top 10 Best Performing Fund for Category Asia Exc Japan (click Image to Enlarge):


5 Years Annualised Ranked 1 (Overall) 
Public Islamic Asia Dividend Fund (+12.10% per annum)

5 Years Annualised Ranked 1 (Non Islamic)
- Eastspring Investments Asia Pacific Equity MY Fund (+8.84% per annum)

5 Years Annualised Ranked 1 (Islamic) 
- Public Islamic Asia Dividend Fund (+12.10% per annum)

b) 8 Weeks Gain/Loss Ranking Table for Category Asia Exc Japan Funds:

Fund Name
YTD as of
13th Feb 2014
YTD as of
15th Apr 2014
8 Weeks
Gain / Loss (%)
8 Weeks Gain/
Loss Rankings
Previous
4 Weeks Gain/Loss Rankings
Public Islamic Asia Dividend Fund
-2.12
0.47
2.59
3
5
Pheim Asia Ex-Japan Islamic
0.94
2.86
1.92
7
4
Public Asia Ittikal Fund
-2.29
-0.36
1.93
6
5
PB Islamic Asia Equity Fund
-1.51
0.97
2.48
4
1
Eastspring Investments Asia Pacific Equity MY Fund
-3.27
2.28
5.55
1
9
Eastspring Investments Asia Pacific Shariah Equity Fund
-2.49
-3.33
-0.84
8
6
Pheim Asia Ex-Japan
-0.74
2.67
3.41
2
2
PB Islamic Asia Strategic Sector Fund
-1.9
0.15
2.05
5
3
Hong Leong Asia-Pacific Dividend Fund
Newcomer
2.66
N/A
N/A
N/A
Hwang Select Asia (Ex Japan) Opportunity Fund
Newcomer
0.67
N/A
N/A
N/A
AVERAGE 8 WEEKS GAIN/LOSS (%)
2.39
Best Performing Fund over 8 weeks period: 
Non Syariah : Eastspring Investments Asia Pacific Equity MY Fund (+5.55%)
Syariah : Public Islamic Asia Dividend Fund (+2.59%)

Worst Performing Fund over 8 weeks period:
Non Syariah :  -
Syariah : Eastspring Investments Asia Pacific Shariah Equity Fund (-0.84%)

c) Performance Comparison with the MSCI Asia Excluding Japan Index between 13 Feb 2014 to 15 April 2014


MSCI Asia Exc Japan Index (%) Gain/Loss : +5.90%

Comparison With:
  • Average Top 10 Unit Trust (%) Gain.Loss +2.39% (Under performed the MSCI Index)
  • Non Syariah - Eastspring Investments Asia Pacific Equity MY Fund : +5.55% (Under performed the MSCI Index)
  • Syariah - Public Islamic Asia Dividend Fund : +2.59% (Under performed the MSCI Index)

Review
Fund Category : Greater China
Top 10 Best Performing Fund for Category Greater China (click Image to Enlarge):


5 Years Annualised Ranked 1 (Overall) 
CIMB Principal Greater China Equity Fund (+7.82% per annum)

5 Years Annualised Ranked 1 (Non Islamic)
CIMB Principal Greater China Equity Fund (+7.82% per annum)

5 Years Annualised Ranked 1 (Islamic) 
- Public China Ittikal Fund (+4.33% per annum)

8 Weeks Gain/Loss Ranking Table for Category Greater China Funds:

Fund Name
YTD as of
13th Feb 2014
YTD as of
15th Apr 2014
8 Weeks
Gain / Loss (%)
8 Weeks Gain/
Loss Rankings
Previous
4 Weeks Gain/Loss Rankings
CIMB-Principal Greater China Equity Fund
-0.3
-0.34
-0.04
4
4
Public China Ittikal Fund
-1.89
0.25
2.14
1
1
PB China Pacific Equity Fund
-3.52
-5.5
-1.98
8
9
PB China Titans Fund
-3.49
-3.36
0.13
3
8
Public China Select Fund
-3.6
-3.33
0.27
2
8
MAAKL Greater China Fund
-0.98
-3.93
-2.95
10
2
AmIslamic Greater China
-3.72
-5.47
-1.75
7
5
Eastspring Investments Dinasti Equity Fund
-2.77
-3.46
-0.69
5
3
Manulife Investment - China Value Fund
-2.15
-4.7
-2.55
9
6
Pacific ELITE China Growth Fund
-2.35
-3.85
-1.5
6
7
AVERAGE 4 WEEKS GAIN/LOSS (%)
-0.89

Best Performing Fund over 8 weeks period: 
Non Syariah : Public China Select Fund (+0.27%)
Syariah : Public China Ittikal Fund (+2.14%)

Worst Performing Fund over 8 weeks period:
Non Syariah :  MAAKL Greater China Fund (-2.95%)
Syariah : AmIslamic Greater China (-1.75%)

Performance Comparison with the Shanghai Stock Exchange (SSE) Index between 13 JaFebn 2014 to 15 April 2014


SSE Index (%) Gain/Loss : +0.15%

Comparison With:
  • Average Top 10 Unit Trust Equity (%) Gain.Loss : -0.89% (Under performed the SSE Index)
  • Non Syariah - Public China Select Fund : +0.27% (Out performed the SSE Index)
  • Syariah - Public China Ittikal Fund : +2.14(Out performed the SSE Index)
*******************
That's all for this review folks!


Cheers and Happy Investing!


Like to start investing in Top Performing Funds such as Phillip Master Equity or CIMB-Principal Greater China and at the same time save more via Lower Sales Charge?

Then feel free to contact me at shanesee03@gmail.com for advisory and recommendation.