The peril of predicting Straits Times Index

With another week of trading next week before we bid adieu to 2011, let us see whether predictions of Straits Times Index (STI) at the start of year hit the marks.

The Straits Times carried an article entitled “STI tipped to grow 10% next year; Index may hit a high of 3,600 on strong Sing dollar, low interest rates” written by Yasmine Yahya dated 13 December 2010.

In that article the writer sourced for predictions from analysts on the level of STI for this year. The details of the predictions are following:

Nomura: 3,600 points reached by middle of year
UBS: 3,600 points by end of year
CitiGroup: 3,450 points in the year
SIAS Research: 3,400 to 3,500 points before March this year

The STI today ended at 2,676 points. The highest it ever reached was 3,280 points and that was on 6 January 2011, near the start of the year. The predictions were so optimistic but in reality the stock market was negative since the start of August. The Euro zone sovereign debt crisis really hurt bad. Though the Euro zone crisis was already known back in 2010, the analysts did not think that it was going to be really that bad back then.

Such is the peril of trying to gaze at crystal ball, putting your reputation on the line and try to suggest where the STI will be heading. If these predictions can be trusted, then many will be rich when investing in shares. Situations and conditions change throughout a year and it pays to take notice of these winds of changes and adjust your investment tactical and strategic directions.

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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