Don’t catch the dip, wait for generational opportunity to buy stocks
What is a generational opportunity to buy stocks?
- A generational opportunity is a window granted to individuals to buy stocks at a deep deep discount.
- One must possess great patience to wait and strong stomach or foolhardiness to plunge in when the time comes.
- Investors do not believe that such levels will come but history repeats as long as people continue to be driven by animal spirits.
- When you catch such an opportunity, you stand to make more money than trading.
Are you kidding? Such windows happen at all?
In the past 20 years, there were at least two such generational buying opportunities.
- Asian Financial Crisis (68% correction from market high of STI 2504 points in 1996 to bottom of STI 800.27 points in 1998).
- SARS Epidemic (see story of SARS in Singapore in 2003 here)
- Subprime Crisis (63% correction from market high of STI 3906.16 points late 2007 to bottom of STI 1455.47 points early 2009).
For those with eyes on foreign stock markets, there was also the bailout of Long-Term Capital Management that more of less coincided with the timing of the Asian Financial Crisis. Followed by the bursting of the Dot Com Bubble and then 9-11 tragedy, markets more or less recovered only with the end of the the SARS Epidemic in Asia. When bad luck strikes, they usually come in twos and threes.
What happens if history repeats?
A repeat of the kind of market corrections with magnitudes between 63 – 68 percent will bring the Straits Times Index to level between 1109 – 1282 points. Every dollar of capital not spent now can fetch three times as much at price earnings ratios that are so much more attractive.
So, when is time to buy Singapore stocks?
Wait for it. As I said earlier “When bad luck strikes, they usually come in twos and threes.”
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