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End of Recession?

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image of pe ratio for countries at http://markets.ft.com/markets/overview.aspNews out from the Economic Cycle Research Institute states emphatically that the deepest recession since World War II that we are experiencing is ending.

The premise behind this article is the fact that all the leading economic indicators, U.S. Long Leading Index (USLLI) and Weekly Leading Index (WLI) has been rising for 4 months after November 2008 and this is the four consecutive month that the two indicators have risen.

While the U.S. Coincident Index is still plunging, the report predicts that with the two indicators moving up strongly and with the added impetus of the huge economic stimulus plan that the Obama administration put into effect, the end of the recession is near.

You can look for the article "End of Recession in Sight".

Another important information to look at is a very useful pdf document at Financial Times.

  • Go to "Market Data" find this information box with research data archive
  • Choose under category choose "equities", while for report choose "ratios"
  • After that click on the date that you are interested in using the calender beside it.

It may sound difficult to do all that, if you are not sure, click on the image where I have highlighted in red where to choose these options. But trust me that it will be very useful to you as an investor.

To illustrate, just around a month back, if you have seen that the P/E ratio for the whole Singapore market was priced at 8.8 times its earnings or in March it was at 5.6, you would have realised that the Singapore market was seriously being undervalued.

What would you have done as an investor? If you had studied a bit of history and know about the cyclical nature of the equities markets and know that the markets generally trade around the 18-24 mark, you would have been overweight in the Singapore market and bought stocks like the banks or SGX.

In fact if you had looked at the chart, you would have looked to invest in a lot of countries. Now, Spain, Russia and UK looks cheap relative to the rest of the world compared with their projected yields.

At one time in 2007, the China market PE ratio was in the stratospheric 40s-50. What did I do then? I sold off my funds invested there. In case you think I am a market seer, I'm not as I didn't sell off my stocks holdings in Singapore.

Now, it is time to get in if you haven't yet. Remember the 2Ds- Dollar Average and Diversify.

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The information contained in this blog is prepared from data believed to be correct and reliable at the time of publication of this report. The authors do not make any guarantee or representation as to the adequacy, accuracy, completeness, reliability of the information contained herein. Neither the authors or any affiliates or related persons shall be liable for any consequences (direct or indirect losses, loss of profits and damages) of any
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