Monday, June 5, 2023

Having A Ride Of Our Lives

If you had been following very closely to the markets (especially the U.S.’s), you would have probably experienced a metaphorical roller coaster ride, mainly due to the debt ceiling issue that the U.S. government was grappling about, not to mention the various finance and business news channels blasting about it daily. What we had been hearing were things like “markets selling due to debt ceiling concerns” or “markets rebound on resolution of debt ceiling”, or along those lines, and trust me if you had read enough of these, your heart would have experienced the same level of adrenaline rush that was felt as if you were on the Cylon ride in Universal Studios Singapore.

If you are a trader, yes, having those feelings described above would be completely understandable as the positions that you take are short term in nature, perhaps lasting minutes, hours, days or weeks.


However, if you are an investor, with a runway of 10 years or more, the past month’s tumultuous ride is nothing but a small blimp in the overall scheme of things. In fact, 1 month out of 10 years is just 1/12 x 10 = 0.83%, and this percentage will go smaller if you increase your runway by 15, 20, 25 or even 30 years (the latter being the typical employment duration for most ordinary folks like you and me). So, if 0.83% of your investment span had experienced the rush, I am not sure if your heart can take it for the remaining 99.17% of the time.


Whether you are an active or passive investor, let us not occupy ourselves with the feelings of highs and lows, and instead take the news in our stride and focus on the longer term. Provided you had chosen the correct investment philosophy and methodology, which includes diversification across different asset classes, regions/countries, sectors/industries and companies, and do proper rebalancing according to your age and/or your risk appetite, everything will be fine when the time comes.


Keep calm and stay invested.

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