Speaking about volatility; just three weeks ago, there was talk of doom and gloom in the markets, with the Straits Times Index (STI) nearly touching the 3,000-point mark on Boxing Day. As of today, the STI closed at 3,198 points, almost a 7% increase. Along the same time period, the S&P500 had recovered some 10%; from 2351 to 2587 (before the U.S. markets opened on 11 Jan 2019).
Looking back during the two weeks that straddled between 2018 and 2019, quite a number of fundamentally sound companies’ share prices were at a low, which meant buying opportunities. However, we are able to make this observation and conclusion on hindsight. If we were able to turn back the clock and time-travel back to that fateful fortnight, do you think we could still make the buy call confidently?
This brings up the oft-mentioned trait about the financial markets which I harped on like a broken record, and that is no one is able to predict the future correctly. Sure, one can get it right some of the time, but no one can get it right all of the time. During the Christmas period and the run-up to the New Year, with the indices heading south, there were strong expectations that they could go further down, and very few would think they could go up. Some may had bought in, while others kept their reserves at hand, waiting to swoop at even lower prices; I guess the former group has won this round. To be honest, for myself I had only bought into one counter this round, and only after careful deliberation (and no, I did not buy in at a low).
To add, I had encountered some cases of panic selling, liquidating their shares, only to see it rising back up just days later. I guess the willing (and lucky) buyers were the ones that I mentioned in the previous paragraph.
So what is next? That is a very good question, but unfortunately I do not have a very good answer. I can give some good advice, though, and that is stay focused, stay calm and stay invested.