Tuesday, 17 March 2015

Stock Markets Toppish – What Should I Do?

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?
Please also read a wonderful written post by LP - Unactionable advise

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…
Anyway, I am just back from Bali, a yearly tour routine location for me. The sun, sea, sand, delicious food, nice restaurants, cafes, bars, friendly people, reasonable pricing …

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!


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14 comments:

  1. Hi Rolf,

    Big Bear... Be careful of what we wished. Haha.

    Usually Big Bear brings other bad things too, such as lost of jobs, pay cut, pay freeze, etc. Imagine the portfolio drops by 50%, husband/wife lose job. Double whammy, triple whammy...

    Still life must goes on and bills to pay. How many people will dare to "whack" the life savings/warchest?

    Farmer.

    ReplyDelete
    Replies
    1. Hi Farmer,

      Absolutely spot on. Exactly the same wording that I spoken to my colleague today. Bear time, jobs unstable, pay cuts, retrenchment, still dare to whack?


      Frankly I am not accumulating warchest now... I am accumulating more rainy funds! I seriously do not hope for the bear. Seeing people losing jobs around you is definitely not fun. I seen it before.

      I am not very noble. But given a choice, I prefer a good economy over to just profit from bear.

      Delete
  2. Hi Rolf,

    I like how you take into account your own personal finances and realise your own thought processes before coming to a conclusion with investing. I think many people don't realise that investing is very personal.

    "What ?! You investing during market peak?"

    "I allocated a little only....."

    ReplyDelete
    Replies
    1. Hi BfGf,

      Welcome. Thanks for the comments. Your first visit here, I must give u Ang pow!

      I agree totally that investing is very personal. Keep searching for your own style. Don't wear black tees, jeans and new balance because Steve Jobs did that. Be patient, it takes awhile.

      Listen to your friends, or bloggers for exposures, facts and figures, and not for tips and plain follow.

      Understand "Rolf Suey" until u can re-arrange the letters to find "yourself"

      I still invest during peak. little also invest. Invest also not nec mean money into stocks... invest can means investment into myself.. haha.. see the slogan at my header. :p

      Your little may mean a lot to me! haha

      Delete
  3. Hi Rolf

    Did you bring your daughters along to Bali? Id like to go there too enjoying the beach and having a slow pacing time. Good that you have a routine yearly place to go along as a destination. I have yet to pick mine ;)

    ReplyDelete
    Replies
    1. Hi B,

      No kids. I felt v guilty after seeing another couple bring their kid. The next time I will bring them.

      There are so many things to do in Bali. I will split my days. Relax at beach, or jog at beach, sun tan, swim, food n body massages. Tour at north or south of Bali explore the wild and culture. Then shopping, good coffee, write blog. Every meal different food.. local, chinese, western, italian, Japan etc....more importantly.. cheap and friendly people.

      I look fwd to c your Holiday post soon.. u hor.. cannot only blog about stocks, finance, career.. u know.. life is more than that.. we are only in our 30s... not like #@&$#!!!

      haha :-)

      Delete
  4. I see somebody being a man of leisure at Bali ;)

    Investing for the future is important; having fun now is also!

    We never know... Just in case there's a product defect and we get recalled to our maker...

    Must hedge!

    LOL!

    ReplyDelete
    Replies
    1. Hi SMOL,

      I already take over your SG Man of Leisure title. You are now officially Snake Man of Leisure. :-)

      I think the fallacy many people have is they see themselves too far into the future that they forget now.

      The fruits awaiting in the future is important, but what you have NOW is something u can never turn back in future.

      The same overseas tour destination, u go there at 20, 40 or 60 yrs old, all feel different!

      Delete
  5. Hi Rolf,

    Thought provoking article with gorgeous pictures, why hide your face though? lol

    ReplyDelete
    Replies
    1. Hi Richard,

      Until the day, I truely find myself, I will reveal.. haha. that is when Rolf Suey blog will change to "Yourself" blog.

      Just kidding.. actually the reason is I do not want to attract too many young Mei Mei readers... haha.. my wife and daughters are reading u know... keke

      Delete
  6. Hi Rolf,

    Very good thinking process.....Myself had not been buying any new or additional shares in Jan & Feb. I'm still sitting on my bonus too.

    Nice pictures of Bali. This makes me wanna to go there too. I was there like 20 years ago....

    Thanks.

    ReplyDelete
    Replies
    1. Hi David,

      It's time to be like me then to spend your bonus on holiday rather than losing into the stock market.. haha

      Wow 20 years is a long time. It's neither expensive nor far to go Bali. Hence I had been going there past 3 years.

      Time to take a break David.. not nec in Bali.. maybe Sentosa also can.. :-)

      Delete
    2. Let me think where should I go first.....lol.

      Delete
  7. As the adage goes, a work day cant ever be too ache for stock exchanges. It is a typical feeling that a work day is too short to arrange all exchanges you wished to. penny stock alerts

    ReplyDelete