Wednesday, April 25, 2007

Sold too early?

Hi Mr Tan,

You have sold all your SGX ETF mid last year, at that time you were saying it was too high.

Since then the market is up abt 30+ %. Now that you said the market is too high and you sold half(and not all) your stock,prob you do not want to miss the uptrend totally in case you are wrong this time. The thing here is that, nobody can time the market correctly.

Though you may be right this time, but you were wrong the other time. A true investor buy/sell a company based on its valuation, company competitive chracteristics, managements and not whether the market is too high/low.

Just my 2 cents comments. I am worried your comments are influencing people, which may or may not be correct.

-------------------

MY REPLY:

You are right.

When I sold the ETF, it had appreciated by 50% over my purchase price (bought two years earlier). I felt that it was adequate. (At that time, my ETF represented 20% of my total stock market investments).

At the current level of the Singapore stock market, I am reducing my other shares (bought more than 15 years ago) by 50%. I will wait for a lower level to re-invest in the ETF.

Under normal circumstances, I do not time the market. At the current level, I want to reduce my holdings.

Anyway, the reduction is being made in stages.
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2 comments:

Anonymous said...

Hi Mr Tan,

While I appreciate your insights into many insurance issues (especially buying term insurance), your market timing posts are certainly not among them; in fact it could be detrimental to encourage market timing.

If an investor has an investment plan, stick to it. (If you don't have one, create one!) Market timing is not going to work.

Many writers have already documented that market timing does not work. Read up John Bogle's book in more detail if you must or ask him personally if you managed to get to meet him in future.

indexfundfan
www.indextown.com

April 26, 2007 2:43 AM
Tan Kin Lian said...

Dear Indexfundfan

You are right about John Bogle's advice to avoid market timing. He advised to stay invested all the way.

I generally follow this principle.

I wish to make an exception in this instance (when the market is irrationally exuberant). I have seen what happened when foreign funds move out of a small Singapore market.

You can get to read my views in the FAQ in my website, www.tankinlian.com/faq.

April 26, 2007 8:06 AM

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