We are not safe yet

This week, Singapore market made a remarkable come back. Although stock has bounced from the low and recover some what. The general consensus is we are not out of the correction yet. Read from some where else, looking at the extent of correction this round. It would take a few months for market to recover and subsequently resume the uptrend.

However, from my perspective, this correction would not be the same as the previous two correction we have encountered. At that point of time, the global growth still going strong. So, after the "short" correction, stock would come back and making new high. But looking at this subprime problem, the implication is it might derail the US economy and cause it to slow down. The effect of US slow down would only be felt after 6 months or a year. Any new big news would cause new selling wave.

This is a good time to do your own independent research, get the buy list confirmed. Once another market down swing come, go in and grab some bargain. Stock that has strong growth but reasonable valuation is worth to take a risk at current moment. However, no rush to buy yet. The foreign funds that has pulled out from asia market 3 weeks ago are not going to come back immediately. Imagine many developed market investor redemp their fund and cause the fund manager to start selling the emerging market equity. It makes a while for people to regain confidence and put back their money into fund. When you see some foreign fund start buying, then it would be safer to go into stock. Because you know the big players would push up the price. Of course, you don't expect to buy at rock bottom price, but your chance of going through another emotional ride is being minimised.

I would monitor closely. I do hope STI would be able to go down to 2900. That would be a golden opportunity to add some good stock and hope to profit in the coming 3 years. The key is exhaustion of bad news. Let all the bad news come out at the same time and market adjust the risk premium accordingly. After that, as long as company still growing, I think we would be back on uptrend.