Tuesday, March 10, 2020

If...

If you had just started investing, the huge fall of the Straits Times Index (STI) earlier on Monday may have spooked you. Surely, a 6% drop of the STI within a day was a horrible feeling, especially so for those who did not go through such sudden huge declines and/or got used to the boom times in recent years.

If you had disregarded your emotions and adhered to your investment principles and strategies, then whatever happened on Monday would be like a walk in the park for you. Knowing what to do next, whether in a bull or bear market, is a good sign of control and rationality.

If you had identified opportunities even when the sky was falling around you, this meant that you were able to see a silver lining amongst the doom and gloom. Prices of equities may be near your calculated valuations, so it is probably time to load them up on the cheap; not all in, though, maybe some nibbles.

If you had a diversified portfolio made up of different asset classes (e.g. The Bedokian Portfolio), your capital would be less affected than those which were in just one asset class (in this case, equities). The different correlation between the asset classes act as counterbalance to one another in different market and economic conditions, hence your losses would be mitigated.

If you are a passive investor, do not be mindful of such happenings. Instead, you should just rebalance your portfolio during your designated date and carry on with your everyday life. 

Stay calm, stay rational and stay invested.

2 comments:

  1. "Knowing" this day will come soon after COVID 19, still can't resist buying some 52 weeks low counter last week.

    Have to learned to resist for even today, there are many counters look so "attractive". New 52 weeks low ma!?

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    Replies
    1. Hi temperament,

      Low can go lower, high can go higher, question is what would be the comfort level to enter? This would depend on each individual and his/her set parameters.

      As for myself, I had entered some positions last week and yesterday. For last week it was due to the counter hitting slightly below its P/B, while for yesterday a trigger was activated based on my "10-30 Rule" on the STI.

      Cheers!
      Bedokian

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