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Recent Falloff Compared With the Past


chart of 5 days from Yahoo Finance The recent fall in the markets over the past week in May has made some investors become wary and probably burnt some contra players. The fall can be illustrated by the graph on the left.

However, if you remember the climb by the stock market over the year, you will realize that the fall in the market is nothing compared with the increase over one year. As seen by the graph in Yahoo finance below. All the charts show the STI, which mirrors the fluctuations that all stock markets have experienced over the past few days.

chart of 6 months from Yahoo Finance

Over short term, the market fluctuations shows dizzy highs and lows. When put in a year’s perspective, the graph clearly shows the bull run.

If you put it to two years, the graph showing the fall and rise becomes even clearer. 


chart of 1 year from Yahoo Finance

The third graph, with 1 year’s data, shows the steep drop in the market towards the end of 2008 as the financial meltdown accelerated after Lehman Bros failed.

The turning point in March 2009 was the start of the now year long bull run.

Some people are still arguing that we are still in the bear market and the run so far has been a bear trap.

chart of 5 years from Yahoo Finance

To put that into perspective, let’s take a look at the last chart which is a duration of 5 years.

It shows that we have recovered the huge loss in the markets and are back somewhere near Feb- March of 2008.

If anyone can tell me that they have predicted every single turning point from its apex at late 2007 till now in May 2010, they are just plain liars.

So what can you as investors do? Buy on the way down and buy on the way up. Then don’t forget to sell some when it is up a lot to consolidate and sell off gains.

I don’t normally look at charts, but these illustrates very clearly with hindsight what to do as investors. Buy low, sell high isn’t easy and it takes lots of patience and courage.

Have a good week ahead.



1. Yahoo Finance: http://sg.finance.yahoo.com

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