Value Investor: when to buy

If everyone is waiting for crashes like 2009, 2009 alike crashes will not arrive.
2009 crash arrived simply because no one in 2007 thought there would be a 2009 crash.

STI index is still nowhere in the region achieved in 2007.

Will the crash come? definitely. How long? I am not sure. Maybe next year. Maybe ten years later.

(19-10-2012, 11:26 AM)yeokiwi Wrote: If everyone is waiting for crashes like 2009, 2009 alike crashes will not arrive.
2009 crash arrived simply because no one in 2007 thought there would be a 2009 crash.

STI index is still nowhere in the region achieved in 2007.

Will the crash come? definitely. How long? I am not sure. Maybe next year. Maybe ten years later.

Can I add? And when/if it crashed 40-50%, it may be from a level of STI 8000. Then it will still be higher than today's prices after the crash. Maybe, who knows? If I know, I won't be here writing.

(19-10-2012, 11:39 AM)cif5000 Wrote:

(19-10-2012, 11:26 AM)yeokiwi Wrote: If everyone is waiting for crashes like 2009, 2009 alike crashes will not arrive.
2009 crash arrived simply because no one in 2007 thought there would be a 2009 crash.

STI index is still nowhere in the region achieved in 2007.

Will the crash come? definitely. How long? I am not sure. Maybe next year. Maybe ten years later.

Can I add? And when/if it crashed 40-50%, it may be from a level of STI 8000. Then it will still be higher than today's prices after the crash. Maybe, who knows? If I know, I won't be here writing.

Hi,
i think benchmark index like the S&P 500 or DOW and many others don't really works strictly this way. Maybe some "experts" can explain how Dow or S&P or STI really works?
i use to think like you too. i have read somewhere but did not record it down how benchmark index really works.
Cheers!

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(19-10-2012, 11:26 AM)yeokiwi Wrote: If everyone is waiting for crashes like 2009, 2009 alike crashes will not arrive.
2009 crash arrived simply because no one in 2007 thought there would be a 2009 crash.

STI index is still nowhere in the region achieved in 2007.

Will the crash come? definitely. How long? I am not sure. Maybe next year. Maybe ten years later.

i don't think 10 years later. Because technically when the index like S&P drops below 20% of it's latest high, it is technically a bear market. MHO.

If it is a mean to counter inflation, there is no point to buy only when it is dirty cheap. to wait, is also a cost to consider. the money is slowly eating away by inflation and the bear market everybody is expecting might not come in a while.

of course, if it is to buy to have 10-baggers, now probably is not the time to buy.

My personal view only. I see a potential run-up in the next few years. I was bearish most of the times for past 1 year on the European crisis and China housing estate bubbles. However, it is clear that the government are tackling them (but there will be no instant or significant solutions) and so far seems to me there are no hidden crisis (like sub-prime) looming. I know of one (South East Asia crisis) but it will come abit later maybe 2017-2019. Also, I agree with MW, most stocks are fairly valued now but defintely not insanely overvalued. The crash usually only comes after irrational exuberance. That is why my strategy has changed to mostly cyclical, strategic and dividend plays.

I used to think that there will be another economic crash around the corner. So wait for it (the next crash). When things crap out again I'll get my 10-baggers. Just this time I'll get it right.

Value investing books have many famous slogans such as margin of safety, fat pitch, be greedy when others are fearful etc. But these are simply "cautions" against our human nature to run with the herd. Things you should not do. A lot of them are even said by uncle Warren himself. After all uncle Warren did appear to have waited for a long time and sat out the equity markets throught at least a couple of cycles. "Appeared" to do so.

But he did not do nothing. He bought businesses whole and recycled/compounded their cash flows elsewhere. And I bet he paid reasonable price for those businesses he bought, which he thinks is worth his time and money. And he did that across market and economic cycles, regardless of where the index is at. If he has a margin of safety equivalent to the time when he took up his major equity positions and held onto that without flexibility, he would have done nothing. And Berkshire Hathaway would have been just a backwater company with some large stakes in stocks but nothing else.

We may not be able to buy whole businesses, but are you doing nothing, or nothing?

(19-10-2012, 12:27 PM)mrEngineer Wrote: My personal view only. I see a potential run-up in the next few years. I was bearish most of the times for past 1 year on the European crisis and China housing estate bubbles. However, it is clear that the government are tackling them (but there will be no instant or significant solutions) and so far seems to me there are no hidden crisis (like sub-prime) looming. I know of one (South East Asia crisis) but it will come abit later maybe 2017-2019. Also, I agree with MW, most stocks are fairly valued now but defintely not insanely overvalued. The crash usually only comes after irrational exuberance. That is why my strategy has changed to mostly cyclical, strategic and dividend plays.

Ha! Ha!
Since when MR. Stock doesn't climb the "WALL OF WORRY"?
Since when everything is "Hunky-Dory".
That's when we all should be very wary.
We all aim to buy low & sell high.
But that's not how the story ends.
We all ended buying high & sell low.

Anyone buy higher & sell higher?
And repeat and repeat until caught by the Mr. Peak.
Thereafter like Jack & Jill came tumbling after.

(19-10-2012, 11:54 AM)Temperament Wrote: Hi,
i think benchmark index like the S&P 500 or DOW and many others don't really works strictly this way. Maybe some "experts" can explain how Dow or S&P or STI really works?
i use to think like you too. i have read somewhere but did not record it down how benchmark index really works.
Cheers!

Uncle Temperament, what do you mean?

Isn't the index just a basket of stocks? For the STI, it's the 30 largest stocks (together with some other criteria like specifying some level of liquidity) listed on the mainboard. Of course, weighting of each stock in the basket is another factor.

Essentially, isn't the index just a representation of the 'price' of the market?

If you are young, and have set aside 1-2 years of living expenses, and you can say f***-you to your boss, the excess income you earn every month can be set aside for investing. Dont bother to time the market, invest regularly, avoid it only when everything seem overvalued..

As for what to invest, compare bonds, preference shares, reits, equities, properties and cash, choose the one that gives the highest present value after discounting the future earnings. Of course, it takes a lot of learning to identify which earnings are stable, can keep up with inflation, etc

Personally, i am out of bonds, preference shares and reits. I dont think they are cheap at today's price. I am starting to look into the local banks

(19-10-2012, 01:45 PM)kazukirai Wrote:

(19-10-2012, 11:54 AM)Temperament Wrote: Hi,
i think benchmark index like the S&P 500 or DOW and many others don't really works strictly this way. Maybe some "experts" can explain how Dow or S&P or STI really works?
i use to think like you too. i have read somewhere but did not record it down how benchmark index really works.
Cheers!

Uncle Temperament, what do you mean?

Isn't the index just a basket of stocks? For the STI, it's the 30 largest stocks (together with some other criteria like specifying some level of liquidity) listed on the mainboard. Of course, weighting of each stock in the basket is another factor.

Essentially, isn't the index just a representation of the 'price' of the market?

i think one of the reason is some counters in the basket of stocks will be replaced from time to time when they are not performing. Like NOL and SMRT. And there are other reasons too which i have forgotten or too cheem for me to remember. Will some experts please chip-in. Help! i need somebody help! (The Beatles).