By: Jay So, 600+ stocks out of the 700+ listed counters on SGX are penny stocks (trading less than $1). What are the implications? What are some takeaways one can develop? For me, the few takeaways are as follows: 1. The market is cheap. The stock market can tell you the prices of stocks, but not their true values. When these kind of statistics get on the newspaper, you can tell, yeah things are quite bad, there may be some real bargain going on. But somehow, it feels like it is not the bottom yet. It has to be total despair when prices go way, way, WAY below their intrinsic values. Nevertheless, things do look cheap now. Just that they can get cheaper :) 2. Small frys get killed. Despite its mood swings, the market is not stupid. I am not sure how the same stats look in the best of times (was it maybe 100+ out of 700+ are penny stocks). But this stats did ring a warning in me. Yes not all 600+ counters are really lemons, we can find gems here. But how many? 300? Not likely, 100? Maybe, if we stretch our imagination and start building castles in the air a bit. But my guess is more like 10-20 real good co.s with fundamentals that can bring in cashflow for the next 30 yrs. (I am arbitrarily guessing here, no hard facts to support one...) Singapore is a young country and has a unique economy that is very Govt driven, a small population educated to be obedient workers, no natural resources and no domestic market. So, how many good co.s can we produce? Sweden, the country with most no. of MNC per capita, has maybe 15-20 MNCs (like Ikea, Volvo, Ericsson etc). I think Singapore can be considered successful if we can produce just one or two. Read more...