Tan Kin Lian's Blog: Invest for the long term

Monday, March 24, 2008

Invest for the long term

Hi Mr. Tan,
As current market was already so volatile, some says that this time around may be the bottom, and even predicted that stock market will surge, like in this article: http://www.reuters.com/article/hotStocksNews/idUSN0732951420080323.
What is your opinion about this?

REPLY

If you are investing for the long term, the current level is a good time to make the investment. It is now 30% below the previous peak.

6 comments:

Anonymous said...: I felt that the previous "peak" was quite artificial. If you look at the previous peak, it grew at a phenomenal 30%++ in a year (e.g. STI shot from 2,500 to 3,500 in less than a year, that's 40%!). It has to come down anyway because a lot of transactions were margin plays.

Therefore, if you are using previous "peak" as a gauge, I would advise you to be very careful. I don't think today's market is good to invest in. At very best, it is slightly above fair value.

I rather invest when the prices are at a discount over their actual value, for e.g, when STI reaches 2,200.; March 24, 2008 3:32 PM
Anonymous said...: We are in the beginning of a bear run. From 2001 to 2007, the world has been enjoying 7 good years of bull run. I foresee this bear running downhill for a long while, probably another 2~3 years before it rest at the bottom for another 3~4 years.

No need to hurry to "invest", unless you are in a hurry to throw away your hard earn cash. Don't worry, you are not missing the boat, because the last boat, Titanic, just sank, and they are still looking for construction materials to build a new boat.

R.; March 24, 2008 4:08 PM
Anonymous said...: 2200 is a nice level as it is 40% below the artificial peak.

A better level is 1900 as it is 50% below that peak.

Maybe, if things get real bad, it can go down to 900 which was the bottom during the Enron crisis.; March 24, 2008 4:19 PM
Anonymous said...: To all the comments above, it seems all of you are trying to time the market... instead of timing one should be looking at the fundaments of a company and paying a fair value for being the owner of a business. Value should be the deciding factor and not how high or low the market is now.; March 24, 2008 11:25 PM
Anonymous said...: To anon 11:25:

I am not sure about the rest but I am not suggesting people not to look at the fundamentals of a company and paying for the value.

I am advising the when you identify the right companies, select a good time to go in. Yes, choosing good fundamentals is important but timing is also important. That's why you buy at a discount.

There are moments when people sell down because of panic, fear and doubt, and that's when you get in to get the good stuff, after you have done your research on the company's management, business fundamentals, long term outlook, price earning ratio, debt and liabilities, etc.

R.; March 25, 2008 12:26 AM
Anonymous said...: Hi all,

If you're an index fund fan, and you're primarily vested in index funds or ETFs in your asset allocation plan, the issues of market timing and stock-picking would not come into the picture.; March 25, 2008 3:42 PM