July 4, 2007
Fear not, bull market has years of life left
THANK you, Straits Times, for confirming my nagging suspicion that this must be the most bullish and durable economic cycle that Singapore will experience for many a year to come.
As a contrarian, I can't decide whether it was the article on 'Surging asset prices could trigger 'big shock' worldwide' or ''Poster girl' had to empty piggy bank for son's $100 medical bill' that put the proverbial nail in the bear's coffin (ST, June 30).
These articles are proof that bull markets 'climb a wall of worry'.
First, I would like to know where all the risk managers were right before the 1997 Asian crisis. Were they prescient enough to call that event?
Second, people need to understand that bull markets are neither born of the same fundamentals nor do they die the same deaths: there is a very wide gulf between the fundamentals in place right now and those prior to 1997 and no one is wise enough to predict when and how the current bull run will end.
The mere fact that there is so much liquidity and that this liquidity will eventually feed inflation suggests strongly that more debt and more investment in hard assets is a better approach. Sitting on cash could very well be a slow path to reduced wealth in the next five to seven years.
Singapore experienced eight years of sliding to dormant property prices while its economy dodged a number of bullets, from the reverberations of 9/11 to the Sars epidemic.
From 2000, while property prices in the UK, Australia and the US rose steadily and while the economic juggernauts in China and India roared on ceaselessly, Singapore sauntered along in fits and starts.
And now a mere three years into this recovery and Singaporeans cannot believe it. It's as if they can't stand prosperity!
It seems a better bet that an eight-year bear cycle will be followed by a bull cycle of at least equal if not longer duration and that its vigour will equal or exceed the severe malaise from 1997-2003.
There will be air pockets along the way and surely no one should be leveraged beyond economic prudence, but to rain on the parade at this stage is severely premature.
The time to sell will be when risk managers see little or no risks and contrite 'poster girls' from the 1997 Asian crisis have a change of heart and start showing up at those show flats on Orchard Road.
Christopher A. Bobin
STAY INVESTED
The mere fact that there is so much liquidity and that this liquidity will eventually feed inflation suggests strongly that more debt and more investment in hard assets is a better approach.