Unless you have been living in a cave, not read the papers at all, not on social media or don't watch the news.. you will have noticed the economy is in a sea of red, currency is falling, interest rate seems to be increasing and commodities is falling.
So in a situation like this what have happened to you emotionally. If you have monies invested, how do you feel? From the sea of red we have seen, alot of people have panicked and sold off their positions in the markets. Are they really investing or speculatiing
As of last night, markets in the US have rallied and most markets in Asia today rallied once it opened. How do you feel now? Probably sad if you had decided to sell to 'cut loss', because you heard somebody tell you that the crisis is coming...
You probably feel happy if you did not sell, at least now there is a glimmer of hope that your losses can be recovered. You probably be happiest when you saw the past few days as discounted price to invest into the market.
So is the rally sustainable? Is this the calm before the storm? I do not know. But I do know that if you have really decided to invest then these small distractions in the market is just a 'glitch in the matrix'. What I do know is that almost every country in the world, (probably other than Greece, just kidding) wants their economy to be good and growing. Every countrt will try their best to be competitive in the world to boost their economy. They will take measures to ensure the economy will not take a straight line southwards and never come back up.
For example, China, the RMB had to be devalued to ensure their goods become cheaper to drive export. Singapore dollar have to go down too to ensure our currency is not too strong that our goods and services becomes too expensive relative to our neighbours or competitors. China has put in measures to ensure the stock market does not crash too much.
With all that said I do know that in a longer term, your returns on your investments WILL make money but following some simple rules:
- Always stay invested
- Do not let your sentiments get the better of you
- When the market is down, hold your investment or invest more
- Have a proper asset allocation strategy, diversify
- Do a balance sheet for yourself and family (eg. Net worth, cash flow)
- Speak to a reliable adviser
Its always tempting that when you hear someone has made heaps of money in the markets and you want a piece of the pie. When that happens the good times are already over.
Its also tempting when you hear 'inside information' and invest. Hoping to make heaps if money in a short time. That's specualtion and not investing. Speculation is almost gambling.
I has an experience at the turf club once. I am not a gambler and I do not know what horses to buy. We had an event at the turf club and while standing around one of the horse trainer came and told us to buy Flying Stallion (really cannot remember the name but horses names in these races tends to be cheesy) for the last race. Wow! 'Inside information' from the horse trainer! We bought the horse and waited and waited and waited.... finally its the last race!
The gates flew open the horses came out of the starting line. My heart was pounding, the crowd was going wild! I looked for the horse I have placed my bets on. Its in second place! Yes its a good chance now!
Then 3rd place.. it ain't over to the fat lady sings! Come on you can do it! 4th.... 5th... crap.. inside information my ass! I can't believe I have waited for the last race just to see my horse lose..
In summary, its about time in the market and not timing the market that will ensure that you will be profitable in investments. So relax, have faith in the markets and invest.
