With market dropping almost everyday, what is your strategy?

[martin]

Hi Martin, I feel that STI under 3,000, is a buy and will return in the long term, a yield of above the CPF yield of 2.5% plus capital gains plus some margin of safety.

Last GFC I started buying STI ETF once STI dropped below 3,000 and averaged down. The dividends I have collected since the last GFC exceeded the CPF yield of 2.5%.

Finally, STI ETF is treated like a unit trust so you can use 100% of CPF-OA (less the first $20k).

Thanks for sharing, limster. Agree with you. Will act tomorrow. Didn't know eS3 is treated like unit trust.

 

[Biogentic]

Hi Martin, I feel that STI under 3,000, is a buy and will return in the long term, a yield of above the CPF yield of 2.5% plus capital gains plus some margin of safety.

Last GFC I started buying STI ETF once STI dropped below 3,000 and averaged down. The dividends I have collected since the last GFC exceeded the CPF yield of 2.5%.

Finally, STI ETF is treated like a unit trust so you can use 100% of CPF-OA (less the first $20k).

hi, is it true we can use all of the CPF-OA to whack STI ETF? i have not invest in my CPF-OA before

 

[limster]

Limster, may I know is the reason for using cpf to buy sti etf simply because cpf pays 2.5% to OA whereas at current prices, ES3 yields more than 3%?

I have not thought about using my cpf, but your post does make me ponder.

Hi Martin, I feel that STI under 3,000, is a buy and will return in the long term, a yield of above the CPF yield of 2.5% plus capital gains plus some margin of safety.

Last GFC I started buying STI ETF once STI dropped below 3,000 and averaged down. The dividends I have collected since the last GFC exceeded the CPF yield of 2.5%.

Finally, STI ETF is treated like a unit trust so you can use 100% of CPF-OA (less the first $20k). During the last GFC, because I had orders pending settlement, the 'buy limit' was not accurately reported in CPF, so I actually exceeded my limit when buying comfort delgro. Which is less likely to happen with STI ETF since theres 100% usage less $20k.

So I learnt what happens when you key in CPF order and exceed your CPF limit - you top up cash, the order will be split, some shares go to CDP, some shares go to CPF. Fortunately, there is no change in brokerage commission.

(edit: reposted to add in the last para to clarify why 100% limit is important)

 

[NewInvestor]

Thanks for sharing, limster. Agree with you. Will act tomorrow. Didn't know eS3 is treated like unit trust.

Maybe can do slowly. Dow Futures suggest that Dow will open 800 points down! It could be a bloodbath in the US tonight. If so, STI ETF could be quite cheap tmr. No telling when markets will stop falling.

 

[henrylbh]

Damn..My pants already down..

Luckily I can afford to walk around naked for some time..

Caught with pants down not so bad unless caught being screwed. Pants can still pull up but no way to be unscrewed.

 

[martin]

Maybe can do slowly. Dow Futures suggest that Dow will open 800 points down! It could be a bloodbath in the US tonight. If so, STI ETF could be quite cheap tmr. No telling when markets will stop falling.

Yes, will slowly enter.

 

[Bedokian]

Thanks for sharing, limster. Agree with you. Will act tomorrow. Didn't know eS3 is treated like unit trust.

ETFs are like unit trusts tradable in the market.

As what ST had mentioned, it is one of the best inventions in the world.

 

[Xyresic]

sti reaching 2.8k soon

******* HONG KAN RIAO RAH

 

[limster]

EIMI bid-offer spread went crazy after a 19% drop in price (double the HSI/China drop??) and circuit breaker triggered "AESP Auction Call"

Someone shorting EIMI?

 

[Shion]

The drop is getting steeper, we might see fast rebound if any.

 

[friedpiggy]

hi, is it true we can use all of the CPF-OA to whack STI ETF? i have not invest in my CPF-OA before

log into cpf acount you will see the investment limits.
I also load Sti etf with CPF whenever it yields real good.

 

[limster]

To be disciplined, you need to write out a plan, for example, if you form a view of bottom at 2,000

STI 2900 - buy 3,000
STI 2700 - buy 3,000
STI 2500 - buy 4,000
STI 2300 - buy 3,000
STI 2000- buy 3,000

If you ask, shouldn't my plan is to buy max amount of STI ETF at STI 2,000? I would say in reality, by the time STI reach 2,000, you will be too scared to pull the trigger on a large amount and you will be lucky that you bought anything at all. At STI 2,500, you should still be brave enough to buy more in order to value-cost average, but not at 2,000.

 

[Shiny Things]

EIMI bid-offer spread went crazy after a 19% drop in price (double the HSI/China drop??) and circuit breaker triggered "AESP Auction Call"

Someone shorting EIMI?

Nope, someone getting violently stopped out.

The same thing happened in a couple of ETFs I track - they traded down 15%-20% this morning when the underlying stock baskets were only down 4%-5%. (They came back surprisingly quickly, though - the dislocations lasted about 15 minutes, tops. If I hadn't been woken up by a garbage truck at 4:30 this morning I would've slept through the whole thing, but for those 15 minutes there was free cash lying on the street.)

Basically what happened is this:

• The market-makers switched their machines off because markets were unusually volatile;
• Price-insensitive retail traders said to their brokers "oh my god get me out at any price" - or, equivalently, their brokers said "you've lost too much money, we're cutting you out";
• Those retail traders were forcibly sold out, into a market where prices were plunging and there was no liquidity;
• Prices end up plunging miles away from their fair value until the market-makers switch their machines back on (or smart traders buy the dislocated ETFs and wait for them to converge.)

The buried lede here is that ETFs work quite well! Stuff swung around a bit for about 15 minutes, but if you weren't using leverage - if you were just buying-and-holding - and you were off doing your job or something like that, then as far as you were concerned the ETF tracked the basket of stocks very nicely.

 

[JustTrade]

I see the way DJ drops. Machiam like their credit rating kena downgrade laidat...500 points last fri and today. HOLY COWWWW

 

[friedpiggy]

Don't anyhow hoot. Most of the times, trend is your friend.

March 2009 STI uptrend.

STI since last Friday. Looks like a falling knife to me !

How many days moving average do you use? 10?

 

[limster]

thanks Shiny, very informative as usual

 

[joshua182]

jeez shiny. that amount of knowledge you have.. thanks for sharing!

 

[Maeda_Toshiie]

To be disciplined, you need to write out a plan, for example, if you form a view of bottom at 2,000

STI 2900 - buy 3,000
STI 2700 - buy 3,000
STI 2500 - buy 4,000
STI 2300 - buy 3,000
STI 2000- buy 3,000

If you ask, shouldn't my plan is to buy max amount of STI ETF at STI 2,000? I would say in reality, by the time STI reach 2,000, you will be too scared to pull the trigger on a large amount and you will be lucky that you bought anything at all. At STI 2,500, you should still be brave enough to buy more in order to value-cost average, but not at 2,000.

No, I think the bigger problem for some of us is that it is impossible to time the market to buy at 2000. When at 2000, you will wonder if it will hit 1500. At 1500, you will wonder if it will bottom out at 1000. So on and so forth. Catching the bottom and peak is nearly impossible. Hindsight is 50/50.

It's like buying DBS at its bottom. How far will it drop? $12? $10? $8? $6? Can we catch the bottom within a single dollar?

 

[Tuckie]

Nope, someone getting violently stopped out.

The same thing happened in a couple of ETFs I track - they traded down 15%-20% this morning when the underlying stock baskets were only down 4%-5%. (They came back surprisingly quickly, though - the dislocations lasted about 15 minutes, tops. If I hadn't been woken up by a garbage truck at 4:30 this morning I would've slept through the whole thing, but for those 15 minutes there was free cash lying on the street.)

Basically what happened is this:

• The market-makers switched their machines off because markets were unusually volatile;
• Price-insensitive retail traders said to their brokers "oh my god get me out at any price" - or, equivalently, their brokers said "you've lost too much money, we're cutting you out";
• Those retail traders were forcibly sold out, into a market where prices were plunging and there was no liquidity;
• Prices end up plunging miles away from their fair value until the market-makers switch their machines back on (or smart traders buy the dislocated ETFs and wait for them to converge.)

The buried lede here is that ETFs work quite well! Stuff swung around a bit for about 15 minutes, but if you weren't using leverage - if you were just buying-and-holding - and you were off doing your job or something like that, then as far as you were concerned the ETF tracked the basket of stocks very nicely.

nice insight here. thanks.

 

[maxinger]

To be disciplined, you need to write out a plan, for example, if you form a view of bottom at 2,000

STI 2900 - buy 3,000
STI 2700 - buy 3,000
STI 2500 - buy 4,000
STI 2300 - buy 3,000
STI 2000- buy 3,000

If you ask, shouldn't my plan is to buy max amount of STI ETF at STI 2,000? I would say in reality, by the time STI reach 2,000, you will be too scared to pull the trigger on a large amount and you will be lucky that you bought anything at all. At STI 2,500, you should still be brave enough to buy more in order to value-cost average, but not at 2,000.

just for u to consider;

STI 2900 - sell 20k
STI 2700 - buy 5k
STI 2500 - buy 5k
STI 2300 - buy 5k
STI 2000-