This is pretty much the Holy Grail when it comes to investing. We hear this question being asked at almost every investment talk, including one that we attended yesterday.
The truth is, no one really knows the answer to this question. If it could be answered easily, you would be seeing a lot more billionaire Warren Buffets hanging around doing nothing but investing.
In our opinion, most people shouldn’t get caught up spending too much time trying to find out the answer to this question. Timing the market isn’t really necessary for most, if not all of us. Here is why.
Price is what you pay, value is what you get
One thing we have to understand is that the stock market is never perfect – which means price fluctuations does not always represent the true changing value of a business. With the Straits Times Index (STI) now over 15% off its 52-week highs, it could present some opportunities for investors to buy good value stocks that are currently trading at a “discounted price.”
If an investor decides to buy a blue-chip stock on the STI now, he will be getting, on average, a “discount” of about 15% compared to buying it at it’s peak. Some people may see this as an opportunity to buy stocks in companies that they feel are undervalued, since they will be paying 15% less than what other people were previously paying within the same year.
But in the same token, any investor who buys now will also be paying a premium of approximately 10% from the STI 52-weeks low.
Investors should always consider the value that they are getting when they buy a stock rather than the price they are paying. In that way, it doesn’t matter if prices go up or down in the short-run after they have purchased. An investor purchases a stock because he believes he is getting good value over the long-run.
Value Investing
Here is an analogy to help you understand the differences between price and value. Assuming we (financial writers) decide to sell Laksa tomorrow for $12.90 a bowl. And for some incredible reasons, we did manage to sell about 30 bowls on our first day (perhaps due to the novelty of supporting young hawkers), raising a pretty decent sum of $387.
However, after a couple of weeks, our daily sales figure started to reflect the true quality (or lackof) of our Laksa. What used to be 30 bowls a day have now started dwindling to less than 5 bowls a day. To turn things around, we decided to slash our price to $7, reflecting a “discount” of 45%.
Concurrently, a great and experienced hawker nearby decides to start a new Laksa shop and offers a reasonable starting price of $4 per bowl. After a couple of weeks, the hawker decides to increase price, since demand is beyond what he can cope anyway. He increases prices by 50%, to $6 now.
Which would you buy? Would you go for our sub-standard $7 Laksa, which is now selling at a discount of 45%? Or would you continue to opt for the awesome $6 Laksa, even though it is now more than what you used to pay?
This is why successful investors like Warren Buffet hold on to many stocks for long periods of time. The price at the time they bought did not matter to them. What was more important was the value of the company over the long-term. Investors like us should learn from this and see long-term value.
Of course, being able to buy at a lower price is an added bonus. But why say no to a great deal just because you have to pay a little more? On the flipside, why say yes to a bad deal just because it is currently selling at a lower price than what it was yesterday?
Why prices fluctuate
In economics 101, we study scenarios as if every person in the world was rationale and had the same access to the same set of information. However, we know that isn’t true in the real world. Hence, in the same token, the stock market is also very irrational.
Prices of stocks may rise and fall in the short-term for many different reasons. Rumors about a company, a contract win, a write-off, structural changes, government policies. The list goes on.
How to identify companies with great value?
For us mere mortals, there are simple ways we can identify companies that would have great long-term value. No one has to plough through stacks of financial statements or compute a new-age quantitative model to know that some companies will always have work in times of economic expansion or recession.
Companies in sectors such as utilities, infrastructure, healthcare, supermarkets and banks will always persist – they are businesses people use whether they are rich or poor, whether the economy is booming or slumping or whether they even have jobs or not.
This is the same way investors should think about when building a part of their portfolio – to earn stable returns over the next few decades, regardless of the economic situation. And if you are not sure, do yourself a favour and just buy the STI ETF.
Advertiser Message
From Oil Shocks to AI Optimism: Markets Face Competing Forces in 2026
Geopolitical tensions in the Strait of Hormuz are stoking inflation fears, while the continued surge in AI-related stocks is raising questions about sustainability.
Can markets keep climbing under these conflicting pressures?
Join FSM ETFestival x Mid-Year Review 2026 on 11 July for the 2H 2026 outlook and share how you can invest beyond the crisis.
