10 Thoughts On Panic Market Selling Today

Publish date: Tue, 06 Feb 2018, 08:42 PM

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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