I have been very tempted by market news lately. It seems almost all news these days are of analyst making bullish calls, expecting a great year ahead and reporting money moving into the stock market. On the other hand, the market is due for a technical correction.
The question here is that will investor irrationality keep pushing up the stock market? I believe that most investors have already entered the market over the last 3 months and anyone entering the market now is just the few that has missed the boat and want to catch onto the last part.
Caught up in the greed and exuberance of the market, i made some target prices for several stocks on Monday, on hindsight, i think i will put them on hold and wait over the next couple of weeks for more earning news. I have this feeling that the market will correct in 2 months and bottom out again in the May - June period. If i turn out wrong, at least i know i am just being rational.
Just looking at the STI chart over the past 10 years has revealed that the index takes a longer time to accumulate (sometimes even years) than the time taken for a reversal. Better not to get sucked into the idea of potential gains at the expense of good value, after all, what really affects your bottom line is not small expenses like our day to day food, but poor investment decisions that wipe out up to 10 - 20% of your net worth in a matter of days.
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