For the past 3 years, I have been investing almost my entire salary packet into the stock market. The aim of doing that then was to ensure that I was able to make my investments when the market was at its worse as statistically markets outperform just after a terrible year. The second idea was that recessions don't last and markets can seldom sustain a downturn for 3 years.
This idea paid off rather well in 2009. At this stage, even though I have predicted another fantastic year with STI reaching 3400, the case for a V shaped recovery in Singapore is no longer as rosy as a month ago.
One idea which was off my radar was how the government may react to the people's anger over immigration as a key issue during the next elections. To appease the voters, the government may make adjustments which may hurt small businesses and HDB speculators and this may increase costs over the short term in the form of inflation for citizens and higher operating expenses for businesses. There is also a subtle shift of news to focus on future not so much about GDP growth but about being productivity growth.
On the whole, these adjustments will be negative for Singapore businesses even though i would expect most readers to welcome these changes. the higher cost of hiring a Singapore will eventually trickle down to the consumer. If we adopt Japan practices and try to model them, we will end up paying japanese prices for goods and services.
While such news will hardly impact the defensive yield investor, my mandate this year is to accumulate about my annual income worth of blue-chip equities, so it may be prudent to sit out the market and miss the upturn bought in by the Chinese New Year and just lay low for about 6 month.
The money will sit in a fixed deposit for now and I will come back when investors try to heed the cliche "Sell in May and go away".