Monday, June 25, 2018

The sky is falling!

Expansionary monetary policy by the Chinese. Trade wars, tariffs. 1997, 2001, 2008, and now maybe 2018?

Is the bull market over? Are we going into a great recession that will leave our stocks destroyed, our savings burnt, our retirement plans over?

Sell, sell, sell, sell everything!

Just kidding.

Price is what you pay, value is what you get.  Frankly, at this point, I see many of my stocks going into the red, and personally, of course, I am slightly concerned. At times like this, I have to wonder whether I have purchased the right stocks, at the right price.

It isn't fun to see the money that you have worked hard to save burnt on the whims of someone's twitter account (*cough*). Funds are slowly retreating and withdrawing and building up their cash reserves, preparing for the bear market that hundreds have predicted for awhile. It is quite evident that the market of 2017 is probably not going to repeat itself in 2018. Or will it? 

The point of all this is that at all times, we just have to remember this : do not let our emotions get the better of us. If the fundamentals of the stock one has purchased is still there, valued properly and with decent enough analysis, one just has to remember that emotions get in the way of our wealth.

I will refer to this white paper by Barclays that showcase the issues with emotional investing: https://wealth.barclays.com/en_gb/home/research/research-centre/white-papers/Behavioural-Finance/Cycle-of-investor-emotions.html

In a bull market, it can be such that it seems like you can close your eyes, randomly choose a stock and it will shoot to the moon. It may not be so as stock prices are overvalued, going to astronomical levels without financial justification for the numbers.

At this point, I would just suggest to people to remember that even those who, if they had held on to their stocks in 2008, and just added more as time went along, would not have bore the brunt of the market's nastiness, but may have recovered from it and even did pretty decently with their portfolio.

In fact, it might be good that the market is now finally correcting itself. There might be more good value purchases and one might find great stocks at great prices, something that has not been that possible for awhile now. 

Buy the right stocks, and close your stock watchlist app so you don't panic and make the wrong choices. Doing nothing may often times be better than trying to do something when it comes to investing.

The Great Singapore Sale is coming soon!



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