It is getting harder to invest in the local stock market, while expecting a decent return (more than 10% excluding dividends) for a holding period over 1 year. The low hanging fruit have all been taken.
However, my feelings (yup, my feelings) tell me that I have and need to buy stocks. At the back of my head, some part where my feelings are stored, a little voice is telling me, "you are missing out on a good opportunity!"
But this is what I see. The Straits Times Index is currently trading at about 1.8 times book value and 15.9 times earnings. PE-wise, this as close as the historical average as it can get, plus minus 1 times, or an up and downside of 6.3 percent. The logical part of me tells me that all things equal, the risk-reward ratio is not there for the stock market as a whole.
What about picking individual stocks? So far, most of my stock picks have crumbled like the broader stock market. In terms of what I have in the portfolio, some of them, like Etika International, have taken a walloping. Interestingly though, my stock screen has churned out stocks like Boustead, Kingsmen and Etika International as good businesses at cheap prices. I dare not bite. Yet.
Do you have any good businesses at cheap prices you would like to share? No S-Chips please, I am allergic to them!