GDP forecast and investment strategy

Looking at the stock market woe of the past 2 weeks, one wonder whether this was over-done or is there further downside.

The Straits Times Index (STI) gave up 11.3 per cent in just two weeks from 1 August peak of 3,215 points to 2,850 points as at 12 August. My Singapore equity portfolio was down 14.5 per cent and majority of these shares were acquired between May 2008 to June 2011. In past two weeks, I bought some more blue-chip shares to build up the equity portfolio. Needless to say, the new share purchases also declined after buying. That was the market volatility we were seeing.

Are we catching a falling knife by going into the market and buy shares at this volatile time? Our stand is that as long as the STI is below 3,000 points, it presents opportunity to acquire some good shares and these shares had a track record of good dividend yield in the past. These dividend yields beat the bank interest rates anytime. One caution is still that one must have free cash fund to make this investment strategy.

GDP Forecast for 2011

What were the GDP forecasts made by the International Monetary Fund for this year? The most current forecasts made were in April 2011 to July 2011 period before the world saw the Euro-zone debt crisis blew up and the downgrade of US government debt by Standard & Poor’s.

European Union +1.7 %
UK +1.5%
Germany +3.2%
France +2%
Italy +1.1%

USA +2.5%

China +9.6%
India +8.2%
Japan -0.7%

Middle East and North Africa (MENA)            +4.2%

After the twin problems of Europe and USA, IMF has yet to revise the GDP numbers. We will see.

Copyright © 2011, 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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