In continuing with the series, I like to draw attention to the valuations of the STI Index, which notoriously received the dubious distinction of having as bad a year as Greece. It’s probably worthwhile to note that the last 5 years have not been by any measure a particularly exuberant time in the stock market (especially in comparison to 2005 – 2007). This lower valuations have also resulted in a corresponding surge in the dividend yield of the STI to close to 4%, a near record high. Some large capitalization stocks are extremely cheap, trading at close to 2008 levels.

Can stocks go lower?

Sure. But I would argue that hoping for the bottom in 2008 valuations is a case of being penny wise pound foolish. Risk reward ratios are skewed towards risking 10 cents on the dollar to make 50 cents to a $1. We should probably bear in mind ......