My photo
I'm a Singaporean. The purpose for all my blogs is to share my life experiences in Singapore.

My Lessons on Investment

What are Shares, Unit Trust and ETF?
See which investment instrument is suitable for you.
What are Preference Shares?
It is different from the common shares.
How to invest using your CPF saving?
Enhancing your retirement saving
How to invest regularly if you do not have a lot of saving?
You still can invest if you can save $100 per month
How to buy gold in Singapore?
Different ways of investing in Gold.
My Investment Strategy
Having a winning strategy is important
Be a investor or a trader?
Reasons on why I want to be a investor rather than a trader
Peace of mind after buying shares?
Reasons on sleepless night after buying shares
Things to avoid in stock market.
Don't attempt to try these even you are an expert
My favorite quotes from Warren Buffett
Very meaningful and useful investment quotes
Buying stocks based on price and value
This is the method I use when buying stocks
Investor, Traders and Speculators Charts
Charts are affected by different players in the markets
My Quotes/Rules of Investment
My own investment rules and quotes
The Goose That Laid the Golden Eggs
Protect them at all costs
Dealing with Market Randomness
Reasons on why market direction cannot be predicted
Who can be trusted in the market?
Beware of people who give you tips
Why I am not afraid of losing money in my investment?
Know your own limits and rules of the game.

My Market Analysis

STI Index
Comparison between 1998-2000 and 2008-2000
STI Index movement
Prediction from Oct 2009 to 2011
Reason Why Gold might be a good investment
EUR/USD 10 years chart
Will it go up or down?
Taiji Symbol VS S&P 500
S&P 500 25 years chart
True value of S&P 500
Based on dollar index from 1988 to 2009
US Dollar Index
Using Taiji to Analyse
S&P(2007 to 2009) VS NIKKEI (1990 to 1992)
Is there any similarity?


Total Pageviews

My Mobile URL
Surfing with a mobile device?
Take note of my URL below

Sunday, October 18, 2009

True value of S&P 500 based on dollar index (1988 - 2009)

I have drawn up the chart to see the effect of multiplying the S&P500 and dollar index. My purpose is to show why non US investor must know the Dollar Index if they are buying US shares. US Dollar Index is the measurement of US Dollar value compared to other major currencies.
To simplify the chart, I am using one value for each year taken from the beginning of the year. Please note that I have used Oct 09 value for year 2010. Let make a assumption that the movement of your share price is tied to S&P500.
We can see that during year 2001, the product of S&P500 and dollar index is the highest. It means that if you are a non US investor, you will buy or sell US shares at the peak. In 2007, we can see the S&P500 have reach 1438 which is higher than 2001, but the product of S&P500 and dollar index is lower than that in year 2001. It means that if you buy US shares in year 2001 and sell share in 2007, you are in fact making a loss.
The chart also shows that the value of US shares is getting weaker since 2001. The recent bear rally has only reached the value during year 2003. So don't you think US shares are still considered very cheap now? The question now is will it get cheaper or it is worth to buy US shares?

No comments: