Reduction of equity portfolio

When the Straits Times Index (STI) reached 3,200 points level on 15 October, I started to reduce my equity portfolio on some selected shares. When the STI was climbing in first two weeks of November peaking at 3,313 points on 9 November, it was easy to sell shares. There were willing buyers.

My equity portfolio was halved and the gains were 18 per cent on costs. These shares were accumulated since mid-2008 some two years back. This was a case of buy and hold strategy of some blue chip stocks. This strategy still has its place in investments and not to be written off.

From mid-November onwards, STI turned and started to head south. Now, STI stood at 3,150 points. It takes discipline not to be tempted to buy shares when STI is slipping and when there are uncertainties in US’, Europe’s and Japan’s recovery from the Great Recession. Singapore’s economy is forecast to grow between 4 to 6 per cent in 2011, a sharp contrast from 15 per cent projected for this year. This moderation in economic growth will put a brake on any phenomenal increase in the STI. The problem in the Korean peninsula is another flash point. It will be better to sit tight and see how the twin problems of the global economy and this geo-political situation will pan out.

Copyright © 2010, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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