the Greatest Crash in Stock & Property Market is coming.

[Dennis Ng]

Recent plunge in China stock market and Dow didn’t trigger any effect on Asian Stock Markets, in my opinion, this is a sign of market going crazy. Even recent plunge in China market, DOW and other global markets also didn't react as well.

This is a global bull run driven by liquidity......however, when things turn around, it will be a BIG, BIG Crash becos much of the liquidity is attributed to Leverage by Hedge Funds, Private Equity, Yen Carry Trade etc, etc.... when liquidity tide turns and risk premium increases.....the crash would be like an avalanche....

The Crash would occur in both Global Stock Markets and Global Property Markets....remember the global stock market crash in year 2000 to 2002 was buffered by rise of global property markets.....so if BOTH Stock and Property markets crash, it will not be a pretty sight.

When the crash does come, it might be worse than 1928's Great Depression.

yes, in my opinion, STI index surpassing 4,000 points is a foregone conclusion.

However, I also think there'll be a crash in global stock markets and global property markets sometime in future, possibly end year 2008 or year 2009, after Beijing Olympics and U.S. Elections.

What will be the trigger for the Crash? It can be anything.

the thing with Global Liquidity as I mentioned, it can vanish overnight as well, when everyone rush for the exit, it is when the crash would occur. What cause everyone to rush for the exit door....I really don't know.

Prime Minister Lee said that even if China Stock Market crash, its impact on the world is expected to be limited.

In my opinion, actually if and when China Stock Market crashes say, from 5,000 points (now about 4,200 points) to 2,000 points, it might still create a domino effect. Why?

Imagine if by then majority of people in China are risking alot of their money in the stock market and even borrowing to "Play" in the market, when a crash comes, many households will go into financial ruin....it might then lead to a fall in consumption, and if and when the China's economy slows down (it need not even go into a recession) from the current Official 10% growth rate (unofficial REAL growth rate I guess is 20% instead) to say, 5% growth rate, it would be sufficient to create a demand shock to the rest of the world.

Do NOT underestimate the IMPACT of a DOMINO effect.

As I mentioned, my personal opinion is that when the next crash comes, it will be the WORST in Human History, as it would be the BIGGEST Crash in Both Global Stock Markets and Global Property Markets.....

why it will be the WORST in history is becos of the HUGE expansion in Deriviatives and LEVERAGE in the past 5 years......and the Massive Growth in things such as Collaterised Debt Obligaitons, Hedge Funds, Private Equity Fund etc....

Please note that yes, if this CRASH occurs, Singapore will NOT be spared. Singapore is like a small "sampan" in a big ocean. However, in my opinion, Singapore will be one of the Few SAFE Havens in the whole world becos Singapore is one of the rare few countries in the world whereby we are financially strong, each S$ issued is somewhat backed by foreign reserves we have.

Furthermore, Singapore is a Global Financial Centre, whereby even in a crisis, there'll still be Wealth parked in Singapore due to the many advantages that Singapore has.

We will not know the exact timing of the next Crash. My guess is end year 2008 or year 2009, LBWOES's guess is much earlier than that.

Importantly, we must ask ourselves how are we prepared for this Crash, how are we positioning ourselves to not only survive the Crash but be one of the Few that will actually increase our wealth massively in the coming Crash.

Each Crash is a MAJOR Transfer and Re-allocation of Wealth. The IMPORTANT question is whether you will receive wealth or you will suffer loss.

[Dennis Ng]

wrote the postings a few days ago. Only now did I realise there is an article in Business Times on Friday 22 Jun 2007 entitled "The Beginning of the End" and noticed the similarities in views that expressed by myself with Marc Faber and Mark Mobius.

'Definitely agree with Mark Mobius that The most expensive words in the world are: This time it is different.'

Here are some comments by Marc Faber and Mark Mobius in this article:

Cheers!

Dennis Ng, http://www.HousingLoanSG.com

Marc Faber: We had a more than 20-year bull market in bonds - Sept 21, 1981, to June 2003 when the 10-year (US) Treasury bond yield fell to 3.3 per cent and the JGB (Japanese government bond) yield fell to less than 0.5 per cent. We are now at the onset of a major bear market in bonds worldwide that should bring interest rates above the level in 1981 when US Treasuries were yielding over 15 per cent. But this process will take at least 10 years. In this environment stocks will not do well in real terms but will rise in nominal terms. How high will depend on (US Federal Reserve chairman Ben) Bernanke's money printing presses.

markets - one that has invalidated past investment cycles and boom and bust theories.
Mark Mobius: Someone once said, 'The most expensive words in the world are: This time it is different.' There is no new paradigm at work in equity and bond markets which would invalidate past investment cycles and boom and bust theories. The nature of markets is such that there will always be excesses in bullish moods and bearish moods. In 1999 and 2000, the majority of investors felt that we had entered a new paradigm and earnings did not matter but the 'burn rate' (the speed at which companies could spend and expand) was more important. Of course that mania resulted in disaster for many investors.

Marc: There is no new paradigm but there are central banks that expand money and credit at a fast pace and create 'excess liquidity'. This is particularly true of the US Fed, which through its expansionary monetary policies led the US to have a close to US$800 billion current account deficit, which then leads to a 'savings glut' and excess liquidity around the world. This liquidity then drives all asset markets, including stocks, commodities, real estate, art, collectibles, and even until recently bond prices, higher.

Mark: No one knows when the music will stop and the party end. Normally, however, when everyone is unanimous about the viability of the market and the impossibility of it going down is when the market will probably crash. It's just like when you have a party with lots of alcohol. Everyone is happy and gets drunk. They feel wonderful and the world is bright. Then the alcohol wears off and you wake up with a hangover. It's all over.

Marc: It will stop when the excess liquidity gradually dries up. This can happen for a variety of reasons. Consumer price inflation could accelerate and economies overheat, thus draining money from the financial sector into the real economy. Or it could happen because of illiquidity in the US household sector, which would curtail imports and lead to the current account deficit of the US no longer expanding. There are already some clear cracks in the global asset bubbles: US housing prices, the sub-prime lenders, investment banks, and most recently, the bond market. The second half of this year could become painful.

Marc: Excess liquidity has been driven by the US current account deficit growing from 2 per cent of GDP in 1998 to close to 8 per cent now.

Growth of the current account deficit has slowed down as the US consumer is struggling. If US inflation were properly measured, we would already be in a phase of stagflation in the US. (The rate of new money flowing into the global system) has slowed down considerably and so not every asset bubble can continue to expand. The global bond market was the first casualty.

The reason that other asset markets have continued to soar is, however, increased leverage and a flight from cash into assets as people rightly begin to realise that paper money's purchasing power is collapsing. Therefore, any catalyst, no matter how small, could one day reverse investors' expectations and lead to a process of de-leverageing and a collapse in asset prices.

Marc: Emerging markets would suffer the most in a global tightening environment coming from the US current account deficit no longer expanding.

Mark: A severe market correction could range between 20 per cent and 70 per cent.

Marc: Once the shares of Goldman Sachs are down by 20 per cent from their peak the phones at the Fed and at (US Treasury Secretary) Hank Paulson's office will ring asking them to cut interest rates to support the asset markets. So, who knows? But in real terms (in gold terms) US financial assets will be 'toast' for a long time.

[Dennis Ng]

People have short memory.

Most people might NOT have remembered that Shanghai stock market crashed in year 2001 at over 2,000 points and bottomed in Jun 2005 at 1,000 points. It took 1 year 5 months to reach back to 2,000 points in Nov 2006. The scary part is in less than 1 year, the market TRIPLED from 2,000 points in Nov 2006 to now OVER 6,000 points in Oct 2007.

If this is not a bubble, I don't know what is.

The scary thing is this bubble might get bigger and might even exceed 8,000 points by next year before it finally burst. When it burst, I’ll not be surprised if prices drop by 50% or more to be about 3,000 to 4,000 points only.

In April 2007 alone, more than 1.674 trillion yuan as withdrawn by people in China from Bank deposits to GAMBLE in the China Stock Market. One day trading volume can be over 46 billion dollars and volume now exceeds ALL THE STOCK MARKETS IN ASIAN REGION COMBINED.

When China stock market crashes, China economic growth is likely to plunge and we must not forget that China is the MAIN Economic engine driving World Economic Growth now. When that happens, world’s economic growth would suffer.

[Dennis Ng]

below I attach discussion we have in another forum, for everyone's easy reference:

Originally posted by Microhard

Originally posted by Dennis

Originally posted by Microhard Dennis, your expectation of a crash in end 08 is based on china olympics and US elections?

Hi Mircrohard,
Why I expect markets to crash?

Becos bubbles like China Stock Market always burst.

Why end year 2008? Yes, China and U.S. expected to do everything within their power to avoid the bubble bursting before Olympics and Elections.

Even S'pore's latest move to scrap Deferred Payment Scheme of properties in my opinion is also govt trying to avoid property prices from running up too fast and burst before Forumula One Race in Sep 2008.

Thus, S'pore property market still good at least until 28 Sep 2008.

Cheers!

Dennis Ng, http://www.HousingLoanSG.com

Dennis,

Thanks for ur reply

[Dennis Ng]

Originally posted by San
Dear Dennis,

YES.

(was in e launch of F1 on 28-09-07, lots of hypes govt is driving now, esp. hotels near marina bay r marking up 30%higher)

Not forgetting 2008 is a leap year w 366days.

yes, and also typically year of the Rat is a good year as well.

That cannot be said of year of the Ox (year 2009) and year of the Tiger (2010).

If we look back, these are all bad years.

1. year 1973 to 1974 (Oil Crisis)
2. year 1985 to 1986 (S'pore First Recession)
3. year 1997 to 1998 (Asian Financial Crisis)

4. year 2009 to 2010 (Global Financial Crisis??? this is what I predict. Year 2009 Global Crisis and Global Stock Markets and Global Property Markets crash. Year 2010 market bottoms. So please don't rush out to invest all your money when crisis comes, should it comes in year 2009.

Thus, instead of a Joseph Cycle (7 years cycle), I actually find it coincidentally that it typically happens on a 12 year cycle (Zodia Cycle?) Of course it might all be a matter of coincidence.

[Dennis Ng]

below I paste discussion I had on another forum for everyone's benefit.

Cheers!

Dennis Ng, http://www.HousingLoanSG.com

Originally posted by kuntakinte

Originally posted by Dennis
in my opinion, even if a Global Financial Crisis occurs in year 2009 or year 2010 as I see a high possibility of happening, property prices in S'pore would first continue to rise (another 10% to 30% upside). Thus, even if prices crash thereafter by say 40% to 50%, prices after crash would at most be about 20% below current prices.

Those who sold out in early 2007 would still lose out as prices of properties have surged at least 50% compared to early 2007.

Cheers!

Dennis Ng, http://www.HousingLoanSG.com

Property prices surged at least 50% since early 2007! Do you have the data to show the increase? What advice for those who are still standing aside waiting for a price dip?

How come HDB 'privatised' HDB rental market? Profiteering?

Hi kuntakinte,
just go to URA website and search for some properties and you can see the price difference yourself. The url is here:

http://www.ura.gov.sg/realEstateWeb/rea ... claimer.do

let me give you just some examples:
Bayshore Park. Current price is about $875 psf. Jan 2007's price about $500 or 75% increase.

East Meadow. Curernt price is about $700 psf. Jan 2007's price about $500 psf pr 40% increase.

As mentioned, my opinion is that even if property prices crash, prices would be about 20% below current levels.

However, that is ONLY if property prices crash. If there is no crash and just a correction, prices might be same as current price even if someone stand aside and wait for correction/crash.

The key is NOT to over-commit when buying a house to STAY. I bought my HDB flat in 1995 at over $400,000. It went up to S$580,000 at 1997's peak. During crash, prices dipped to about $380,000.

Even if prices had crashed to say $300,000 or 30% below my purchase price, would I panic? Of course not, so long as I have no problem servicing the Housing Loan instalment, the price fluctuations in the interim period actually has no impact to me, unless I'm forced to sell when prices are low.

In my opinion, HDB is taking the opportunity to "let go" the excess HDB flat supply they have and also to so-called "manage rental increase".

Make money while the sun shines. This applies from govt to business to individuals.

We need to let the trend be our friend and of course we must positioned ourselves well in case "we are wrong". I always think "what if my opinion is wrong and the worst case scenario happens, will I be financially ok? What's the upside potential? What's the downside risk?"

Do not invest if there is a chance that any mistake can be devastating and wipe us out.

We can only learn from our mistakes if our mistakes are not fatal.

My crystal ball also tells me that inflation next year is likely to be above 4% in Singapore and might even be double digit in some countries in the world.

[Dennis Ng]

What I say people can probably ignore. Some might say:"Who is Dennis Ng anyway? Why should I care what he says?"

However, I would urge people to take note when Warren Buffett speaks.

Below is what Warren Buffett said when he was interviewed in China recently in Oct 2007.

Cheers!

Dennis Ng, http://www.HousingLoanSG.com

Oct. 24 (Bloomberg) -- Billionaire Warren Buffett said investors should be ``cautious'' about China's stocks after the country's benchmark index more than doubled this year.

``We never buy stocks when we see prices soaring,'' Buffett told reporters today in Dalian, northeastern China, where he's visiting a subsidiary of his Berkshire Hathaway Inc. ``We buy stocks because we're confident of the company's growth. People should be cautious when they see prices rising.''

Buffett this month said Berkshire had sold its stake in PetroChina Co., which has risen 76 percent this year to become the world's second-biggest company by market value. China's CSI 300 stock index has climbed 48 percent since May 17, when Li Ka- shing, Asia's richest man, said there ``must be a bubble.''

The index has risen 174 percent this year, the biggest increase among 91 stock benchmarks tracked by Bloomberg. Investors in China have opened 46 million trading accounts this year, nine times last year's amount, as individuals poured their $2.2 trillion in savings into equities. The demand has pushed up valuations of China's stocks to the highest in the world.

``Buffett is right about China stocks, whose valuations are too high,'' said Wang Zheng, who manages the equivalent of $500 million at the asset management unit of Everbright Securities Co. in Shanghai. ``It doesn't make sense any more to still play in such a market. It's about time to pull out of it.''

PetroChina

Buffett said he was ``appreciative'' of the performance of PetroChina, the nation's biggest oil producer, and that he is doubtful he can find another stock like it. Berkshire owned more than 10 percent of PetroChina's publicly held shares as of the end of last year, a stake that fell to 3.1 percent as of Sept. 30, according to disclosures.

The company has sold all of its holding, Buffett said in a Fox Business Network interview on Oct. 18.

Buffett learned about buying well-run, out-of-favor companies while studying under Columbia University business professor Benjamin Graham, an advocate of value investing. The 77-year-old said today he's seeking to invest in large Asian companies with businesses he understands, denying Chinese media reports that Berkshire invested in China Life Insurance Co.

``If you understand a business and buy at a reasonable price, there's no risk,'' Buffett said. ``We've never realized a loss because we understand the businesses that we buy in.''

China, Hong Kong

Only government-approved investors can trade in Chinese shares in the mainland. Some companies, such as PetroChina, are listed in Hong Kong and can be bought and sold by any investor.

The CSI 300 rose 0.9 percent today and reached a record on Oct. 17. Hong Kong's Hang Seng index, which climbed to a record the next day, fell 0.2 percent today.

Buffett's trip to China today and a visit to South Korea tomorrow were planned by Iscar Metalworking Cos., an Israel-based toolmaker in which Berkshire bought an 80 percent stake last year. Iscar, which owns Korean and Chinese manufacturing facilities, was Berkshire's first non-U.S. acquisition.

As chairman of Berkshire, Buffett transformed the Omaha- based company over four decades from a failing textile maker into a $200 billion investment and holding company with businesses ranging from ice cream and underwear to insurance and corporate- jet leasing.

Buffett, whose investment decisions are followed worldwide, said the company's strategy wouldn't be derailed by problems in the U.S. housing market.

Mortgage defaults by people with poor credit histories have triggered a worldwide rout in debt and stock markets, and U.S. Treasury Secretary Henry Paulson last week called the housing slump ``the most significant current risk to our economy.''

``The subprime crisis is a real problem in the U.S.,'' Buffett said. ``But we have lots of problems in the U.S. We went through two world wars, we have other issues. We don't go in and out of the market.''

[Dennis Ng]

Below is the "gist" (not his exact words) of what Warren Buffett also said during his recent visit to China:

Cheers!

Dennis Ng, http://www.HousingLoanSG.com

On his view on China Stock Market:
"as prices move higher, people should be more cautious, not less."

"I would suggest be careful. But people are captivated when prices go higher."

I like to buy when people are discouraged to buy. Now people are pretty encouraged to buy stocks.

On his sale of Petrochina:
In year 2003, he used US$0.5 bn to buy about 10% of Petro China. Recently, he sold his entire stake in "tranches" and got back US$4 bn. (a 8 bagger in 4 years, not bad at all!)

"At US$30, PetroChina is a great buy. Now that Oil prices are over US$75 (in Oct 2007), it is not." Its market capitalisation is now 2nd highest in the whole world, even higher than General Electric.

TV reporter remarked that Warren Buffett selling PetroChina’s shares is a mistake as prices went up another 35% after he sold and he “lost” over US$1 billion for selling too early.

On this, Warren Buffett said:”yes, on hindsight, we bought too little, and we sold too early.”

Dennis Ng’s comments:
I like to remind others that similarly in year 1999, Warren Buffett was widely reported in newspapers that “he has lost his touch” as Bershire Hathaway underperformed many other funds in the world. However, during the next 3 years as market crashed (year 2000 to year 2002, markets lost an average of 50% while Bershire Hathway’s share price was up 10%.....would people who “thought” that Warren Buffett made a mistake selling PetroChina shares now actually are the ones making the mistake instead?

Well, I tend to think so. Only time will tell whether I’m right though.

I also remind everyone of one of Warren Buffett's famous quotes:"Be Greedy when Ohers are Fearful. Be Fearful when Others are Greedy."

when asked what is the essence of Value Investing:
really looking at a stock as a business. Look out 5, 10, 20 years, what the company would be, whether the management can be trusted and pay a reasonable price for it.

Value Investing is NOT about getting rich quick.I don't know how to make money quick, I know how to make money over time, not next day, not next week, not next month though.

Never buy stocks you don't understand. If there are 9,999 stocks in the market which you cannot understand, look for the rest that you do.

I read annual reports like people read newspapers, hundreds and hundreds of them every year. I bought PetroChina based only on reading its annual report. I didn't read a single analyst report on PetroChina nor spoke to the management before I decided to invest.

Each stock (company) is different. You look for different things for different companies and different industries. It is like when you look at a man, you might like one for his build, another for his wisdom, yet another for his intellectual ability.....

At the end of the day, we focus on what the company will be earning 5 years from now, 10 years from now, if we feel good about the current price we're paying, we buy. If we don't understand the business, we don't buy.

[Dennis Ng]

earlier in the year I warned that even when the market correct by 10% to 20%, some stocks can fall by as much as 50% or more.

I hate to see that I'm correct. Currently, some of the "once very hot" stocks such as Rowsley and Yongnam have done exactly that.

Yongnam was 56 cents in July 2007. Now 28 cents, or a drop of 50%.
Rowsley was 40 cents in July 2007. Now 11.5 cents or a drop of 71%!

The problem is what happened was just a correction so far. I also warned that in a market crash, market can drop by 20% to 50%, while some stocks can fall by 50% to 95%....

I remember someone told me that he/she intend to use the 6 months "interest free" offer on Personal Loans and invest in REITs to reap the returns. I told the person personally I would NOT borrow money to invest in shares. I only ask people NOT to be in hurry to pay off Housing Loans, never ask people to borrow money to invest in stocks....

If this person had bought REITs in July 2007, again current prices of most REITs are lower.

Eg. A-REIT was over $3, now $2.26 or drop of 24.6%
Capital Mall Retail Trust was over $4.20 now $3.16, or a drop of 24.7%

In the last few months, I kept warning that as market prices move higher, risk increases rather than decreases, that it is a time to pyramid one's investment dollars. ie. as market move higher, we invest less and less of our money...

I hope these postings of mine were not in vain.

[Dennis Ng]

Originally posted by OE
Dennis,

I know you have often cited Simon Sim's Joseph cycle. I have not read the book.

My recollection of Asian market bottoms (1985, 1997) were in the zodiac year of the Tiger. Going forward, I believe 2009 is the Year of the Tiger. Haha, it looks like it falls in the year you have repeatedly forecasted as the year markets bottom

Hi OE,

yup, may be it is coincidence. But look at past cycles, 1973's Oil Crisis, 1985's S'pore's First Recession, 1997's Asian Crisis...what about 2009? My "fear" is it'll be a Global Financial Crisis and stagflation. Of course, astrologist and fengshui masters will tell you that there is a definite link, not coincidence. While others (eg. Simon Sim) might use Technical Analysis in trying to figure out market tops and bottoms.

Each crisis is a TIME when MASSIVE Wealth Transfer & Re-distribution Occurs. ie. during Crisis, there'll be Rich who become Poor, and there'll be those who are not so Rich but become Rich due to the crisis. A Crisis might be the end of the world to some, but might be the start of many good things for others.

Remember that a Crsis is ONLY an Opportunity for those people who have CASH to invest during Crisis.

A Crisis is JUST a Crisis for those who are STUCK and fully-invested and might take many years to go back to Square One (Break-even). Look at the Japanese. Japanese stock market crashed in 1989 from 38,000 points. Today, after 19 years, the market is about 15,000 points, or still 60% down....very far from break-even.

What S'pore stock market faced recently is a correction. Of course, many stocks have "crashed" more than 30% to over 60% and might NOT recover even if the Index recovers in due course.

I found it interesting that Simon Sim predicted that STI can breach 4,000 points back in 2003 when STI was only 1,400. I've never seen an analyst who is daring to make such predictions. And interestingly, he also predicted market top in year 2008.

I guess it is important for us to assess the probabilities of each scenario and then try to prepare and position ourselves accordingly, and most imporantly, ask ourselves:"what if I'm wrong, will I be financially ok?"

[Dennis Ng]

Originally posted by feudallordcult
well, personally i'm quite glad i heeded dennis advice. hv to hold for a while now otherwise come CNY no money to give angpao

Hi feudallorcult,
I'm glad my sharing has helped you.

To clarify, I'm not a "pessimistic" or BEARISH person by nature. Friends who know me, know that I'm one of the most positive persons around.

I only observe the market and try to work out different possible scenarios. And STI having been through the LONGEST bull market (since Mar 2003 to now), has a much higher likelihood to FALL than to rise.

Even if STI rise, the upside most market analysts have opined is capped at 4,300 (most bullish view by Simon Sim, author of Joseph Cycle). 4,300 is just 10% above the recent high set in Oct 2007.

Thus, the Risk/Reward Tradeoff is NOT attractive. That is why I keep saying that as markets move higher, risks increase, rather than reduces, and what can a person do to PROTECT hiimself.

The SIMPLE strategy (can be applied by EVERYONE even if he/she has ZERO knowledge), is simply to "invest less and less money as market move higher" and to start to raise Cash Level.

I also shared that even the "Investment Clock" concept has shown it is TIME to move into Cash when economic growth starts to slow down.

I have NOTHING to gain to share ALL THESE information with forumers, since my business is NOT even related to stock investing.

I really hope that I have helped some people out there to protect their gains, protect their capital or at the very least, minimise their losses.

I hope by now it is clear to everyone that:
1. My intention is Good
2. My conscience is Clear

With the markets falling like a stone, soon, there'll be blood on the streets. And actually that is the BEST time to invest.

This is provided that you have heeded my advice NOT to invest 100% of your money and have BUILT-UP some Opportunity Fund.

Today, my 2nd article for My Paper is published and in it I again shared the importance of having an Opportunity Fund. I think I'm possibly the ONLY Financial Planner who urge people to have Opportunity Fund. Most of them will tell you, the possible LOSS of not in the market, is HIGHER than the potential profits from trying to time the market.

Why? Becos they want to sell funds every single day, "everyday is a good day to invest your money" theory helps to serve their purpose of selling funds to you.

I admit is it almost impossible to TIME THE MARKET over short periods of say 1 month to 1 year. However, it is POSSBLE to observe GENERAL Trend and to know whether we're likely to be at the tail-end of a Bull Market.

To know and do this is NOT rocket science knowledge, it is just a matter of Common Sense and having "Street Smartness". Of course, the "theorists" would attack and say that what I said is NOT supported by any NOBEL prize winners or other research done by top notch economists.

However, I kept sharing that what I share are Knowledge (theory) and Experience (both that of myself and that of my several Mentors, who are all self-made multi-millionaires.

Many have laughed at my postings. Some have called me broken record.

If I have to repeat 100 times my message to get it across and benefit the public, I will repeat 100 times. If it needs me to repeat 1,000 times, I will repeat a 1,000 times. I'm doing it for whose benefit?

I already learned all these things, so I'm just trying to share what I know.

Nobody needs to go through my previous experience of making money in 1993, only to give back all my profits and lost 40% of my Capital in 1994's "CORRECTION". However, I guess people have to go through this experience personally to really learn the lesson.

I hope some didn't have to pay unnecessary tuition fees to learn this and had protected their capital and profits by heeding my words.

A Market Steep Move downwards is a very RARE lesson.The best thing one can do now is (as chialc has suggested), write down your thoughts every single day. In future, what you wrote in these difficult times would be a very valuable reference and guide to future decisions..

What to write? Write down your thoughts, feelings and what decisions are you making, and the MOST IMPORTANT THING is WHY did you make the decision. The WHY (reason) is more important than what you did or didn't do.

Remember, not making a decision is a decision by itself. I hope the decision-avoiders are cognizant of this.

P.S. I'm just an Average Singapore Retail Investor who is on my personal investment learning journey (similar to many of you). You can definitely have a different opinion, so please avoid any personal attacks on me.

A minute used to attack anyone is a waste of 1 minute and the waste of 1 minute of every person who spend time to read that personal attack.

[Dennis Ng]

Originally posted by AhDong

Originally posted by Dennis
The SIMPLE strategy (can be applied by EVERYONE even if he/she has ZERO knowledge), is simply to "invest less and less money as market move higher" and to start to raise Cash Level.

Dennis Ng

this means the opposite hold too? ie when market move lower, invest more and more?

Hi Apong,
not exactly.

I personally am not about to use my Opportunity Fund to buy into stocks now.

I will watch the "volume" very closely. If and only if the volumes reduces, that might then signal the possible end of selling.

Yesterday and today's drastic drop will trigger another round of "margin calls" and force-selling. Many people who "bargain hunted" in the last 1 month are now "bleeding".

Some are forced to sell becos they cannot meet "margin calls".

There'll be blood on the street.

Remember a few days ago when someone commented that it is time to buy becos we should "be greedy when others are fearful?"

What did I post? I said, the problem is, not everyone is fearful yet.

The BEST time to buy is when even all the people who are "calling" buy start to keep quiet.

My worry is how will U.S. performs tonight when U.S. market opens. If U.S. drops drastically too, then it will trigger another round of selling.

A technical rebound might come in sooner or later. As mentioned, I'm not a "active trader". I don't have time to monitor market during market trading hours. Thus, I will NOT be trying to buy low and take some profits on rebound.

I also mentioned many times that each of us MUST know our own strengths and weaknesses. We should only invest when we have an "edge" and not invest at our own disadvantage. I even made a separate posting to highlight this: "We don't have to be an all-season player."

I can never beat proprietary traders of stock broking backed by so much information and research of broking firms, and their "trading cost" is almost ZERO.

P.S. this is my own personal limitation. I'm not saying there aren't traders who are so good that they can beat proprietary traders. For all we know, you might be one of them.

I mentioned that I like to invest without my investments making me unable to sleep at night, and I termed it "Sleep Level Investing".

Yesterday night, I slept soundly. Tonight, I'll sleep soundly as well, notwithstanding the fact I don't know how U.S. market will perform becos I don't stay up at night to watch the U.S. market.

[Dennis Ng]

Looks like I'm NOT alone in "fearing" that we might face one of the worst Global Financial Crisis ever...

At least you know that I did NOT echo Jim Rogers. I said this before him.

Jim Rogers said on 31 Jan 2008:
“We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene.”

Where he expects the pain to be most intense is on Wall Street. He says he hasn't covered his short positions on the investment banks or Citigroup (C, Fortune 500) and won't for a while. "Those things are going to go way, way, way down," says Rogers. "The investment banks are down now because of the problems in the credit market. Wait until the effects of the bear market come along. If you just go back and look at other bear markets, investment bank stocks have gone down enormously. We haven't gotten to that stage yet. It's going to bring their balance sheets under duress. This is going to get much worse. But that's where there have been excesses for the past decade or so. And whenever you have a bear market come along the great excesses of the previous period are the ones that get cleaned out the most."

[Dennis Ng]

did you all read Manpower Minister Ng Eng Hen's warning in Straits Times today (4 Feb 2008)?

quote:
His advice to Singaporeans: "watch events that occur elsewhere in the world closely and tighten your belts whenever possible".

[Dennis Ng]

in every Crisis, there'll be Opportunities.

The coming Crisis will be another Great Opportunity for Major and Massive Wealth "Transfer and Re-distribution". Those who have prepared and positioned themselves well will see their Wealth possibly mutilply by a few folds. Those who are caught on the wrong side might see their wealth "transferred".

Yup, I personally also think it is NOT yet time to bargain hunt in the stock market, China stock markets have not really "tanked" yet....

This is similar to the stock market falls in year 2000. Those who went in too early to bargain hunt might discover that when the "Real Bargains" surfaces (Year 2002), they had already run out of Cash to invest.

Well, I was one of them and I remind myself NOT to make the same mistake this time round.

Forumers might also want to read up on "stagflation" as we might be entering into one such period soon. If Singapore grow by 4% in year 2008 and inflation is 5%, is there really any growth? Year 2007 S'pore grew by 7.5% while inflation was 2%. The "Gross Growth numbers" without adjusting for inflation may make the figures look better than they really are.

Anyway, this is just my personal opinion.

Here's wishing you (everyone out there) and your loved ones Happy, Healthy and Wealthy for the year 200 "Huat"!