Archive for the ‘Investment Advice’ Category
End Of The Year Update
2009 end of the year update
2009 has been a year of recovery, first in share markets & then in global economic activity. Patient investors have seen some recovery in their wealth after the losses of 2008.
The perception of risk is still out of balance. While government bonds are expensive and there is still a lot of money in cash, equities and corporate bonds are no longer cheap.
Outlook for 2010
2010 is likely to see the economic recovery continue and become self-sustaining. Interest rates likely to be kept low by the US and the Europe.
A ‘U’-shaped recovery is most likely, which in some ways is the best outcome for investors. A ‘U’-shaped recovery presents investors a chance to enter the market when asset prices remain low. Global GDP growth in 2010 is at 3.6%-3.8% according to consensus.
Share markets are likely to rise further thanks to the combination of improving economic and profit growth, low inflation and still low interest rates at time when there is still plenty of cash on the sideline.
However, with uncertainties about the strength of the recovery and key central banks moving towards rising interest rates in the year ahead, share markets will be more volatile and gains more constrained than has been the case since March. A well-diversified portfolio should help to smooth performance.
October Update
Update for Oct 2009
Stock markets in the developed economies were mostly down in October, while Asian and emerging economies held up better. Commodities such as gold and crude oil made new highs in October.
The global financial markets have made a V-shaped recovery while the global economy has done a slow pickup. In the coming month, the financial markets will be take a breather while the economy catches up.
Developed countries
Australia has raised interest rates by 0.25%, for a second month. US and Europe kept their interest rates steady when their central banks met in October for review.
MAS has kept its policy unchanged on the Nominal Effective Exchange Rate, maintaining the policy band width and the level at which the Singapore dollar is centered. Singapore cut negative GDP for 2009; the government expects 3% growth in 2010.
When is the best time to invest?
The answer to that question is NOW! Here is the 3 possible scenarios U-shaped recovery, V-shaped recovery, W-shaped recovery and why.
drawn on MSCI World Index, area circled is NOW.
I’m not saying if you have $200 thousand, you should go dump in all into investment tomorrow. As one of the risk management strategies, break it up into a few tranches. It is impossible to time the market to the exact day. You would have been incredible if you can catch the low prices of a few months. Based on 3 assumptions: that there IS eventually going to be a recovery; your time horizon is 3 years or above; and you haven’t lost all your liquidity.
Of course, risk management and liquidity management applies. We do not have a gambling problem.
