When Your Stocks Crash, Here’re 3 Things You Shouldn’t Do

If you find that your stocks are down since 2015, don’t be surprised.

For instance, Singapore’s market barometer, the Strait Times Index  (SGX: ^STI), has fallen by 26% from its peak in 2015 (reached in April) to last Friday’s close.

Furthermore, only seven of the 30 stocks that make up the Straits Times Index had produced a positive return in 2015. The three worst stocks came from the likes of Noble Group Limited (SGX: N21)SembCorp Marine Ltd (SGX: S51), and SembCorp Industries Limited (SGX: U96).

In such a situation, your stocks may have fallen hard – or even crashed. The natural question could be what should you do? Thing is, it may be instructive to start with things you shouldn’t do. Here are three:

1. Have the idea that “I have made a mistake. I am a terrible investor” click here

2. Have the idea that “I bought it at $5, it’s now $3 – so, I’m should average down” click here

3. Have the thought that “There is no good news, all the news is terrible. I’m selling!”

It can seem hard to get any good news in the current environment. Most of the headlines seem gloomy.

For instance, Keppel Corporation Limited (SGX: BN4) has reduced the headcount in its Offshore and Marine segment by 6,000 employees. Meanwhile, Mapletree Industrial Trust (SGX: ME8U) had provided a gloomy outlook for the industrial real estate market in Singapore in its latest earnings. Elsewhere CDL Hospitality Trusts (SGX: J85) had recently given an uncertain outlook for the hospitality sector.

A collection of bad news – such as those above – can impose the idea that there is little chance for stocks to climb. Subsequently, an investor may be compelled to sell and wait for better times to appear.

Thing is, it is easier to miss good news when we are buried under gloomy headlines. And, there are good news around.

Take SATS Ltd (SGX: S58) for instance. The catering giant recorded a meaty 27% year-on-year jump in quarterly profit in its latest reporting quarter. Meanwhile, electronics manufacturing services provider Venture Corporation Ltd (SGX: V03) had also bucked the trend by posting double-digit revenue and profit growth. Aircraft maintenance outfit SIA Engineering Ltd (SGX: S59) also had better news to share earlier in the month when it released its earnings and reported increased sales and profits.

It is not to say that the aforementioned trio make good buys now; as always, we should do our homework before buying any stock. The point about bringing up the trio of SATS, Venture, and SIA Engineering is to highlight the idea that if we keep our eyes on the business behind a stock ticker, we may see a different picture in certain pockets from the gloomy headlines which are prevalent today.

Good news may become buried under pessimistic headlines. If we can identify companies that have had great business performance but poor stock market performance, then we may have found stocks that can outperform over the long-term.

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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.