Sunday, February 3, 2013

Do you dare to buy STI now?


2 years passed since the last post and many things changed. I am closer to my goal of $3 million in asset, thanks to my full time job but still far from reaching the distant goal. I also invested in 2012 and made some gains but still could not beat the STI benchmark soundly. I learned to cut losses and try to ignore emotions during investment. Hence, I made the decision not to invest in individual stocks anymore. This will save me time spent in tracking, reading, buying and selling.

The 2 problems regarding investing in the STI now are:

  1. Investment Strategy
  2. Market Risk

Investment Strategy

The common strategy for investing is dollar cost average. However, I prefer not to use it as the theory does not feels correct. It does reduce the risks which I encountered sometimes, eg Biosensor which I had sold after it got below my 10% cut losses but soon rebounded higher. Several alternatives like lump sum and dollar value averaging are available. I wish to explore dollar value averaging once since I feeling dangerous about investing in STI now.

Dollar value averaging compensates more when the value drops and invest less when the value rises, unlike dollar cost average which uses a constant.

Market Risk

My biggest concern is the STI is near the peak now. All it takes is a bad news and the market could get into correction mode or reverse completely. Nevertheless, since Chinese New Year approaches and after getting some positive statistics from Yahoo about STI ETF, February feels like a good month.





Month% Monthly Gain vs 3 months laterSamples
Jan1.17%5
Feb3.59%5
Mar2.15%5
Apr2.35%5
May0.30%5
Jun-0.18%5
Jul-2.60%5
Aug-1.81%5
Sep-0.48%5
Oct0.72%5
Nov0.03%5
Dec-0.09%4

Conclusion

I will try buying STI and dollar value average one month later before selling in May, June.