15 March 2020

Market Crashed, Is It The Right TIme To Buy?

Hi all,

Hope everyone has rested well today. Tomorrow will be Monday and the market opens again. The market is very hot, my phone is buzzing with messages and calls every 5 minutes. I thank you for your kind patience while I try to help everyone.

On a quick note, it is not wrong to ask either over the phone or a text, is it the right time to buy now? Alas please don’t expect a clear yes or no. It is not treating the question with equal importance. Surely a detailed analysis is preferred. To have a detailed discussion, it takes at least 10 mins to share and cover both angles. At the same time, this is not fair to others who are anxiously calling their brokers to snag prices which are swinging. Not to mention the fear and horror they are facing and wanting to talk to their broker (me). Thus I wanted to write a short note to reach out to everyone.

Another point I would like to make is that it is absolutely wrong to take someone's view as an absolute reference. The analysis shared should be combined with your own personal financial conditions and your own views too. In this way, it is easier and better to appreciate someone's view or suggestions with that question, is it the right time to buy now?

So is it the right time to buy now? Is this the bottom? Is this the best price or will it go lower?

To start this question, everyone agrees that this is not a 2008 Great Financial Crisis. This is a health crisis which will bring about a financial crisis. So the next few days market will not react the same way as 2008. In my view, using the 2008 chart as a reference might result in incorrect expectations.

In fact, in the past few days, the market was declining much faster than in 2008. It's just down and down and then gapping down to continue dropping down. None of such has happened before in 2008!

To simplify the point above, in 2008 it was: down, down, up, down, up, up, down, up, down, up. This happened while the entire trend is moving down. Yet what was experiencing in the last few days was simply: down, down, gapped down, down, up, gapped down, up. And it is still unknown and unfolding.

Overview, central banks have stepped in to do rate cuts, quantitative easing while at the same time strengthening health measure controls. This is the first step to be done, which has happened. Whether if it is effective, that is another question too.

The market is always forward-looking. That means the market tends to factor in future information. From technical chart consideration, it is likely Straits Times Index may fall past 2500 and to 2200 support level. This is because of the past few days of market decline and the momentum of the decline.

Likewise from the fundamental view, businesses are affected, cash flow issues which results in more bad debts for the banks. This may spiral further and that means the market will go lower. It is overall a vicious cycle.

However, there has always been a technology revolution ongoing though not widely accepted. This is because of the different age generations of people who cannot accept the industrial disruptions.

The global economy has matured, thus the growth has slowed over the past few years. There is no fantastic growth because it's the same industrial age after a prolonged period of time. Covid19 may be a great reason to further push for the Digital Revolution. With health measures in place such as social distancing, lesser travelling and stay home quarantine, it fits the criteria for an increment of online usage, thus forth a boost to e-commerce and other related sectors.

After covering general technical and fundamental aspects, to decide to enter the market also depends on the individual risk profile, tenure, capital size and investing reasons. All these cannot be a simple buy or not.

The volatility in the market now favours both investors and traders. Investors can pick prices based on different accounting ratios. Traders can capitalise on market swings to churn for profits (or losses if the market turns).

If buying and holding is your preferred way, then watch for prices for entries or exits. No one knows when is the lowest or highest. In short, investors can buy now, regardless of big or small amounts, please spread the trade purchases so as to average the purchases again if necessary.

Traders can try for the currently oversold situation and catch the rebounds. All the technical indications are haywire. This also means it might be a strong rebound for every plunge. Humans traders and algorithm trading programs will be very very active in times as such. Opportunities abound!

Too many reports are addressing the doom and gloom. Not many views are positive and many did not mention of the digital revolution that is ongoing. Since the market is forward-looking, my view is that it is factoring in over the next few weeks. At the same time, there will be new economic solutions to be discovered so not all is lost. These are some very general positive viewpoints of my 2 cents. Bluechips that worth looking at for investing includes: SGX, Singtel, Banks.

So is the right time to buy now? Hope this email helps to give some positive perspectives.