"Irrational Exuberance"- 180 degree

Got a week off from school, did a review on the dividend payout of the STI components at current price. At indicative 12 mth yield hovering above 3% for many, was wondering whether it is time to pick up some stocks. A few months back an ex-colleague was mentioning the index could well touch 2600. "Aiyo, touch wood" was my response. Now at 2670, it is not unthinkable, maybe can be worse.

Over dinner, my son told me he could remember I used to come home and repeatedly exclaimed Greenspan's favourite phrase "Irrational Exuberance! Irrational Exuberance!". I could recall those days when I thought the runaway prices of some stocks was irrational. I used to acquire only stocks that paid good dividends. At those heady prices, the percentage of return from dividend would have dropped substantially unless earnings grew in the same momentum as the prices. So on days when I felt more rational and less greedy, I sold some only to watch the price ran up and up and regretted again and again. Can you believe it prices have now fallen to below the very first level of "regrettable" sales.

Now we are at the other spectrum, some stocks are paying fabulous dividends.Ok if we go defensive and consider for example StarHub, the indicative 12 month yield is 6.4% or SPH the indicative yield is 6.5%. But now the sentiment is so bad and the exact reverse is happening, i.e. every time you think you are rational and start buying, you watch the prices go down further and you regret. Going by the same pattern of human behaviour, I will stop buying. However if I am suppose to learn from history, I will one day also regret not trusting my rationale. So, dilemma, dilemma.

Watching CNBC provided some clues though. One analyst (never mind who, they are all wrong anyway) says don't go all out. Go cost averaging, i.e. nibble at various levels. Hmmm....I like his advice, suits me fine. Why? Because now that I don't work I can only NIBBLE anyway.