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1 Investment Action for Volatile Markets

To say that the Singapore stock market has been volatile lately might be an understatement.

In August alone, the market indicator, the Straits Times Index (SGX: ^STI), has fluctuated from an intraday high of 3214 points to an intraday low of 2808 – a gap of more than 10% within a month.

For individual companies like Keppel Corporation Limited (SGX: BN4), the band of change was even wider. The oil and gas company’s shares have seen a peak of $7.67 and a trough of $6.32 during the same period.

In volatile climates like these, what we do may make a difference in how our investment results pan out over time.

Keeping a journal

Buying while the chips are down may sound easy. But in practice, it may be a hard thing to do. (Try imagining yourself clicking the ‘buy’ button when stocks are in a sea of red.)

To get better at this, we may want to first take stock of our own behavior during downturns. If you have followed a  suggestion I gave back in a December 2014 article, you may have noted down how you felt in August when the market went all topsy-turvy. If you did (hooray!), you might be able to answer the questions below:

  • Were you fearful on Tuesday, 25 August when the Straits Times Index fell to its intraday low of 2808?
  • Were you able pick up shares on the aforementioned Tuesday?

This is not to say that picking up shares of any random company will automatically be a good thing. But, it does give you hints about whether you are able to act in a contrarian fashion to where the market is heading.

A Fool’s take

Awareness of your own behaviour and tendencies is the first step to understanding how to get better at investing. If you are able to diagnose the source of your discomfort when the market falls, you may stand a better chance of putting together measures to counteract it.

The measures could come in the form of keeping a larger cash position or simply, the act of not looking at changing stock prices too frequently. Whatever you choose, you are choosing it for yourself as everyone behaves a little differently during downturns.

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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.