Sunday, November 11, 2007

A good time to invest in the stock market

Hi Mr. Tan,

The stockmarket has corrected. When is a good time to invest in the stockmarket? At what level?

REPLY

It is difficult to pick the bottom. Some people think that it is all right to invest when the market has dropped 10% from its peak. Based on this formula, the right level is 3,500 on the Straits Times Index. I prefer to wait for it to drop further to around 3,300 on the ST Index.
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4 comments:

Anonymous said...

Dear Mr. Tan:

Hi, I remembered during your earlier postings, you mentioned that a good time to enter the current stock market is when STI is approximately 2800. I am sure those who have heeded your advice and bought in during the August low would have made a healthy profit. At current market situation, ss there any reason why you have placed STI 3300 as your current bottom level? Is the August STI 2900 level unlikely to repeat itself in the next 3-6 months?

Thank you!

John Lim

November 12, 2007 4:39 PM
Anonymous said...

My view, since the increase price of oil affects stock market adversely, so the converse would be true.

If the oil price is hitting the highest level - US$100 per barrel, the stock market dropping, it's the best time to get in now!

All you need is to wait for one year, in the tail end of 2008, oil prices dropped and you can reap your rewards.

By the way, the oil price forecast is made by our million dollar minister, so cannot be wrong lah. Now you know Singapore controls the oil prices.

"... But he added that the GST effect will wear off by the second half of 2008. In addition, transport costs will drop and oil prices will wash out next year. " - Channelnewsasia on Mr. Lim Hng Kiang's response to higher CPI.

November 13, 2007 1:51 AM
Tan Kin Lian said...

Dear John Lim

Since my earlier posting, the stockmarket had gone up to 3850 on the ST Index.

I do not think that it will come back to 2800.

I will be happy to make an further investment when it reaches 3,300.

November 13, 2007 2:24 AM
Anonymous said...

Dear Mr. Tan:

Thank you for your reply. As the regional stock markets move in tandem with the US indices, a long term decline in US indices would also adversely affect our stock market. In your opinion, do you think US will be able to weather out the current sub-prime storm?

Personally I feel that other than China and India, global markets and Asia ex Japan are currently at reasonable valuations, based on historical and current PE ratios. A further dip in the stock markets would translate to even cheaper stocks, which would bring more foreign funds into Asia.

Hence, I do feel that it is only a correction this time. The question is only, how steep a correction.

John Lim

November 13, 2007 9:18 AM

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