Tuesday, February 6, 2018

10 Thoughts On Panic Market Selling Today

It's been a long time since we saw markets behave the way they are like this.

The last time was sometime during 2014 if I recall but the volatility fell short as market continues to go up thereafter. Since, it's been an easy ride for investors as the stock market goes one way higher and higher.

I promised to keep moments like this so that I can look back a few months or years later.



Here are 10 of my thoughts of the market today:

1.) The market goes up in a steady manner but goes down jumping a cliff.

The way up is usually slow and steady but when there are panic selling, all hell breaks loose as the market slumps within a few hours.

2.) Actually, we are back to pre 2018 levels. No big deal.

It is only a big deal because of the way it drops within the past 2 days or so. Actually, we are back to the pre level before 2018 just 2 months ago. The bull trend is still very much intact. A correction pullback is healthy to move further upwards.

3.) In the first hour of panic selling, good stock bad stock all get whacked down heavily. 

Regardless of the type of companies you are holding (banks/telcos/reits/oil/energy), all hell breaks loose in the first hour. But you can quickly see that the stronger companies rebound quickly thereafter before market close as traders close their short position or funds buying in.

4.) My own portfolio is not spared, down by $13,475 as reported by stockscafe. 

My portfolio is not immune to panic selling or correction. It goes down approximately in line or slightly lower than the index.


5.) Dad texted me to be careful of the stock market, as news spread throughout the media everywhere. 

I replied by telling him I bought Singtel.

6.) This is the type of prelude to a bear market.

In a severe bear market like the Great Depression, Dotcom or GFC, we'll see consecutive days like this. It's not as easy as it may sound to stomach a few consecutive losses of 5 digits at one go.

7.) Chatgroup becomes very active during market selloff like this.

We have a chatgroup among the financial bloggers who discuss about stocks. It is days like this that most are excited and are pouring support to one another reminding the path we choose to walk together.

8.) Almost all asset classes are down, including equities, bonds, crypto, currencies.

Only gold are marginally up as people flock to safe havens in search of protection hedges. Gold mining stocks are a bad hedge as they are correlated to both equity and gold.

9.) Cash and CPF came out among top in class.

It is on days like this people appreciate how important cash is in one's portfolio. They do not yield much over the long term but when utilized properly, they can bring about super returns in one opportunity.

Your money in CPF will also not be impacted as they continue to earn 2.5% and 4% respectively regardless of market condition, at least for now.

For those who are savvy, you can also double up your warchest in the form of CPFIS on days like this, when you are about to go into shopping mode.

10.) Networth or Dividend

If you are trouble facing markets like this, you must have think of your portfolio in terms of networth.

One quick remedy is to think your portfolio in terms of dividend. When the markets get cheaper, you buy more units and therefore your dividend increases. Hoila... just make sure you buy solid fundamental companies.


Thanks for reading.

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18 comments:

  1. Same here 5figure drop in a few hours due to people panic selling.

    It difficult when thinking about how that 5figure unrealized loss can be used to buy more stocks or buy stuff or have a great cny dinner.

    Really have to control emotion well else will feel like just sell everything.


    ReplyDelete
    Replies
    1. Hi Shawn

      I think we have to shape our mind into thinking we are a clear winner holding our stocks long term provided they are good companies. That way we see a totally different direction of light :p

      Delete
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  2. Hey B

    My portfolio dropped $50k yesterday - I went shopping and bought FCOT and ART. Portfolio rebounded today. Good to have ample warchest at times like this. And the courage to deploy.

    Anonymous A

    ReplyDelete
    Replies
    1. Hi Anonymous A

      Wah can agak agak know the value of your portfolio hehehe.

      Its indeed a good chance to accumulate more reits on dividends. There are a couple of blue chip too which Im interested.

      Delete
  3. While today’s market still looks over-valued, this drop has presented some good chance to nibble a little hehehe :p

    ReplyDelete
    Replies
    1. Hi Sleepydevil

      Indeed you have increased your allotment for singtel up to 250%!!

      Delete
  4. Still relatively new to investing. Like to hear some general feedback

    Generally, will it be good to wait until the volatility subsides (bollinger bands, VIX) before you cash in? In case you catch a falling knife?

    ReplyDelete
    Replies
    1. Hi INTJ

      Generally I'd try not to average down too fast but as soon as I see value i just go in, typically earlier than the bottom but im not too bothered. I know my long term horizon will win me the game.

      Delete
  5. This comment has been removed by the author.

    ReplyDelete
  6. Nice perspective Brian. I had just written about dealing with Market Free-Falls just a few days before this happened - perhaps I should write next about the market skyrocketing 200% in 2018...

    ReplyDelete
    Replies
    1. Hi Frankie

      Yeah!!! You should write about the opppsite, maybe it might come true haha

      Delete
  7. Good sharing.

    What goes up must come down and a correction is well expected when Index is breaking new high.

    Market may tapper off towards the the World Cup 2018 period but for now CNY is just a few days away.

    Local Market may have a CNY Rally before taking a break for the World Cup!
    No panic for now!

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