November 8th, 2008

There is Light at the End of the Tunnel

by karen.tang

It has been a while since I last posted a message.

Not sure if you care about the outcome of the US presidential elections but I’m happy that Obama won! He made history and proved that the impossible can be possible. Without wasting time, he has quickly put in place a team of top administrators and experts to assist him in charting the challenging path ahead.

A week before the US election on 4 November, we experienced some record breaking market rallies. The STI gains rose to 18% in 4 days last week after Fed rate cut. The Dow Jones Industrial Average leapt 193.95 points (2.16 per cent) to 9,184.91 in opening trades and the Nasdaq surged 38.05 points (2.30 per cent) to 1,695.26 last Thursday. The broad-market Standard & Poor’s 500 index advanced 21.97 points (2.36 per cent) to 952.06. China, Hong Kong and Taiwan also lowered rates as part of efforts to avert a financial system meltdown and Japan’s central bank has also followed suit.

History has shown that markets typically start recovering about 6 months before you hear about the good news in the media. Though bad news will continue to capture headlines, do not let this blind you to the fact that markets could recover faster than you think. The market is irrational right now. But rational thought will return and markets will stabilize and life will go on.

I’ve enclosed a slide here (see below) from Franklin Templeton Investments. It shows you the opportunity cost of those who are staying ’sidelines’ because of fear.

I’ve also shown a snapshot of an article - This is the Time to Buy on Dips - from Business Times Weekend 1-2 Nov’08. I draw your attention to the top right chart which reads ‘Swift Recovery from Asian Crisis’ . Notice the similarity of the downtrend during the Asian Financial Crisis and the current crisis? There is a possibility that the current crisis will bottom out soon.

If you know of family members and friends who are confused or hesitant about investing, please pass our contact numbers to them. We’ll show them how to get started and would be happy to educate and guide them on the path to wise investing.

There is light at the end of the tunnel! Hang in there…