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Thread: Time to exit, not enter, markets

  1. #1
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    Default Time to exit, not enter, markets

    July 6, 2007

    INVESTING IN STOCKS AND PROPERTY

    Time to exit, not enter, markets


    HAVING made a living as a fund manager and trader for the past 25 years, I have seen the general investing public hurt numerous times when they invest aggressively near the peak of a bubble, whether in stocks or property.

    Retail investors should adopt a very long-term horizon to benefit from the stock and property markets.

    The starting point of major stock investment or purchasing a property for investment is important. Always try to start major investments during a recession, a global market crisis, a banking crisis or when nobody is interested in stocks, like during the Sars period.

    The art of investing can be broken down into three quantitative variables of time, price and size. Investors should pick a 'terrible' environment/time when prices are distressed and commit big (but definitely without leverage).

    The opposite is also true. In a very bullish, 'good' environment/time with high prices everywhere, investors should reduce the size of investments and ensure that whatever is outstanding is getting smaller and smaller.

    Forget about wanting to liquidate all investments at the top of the market. It is an impossible task.

    The basic idea is to invest aggressively (without leverage) near the bottom and get out when markets are euphoric, like now, even if they could go higher and carry on longer.

    Global imbalances are currently at an extreme, making the environment ripe for a market crisis like Oct 19, 1987.

    Markets (individual share and property) will go up and down over a long period of time, although the general stock index hides this truth as new, strong shares always replace old, declining shares over the years, giving you a misguided view that the index always heads much higher over time.

    As Singapore markets become globalised with much foreign participation, Singaporeans would do well to be patient and courageous by investing near the bottom of the down cycle and selling to foreigners near the top of the up cycle and repeating this process.

    If you have missed the huge bull market, that's just too bad. Now is not the time to jump in aggressively as the risks are increasing exponentially.

    Bull and bear markets always repeat themselves, just like summer and winter. Be very patient and do your homework.

    You do not need to be a genius to make money in the markets. You need common sense, discipline and a clear long-term workable plan, without which the markets are like a hot fire and will burn fingers.

    Chua Soon Hock

  2. #2
    Unregistered
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    Default Re: Time to exit, not enter, markets

    Stocks and real property are not the same. Stocks you can live without. But you need real property (either rent or own). I agree that if buying real property like buying stock for investment, then the investor should no cautious in entering the market. Not many traders will recommend a buy in this buoyant market. The upside is very unpredictable. Trying to time the market for the best price is like chasing a moving target. Don't be greedy. Just buy one real property for stay. If got loose change, buy another for investment during a bull market. Let the hedge funds buy now. The lesson - don't invest in funds now. Don't invest in anything during the bull run. Wait for the bear. Bull = sell. If buy, you will get BS.

  3. #3
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    Default Re: Time to exit, not enter, markets

    How come they allow a fund manager to "talk down" the market in the newspaper so that he can buy at a lower price?

    Like that can meh?

  4. #4
    AsiaOne
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    Default SM Goh: Property Prices At "Higher End" But Government "Not Too Worried"

    Prices are still affordable for middle-income and HDB heartlanders, he says
    (Edited transcript of SM Goh's interview with CNBC)
    Irene Ngoo
    AsiaOne
    6 July 2007

    Property prices in Singapore are at the "higher end" now but this does not mean a property bubble forming, said Senior Minister Goh Chok Tong.

    While he noted that the property market is active, he said the government is "not too worried" and is watching the property market closely.

    Mr Goh said this in an interview with CNBC, when he was asked if a property bubble seems to be forming in Singapore.

    "Property bubble is short-term. I think the property market is active, but at this stage, we are not too worried. The prices are at the higher end. We watch very closely," he said in the interview, aired on CNBC today.

    "Prices for the middle-income and for the HDB heartlanders … are still quite affordable for Singaporeans in general. So, my worry will be where do we go from here? It's a longer-term worry. It's not a short-term worry. It comes back to my point about talent. For Singapore to grow, you need talent, talent from Singaporeans or within Singapore and talent from outside."

    Private home prices have shot up across the board in Singapore because of the property boom, robust economy and influx of foreign capital. The continuing rising trend has raised concerns that the property is getting overheated.

    Estimates released by the Urban Redevelopment Authority (URA) earlier this week show that private property is on a dramatic upswing with plenty of momentum. Prices for the April to June period rose 7.9% – the biggest jump since the third quarter in 1999, when the market staged a brief recovery before sliding into a lengthy slump. The increase comes on top of a 4.8% rise in the first three months this year.

    The Senior Minister said some MNCs have complained about the rising rental because of the property boom here but they are not staying away.

    Mr Goh was interviewed for a CNBC special marking the 10th anniversary of the Asian financial crisis. He was then Prime Minister of Singapore when the financial meltdown swept the region, bringing several Asian economies to their knees. Singapore was not spared either, and was forced to cut 20,000 jobs, wages and CPF contributions.

    Asked if rising costs could put Singapore at risk again of another crisis, SM Goh said: "I myself do not think a financial crisis is going to happen. The stock markets in Asia, of course, are very lively. Share prices are generally at an all-time high, but the banking structure is strong. In Singapore, we are resilient and have hardly any non-performing loans which we need to worry about."

    "We have separated the non-financial activities of the banks from the financial activities. Banks running hotels, for example, and other non-financial activities have been taken out. So, in Singapore, we are less concerned about another financial crisis. But in the region, I think we need to watch that. But generally, my sense is that the banking industry in the region is also resilient."

    SM Goh, who is chairman of the Monetary Authority of Singapore, also made this point in an earlier interview yesterday with the BBC, saying that while Singapore's buoyant stock market may suffer a correction, a financial crisis is not on the way. He also said that the government should not interfere in the stock market.

    Asked again by CNBC if rising costs - not just business costs but cost of living as well - could put Singapore at a disadvantage, he said this is a worry and the government is monitoring inflation.

    He added: "Costs are always a factor, but generally, you do want the standard of living of Singaporeans to go up. And a higher standard of living means more income in real terms, in the real sense. We do monitor inflation."

    "Costs - we do worry. But that means you've got to move into higher value-added industries, like biomedical services and financial services, education, health and so on. We cannot be doing things which we were doing before 1997, where China and India will become much more competitive. So, costs are always important, but we are not going to allow costs to prevent us from growing. Just move into the right sector."

    Has this kept any MNC from setting up base here or setting up plants here?

    SM Goh said: "We are seeing quite a few of these - not so much in the manufacturing side but MNCs in the sense of international financial institutions - more wealth management, hedge funds and other such regional head offices are being set up in Singapore."

    On the biggest lesson from the Asian financial crisis, Mr Goh cited having a strong financial sector as a key factor to withstand such a shock.

    "We realised very much earlier that the financial industry is a global industry and, therefore, you’ve got to be more aware of what’s happening in the world and in the region, in particular. So you've got to set up, not just internally but also externally, a system of regional surveillance of the financial performances of banks outside Singapore too. In other words, it requires cooperation from other countries as well."

    Just as Singapore has learnt a lesson from the financial upheaval a decade ago, he said other Asian economies are also "very much more acutely aware of the importance of bank supervision and good corporate governance."

    "Our neighbours' own banking sectors - as far as you can see - are also much more resilient today than during the financial crisis or just before that."

  5. #5
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    Default Re: Time to exit, not enter, markets

    I totally agree this is the time to exit, not enter the market. I cannot comprehend people who buy properties for speculation at this point and say they want to sell within the next year or two and "retire". Of course there will be a handful who will get away with this strategy but the majority who do this will very likely end up in bad shape, to say the least. In the stock market, there will an opportunity to sell your stocks at 1%, 2% etc lower. In the property market, there may not even be a next bid until 20% lower.

    For those of you who think we are at the start of a property bull cycle, think again. Singapore & the global economy is already at the tail end of an extended economic bull cycle - unless you tell me that economic and business cycles no longer exist..something the internet guys were saying in the 2000s - and there NO WAY THE PRESENT FROTH IN PROPERTY MARKET will hold up. I agree that the supply/demand mismatch will see to it that the Singapore market is well supported whenever it falls but the "froth" i.e. 10-20% gains seen within the last six months will disappear very very quickly once the cycle turns. If you're smart, buy a property 3-6 months after the newspapers cry "RECESSION" on their front pages.

  6. #6
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    Default Re: Time to exit, not enter, markets

    Quote Originally Posted by Unregistered
    I totally agree this is the time to exit, not enter the market. I cannot comprehend people who buy properties for speculation at this point and say they want to sell within the next year or two and "retire". Of course there will be a handful who will get away with this strategy but the majority who do this will very likely end up in bad shape, to say the least. In the stock market, there will an opportunity to sell your stocks at 1%, 2% etc lower. In the property market, there may not even be a next bid until 20% lower.

    For those of you who think we are at the start of a property bull cycle, think again. Singapore & the global economy is already at the tail end of an extended economic bull cycle - unless you tell me that economic and business cycles no longer exist..something the internet guys were saying in the 2000s - and there NO WAY THE PRESENT FROTH IN PROPERTY MARKET will hold up. I agree that the supply/demand mismatch will see to it that the Singapore market is well supported whenever it falls but the "froth" i.e. 10-20% gains seen within the last six months will disappear very very quickly once the cycle turns. If you're smart, buy a property 3-6 months after the newspapers cry "RECESSION" on their front pages.

    I know, but I can't just possibly wait another 5 more years right?

  7. #7
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    Default Re: Time to exit, not enter, markets

    Quote Originally Posted by Registered
    I know, but I can't just possibly wait another 5 more years right?
    I think he was referring to "speculation" i.e. those buying for speculation.
    Maybe you could choose to rent. It's not a dirty word. I have colleagues who have sold and in turn, rented or moved in with their in laws. They choose not to chase the market.

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