3 Investment Actions 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), had fluctuated from an intraday high of 3214 points to an intraday low of 2808 – a gap of more than 10% within a month.

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

Action No. 1: Keeping a journal

I talked about keeping a journal in a previous article here and how it can help you diagnose your own areas of discomfort in acting against the crowd.

Action No. 2: Be selectively greedy

After keeping a journal, I moved on to talk about keeping a watch-list and buying stocks responsibly.

Action No. 3: Being patient for results

In periods of volatility, days may feel like months, and months may feel like years.

If we check share prices of the stocks we bought too frequently, we may start to feel impatient for returns which have not come. Thing is though, great business performance can only be seen in years, not days or months.

We should always keep in mind that companies report their results on a quarterly or semi-annual basis. As such, there is often little basis for the price of a business to be fluctuating as wildly in the periods in between the reports.

Instead of obsessing over a stock’s price, we should focus our attention on the underlying business results and make our decisions based on the health of the underlying business.

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 can achieve that, then moderating your own behavior would be the next step.

In doing both, we can then move one step closer in becoming a better investor.

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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.