If you are a serious investor, then there should be a proper and methodical approach. What is the aim? Are we investing for retirement funds? We should all understand that fundamentally good stocks will give us good returns over a long period of time.
The broad market is generally trading without a fixed direction with the Straits Times Index (STI) gyrating in a tight range. There is no special reason for this phenomenon, as I believe that it is typical of a mid-bear phase for the market to be behaving this way.
The earthquake in China’s Sichuan province has resulted in huge losses in human lives. It is a tragedy for humankind but global stock markets staged a rally despite the many deaths being reported. What are the hot spots that we should be looking out for?
Why are there more and more people sitting on the fences? What are they waiting for? These investors are waiting for news that will cause the market to plummet, as these events will lead to panic selling. Add to the selling by speculators and you will have more panic selling.
On the other hand, the Chinese stock market has been falling non-stop since last year. What is the relationship between China companies and the US subprime issue? None. There is no relation but why has the Chinese market fallen by so much?
We are currently in this phase where bad news has been discounted and everybody is waiting for the US Federal Reserve to cut interest rate. Everybody thinks that the US is in a recession and interest rate will have to come down.
Now that all of the Singapore companies have reported the financial results, we are also very clear on how the three local banks have handled the subprime mortgage exposure.
The selling was due to the bad result for Prime Minister Abdullah Badawi, who secured a good victory just four years ago, only to be faced with such a slim victory. Now that the opposition has secured Penang, will it result in another racial riot like the one in 1969?
To catch a big rebound, certain enthusiastic, high-risk, high-return measures can be adopted. Nonetheless, playing safe can also be used as a method. To enter the market, buy stocks that drop a lot on a weekly basis. Singapore Exchange (SGX) is a good example.
I have been very patient with my portfolio, sitting on it from the Year of the Monkey to the Year of the Rooster, Dog and, finally, the Year of the Pig. Sensing that the “pig” is well fed and ready to be slaughtered, I took the decision to take profit.
