The Straits Times Headline: STI fall below 3,000 points

(04-02-2014, 06:37 PM)Temperament Wrote: Look like nobody here has tried pyramid up buying?
All of us seems to buy all the way down.
Me included.
Why?
Psychology factors in play?
i suppose we are all afraid of the serpent has slithered away before we can do any thing?

Not true. I have bought on the way up before. As a long term investor and value investor, I would buy it when there is sufficient MOS to the intrinsic value. Of course, buying on the way down is a bonus but the market is never predictable.

just remembering what Dennis said last time, do not catch falling knifes.
I personally find that no need to rush into opportunities as there will be always another one.
No doubt you can never time the bottom, but I find no point being the first to test the market either.
Be clear and sure then strike.

(04-02-2014, 11:10 AM)kagemusha Wrote: If it turns out to be false, I missed the boat

It is possible to use a tiered entry strategy to purchase ETF. (Doubling your position for every 3-5% drop in the index)

You need to have sufficient capital to do so.

Some may argue that this is not value investing which I do not denied.

If you have valued the ETF is cheaper. Increasing large stake at each tiers give you larger MOS.
Maybe a different perspective of valuation.

DOW has probably run ahead of the US economy recovery story so a series of poor corporate earnings and data pointing towards a slowing down of growth initiated a correction. Also US debt ceiling due this Friday. The market is expecting US govt to raise the ceiling so alternate scenario will be a nasty surprise.

However, for STI, I felt that many companies are doing well (at least they painted such a picture to me) and economy is growing steadily so it was more being dragged down by the current sentiment of the EM. Many of our blue chips are matured companies with stable earnings and paying decent dividend. Don't see why fund needs to flow back to US for that 2%-3% interest rate bond. If SGD strengthened against USD, all the better when they convert back to USD.

Dow may be down for more corrections. While I don't see why STI should fall along with it, it will most likely be dragged down further.

Just my thoughts.

In one of my previous posts, I mentioned that you can never know how news are being absorbed by market.
If US economy shows signs of recovery, which is good news (market should goes up), Fed rightly taper bond buying.
But market reacts by going down, due to Fed's tapering.
So I prefer to steer clear until dust settles.
Singapore market will always react to US' swings.
If US goes down, Sg will get dragged down as well, regardless of good local corporate report.

No need to win every battle, winning the war is more important.
Again, this is simply my point of view.

(04-02-2014, 09:46 PM)corydorus Wrote: If you have valued the ETF is cheaper. Increasing large stake at each tiers give you larger MOS.
Maybe a different perspective of valuation.

First of all, ETF is a fund that tracks the performance of the index. Which means that we are indirectly referring to the basket of stocks that the ETF tracks. (Assuming a cash ETF, not a synthetic ETF)

Secondly, to determine the value of the ETF will require a fundamental analysis of the stocks which forms the index, i.e SOTP analysis. However, if one does a detail analysis of the index, it will be better off to buy the value stocks in the index, instead of buying the ETFs, which will provide a lower return. (It might be possible to do it for STI or DOW, but S&P 500 or Russell 5000?)

Therefore generally, most individuals who purchase ETFs, don't value an ETF. It is more than often a bet on the sentiment and the general trend of the market.

(04-02-2014, 11:52 PM)csl123 Wrote:

(04-02-2014, 09:46 PM)corydorus Wrote: If you have valued the ETF is cheaper. Increasing large stake at each tiers give you larger MOS.
Maybe a different perspective of valuation.

First of all, ETF is a fund that tracks the performance of the index. Which means that we are indirectly referring to the basket of stocks that the ETF tracks. (Assuming a cash ETF, not a synthetic ETF)

Secondly, to determine the value of the ETF will require a fundamental analysis of the stocks which forms the index, i.e SOTP analysis. However, if one does a detail analysis of the index, it will be better off to buy the value stocks in the index, instead of buying the ETFs, which will provide a lower return. (It might be possible to do it for STI or DOW, but S&P 500 or Russell 5000?)

Therefore generally, most individuals who purchase ETFs, don't value an ETF. It is more than often a bet on the sentiment and the general trend of the market.

i have been thinking should i buy STI ETF or only the value stocks in the ETF for sometime already.
i would not think of buying an Index Fund when i was younger. Besides, why should i incur more expenses then necessary if i can buy individual stocks?
If i keep the ETF vs a porfolio of stocks for 10 years, imagine how much more expenses i have to pay for the ETF.
And most probably lower yield in dividends and capital gain.
Another words for those who can quite confident in DIY, DIY should give better ROI.
On the other hand we can do a 30-50% STI ETF, the rest DIY.
If this way can make you sleep better at night.
But i think if you do it this way, the stocks you pick for DIY should be not in the STI ETF.
In order you can sleep even better at night.
Only thinking aloud only.
Anyway, everyone of us has our own idea to invest.
Shalom.

Just thinking out loud.

STI ETF gives you a basket of stocks diversification. Thus our valuation DIY process may not need to be that in-depth which may fit most amateurs. Out of the full list, do spot checks on 3 bank, telco, and another half dozon within it. If on average is cheap in PE, EPS, dividend returns, BV etc that maybe the few basis to invest.

To put more punch on selective counter. Say you like Singtel a lot. We can further DIY on them.

When the whole market is down and since STI consists of blue chip companies, buying ETF makes sense as it adds beta into your portfolio when the market is down. You can spot alpha by picking stocks during market downturn but when the whole market is down, some of the small cap stocks are not very liquid.

The concept really is that when markets recover, the index stocks are the ones to lead the way and therefore adding beta makes sense as the aim is to ride on the first wave of recovery.

So, my strategy is when the market on a whole is down, I pick index stocks and/or buy STI ETF to add beta. When markets are going nowhere or on a upward move, I tend to pick individual stocks that are not in the index to add alpha into my portfolio. In this way, there is a balance between alpha and beta in my portfolio.