Has The Fed Really “Gone Crazy” ?
|image credit to steemkr.com|
Yes, this was what President Trump said after Federal Reserve’s recent rise in the interest rate and signals for more to come which has caused the recent “market rout” where world major indexes dropped by more than 5-8% in two days including most of the Asian’s stock market.
I am sure you have been bombarded by all sort of news headlines on “Market Crash “ or even active discussion about share price dropped or portfolio value decreased among your chart group.
Dow plunges more than 800 points in worst drop since February, Amazon and tech shares lead the rout ( from CNBC.com)
In line with all major market indexes, STI also corrected by more than -200 points and it has downed by more -10.7% since Jan 2018 and -16.3% from the previous peak, achieved in May 2018.
I am sure many investors also very nervous and in fear of looking at their shrinking portfolio value.
One of my friend e-mailed me and asking if he should sell his stock as the market seems going to crash, also asking what am I doing in recent “market rout”.
I forwarded him below charts :
Although -1400 points dropped in Down Jones seems a lot, but if you look at the surged since 2009 (by close to +20K points), one can’t even notice the dropped and is just slightly below +2SD. A -6% dropped is almost “negligible” from the chart as compared to +300% surged.
I think it is still too early to call this as “market crash” and market have much more room to drop to co-called crisis level. The market just tries to find excuses to "react", any reason can be a trigger point, it could be geopolitical risk, trade war, interest rate hike or any "unknown-unknowns".
But how about Singapore or some other Asian markets?
Well, STI don’t even touch +1SD after GFC in 2009 till now and it has been moving along +/- 0.75SD where I think our market’s valuation is not expensive nor that cheap. It drops to close to -1sd in early 2016 where I decided to deploy some of my war-chest and bought some banking stocks if you recalled in my earlier blogs ( here : How I stage and deploy my war-chest in a volatile market ). Same for HKG’s HSI and China’s market also moving below the long term mean level at this point of time.
So what does it mean for investors?
As I am still more than 75% vested in the market, I will not deploy my “war chest “ at this moment and of course, will start to look at some stocks in my watch list if STI continue to head south towards the 2800 level. One will need to have “discipline and patience” in deploying your war chest, else you may end up with no cash to deploy if the crisis really hit hard.
Of course, if you are in the stage of “wealth accumulation “ and still have “active income” to use as war chest continuously , you may continue to “buy on the dips “, averaging down on good fundamental stocks or Index ETF as buying below the long term “mean” will allow you to have better chance to” win or beat” the market.
I have been busy “catching Pokemon “ and have a short staycation with my family in JB, also going back to my hometown to enjoy the good and nice food recently. STE is also a bit “ cheapo” and not as “atas “ as those “warriors “ out there as we try to take advantage of good exchange rate of $SIN to RM of 1 to 3 (kidding :D ), most of the things look cheap when you divided by 3…hahaha.
One should get most “utility “of happiness on what you spend and not by the amount of how much you have spent, so long as you are spending on something you like and enjoy, like my friend LP on car and Chris on his special collection of “toys”…
Am I really “cheapo”? I don’t think so when coming to something we like e.g Holidays, those who read my blog will know that STE and Mrs really like to travel and spending $15-20K each year on some exotic holidays like “ Chasing Northern Light in Norway “ , “Dream Cruise to Alaska and Canadian Rockies tour “, “Wonderful trip to Land of Fire and Ice : Iceland “ , Switzerland, New Zealand etc ….(you may like my photos gallery: here )
Frugal vs Cheap: Are You Frugal Or Just Cheap?
Besides, happiness is not just about the amount we spend, but the “impact “ and consequences on others. STE is happy to sponsor his niece to attend the local university as he was the only lucky one in his family that have a chance to attend the tertiary education. As I mentioned in my introduction blogs, most of my sibling not even have a chance to complete their primary school education. Now, by understanding the importance of education and how it could make our life much different, STE will not hesitate to say “Yes “ on such “happiest “ way of spending money.
I think it will be an endless debate on how and what “warriors and monks “ are spending and will be spending, one should just spend on what you like as long as you enjoy it and get the highest “utility” out of it.
Regardless of being “ Monk or Warrior “ : Be Happy in what you “have “ and “ achieved”.
Quote Of The Day :
“Frugality is one of the most beautiful and joyful words in the English language, and yet one that we are culturally cut off from understanding and enjoying. The consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things.”
PS : For the past few weeks, I have done some minor “re-balancing “ on my portfolio as I sold my SIA Eng and YZJ ( taking profit of more than 40% from my purchase price), and also buying two more counters with A ( which I will update in my next Portfolio and Dividend Update). I have also decided to trim my holding in OUE-Comm after the “right issue” been announced and buying back the “rights “ from the market in the last two days to take advantage of price correction of more than -20% since the announcement of right issue, I am going to apply for more excess right as well. The rest remains the same and I am happy to “keep calm “, collecting the dividend. :D
Stay tuned for the next update.
Sorry for being noob. Hoe do you get data to plot the chart for sd?ReplyDelete
I use to download the data from yahoo finance ..but now historical data for STI is not available but I still can add the monthly data by myself , as for the others like DJ/ SP500 , FTSE100 / HSI historical monthly data still available.. pls refer to below link...
Hope this clarify..
Thank you! no wonder, i only manage to get data from 2011 onwards for sti.ReplyDelete
Thanks for sharing the latest regression line chart!ReplyDelete
It considered a very good trader I enjoyed reading it.I like the quality of your blog. We offer latest updates for Singapore Stock Market, Those who wants to be up to date SGX stock picks, stock recommendation Singapore. You can follow our blog for the best results inReplyDelete
SGX Stock Market.
Trump calling something else crazy is pot calling the egg black.ReplyDelete
Shares to Buy
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