Learn the Art of Investing

Those who don't sell and heed the advice of EXPERTS will regret. A crash is around the corner experts are all warning you!

Straits Times Forum Page. 6 Jul 2007
.
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