Stay Defensive, De-Risk Portfolio, Protecting the Down Side in Current Market Condition

I invited my good friend and my soccer buddy for more than 20 years, Sani Hamid, to speak at a private event organized by Online Traders Club Singapore.

I shared about Sun Tzu in Investing while Sani talked about “Short vs Long Term Investing: Who Wins?“, how he convinced his mother in-law to invest in gold (lol) and how to build a portfolio to reduce market risk and business risk through asset allocation and diversification.

All participants were impressed by Sani Hamid’s knowledge in this great event.



Kenny Loh’s sharing on Sun Tzu in Investing


Sani Hamid’s Sharing his topic :Short Term vs Long Term Investing and how to use a Diversified Portfolio strategy to Stay Defensive, De-Risk Portfolio, Protecting the Down Side in Current Market Condition.

Current Market Risks

1.       The U.S. markets are clearly overbought and despite any correction, will continue into even more overbought territory if it moves higher from here. The only way to bring valuations back to historical norms of around 16-18x P/E is for a major decline to take place. And as we all know markets will tend to overshoot to the downside (in the same way they overshoot to the upside like now);

2.       The current market expansion is already into its 8th year and is the second longest after World War 2 – second only to the 1990 to 2000 rally. That rally came to an abrupt end thanks to the bursting of the Dot Com bubble. As it stands, we find it hard to justify further sustainable gains on the U.S. markets as we enter into a period where we will have the Federal Reserve tightening interest rates AND withdrawing liquidity at the same time (see NY Times  March 13, 2017 “The Fed’s Era of Easy Money Is Ending”);

3.       Further out, we expect the U.S. economy to sputter as the short-term hype over President Trump’s policies either wanes or prove to be difficult to be implemented. And even if these make it off the drawing board, the majority are counter intuitive and will lead to a less competitive, less efficient & slower economy.

Advice from Sani Hamid, Wealth Director, Wealth Management (Economy & Market Strategy), FINANCIAL ALLIANCE PTE LTD

What should investors do?

Any rally from here should be taken as a step closer to the top of the market cycle. In other words, U.S. markets today are neither at the bottom or middle of the cycle but in the last quadrant. This means a deteriorating risk/reward ratio – investors will be taking on more and more risk without being sufficiently rewarded.

As such investors should take a cautious and defensive approach when investing under such market conditions. The term “caught holding the baby” should be of a primary concern. De-risking one’s portfolio, protecting the downside, investing into non-market correlated assets etc all come to mind at this point.

On our end, our risk-based portfolios are in a defensive mode which should guard against the ensuring volatility. We have also introduced a thematic portfolio called “90/10” which seeks to provide investors with a lower volatility option on their investments in this uncertain market environment.


I will be conducting a “Diversified Investment Portfolio Construction” workshop to share the strategy and methods to DIY an investment portfolio to manage risk. I will share how the professional investment managers use Asset Allocation, Diversification, Core-Satellite strategy to build their portfolio for investors.

Seats are very limited. Sign up here



This Post Has One Comment

  1. Bob Ashman

    An excellent presentation

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