Singapore’s Straits Times Index (SGX: ^STI) climbed to new highs last Monday (6 July 2026), and proceeded to set new record highs for five consecutive days.
As of Friday, the index has broken past the 5,400 mark, and is a whisker away from 5,500.
Along with the rise, shares of the banking trio of DBS Group (SGX: D05), Oversea-Chinese Banking Corporation (SGX: O39), and United Overseas Bank (SGX: U11) have also reached their own highs as the index marches upward.
Apparently, the rally is not done yet.
Analysts are convinced that there is still room to run for Singapore’s banks, with some even revising their target prices upward for each bank.
We’ll find out by the end of the year whether they are right.
After all, stock prices are easy to check.
But what’s easy can also be misleading.
In fact, if you are not careful, a rising stock price may be the most convincing liar in the room.
The high that whispers “you are right”
When a stock you own keeps climbing, it’s hard not to feel vindicated.
The rising price feels like the market agreeing with you.
It’s the little voice in your head saying: “You are right”.
Let’s not kid ourselves – it’s a lovely feeling.
But it is also where the trouble starts.
In their book Winning Decisions, Professor J Edward Russo and Dr Paul JH Schoemaker draw a sharp contrast between process and outcome (see enclosed table).
|
Good outcome |
Bad outcome |
|
|
Good process |
Deserved Success |
Bad Break |
|
Bad process |
Dumb Luck |
Poetic Justice |
In an ideal world, a good investment process leads to a good outcome.
And then, there’s the part we often forget: a bad process can still hand you a good outcome.
They call that dumb luck.
At a market high, dumb luck wears a convincing disguise.
When almost everything is going up, the rising tide lifts all boats, the seaworthy and the leaky alike.
But alas, from the stock price alone, you simply cannot tell the two apart.
Here’s the danger: treat a rising price as proof you were right, and you stop doing the work.
You skip the hard questions.
You add to your stock position, certain you’ve cracked the code to making money.
The bill arrives later, usually when the tide goes out.
A rising stock price which is not backed by a growing business will eventually head south.
Playing with the casino’s money
Now for a subtler trap.
Consider this: win big at a casino and something strange happens.
The additional chips in your hands stop feeling like your money.
These profits feel like free money, extra cash to use at your discretion.
So you bet this “free money” in ways you never would with the cash in your wallet.
