Invest for the long term

Hi Mr. Tan,

In your opinion, how long will the subprime crisis continue to haunt the global stockmarket? Will Asian be affected and how seriously? Is it safe to invest in stocks now?

REPLY

The experts are still uncertain. I can only give my personal gut feel.

I believe that the bad news on the subprime have mostly been disclosed. The large banks have made big provisions for their subprime losses.

Several large soverign funds, including GIC and possibly Temasek, have taken large stakes in the big American banks and stockbrokers. Perhaps they recognise that the current prices have fully reflected the bad news.

It may be a good time to make a long term investment as most stockmarkets have corrected more than 10%.

The challenge next year is a slowdown or a possible recession in the American and other economies and the high oil price. This is likely to be manageable as the central banks will adjust the interest rate to keep the economy moving along.

We have to accept these cycles and invest for the long term.