STI hits new high

Do you feel the fear?

Well, the answer is quite obvious with the STI hitting a new high today cruising past the 3300 mark. A couple of brokerage houses and analysts have predicted a few months ago of a correction sometime after the CNY due to profit-taking off the table.

A number of my fellow analysts felt the market is over-bought and they are waiting for 'that' correction before taking any actions. Friends of friends have cut down their holdings with profit-taking amist the pare-down. However, the correction that many have been waiting for will not occur anytime soon. Why so?

First off, my question to you would be: What would substantiate a correction? Are the prices relatively high to earnings? Certainly not for the STI index. Within firms, maybe a couple, but the overall market indicates a strong no. Many companies who have reported for the full year or quarterly earnings have posted strong growth with an average of 10-25%, depending on which sector they are in. Thus, the robust economy is certainly not a case for correction to set in.

We should expect to see the index sailing past the 4000 mark within the year with expectations of investors going strong and the growth figures -- in revenue and profits, surpassing these expectations. What could possibility sustain the current growth that we are enjoying? The answer could simply be what everyone has been chasing after -- Asia's age of discovery, in particular the twin growth, China and India. A phenomenon that could last 20years down the road akin to that of the America Dream story.

However, with high expectations comes greater responsibility on our part as we have to be more alert. For the next result reporting quarter, any actual figures that are below the expectations would see a drop in the prices. These earnings are affected by the relative performance of the economy. Therefore, the stock market becomes a leading indicator of how well the economy is faring. In a buoyant economy like this, all boats rises.

With a robust economy, the one critical factor in deciding which boat rise or sink -- expectations.

a brief intro...

coming from a lower-middle family (by the way it seems the word 'middle' has been of a topic these days due to Budget2007; or should it be upper-low family for me then? heh. ), it has always been part of my goal to break out of the poverty cycle. how should i go about it?

through interactions and readings, there seems 2 probabilities: 1. start your own company; 2. investments.

i began to read books on finance, did a couple of finance modules, visit the SGX website, read the straits times esp. the back of it, and then advise on my parents on investing from what i learned.

It has been said that students can't or shouldn't invest as they dont have the right education much less the capabilities. Contrary to this belief held by the older generations, the best time to invest is when we are students. Besides the principle of compounding, we should start off young, esp in our student heydays because we have the ability to access the different knowledge 'vehicles', the books, the internet financial porters, the hardcopies of the annual reports available in the libraries. In addition, we are at the age where we have 'matured' and hunger for new and more knowledge coupled with the drive and youth on our side.

With much readings and practices, the transition from paper trading to real-time investing wouldn't be without a hitch but we make wiser decisions with the analysis that is backed by real knowledge of financial figures and qualitative reasonings.

And that brings me to where i am --- investing