If We Can View Investing Like Shopping!

Markets continued to slide the last week, with many hitting fresh lows. This kind of market makes many investors run for cover, moving into either more defensive equities or safer bonds. However, I think a shift in mentality is required during such times. Consider that when we are shopping to buy something that we want, we are constantly looking for bargains. Thus, we love sales, and the bigger the discount which something is selling for, the more we love it.

Consider the recent announcement of the Kindle Fire, by Amazon, and selling at 199 USD which is less than half the price of an iPad. And from all accounts, it appears that this has sparked a frenzy of pre-orders for the Kindle Fire. This goes for clothes, bags, and anything which consumers might be interested in. The bigger the price discount, the happier we are buying it.

Now, if we apply this analogy to equities, it should be the same principle, but emotionally, the reaction is very different. More often than not, when markets are in free fall, everyone is afraid to buy in. This is despite the stocks held by many equity funds tend to be very high quality stocks, with regular earnings streams, and are well positioned to ride out the current volatility.

The current situation is painful for investors who have already bought in previously. However, this is temporary. As with all markets cycles, this one will change eventually as confidence returns. And it is often the best bargains which were available for investors to pick up during such times. Think back to other great market crisis which have happened in the past few decades, including the global oil shock in the seventies, the bursting of the tech bubble in late 1999, the Asian financial crisis, and the more recent Lehman Brother’s crisis. Through it all, markets have always recovered. Companies are not one to stand by idly while watching their profits shrink. They will cut costs, start new product lines, innovate. Solely because they are profit driven, they will not stand still. So, equity funds, which are holdings dozens of companies, are investing mainly into the earnings of these companies, and every company will strive to grow its earnings over time. Being able to buy into equity funds while the companies are trading at such cheap prices represents great value. And when bargain hunting, value is what we should be looking for.

BY Wong Sui Jau ON 4 October, 2011,

  This means S Chips will do well.as operating expenses will drop to fuel costs.S Chips which produce oil or build oil rigs will decline while the rest will improve

Investors might also expect that due to china home prices dropping and lower fuel rates that reduced inflation and a higher yuan strength .The possibility of inflation might be contained and theres a possibility due to  economic  growth outlook and many strong factors from this sentence .There wont be an interest rate hike to curb expansion.
Monday is the day BBs will buy back.Gold prices have drop.alot of cash and liquidity in the market

On wednesday and thursday etc. probably estimated that cash will inflow into emerging markets such as china and maybe STI index as it holds one of the relatively lowest PE ratios for a Developed country stockTakes a few days for fund transaction to take place

One fund inflows go back you might see appreciation of SGD dollar as well as a sharp spike rally in the STI index in the morning followed by 3 pm in the afternoon.

  Disclaimer

Follow at your own risk.just my opinions here. 

i expect a 1.43 percent rally in STI Index on Monday once STI breaks 2650 resistance.Shortists who use margin accounts might have to cover back over the next few days leading to a larger rally upwards. .

  A rally might be comming or i could be wrong which may be attributed to downgrading of debt ratings.Watever the case trade within your means so you can dollar average when strat goes badly.

3 Tips that i choose my stocks

Strong Order book

Price vs NAV favorable

PE ratio of less than 10

as well as ability to expand revenue by 1.5 times due to expansion plans each year.

  i take great consideration into companys which may have value patents as some patents are worth millions and millions of dollars and are not reported in balance sheet statements due to  Intangible  assets 138 AASB framework.

Cash flow

And most importantly the management of company from my point of view

 

Lastly

  i been burned before cause i screwed up my technical analysis,maybe my fundamentals and overall economic aspects are ok.technical i suck at it. dont fight the trend.

still learning . Try to rely on both would give best results.

 

Stocks i think will tank pretty well or go up in high bursts this monday.

NOL - Good USD dollar appreciation and cheaper fuel due to low oil prices amid economic  uncertainty.

i only own 5k shares here.