Don’t Pay Attention to Short-Term Market Fluctuations

roller coaster There’s a saying that goes, “Sell in May and Go Away”. It dictates that selling in May and coming back in November protects your portfolio from losses during the volatile period.

Those who sold in May and went away must be laughing at those who detractors who stayed invested throughout. By selling and going away, one would have escaped the 9.6% drop in the STI. On the other hand, this group of people might also miss out on any sudden rally back to 3454 points and beyond.

The difficult part is deciding when to re-enter the market after selling and going away. If you re-enter too early, you might see more losses to your portfolio. If you re-enter too late, you might miss out on a great rally. Therefore, the best solution, I feel, is to stay invested throughout, without taking the hassle to time the market. I do not pay attention to short-term market movements.

In June, I didn’t sell my shares and I certainly didn’t go away. Short-term fluctuations are the best friend of a long-term investor, providing an opportunity to buy into shares at a lower price.

The dizzying haze situation did not help the sombre mood set by Ben Bernanke in the US either. Hospitality and tourism businesses like CDL Hospitality Trust (SGX: J85), Ascendas Hospitality Trust (SGX: Q1P) and Far East Hospitality Trust (SGX: Q5T) were whacked left, right and centre.

Businesses that have nothing to do with the cutting back of monetary stimulus or the haze got hammered as well. Super Group Limited (SGX: S10) was down 22.9% at one point, dropping more than the market. This is a perfect example of the folly of Mr. Market. It is unlikely that money-printing or prolonged haze make people drink lesser coffee.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.