S'pore retail investors make flight to safety

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#1
The start of the next bear market? Tongue

The Straits Times
Published on Aug 9, 2011
S'pore retail investors make flight to safety

Massive volumes of stocks traded as many prefer cash to equity

By Magdalen Ng

ENGINEER Sun Weixin, 28, was probably typical of thousands of fairly small investors caught up in yesterday's massive sell-off of stocks on the local bourse.

He liquidated his entire portfolio of mainly bank and blue-chip shares yesterday, worth less than $40,000. He suffered a loss but did not want to disclose the amount - but said he felt there is too much uncertainty to stay invested.

'I expect the months ahead to be worse. Rather than see my money stagnate and lose more, I might as well take it out until the charts show something better. There's too little information now, so I will be more conservative at this time.'

Phones were ringing off the hook for remisiers and fund managers yesterday, as retail investors reacted to the downgrade of the United States long-term credit rating and rising fears of a new global recession. Last Friday, credit rating agency Standard & Poor's cut Washington's debt rating from triple-A to AA+.

Grandtag Financial Consultancy chief executive Ben Fok said he received a 10 per cent jump in calls from clients seeking assurance about their investments. However, not many made outright redemptions of their unit trusts. He said: 'We usually advise our clients to continue investing, based on the principle of dollar cost averaging. But we have seen clients holding back in the past two weeks as confidence in the market wanes.'

Massive volumes of stocks were traded on the Singapore Exchange. More than 2.49 billion shares worth nearly $2.82 billion were traded, as investors made a frantic flight to safety.

While the US debt situation is nothing new and a downgrade had been on the cards, it added to an already volatile investment environment, with many preferring to hold cash rather than equity.

Another retail investor, Mr John Oh, 35, sold part of his portfolio even before a US debt ceiling agreement was reached, anticipating the downgrade: 'I chose to sell early because no one knows what will happen. I'm going to observe what happens in the next few days, before deciding when to re-enter the market.'

He sold 40 per cent of his $200,000 portfolio before Aug 2 and made a profit of $20,000.

Remisier Jan Lim at stockbroker Lim & Tan expects some technical rebound, but added this reminds him of the two-day crash in 2008 after the Lehman collapse.

On the other hand, Mr Peter Douglas, principal of local hedge fund GFIA, said that he has yet to observe any panic, because the downgrade was foreseeable: 'In terms of historical impact, the downgrade is more than the Lehman shock, but not in terms of medium-term impact.'

A DBS Vickers spokesman also said that they have not seen panic selling, but have observed that investors are trading with more caution during this period.

One unfazed investor is Mr William Wong, founder of Real Star Premier, which specialises in luxury properties: 'I intend to hold my equities for the long term, at least for two to three years. I think that so long as the fundamentals of the company is strong, it will rebound.'

Said Mr Vasu Menon, OCBC Bank's head of content and research for wealth management for Singapore: 'The sell-off over the past week has been very sharp and appears to indicate somewhat of an overreaction as fear has overtaken markets and blinded investors to the decent corporate fundamentals and valuations.

'Until markets are convinced that a longer-term solution to the US and European debt problems is in sight, volatility will remain a fixture and investors need to stay vigilant and prepared for markets to remain choppy in the coming weeks.'

songyuan@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
retail investors win the day!
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#3
It's always good to see things from both sides of the coin:

http://www.marketwatch.com/story/insider...2011-08-09

Everyone have their own opinions - looking at the diverse views from the straits times article above.

But the most important is we should act according to our own personal situation.

If I am "freezing", and this question has been on my mind for sometime, shouldn't I consider "outsourcing" some of our funds if I discover I am not following my own "rules". Or I have very weak self-discipline?
Just google singapore man of leisure
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#4
(09-08-2011, 03:14 PM)Jared Seah Wrote: It's always good to see things from both sides of the coin:

http://www.marketwatch.com/story/insider...2011-08-09

Everyone have their own opinions - looking at the diverse views from the straits times article above.

But the most important is we should act according to our own personal situation.

If I am "freezing", and this question has been on my mind for sometime, shouldn't I consider "outsourcing" some of our funds if I discover I am not following my own "rules". Or I have very weak self-discipline?

very rare to have good fund manager accepting small retail investors. if you are HNWI, you always can find someone to manage your money.

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#5
Freedom,

I am exploring and refering to managed futures, managed accounts, or plain vanilla mutual funds (those that outperfom the index). Not all my funds, just some for benchmarking.

I am not a big fan of passive index funds though.

On one side, I want to have the "fun" of investing/trading. But on the other hand, I have the self-awareness my own returns are quite average Sad

Need to find professionals whom I can "piggy-back" on their coat-tails for that extra ommph!
Just google singapore man of leisure
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#6
I remember MW talked about managed future product before. maybe you can ask him about it.

plain vanilla mutual funds which outperform the index, is it easy to find? passive ETF should be okay.
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#7
(09-08-2011, 06:58 PM)freedom Wrote: I remember MW talked about managed future product before. maybe you can ask him about it.

Nah, I don't know much at all about Managed Futures. I deal almost exclusively with equities only. Big Grin
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#8
Nearly laughed my toes off when i read the article Smile

Quote "One unfazed investor is Mr William Wong, founder of Real Star Premier, which specialises in luxury properties: 'I intend to hold my equities for the long term, at least for two to three years. I think that so long as the fundamentals of the company is strong, it will rebound."

So long term means 'at least 2-3 years'
Old farts like big toe is thinking more like a minimum of 5-10years.

Also, the downgrade is perhaps over-rated. We have known for a long time that the US dont have a clear plan how to cut the deficit. But U.S. being U.S., they tend to get things right only at the most critical period. The deficit will come down if there is enough political will. They have a huge number of wealthy individuals and companies....just a matter of cutting spending and increasing taxes.

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