Many stocks have almost doubled in price in the last 2 months. eg. DBS from S$6+ to over S$12+, OCBC from $4 to almost $8....while this is exciting news for most people, and as the weeks passed by, more and more retail investors are jumping into the stock markets.

However, personally, I think that the surge from March 2009's low of 1,456 for STI till now is a little overdone. How much upside can you expect if you buy at 2,300 levels right now? For the S'pore market to go up to 2,600 is only 13% upside. What about the downside, is it possible for S'pore market to drop to about 1,800? If it drops to 1,800 levels, that is downside of 22%....

One simple rule of Thumb I use to guide me in investing is that the upside potential must be at least double the downside potential, this is not the situation right now, which is why I'm not buying more stocks, but just holding on the 30% of my wealth in stocks.

Below is some comments from David Fuller on the majot asset classes.

Cheers!

Dennis Ng, http://www.MasterYourFinance.com - When you Master Your Finance, You Master Your Destiny!

David Fuller (Fullermoney): Outlook for major asset classes “Cash (fiat currency positions) - These need to be managed if purchasing power is to be preserved. For instance, barely two months ago people were still referring to the USD as a ’safe haven’, but it is predictably and clearly sliding once again. In contrast, the currencies of emerging Asia/Pacific and resources exporters are in fashion once again.

“Monetary metals - We are living through the greatest monetary reflation in global history. Until reined in, this is the key driver of many trends. Connecting the dots, precious metals such as gold, silver and platinum are obvious beneficiaries.

“Commodities - Chart action supports Fullermoney’s contention that the commodity supercycle was sharply interrupted by the global recession, not halted. We still have a chance to repurchase many of these resources cheaply once again, before they reach price levels which choke off demand. Inflation hedge money is moving into most commodities. Fullermoney has previously mentioned a resources war, hopefully of the non military variety. Currently, this is being won by China which continues to boost its strategic reserves, while also using its financial surplus to secure long-term supplies at attractive prices.

“Stock markets - Equities are proving to be inflation hedges and economic recovery candidates of choice, along with monetary metals plus industrial and agricultural commodities. Consequently the next bubbles will emerge from these groups, as I have said before. However performance varies considerably. Price charts are the best guide and Fullermoney themes - emerging Asia, resources, technology - remain in leading positions. We can expect a multi-month correction once this maturing first upward leg runs out of momentum. For leaders, this will probably be limited to reversion to the mean in terms of 200-day moving averages, which are beginning to rise.

“Government bonds - The bear market in long-dated issues is underway, although it may experience some temporary respite when stock markets undergo corrections. Among corporate bonds, conservative investors may prefer to not stray from quality issues, unless you are specialists in this area. Too many corporate hangovers are due to excessive balance sheet leverage.”

Source: David Fuller, Fullermoney, June 3, 2009.