It’s Chap Goh Meh, Have You Peeked into Your Ang Bao?

Prior to this Chinese New Year, I came across some kerfuffle about the “market rate” for an ang bao in Singapore. The topic appeared to elicit heated responses from the general public.

As I recalled this story to my wife, she reminded me that the ang baos – or red packets – one receives during Chinese New Year should only be opened on Chap Goh Meh (the fifteenth day of the Chinese New Year), which is today.

Tradition says that the ang bao is meant to accumulate good luck during the entire Chinese New Year celebratory phase, which is the first fifteen days. So, we perhaps shouldn’t have been peeking into our ang baos in the first place before Chap Goh Mei.

Don’t Peek!

Why am I talking about some ancient Chinese tradition here? That’s because the whole Chap-Goh-Mei-and-ang-bao conversation I had with my wife sparked the thought in me that this could be great advice for your portfolio as well.

Do you peek into your portfolio every two minutes or so? If you do, then maybe you shouldn’t, and – like the Chinese New Year ang baos which are meant to collect good fortune over 15 days – you might want to leave your portfolio alone to compound over time. And just to be clear, ‘time’ here is used to refer to periods measured in years and decades – not fifteen days!

Thing is, sneaking a peek at the share prices of your portfolio every now and then may cause you to react emotionally to short term volatility in the share market. We might do better if we simply held for longer periods of time without too much tinkering.

My Foolish colleague Ser Jing made the chart below to show how volatile Singapore’s market barometer, the Straits Times Index (SGX: ^STI), has been. It is this volatility inherent share prices (and not business performance) that may unsettle the private investor into selling too early.

Return distribution for Straits Times Index

Source: S&P Capital IQ

Ser Jing goes on to point out that short term volatility may melt away into insignificance over the long-term:

“Over those full 26 calendar years, the index has seen four years whereby it has lost 20% or more. There were another three years where it lost between 10% and 20% of its value over a 12 month period. In other words, the market barometer has spent nearly one-third of the time clocking losses.

And yet, since the start of 1988, the Straits Times Index has grown from 834 points to more than 3,400 today, giving rise to an annual growth rate of 5.4%.”

In short, focus on the underlying business behind the ticker instead of sneaking a peek at the prices of the shares you own – that could be a better use of your time. Like ang baos, our portfolio may be best left alone (an occasional check-in is fine, of course!) until the moment you need it.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.