Try to relate the two diagrams together. Do you see what Uncle8888 saw and understand how come he is like that and how did he survive through past few market cycles?
STI ran up 223% and he started to invest!
He was the bei kambing who never read past STI history before investing.
Never too late to invest or start early! Don't worry about market timing.
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Hi Uncle8888,
ReplyDeleteYa, S'pore stocks is one of those markets where prices can go up very high very fast, but also drop very far very fast! LOL!
I think those who experience AFC or GFC will have phobia of buy-and-hold! Kekeke!!
On the topic of market timing & protecting capital, I present the below hypothetical scenario:
Somebody saved $300K by Dec 1999 and he decides to invest seriously in stock market from Jan 2000 ...
1. Buy & hold a S'pore ETF from Jan 2000 onwards, re-invest dividends.
2. Use a simple 6-month moving average to invest in S'pore ETF from Jan 2000 onwards.
Check the S'pore ETF price once a month.
If price >= 6-month moving average then hold or buy.
If price < 6-mth ma then sell.
Only need to spend a few minutes each month for investing decision.
In both cases ... No need to check stock markets or bother with financial news / events etc.
Concentrate on career or other important life activities.
https://bit.ly/2LuCOGz
So how did our hypothetical investor do by end-June 2018?
1. Buy & hold: $300K becomes $745K; CAGR of 5% ... Not too bad, but a lot of big drawdowns along the way.
2. Market timing: $300K becomes $1.6M; CAGR of 9.5% ... Bom pi pi?? Ahhh ... but it underperformed from Aug 2011 all the way to Oct 2016 ... 5 years!!
Any investor who started using this timing method between 2012 to 2016 will have given up halfway! LOL!!