Tuesday, 6 February 2018

STI: What to do amid this sea of red?

My entire portfolio was not spared from the massacre over the past 2 days. The fall in prices came as abruptly as the sudden downpour which resulted in flash flooding in parts of Singapore. 

Even though prices of some stocks are currently languishing at fairly attractive prices, my personal stance at the moment is to do nothing. Why?
  1. Honestly, I only have bullet for one counter so I really need to choose the best option that’s available. 
  2. Furthermore, I haven’t been monitoring any specific stocks and this correction caught me completely off guard. Without proper conviction, I would rather let the opportunity pass me by and not regret making any rash move.
  3. Thirdly, is this correction truly over or could it be just the start of a larger decline? Major bank reports seem to support the stance that market need some time to rest after the strong surge over the past months or years even. 
Nevertheless, this represent an opportunity to split stocks into 3 different groups:
  1. The drop a lot - Stocks that decreased so much that it’s starting to offer value. During a recovery, such stocks are likely to provide trading opportunities or be kept as long term investment. 
  2. Resilient stocks - Stocks that can weather market conditions. These are stocks that I will keep for retirement purposes. 
  3. Anti Gravity - Stocks that defied market forces and continued to increase. Could these stocks be undervalued and considered safer than the rest which is why funds are switching over? 
Flood water also takes time for it to clear up. Hopefully, by then, there will be a clearer picture of what to do. 


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