My Recent Sells in my Funds

I was disappointed at the mild correction in late Feb 07. STI only dropped about 10% and then rebounded back to its original level in within a month. That is too fast and now, the index is going to record highs every week. I view this as negative as the faster you climb, the harder you will fall. Coupled by the overly overheated China market, I believe Spore market will be experiencing another correction soon. There are a lot of reports that the China market is already over valued. It's PE is now >40 times and by comparison, Spore's market has a PE of only about 16. Note: PE is price over earnings and it is a measure of how fast a company can recover its capital. For me, the number should be as small as possible. In China, uncles, aunties and even monks have poured that hard earned money into the stock market, without knowing the fundamentals of what the companythey have bought into are doing. When the big institutions(also called Big Boys) feel that they cannot sustain such risks anymore, they will pull out of the market and a sell panic will occur. As such, I believe the China market will initiate the next correct in Asia. Though i believe a correction is coming, I do not forsee a drastic correction as the Chinese government will take all measures to prevent a collapse of its economy before the Olympics next year.

As such, I have exited my pure China funds. I have sold my DWS China fund as it has acheived 5% returns in the last 2.5months. I feel that is sufficient. In addition, I have also exited my Shenton Greater China fund. For this 5.5 year-old fund, it has given me an average of 19%pa return, which I deemed terrific. My target for funds is 7-10%pa returns.

My last recent exit was the free Shenton Income fund. This exit has nothing to do with the expected correction. I exited as this fund is only <$30. Though I have exited this fund, I viewed this fund as a good fund for stable income and will definitely add to this fund when I have more money for investments.

I will be monitoring the market for next couple of weeks to determine when to sell my BRIC fund. Unless something more drastic happens, I don't think I will be selling off my property funds and the global equity fund.