The Straits Times Index has closed about 3,500 points for the first time since December 2007. This represents a close to seven year high for the index that represents the Singapore's stock market. With this piece of information, we could agree on two things.

1) In general, the market has been on a bullish trend since the global financial crisis in 2008.

2) There will be a time when a crash/correction happens. 

During the earlier years, I have personally experienced buying into a stock during a bullish trend. You will feel an air of invincibility and whatever you touch (or sell), turns to gold. This is a dangerous mentality to follow, especially if you are not disciplined or highly leveraged. It is worst if you are unable to monitor the market on a consistent basis, as this will usually translate to heavy losses during a market crash or downturn.

Since we are on the topic of a crash, it is always good to have a ready war chest ($$) at your disposal in the event that opportunities arise. Since the stock market is pretty much cyclical in nature and what goes up must eventually come down. I have kept aside a reasonable amount of cash for this purpose and retained the rest in dividend generating equities in anticipation of such an opportunity. On the flip side, if this bull run is prolonged, then my dividend yielding stocks will continue to provide a passive income stream.

Once again, my philosophy is to adopt a long term approach to investing. 

Let me know your thoughts...


Yours,
Dream Chaser

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