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Exploit the Recession

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  #1 (permalink)  
Old 16-02-2009, 12:05 AM
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Default Exploit the Recession

If you have the good fortune of remaining unscathed by the recession, perhaps you should turn aggressive and try to take advantage of it instead.

First, make sure you have set aside enough money to cover 1 year's worth of your family expenses, just in case.

Then invest the rest. Take advantage of the recession.

Now is the time to buy. If you buy now, you are buying low. (See also past articles on buy low sell high and buy low sell high 2.)

The stock market is now hovering at a level that is lower than 50% from its peak. Consider buying blue chip shares. All of them have fallen drastically in value though many of these businesses are still extremely sound and well capitalized. Examples of such shares can be found here. And if you don't have your own online trading account, what's stopping you? Just ask around to get started.

Yes, buy blue chips and hold for the medium term. I would hold until the next stock market euphoria, whenever it might be.

The property market is also in the middle of a crash. If you have a few hundred grand (or more) in your "opportunity" fund, I recommend you also start looking around for a second or even third property. If you do not have such spare money, you can also consider upgrading from your current HDB to a condo - try to get one in a good location and I personally prefer freehold condos to leasehold ones.

The value of your properties will go up when the economy recovers.

Suppose you paid $200k and borrowed $800k to buy a $1m house, and managed to rent it out to cover interests and expenses. If the house is sold at $1.4m a few years later, you would have tripled your initial $200k investment!

Good luck!

Remember: if you buy now, you're buying near the bottom.


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  #2 (permalink)  
Old 16-02-2009, 10:56 AM
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Default 4073

i think you are overly optimistic. Property market in Singapore is nowhere near the bottom. We are seeing a reversal from the peak in Sep08, and judging from past historical trends a bottom in 6 months is a bit too early. Besides, rental business is not as rosy as before. Breaking even on monthly installments can be tricky.
Second, US, EU, Asia, the crisis came in three waves. We are in the last zone, hence any recovery is going to be laggard. If you are talking about buying into US Financials, perhaps i might agree, however blue chip SG counters is too optimistic.

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  #3 (permalink)  
Old 16-02-2009, 11:36 AM
catch the bottom--
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Default 4074

I agree with PP that property has not yet bottomed. I would wait.
But for stocks, I have already started my attempt to catch the bottom by buying in tranches over several months. Still buying.
I would sell when the market sets record highs again. Could be in 2011-2012.
We'll see.

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  #4 (permalink)  
Old 16-02-2009, 10:39 PM
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Default 4078

It may not be easy in Singapore's context to use the rent to cover your bank loan. Last time I rented a 3-bedroom condo unit for only $1250. I think the owner can't even break even, let alone he/she still had to pay for the maintainence fee, which is not a small sum.
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  #5 (permalink)  
Old 16-02-2009, 11:15 PM
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Default 4079

Hi catch the bottom,

record highs in 2011-2012...unlikely.

This recession is kinda severe...maybe in 2014-2015 for record highs.

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  #6 (permalink)  
Old 17-02-2009, 01:32 AM
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Default 4080

I don't think property is anywhere near low enough yet. If you think seriously about it, the economy is in worse state than anytime in the past 15 years, so it is not unreasonable to think that we need prices to move back to 2001 or 2005 prices before they can even be considered attractive.

At the moment we have only seen some roll back of the excesses of the past two years (i.e. we are not even back to the pre-boom prices yet). The thing now is to keep your powder dry and wait.
The sellers will have to blink first someday.

Furthermore, this not not a V shaped downturn. An upturn when it comes, is not going to be sudden and sharp. Probably more of a U shaped downturn, when the economy hits bottom, it will stay there for sometime before it starts to recover, so there is plenty of time.

So whatever you do, DON'T BLINK FIRST!
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  #7 (permalink)  
Old 17-02-2009, 02:38 PM
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Default 4082

i agree that's it's not bottom yet, even with stock price this low, remember cheap can be always cheaper. properties have not gone back to pre-rally level yet too.

i'll wait if i have the extra ammunition, unfortunately i need those to survive through the winter days...
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  #8 (permalink)  
Old 18-02-2009, 05:43 PM
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Default 4085

I do not believe anybody can predict the bottom. You buy when there is a significant discount from the peak. You sell when there is a significant increase from the bottom.

Means if you pay $100 for something and it appreciates to $180, sell, regardless whether it will go to $200 or not because you already profit. When it comes down from $200 to $120, buy, regardless it will go down to $100 or not, because you already bought at huge discount.

Most people wants to buy the the lowest ever bottom and sell at the highest ever peak. They want to be fortune teller. Predict? Why not go casino play big/small?
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  #9 (permalink)  
Old 19-02-2009, 10:15 PM
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Default 4097

wow u r giving a very bold advice
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  #10 (permalink)  
Old 23-02-2009, 06:36 PM
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Default 4130

Catching the bottom requires luck as well as analysis. I completely agree no one can predict the bottom exactly.

However, I also completely disagree that the bottom is here. Defintely not so for property, and not so for stocks as well.

My reasons: The macro economic environment. The stock market has tanked since its peak in Dec 07, many stocks look attractive now. However, I think that pricing the stocks based on performance over the last few years without factoring in the economic scenario the world is facing is risky. As for the property market, if we use the stock market as an indicator, it still has a long way to go.

PM Lee mentioned that discussion now has turned from V-shape or U-shape, to U-shape or L-shape. I don't know where he got his information from, so I won't accept it blindly.

However, the reality is that the engines that normally fuel economic growth in Singapore are currently stalling. i.e. Exports

Why not take a "wait and assess" approach for the next 6 months? I really can't see the whole world turning around by early next year, not with all the news that is available, either by local or foreign media.

Can you?
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