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Daniel Loh: Tips On Investing In A Difficult 2015
Aspire, Thought Leaders | 21 January 2015
By: Simeon Ang
Articles (125) Profile

With the start of 2015 being filled with much volatility, we managed to catch up with esteemed speaker and investment coach, Daniel Loh, to find out more about his thoughts and opinions on the investing climate in 2015.

In his speech in the upcoming Financial Growth Summit, Daniel is expected to talked much about his outlook for the year 2015. Intrigued by this, we asked him about the possible dangers that investors should keep an eye out for as well as his thoughts about other notable developments.

Daniel Loh: 2015 will be a difficult year to invest. If investors are not careful in selecting the right markets to play, one might get hurt. The main reason for the uncertainty is the anticipated rise of interest rates (by the US Federal Reserve). We have already seen what happened in the last few months. It all started last July when the US dollar started to appreciate. We can now clearly see that the US dollar has been experiencing bullish sentiments after going through a 13 year period of bearishness.

Uncertainty of the interest rate has caused investors to park their money in the US dollar. And this has caused a lot of turmoil and volatility in some markets. 

In particular, I feel that the crash in crude oil prices is partly due to the rise of the US dollar. Some may say that it is due to the OPEC decision not to cut supply that caused crude oil to crash. But I feel that US dollar does play a significant role too. Then there was a collapse in some currencies such as the Euro, Aussie, Yen or some emerging market currencies like Ringgit. The latest episode is of course the Euro- Swiss franc peg collapse.

As a further confirmation of how investors are fleeing towards safer assets, bond prices have also shot up recently.

Precious Metals – Rebound Could Strengthen Further

Daniel Loh: One other surprise (aside from the crude oil crash and Swiss Franc jump) to me is really the stabilisation of precious metals after the Japanese government announced its second round of quantitative easing (printing money). Gold touched a bottom of $1,130 before the rebound. I do think that previous metals does look like a good investment before the anticipated rise in interest rates.

Precious metals are once again touted as safe havens just before the uncertainty of the Federal Reserve interest rate decision. In my opinion, that is the reason you might have seen gold and silver rebounding in the past few days. I feel that there is a chance of higher prices for both precious metals in the medium term.

An Investor’s Achilles Heel – Not Knowing
Daniel Loh: While opportunities might be available to the astute investor, investors must have in their minds a specific time frame for their positions. Because I strongly believe that the most common mistake that investors make is that they do not know the duration for which they want to hold a position.

When investing, we can execute day trades, position trades for one to two months or we can buy stocks and hold them for a few years or even longer. When most investors buy stocks, they normally do not have an idea how long they intend to hold on to their positions.

Only when we are clear about the duration, then we can apply the appropriate methods to suit the time frame we are comfortable with.

An example would be placing stop losses. We are sometimes taught in books that placing stop losses are important. This is not necessarily true. Some of the well-known investors don’t place stop losses. Investors like Warren Buffett don’t, because they are long term investors. They even average down to add to their positions when price goes cheaper. We can’t say they are wrong. They are long term investors who can hold a position for 20 years or even longer. 

However for day traders, not putting a stop loss would be unimaginable. The most important thing for investors is to know what time frame suits them.

Aside from ascertaining the time frames for your positions, investors might also be keen to learn know how to identify the bottoms of an index or stock (hint: it’s not always about price!). This is something that I will cover in my speech during the Financial Growth Summit 2015. The 2 steps that I will introduce to attendees will be able to help them catch the start of a bull market rally and reap significant returns.

Editor’s note: Readers should take note that individual due diligence is still required before investing or trading in any asset class. Daniel Loh will be giving his address at the Financial Growth Summit 2015. For more details, head over here!

Simeon, an LSE graduate, is currently the editor of Aspire. He specialises on topics surrounding trading psychology, politics and macroeconomics.

Please click here for more information about this author.

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