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STI to cross 3000 boosted by long-term investors

street81
Senior

13-Feb-2010 23:57

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Yells: "Learning to love the streets"

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Good luck to you ya

iPunter ( Date: 13-Feb-2010 23:36) Posted:

Playing stocks is sure to make people "pok!" ... sooner or later... hehehe Smiley

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kellychang
Master

13-Feb-2010 23:51

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sorry ya....

hmm, can i ask u a qn...

u always say i smart...u really means so...

or actually i very stupid.....then never buy n never short during this moment...just wait...then me considered a stupid bird...

then u use sarcastic words to suan me?

hahahhahah....sorry ya..i ask stupid qn..hope u understand...stupid girl always ask stupid qn....

iPunter ( Date: 13-Feb-2010 23:47) Posted:

I see so many friends who has gone "pok" because they hold and hold and argue about fundamentals.

But I always tell them what's the point of fundamentals when they alway buy when high-high?

Not like kellychang, who only want to buy when low-low... very smart... hehehe... Smiley

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iPunter
Supreme

13-Feb-2010 23:47

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iPunter
Supreme

13-Feb-2010 23:43

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Once a year should be ok. hehehe... Smiley

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kellychang
Master

13-Feb-2010 23:41

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pok but still want to play..hahahhha....

u go sentosa ya? me in malaysia, maybe going to genting malaysia...at least no need to lose SGD100 before the game....

hahahahhah

iPunter ( Date: 13-Feb-2010 23:36) Posted:

Playing stocks is sure to make people "pok!" ... sooner or later... hehehe Smiley

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iPunter
Supreme

13-Feb-2010 23:38

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Tomorrow I am going to Sentosa... hehehe... Smiley

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iPunter
Supreme

13-Feb-2010 23:36

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Playing stocks is sure to make people "pok!" ... sooner or later... hehehe Smiley

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kellychang
Master

13-Feb-2010 23:36

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by the way, i wish to take this opportunity to thank ah boy, ipunter and livermore ....

thanks for their valuable advice and guidance...

i wish u guys can huat big big in this coming tiger year!

thanks again! and many thanks!

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SupremeA
Veteran

13-Feb-2010 23:29

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Agreed.

If everyone held the same opinions, who would trade with you?

kellychang ( Date: 13-Feb-2010 23:27) Posted:

chinese new year come la...

dun quarrel la...ok?

whatever strategies, as long as can make money....then good strategy...ok?

he qi sheng cai.....smile :)

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kellychang
Master

13-Feb-2010 23:27

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chinese new year come la...

dun quarrel la...ok?

whatever strategies, as long as can make money....then good strategy...ok?

he qi sheng cai.....smile :)

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Livermore
Master

13-Feb-2010 23:01

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I never said that you don't sell. You must learn when to sell and when to hold. Anyway I have explained what I wanted to say. It is up to individual.

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iPunter
Supreme

13-Feb-2010 22:48

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Stocks is not a zero sum game.

In other words, money can simply "vanish into thin air"...

For example, in a meltdown or downtrend.

Take a stock which has previously run up to a very high price on huge volume.

In a downtrend, there are no interested buyers at high prices. And bidding is done in small volume at low prices.

With bad news and fear, people will sell, sell and sell, while few buyers will buy, price goes lower and lower on low volume.

The only requirement for prices to go down is few buyers and more sellers. Thus those who are holding huge holdings will see their stock's price fall to a very low level on low volume. What happened to the value of the huge stock holdings since it's not a one-for-one buy/sell. It has simply vanished into thin air! Smiley

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smartrader
Elite

13-Feb-2010 22:25

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it is all economics...

eg. i make $1000 through selling a stock, it does not mean the buyer lose $1000 -- the buyer feels that it is the best price to enter and he buys the share from me -- the difference of $1000 is like a interest-free loan from him -- if he is long term investor, he may earn his interest through company dividends (real profit from business) or capital appreciation..

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alexchia01
Elite

13-Feb-2010 21:54

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Yells: "Catch The Stars And Ride With Them"

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There are many ways to make money from the stock market.

Generally, there are 2 types of play, Trading and Investing.When you buy a stock, you should decide if you want to trade, invest or both.

There is no right or wrong, just which strategy you are adopting.

I use both. I invest a portion and trade the rest.

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Livermore
Master

13-Feb-2010 21:22

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Keppeland went all the way from $1 to now $3 plus. How many times you want to trade in and out from $1 to $3 plus? Do you really make more than the peson who held from $1 to $3 plus compared to all your trading from $1 to $3 plus?

iPunter ( Date: 13-Feb-2010 20:39) Posted:

Yes, and the worst thing is, people always think that buying is investing...

But to me, selling* is real investing... hehehe... Smiley

(*Note: Holding is in effect buying ie. you have already bought and by holding, you remain bought, or long)

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Livermore
Master

13-Feb-2010 21:19

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Here's the reality. If one pays too much attention to all the minor corrections, you can trade all you want durng the minor corrections. At the end of the day, you will find you make less compared to the person who held longer BUT paid more attention to the major correction.

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Livermore
Master

13-Feb-2010 21:14

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Of course when stocks are oversold or overbought I have my own chart to refer to

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Livermore
Master

13-Feb-2010 21:11

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I am not referring to holding for 20 years

boyikao3 ( Date: 13-Feb-2010 20:29) Posted:

Of course you can find your ideal price ! But you need to be well equipped with the skills of trading, which many people are lazy to learn.

If you bought and hold any SP500 or DJIA blue bank chips for the past 10 years, you would not have earned much and probably be sitting on a huge paper loss. That's a lot of waiting for nothing ! Buying and holding now in this economy is like burning your real cash to your ancestors !

Livermore ( Date: 13-Feb-2010 20:03) Posted:

You can't always be waiting for your "ideal price" to buy. Be flexible. When stocks ae oversold, use a 2 strike strategy instead of insisting you need to buy at a certain pric

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smartrader
Elite

13-Feb-2010 20:55

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Holding for long term become a wrong strategy when one bought the wrong share -- there will always be star and successful corporations that reward their shareholders year after year...

iPunter ( Date: 13-Feb-2010 20:39) Posted:

Yes, and the worst thing is, people always think that buying is investing...

But to me, selling* is real investing... hehehe... Smiley

(*Note: Holding is in effect buying ie. you have already bought and by holding, you remain bought, or long)

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smartrader
Elite

13-Feb-2010 20:48

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Published February 13, 2010

How deep should a correction be?

Recent market weakness is merely a long-awaited correction amid a longer-term uptrend. By Terence Lin

TIME TO INVEST
As at Feb5, the Singapore market was trading at an estimated 11.7X 2011 estimated earnings, indicating that the market remains an attractive investment proposition

We looked back at four bull markets - 1987-1990, 1990-1996, 1998-2000 and 2001-2007 - for a gauge of how often markets corrected and by how much they fell.

There were 36 observations where the Straits Times Index corrected 4 per cent or more in a bull market.

The median correction was 8.6 per cent while the mean was 10.6 per cent.Corrections lasted for a median period of 24 days, while the average - adjusted for 2003's bear market - correction was 37 days. On average, a correction occurs once every 155 days in a bull market.

In terms of the extent of decline and duration, the recent correction remains largely in line with the historical median.

On the basis of low valuations and a positive economic outlook, we maintain our 3,600 target on the STI by 2011 and reiterate a 'very attractive' rating on the Singapore market.

On the basis of low valuations and a positive economic outlook, we maintain our 3,600 target on the STI by 2011 and reiterate a 'very attractive' rating on the Singapore market.

From a recent closing high of 2933.53 points on Jan 11, the STI fell to a three-month low of 2683.56 on Feb 5 - an 8.5 per cent correction.

Investors fretted over a basket of concerns: China's moves to tighten lending, US President Barack Obama's plan to reform the US financial sector and Greece's deficit crisis.

While the declines in stock prices have reignited fears that the global economy could be double-dipping, we are of the opinion that recent market weakness is simply a long-awaited correction amid a longer-term uptrend in the stock market.

This is not without basis: economic data remains constructive, consistent with past economic recoveries, while major leading indicators continue to trend upwards.

As shown in Table 1, we see that while the recent 8.5 per cent correction (as at Feb 5) may appear rather shocking in absolute terms, it is important to consider this figure on a historical basis.

We did a study on historical bull markets for the STI, looking at four periods (see Table 1). In each period we looked at instances where the market fell 4 per cent or more from a recent peak - our definition of a correction.

The results were as follows:

As shown in Table 2, the median correction was 8.6 per cent over the past four STI bull markets, excluding the period beginning March 2009.

The average correction over the prior four bull markets was 10.6 per cent - higher than the median but skewed by a single observation of a 32.7 per cent decline in the 2001-2007 period, when Sars and the Gulf War suppressed a full recovery from the 2001 technology-led recession.

Our recent experience of an 8.5 per cent correction is comparable to the historical median, and is thus placed almost exactly in the middle of past observations, which suggests the declines we have seen for the STI in January and early February are very much in line with historical corrections.

How long and how often?

The four bull market periods encompassed a combined 5,592 days, which translates to 15.3 years. Dividing this figure by the number of observed corrections, our data suggests that a correction of 4 per cent or more from a recent peak takes place once every 155 days - or a little more than twice a year.

The average correction lasted 46.5 days, while the median correction lasted 24 days. As in the case of the average percentage correction, there was a single observation which spanned 371 days - a second bear market following the half-recovery from the technology slump. Excluding this single data point, the average correction was 37 days, slightly more than a month. The STI's recent downturn lasted 25 days, as at Feb 5 - shorter than average but in line with the median.

The bull market that began in March 2009

The STI bottomed at 1,456.95 points on March 9, 2009, along with global equity markets. Since then, the upward ride has been largely smooth-sailing barring a few notable corrections along the way (see Table 3).

After more than doubling from March lows, the STI is currently experiencing some resistance and there appears to be an air of uncertainty among investors.

We embrace uncertainty as it discounts stock markets and allows investors with a longer-term view to invest on the cheap.

Taking into account that US leading indicators are highly constructive, and that local economic data points to a strong recovery in the Singapore economy, we look at market valuations as confirmation of our investment thesis.

As at Feb 5, the Singapore market was trading at an estimated 11.7X 2011 estimated earnings, indicating that the market remains an attractive investment proposition.

Index bellwethers like SIA and SingTel have recently reported better-than-expected earnings, which suggest that earnings expectations may have further room to be revised upwards. If so, forward valuations for the market will fall further, assuming the index remains unchanged.

Having earlier raised our own earnings forecasts in the belief that consensus earnings expectations were far too low, we see no need to make upward revisions to our earnings estimates at this juncture, even as positive surprises continue to flow.

We are sticking with our 3,600-point target for the STI by 2011 and reiterate our four-star 'very attractive' rating on the Singapore market.

The writer is an analyst for Fundsupermart.com

INSPIRED by the recent market correction, we look at the STI's historical performance for a gauge of how deep market corrections can be.

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