How to Handle the Greece Crisis in the Stock Market

Let me know if these headlines look familiar to you:

“Euro Crisis: Why a Greek Exit Could Be Much Worse than Expected”

“The Grexit risk hits home”

“The Grexit is coming: So what happens next?”

“China’s slowdown deepens, raises risks on global economy”

“Oil prices hit a 17-month low on China slowdown fears”

“Will a rise in US interest rates cause investments to tumble?”

If you have guessed that these headlines came from today’s newspaper, unfortunately that would be incorrect. With a little help from Google, I actually picked these headlines out from… 2012.

Isn’t it interesting how these headlines wouldn’t have been out of place even if they were recycled for use today?

Scary headlines

Just to be clear, I’m not using the headlines above to make light of the current impasse between Greece and the rest of the Eurozone.

Instead, I’m using them to show that while headlines like these will likely dominate newswires in the coming days – just like they did three years ago – and perhaps scare the common investor away from investing, it’s worth noting an important fact:

  • Singapore’s stock market, as measured by the SPDR STI ETF (SGX: ES3) – an exchange-traded fund tracking the market barometer, the Straits Times Index (SGX: ^STI) – is up 22% since the start of 2012, the year when those headlines were hitting newsstands.

The more adventurous among us may have done even better.

For instance, shares of glove-maker Riverstone Holdings Limited (SGX: AP4) and corporate marketing firm Kingsmen Creatives Ltd (SGX: 5MZ) are up by 325% and 75% respectively since the start of 2012.

As my colleague Ser Jing points out,  Kingsmen Creatives and Riverstone Holdings had both turned in some solid business performances over the past decade like generating growing cashflows and having strong balance sheets; these may have been fundamental reasons for the growth in both companies’ share prices.

A Fool’s take

At the time of writing (1:15 pm), the Straits Times Index is down 0.85% on the back of yesterday’s Greek referendum. A near-1% decline isn’t that fun to see, but we need to put things into perspective. When compared to its 52-week high, the drop in the Straits Times Index is not as drastic as one might imagine; viewed this way, the index is trading only around 6.6% lower than its 52-week high.

The stock market doesn’t have to be a scary place if you – the Foolish investor – have a plan and a watchlist of stocks. As the shares of Riverstone Holdings and Kingsmen Creatives have shown, some companies can go on to outperform over time regardless of what’s happening in today’s headlines.

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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 owns shares in Google.