Economic Outlook-2012 and 2013

It seems that many financial gurus and analysts are predicting gloom and doom for 2012 and 2013. There are also talks of the next upcoming global financial crisis leading to the outbreak of World War 3. Renowned Financial Guru, Dennis Ng, even predicted the demise of the Eurozone in 2012. The self made multi millionaire also quoted another analyst on the running of the "biggest Ponzi scam" through the printing of US dollars to finance the largest economy in the world. So, if Mr Dennis Ng is raising his cash position, should everyone of us also start selling our assets to raise cash and prepare to re-enter the market once crisis struck and then snap up cheap and good assets?

My view is that no one can accurately analyse and predict the market. Economic outlook is all about market sentiment. It would be foolish to have everything in cash and missed out on market rally as evident from the past few months. Based on my past experience, I found that it is virtually impossible to time the market and determine exactly when to buy and sell albeit lots of experts claiming they can do it.

An investor must always be prepared to suffer a 50% to 60% plunge in the market value of his investments. Mr Market is forever irrational. What matters most is to have the holding power and the guts to snap up good value assets like stocks or properties in times of financial crisis in order to exploit Mr Market when he is in one of his irrational mood swing.

The dividend yield investment strategy thus offers investors the chance to gradually realise the gains made annually through the payment of dividends instead of seeing all the capital gains made disappear during times of stock market downturn.