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You are an investor, and have the following question in mind:
"Is it time to invest in shares?"

Let me paint a clearer picture for you. Imagine the following 2 scenarios:

  • You invested and the market continues to go down.
  • You did not invest and the market starts its bull cycle.
Both scenarios are bad, but which is the worst?
Personally, I believe (2) is the worst scenario. Why?

Reasons
1. Bull market usually takes more than 5 years to reach its peak.
2. Bear market usually takes much less time (less than 2 years) to reach its bottom.
3. For scenario (1), the market continues to go down, but we are already 14 months in this current bear market.
4. For scenario (2), the market starts its bull cycle, and you have to miss this opportunity and have to wait for another 7 years (5+2).

5 comments

gizmos said... @ December 27, 2008 at 10:59 PM

If bull cycle last 5 yrs and in scenario 2, bull cycle just started, and you missed it. well, u are still not too late as u have 4yr + to ride on. you dun have to wait 7 yrs.

But scenario 1, you have to cut loss or risk no more bullets.

Anonymous said... @ December 28, 2008 at 3:54 AM

I personally am not advocating buy calls at this point, even for investors unless they have big and huge pockets.

It is painful, but last year in december I cut most of my investment after realising I bought at the top. It was not easy, but I rather take the loss, and buy back much lower.

Forward 1 yr later today. Things are a lot clearer. But for the next half year at least, I do not see any hurry in collecting. I'm saying, there is no hurry to enter. If I got pockets like mr WB, I will also 'buy when everyone is selling', but unfortunately I do not have pockets like him.

So my strategy is very personal. I suppose, no strategy is right or wrong. Idea is to adopt one that one is comfortable with. Is it time to enter? A little bit, selectively, perhaps. But if one is asking bout dollar averaging, my answer is a clear no.

--charlesming

Kay said... @ December 30, 2008 at 1:06 PM

If one boughts equities when they are undervalued, one should not cut loss but continue to buy more as equities gets cheaper. And that is assuming if they really bought equities when it is really undervalued. The same cannot be said if equities are overvalued.

Alvis said... @ January 3, 2009 at 5:33 PM

Gizmos, is easier to say than execute it, because when bull cycle starts, there are still lots of bad news accordingly to Elliot Wave. It is only when Wave 3 then people realized that market is in bull cycle, but already missed almost half of the cycle.

Thanks for all the comments.

Nike Albert said... @ January 13, 2009 at 2:44 AM

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Thanks have a good luck.

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