In late Aug 2015, I went on a buying spree as the market became a sea of red over several weeks (see Playing with the Bears of 2015). I actually saw my portfolio collapsed by $60,000 during that period. It looked like the year was heading towards negative returns. Not very exciting.
What does $60,000 mean to you? For some, it could well mean two years of salary? For others, it could mean forgoing a few overseas holidays with the family.
I went away for a week of holiday in Sep 2015. I realised I was actually pretty Zen about it. I didn't check my portfolio at all during the week overseas. Instead, I was devouring seafood and other exotica in Japan. Blowfish sashimi anyone?
When I returned from my escapade, I was most pleasantly surprised to discover that the $60,000 'loss' had been reduced to $30,000. I hadn't sold anything. The slow climb to recovery continues.
Even as that is going on, we hear warnings that Singapore could be slipping into a recession and we have to be prepared for it. So will there be more pain ahead?
Times like this, we trust that we have invested into well run companies with sustainable business models that would navigate the challenges and continue to survive. Speculating in penny stocks is likely a gamble not worth risking. In general, I don't anyway. Maybe I'm just risk adverse?
I am sometimes reminded that how well stocks perform do not necessarily correlate with how well the economy performs. While discretionary goods will likely suffer, essential goods and services will continue to be needed. Supermarkets will still be patronised, bread will still be bought for breakfast, cars will continue to go for their required inspections, etc. We will still need to eat and shit. The basics don't go away. We are certainly not returning to the cave age.
Indeed, some goods and services may well have been considered luxuries in the past. But lifestyle changes have turned some of these into 'essentials'. Consider how dependent we are on Internet services, being constantly connected on our mobiles. Times have changed.
My take is that stocks with these consumer demands will thrive. Certainly, the dividend payout provide the additional safety net of an income stream even as we sit and wait. I can be patient.
Investing is a boring affair. Anything else is a gamble.
Yawn. [Did that make you yawn too? This is so powerful!]