BY LARRY HAVERKAMP

SINGAPORE shares fell 50 per cent in 2008, made a U-turn and roared back with a 61 per cent gain in 2009. We have never seen anything like it before and probably never will again.

This year's spectacular gains made Singapore the fourth best performer among the world's major stock markets.

In first place was Indonesia with the best turnaround story. It fell 60 per cent in 2008 and then bounced back with a 95 per cent gain in 2009.

Second and third places belong to Taiwan and India respectively. They lost 48 and 65 per cent in 2008, followed by a 78 per cent rise for each in 2009.

In a sign of the times, Japan's stock market earned a respectable 20 per cent this year but still finished dead last. It is remarkable that no major market earned less than 20 per cent in 2009.

To put things in perspective, the Straits Times Index has risen around 10 per cent per year over the past 25 years.

This year's 61 per cent gain is unprecedented. It is off the charts. We will probably never see another rebound like it in our lifetimes.

As for the future, the STI's two-year swing from minus 50 to plus 61 per cent shows the difficulty of predicting the future.

Not one stock market analyst got it right. Nevertheless, it didn't diminish their bravado. Analysts still offer advice, make predictions and call themselves "experts".

Much of that expertise, however, is clever marketing. For example, fund managers typically have about 20 unit trusts and investment-linked products under their management.

When you rank those 20 funds from best to worst, there is always a best performer. Managers typically advertise that fund and keep quiet about the rest. It is effective.

Top-performing funds sell like hot cakes. The problem is performance does not persist and the "top fund" changes from year to year. It could be mining one year and an India country fund the next.

It results in investors buying last year's winners, which means they buy when the fund is popular and expensive. Buying high and selling low is the worst possible strategy. The opposite works much better.

This article first appeared in The New Paper