End of the Bear Market?

It's in the news, its on people's faces, its on the charts, market prices and all.

Pessimism is here. Although there are still people who still thinks that prices are at a bargain etc, their predictions may be flawed because perception does not equal reality.

For example, the STI index, which is at the 2000 level, can, at the most, reach below the 1000 level. But it is quite impossible to achieve that. The reason is that once at that level, market prices for all stocks would be below book value and companies should liquidate instead of continuing to run.

Imagine a stock price at $0.5 per share with a Net Total Asset of $2. The ratio is a 75% discount of a P/B ratio of 1. Even if assets are sold on a fire-sale at a 50% discount, every shareholder would still earn $0.5.


But at this period of time, fundamentals are rarely considered. There are real gems in the market right now, which can be confirmed with 2 more periods of financial reports which good faith is entrusted in them.

However, my argument is flawed because of the possibility of decrease in future earnings. But note that I'm talking more on the asset value, which is similar to buying Gold at $900 currently for $450 although gold does not earn any interest for you.