Markets hitting highs
Stock Markets had been smashing record high lately. Nasdaq topped 5,000 level for the first time since Mar 2000. Apple’s market cap hit US$775 billion. The Dow and S&P 500 also routinely hit highs for the past year. The Japanese Nikkei average closing above 19,000 for the first time since April 2000. Over at Britain, the country’s benchmark FTSE 100 index also surpassed the peak set during the height of the dot-com bubble. Back home, STI crossed 3,400 points since the start of the year, something rare since GFC.
Of course back in 2000, some companies in Nasdaq had ridiculous PE of 100x, but today stocks are expensive but not outrageous. E.g. Apple is only trading at ~17x, holding on to US$175 bil of cash. In Singapore STI is trading at undemanding of ~14x.
Invest or Not?
Having collected my bonus end last month, I am sitting with more cash than usual now. Stop envying…haha...its not a lot! I know many bloggers already have their warchests stock up anticipating the crash. I do not have a warchest, just a POSB bank account with little money.
So the question now is to invest the excess cash or not? There are different school thoughts as follows.
Continue to Invest
Some says continue to invest. This is because over long term, the stock markets will beat inflation, bank deposit or bond rates return, as proven historically. Afterall, from 2004 to 2014 (with dividends reinvested), the STI ETF returned >8% and last year’s returns was >6%.
Do not ask me how long is long term? Ask yourself!
Pile Your Cash
Some says, market is too expensive and it’s time to be patient and build up your “war chest” ready to be deployed during a “bear period”. They also says, not only is the market expensive now, there are so many problems mounting in the world. Oil crisis, Greece at verge of exiting Eurozone, Fed to further increase interest rates, China slowing growth etc
Build up your War chest and “Whack” During Bear Market – So Easy?
I heard some has been praying for a big bear, so that we can “whack” your life-time savings, war chest, rainy funds, cash whatever you call it, into the stock market.
Yes, to “buy low and sell high”. It sounds simple. Is that so simple?
Some questions I will like to ask myself.
- In a crisis, my portfolio is likely to suffer a great decline. Still feel good? Still have guts to dump all my excess money into the already plummeted stocks?
- Do I really know when is the trough stock curves? When is the time to buy?
- When is the time it will recover? Am I ready to wait for 1 year, 5 years or even more than 10 years? What if it never recover?
- Which stocks, funds or index to buy?
Rolf’s To Do list Now
Disclaimer: DYODD...I am no Guru…I am not a Gu Shen…I am only talking to myself...
Phew….NOW I am very safe to give my opinions. I will keep it brief since “no one shirt fits all!”
- I will continue to invest, but less allocation of monthly investment funds compared to last year.
- I will be more selective. Select stocks with strong balance sheet, high cash generating, less leverage, good track records to tide over past crisis, non-cyclical nature etc Sounds easy, but in most case, these stocks are usually more expensive than the rest already.
- If still unsure, take a Holiday Break and Do nothing! Don’t think so much…
What else more can you ask in life? Forget about the stock market for now...
View from Hotel Room
Time for some cheap shopping
Ever tried black burger? It’s delicious!
Enjoying the sun, sea and sand on the beach
Dinner by the beach
The beautiful Ubud rice fields
Enjoying “Luwak” coffee (aka as Cat shit coffee) with breath-taking view
The perfect combination of blogging, coffee and sea view.
Splendid sunset view
Easier to lift an elephant leg than choosing stocks!