We've had a couple of consecutive negative returns in the Singapore market in recent times now given the lacklustre start to the year.
It feels weird because on one hand it seems like a pretty normal things that we know the market will react but yet on the other hand because we have not had such negative returns for a very long time, thus a small minor correction in the market makes investors feel pumped up and jittery about it. Already, I've seen a few investors getting hands itchy these few days, getting into plenty of buying activities to each of his own.
Telcos down, banks down, Oil & Gas down. So many opportunities, yet too little funds to allocate. This is what we've been hearing on the side these days.
Perhaps, it is during this time that we should remind one another of the virtue of patience when it comes to buying. Kiplinger called this the general rule to remind investors to never allow yourself to be bullied and tricked by your own emotions into buying something that “can’t wait”. The fact is most things can wait and there isn’t the last train that is going down the track. Even if you had found a stock proven to be in a great position to buy, pace your fund allocation into buying these stocks such that when things get uglier, you would still have the funds to take advantage of them.
For instance, during the global financial crisis in 2008 / 2009, there are plenty of low hanging fruits awaiting for investors to purchase them. These stocks belong to the category where they are strong fundamentally but yet are trading at a very attractive valuation. However, due to market fear at that point in time, there are few investors who are willing to stash their hard earned money into the market, choosing to sit and wait instead. For others, they probably do not have enough cash left to take advantage of the situation.
Buying at the bottom or selling at the high is near impossible task for most investors out there. The hard truth is most of the buying and selling activities would range from within the standard deviation and it can be quite hurtful to see your stock goes up higher when you have sold or lower when you have bought. Even the best fundamental stocks out there could succumb to market decision when the economy gets rough and market will misprice itself. This is why pacing your fund allocations and activities is an important factor that every retail investors should consider.
For an opportunity loss it may seem difficult to endure, a permanent loss of capital is harder to absorb. With that, I will leave you one of the past record showing a few of these blue chip and Reits stock and how their market valuation at that point in time. The situation might be totally different from what it is today, but a food for thought all investors out there.