Is it time to liquidate?

Dear Mr Tan

Stock market is down by a lot, is it adviseable to liquidate and switch to fixed depost?

REPLY:

I prefer to find the right time to make further investment in the stock market for the long term. The drop in the stockmarket make the shares more attractive.

Sharp drop in Singapore market

Hi

Why does the Singapore market drop so much in two days, when the economic fundamental is still sound?

REPLY:

This is due mainly to the outflow of foreign funds. When they wish to liquidate, they will sell at any price. The investors dare not buy. So, the drop is very sharp.

This has happened many times before. When the selling by the foreign funds stops, the market will rebound sharply.

High flying stocks drop more

Here are the prices of the blue chips in Singapore and the market indices.

Stock       Peak  Current  Drop
S Land     12.10    8.20    32%
City Dev   17.90   13.10    27%
CapitaLand  8.75    6.60    25%
DBS        25.00   19.20    23%
Keppel     14.40   11.10    23%
Sembcorp    6.30    4.84    23%
UOB        24.20   19.90    18%
SIA        20.10   17.00    16%
SPH         4.76    4.22    12%

STI ETF    37.30   32.50    13%
Nikkei     18300   15900    13%
HKSI       23500   20570    13%

The market indices dropped by 13%. The high flying stocks dropped by 23% to 32%.

Switch to Global Equity?

Dear Mr Tan,

I have been waiting for your update on the stock market as I respect you as a very disciplined and shrewd investor.

What is your opinion of switching $40,000 worth of my NTUC Balanced Fund to Global Equities Fund?

Thank you for your generous sharing of your investment strategy.

REPLY:

I suggest that you wait for 1 or 2 more weeks. But you can monitor the situation and move earlier, if you feel that it is the right time.

Collapse of the stockmarket

I have been waiting for more than six months for the right time to invest in the Singapore stockmarket.

My target entry point is 2,700 on the ST Index (representing a drop of 25% from the peak of 3,600).

It may not reach this level, so I may start to invest in small amounts from the STI level of 3,000. This is likely to occur within a few days time.

I heard that Warren Buffet had started to invest in some banks (with little CDO expsoure). He has decided that the current prices represents good value. Although the market may drop another 10% or so, he has decided that it is time to start accumulating.

My choice of funds are:

* The STI trakker fund in SGX
* The global equity fund managed by NTUC Income

Funding for research for young professionals.

Getting funding for research is never an easy task. Dr. and Mrs. Lee Kum Tatt had experienced this in their professions and their careers both as recipients and donors of grants. They share with us their experiences and what they think can be done. Read about this in Lee Kum Tatt’s blog.