Selasa, 04 Oktober 2011

Strategy for the current bear market

Target Price
Keppel corp : $5
STI ETF : $2.30 (buy for every 15% drop)
Ezion Holdings : $0.35


A drop of 20% is the usual threshold for declaring a new bear market. My strategy for a bear market is to enter when stocks barely crossed the 20% threshold and buying one lot of STI ETF for every 15% drop. For example, STI ETF's one year high was $3.39. When i bought 2 lots of it at $2.72, it has already plunged 19.7% which was the borderline of a bear market. At this point, 2 things might happen. The first will see prices rebounding, indicating that the plunge was just a correction. If not, the bear market will start and prices will continue falling. Buying at this point and averaging it out for every 10 to 15% it drops will remove all guesswork and capture the whole bear market. If it is indeed a correction, I would have captured the bottom(or near bottom) of it. This will be the best of both worlds. Therefore, the next buying point for STI ETF will be $2.30, which is a 15% drop from $2.72.

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