Stop Hitting Your Head On The Wall

A Bloomberg headline screamed this morning: Most Asian Stocks Fall as Fed Holds Rates; Japanese Shares Slide. Is Singapore’s stock market in trouble today then?

Au Contraire. As of the time of writing (10:46 am), Singapore’s market barometer, the Straits Times Index (SGX: ^STI), is up by 0.7% to 2,916 points. Is your head spinning a little trying to understand what just happened? Why did our local market climb while the rest of Asia is falling?

Thing is, trying to understand how the stock market moves on a daily basis is a loser’s game. You can’t win. And if you do feel frustrated that you can’t make the right guesses, here’s some food for thought: Being frustrated at your inability to guess daily market movements is akin to complaining that your head hurts while you’re hitting the wall with your head. It’s better to simply stop sitting your head on the wall.

Think of the stock market as a kid. Most children can’t think for the long-term. All they care about is the present and how they’re feeling right now. The late investing sage Benjamin Graham has a well-known thought that the market is a voting machine in the short-run (being guided by emotions) and a weighing machine in the long-run (being guided by business fundamentals).

As such, our investing should not be guided by the market’s daily whims. Instead, we should be letting the market serve us. For companies that we are interested to invest in, we should have an idea of the prices we want. And if the market starts acting up and the stocks you’re eyeing reach your buy-levels, you can then act on it.

If you are simply using the market as a guide, you will just end up chasing the market when it rallies and running away from it when it falls. (Does this sound like buying high and selling low, the worst thing an investor can do?)

Letting the market serve you is a more effective and systematic way of investing. And, it will cause less headaches for you as well.

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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 Stanley Lim does not own shares in any of the companies mentioned above.