The Next Big Crash - Are You Prepared?

[Bibi]

I dont see much fear and panic in STI yet leh. I remember last recession, STI used to drop 100+ points in a day.

[cyc]

all the smart money was going to europe towards end of last year from the interviews of quite a few fund managers i read on bloomberg, so if the money gonna flow out from emerging economies where will it flow to? Headlines on european recovery seems to have lessened a lot recently.

A bit off topic but which blue chips would you guys be looking to pickup when the index eventually hits below 3000?

I'll consider ST Engineering, Semb Marine, OCBC. Seems there's good support at 3025 which was this morning's intraday low. STI also hit intraday low of 3025 before closing at 3059 on 12 Dec last month. Barring another major correction in DJI, STI at 3000 - 3050 should be well supported, in my opinion.

[opmi]

Not doing anything.

See if those interested stocks got kenna sell down or not...if still strong, means strong holders at that price.

[Porkbelly]

I dont see much fear and panic in STI yet leh. I remember last recession, STI used to drop 100+ points in a day.

STI is a very small market with lots of local millionaire punters.
It will take far more than DOW's drop to cause fear.
For that to fear to take root:

Tokyo down 100
Hong Kong down 1000
FTSE down 1000
( all in 3 continuous days )

or

Indonesia political mayhem with racial issues
Malaysia political mayhem with racial issues
Singapore politcal mayhem with racial issues
( all together or singularly over 2 weeks )

Other than these... life goes on as usual.

[Wildreamz]

The problem with the Dow is that, in addition to the currency panic in emerging markets, China's growth slow down etc. They have been in a continuous bull market mode for 2 years consecutively.

Just look at their PE early this month:

[Image: Stock-Market-Key-Indices-PE-Ratio-Jan1-2014.png]

Source: http://mystocksinvesting.com/category/st...-pe-ratio/

(someone should really teach me how to extract these info from Bloomberg directly)

Usually during a market correction, the market will revert to reflect more closely to the intrinsic value. The added exposure of some of the Dow components to these emerging markets doesn't help them.

[Temperament]

If you believe stock prices tend to revert to its' historical mean values, has S&P 500 or DOW J. revert back to their mean PEs?

[DP28]

The problem with the Dow is that, in addition to the currency panic in emerging markets, China's growth slow down etc. They have been in a continuous bull market mode for 2 years consecutively.

Just look at their PE early this month:

[Image: Stock-Market-Key-Indices-PE-Ratio-Jan1-2014.png]

Source: http://mystocksinvesting.com/category/st...-pe-ratio/

(someone should really teach me how to extract these info from Bloomberg directly)

Usually during a market correction, the market will revert to reflect more closely to the intrinsic value. The added exposure of some of the Dow components to these emerging markets doesn't help them.

Thats the reason why "ang moh" analyst (US base, Dow, S&P folks)always try to rub it into Asia markets when they dont reflect upon themselve.

However, I must say.. I sense a 1997 kind of feeling. Last year in 2013, Houses transacting at sky high prices and COE touching the $100k mark..
Over the last 1 month, we see a couple of big firm filing for bankrucpty. HGST, Five star travel.. Ssangyong. Unemployment rate will creep up and when these folks deplete their savings, economy will contract and thats when property market hit the trough (by then STI should already be bottomling out).

[Temperament]

and is there such thing as "Cyclical Bull" in a "Secular Bear Market" in ten years term (a period of ten years)?

[arriyana]

Hi Wildreamz, thank you for the PE ratio table.

Just to add on, PE ratio of Dow Jones was running around ~30 to 40 during the 2008 crisis and Nasdaq was at PE 70 at 2000 dotcom crisis. A company at 10-15 times PE is considered fairly valued. Therefore, it doesn't seem like hugely overpriced to me yet.

[Temperament]

Why is PE shot to crazy(very high)value during a crashed(Bear market)?
Is it prices have collapsed too much relative to... ?