Keeping Calm in the Eye of a Market Storm

Credit: Darla دارلا Hueske

Over the past few months, many investors may have felt like they were sitting in a small sampan in the middle of the ocean during a storm.

Singapore’s market barometer, the Straits Times Index (SGX: ^STI), has tumbled by nearly 20% since April. That’s a pretty steep fall. And if the volatility of the past month is anything to go by, some might be feeling sea-sick with the ups and downs of the stock market.

An umbrella of calm

It’s times like these which remind me of how fortunate I am to be in a crowd of investors who think and invest for the long-term. After all, investing when the markets go wild can be challenging as the results may not turn up immediately.

Also, staying invested requires confidence that things will turn out alright in the end. But that confidence might be in short supply just when it’s needed the most.

One way to help us get around our uneasiness would be to surround ourselves with like-minded long-term investors. My colleague Stanley Lim once described how Foolish investors may better handle investing during periods of stress in the financial markets:

“For us to feel confident about our investments, we must know enough about them to be unaffected when untoward developments happen.

Furthermore, if we are able to adopt a long time-horizon (hopefully measured in decades!) with most of our investments, we might be less affected by the day to day fluctuation in share prices and thus become less prone to making mistakes because of our emotions.”

Foolish (capital ‘F’!) investors like these are the ones we may want to mingle with while we sit in the middle of sea in our rocking sampan.

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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.