When Comparing Alternatives, Hang Seng Index Doesn’t Hold Up

By Lucy from manchester, uk (honklings) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h26m / day (79 day average)

I should stop kidding myself, there are individual stocks out there than can trump Hang Seng Index in practically every aspect I deem important.

If talking about wide moat, only one stock in the Hang Seng Index is wide moat (Hong Kong Stock Exchange) whilst everything else is at most narrow moat or even worse, possesses no moat. One can argue that at aggregate, that is a wide moat, but in comparison why wouldn’t I buy the MOAT ETF instead since every stock inside the ETF possesses a wide moat.

If talking about dividend growth history, Hang Seng Index doesn’t have 10 years of dividend growth history (it cut its dividends during 2009). One can argue that I can discount that fact in the dividend growth calculation, but the story is still ugly.

If talking about dividend yield + dividend growth, if using the rules set out in the blog post “If Wide Moat Div Yield + Growth Discount Rate, Forget Market Timing“, then Hang Seng Index has zero growth rate due to not having 10 years of dividend growth history. As a result, in order to hit the discount rate, the dividend yield needs to be 7.15%, which it currently isn’t at.

So whom I kidding? I’ll be exiting my position in Tracker Fund of Hong Kong asap due to an error in my investment thesis. Thank goodness I started small, because the position is very small which makes the decision to treat losses as sunk cost easier.

[Disclaimer]

Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)

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