News highlight (1)

News highlight, a special feature to be included in my blog, where i pick certain phrases/paragraphs of notion/ideas/good advise from the news , stored it up for future reference and debates. :] Enjoy..

"Should we be invested at this stage of the equity market? The past may shed some light in helping us to strategies our move. According to a study done by Fidelity, it is shown that historically,bear market inevitably give way to bulls (Duh..) The 12mths following bear market troughs have always with one stock returns averaging nearly 46%. The implication is that we cannot afford to miss out investing during the first year of a bull market. However, we do not know if or when the market has hit its trough, therefore dollar cost averaging is the way to go. My conclusion is that investing should be based on strategy. Look at time-tested and proven strategies such as dollar cost averaging, diversifying to instruments that carry different risks and returns, locking in profits in a systematic manner and letting time win the war for you. Stay away from the new and exotic financial instruments that sounds to good to be true (probably time is need to test how good this investment product actually is) and do not try to maximise your returns . Do not be fixated with a strong view and place all your investment or a significant amount into a particular asset. The stock market will make a complete fool of us at some point. Try not to take an all-or-nothing approach. For example, in the current market conditions, when there are conflicting views on whether the market has hit a bottom, a sensible strategy would be to allocate 50% of your investment to a regular investment programme into growth funds and 20% into regions, countries or sectors that you think have hit the bottom and are now recovering on a firm uptrend. Hold the balance 30% in cash as spare capital. This is to wait for the "real" bottom, in case the market has yet to do so. Using this strategy, investors will benefit regardless of whether this is a bear market rally or the start of the next bull market because you already have investment exposure.

To highlight one final point, i will quote Mr Buffett : "No matter how great the talent or effort, some things just take time. You can't produce a baby in one mth by getting nine women pregnant" Investment requires time in the market."

Writtern by Albert Lam
Invesmtnet Director
IPP Financial Advisor

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