Last week, the United Kingdom voted to part ways with the European Union. Around the world, stock markets fell. This could be a sign that the vote for “Brexit” was unexpected. Last Friday, the Straits Times Index (SGX: ^STI) ended the day lower by 2%. Newswires cited uncertainties related to Brexit as the main cause. Yet, with uncertainty comes opportunity. Here’re three useful quotes that might help investors deal with Brexit. Keep calm and carry on https://twitter.com/TMFHousel/status/411991015554162688?ref_src=twsrc%5Etfw A big event like Brexit…
Last week, the United Kingdom voted to part ways with the European Union.
Around the world, stock markets fell. This could be a sign that the vote for “Brexit” was unexpected. Last Friday, the Straits Times Index (SGX: ^STI) ended the day lower by 2%. Newswires cited uncertainties related to Brexit as the main cause.
Yet, with uncertainty comes opportunity. Here’re three useful quotes that might help investors deal with Brexit.
Keep calm and carry on
Napoleon's definition of military genius:"The man who can do the average thing when all those around him are going crazy." Same in investing
— Morgan Housel (@TMFHousel) December 14, 2013
A big event like Brexit seems to call out for investors to make big investing decisions. But the better approach might be something much simpler. As the quote above from Napolean – shared by my colleague Morgan Housel – notes, winning wars is not always about big actions. Keeping a cool head and performing simple, regular tasks, is the key instead.
It’s the same with investing. Doing something average such as investing regularly could work .
Uncertainty and investing go hand in hand
In October 2008, when the world was mired in a financial crisis, Warren Buffett penned the following in an op-ed for the New York Times:
“I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.
So if you wait for the robins, spring will be over.”
There may be one thing that we can be certain amidst the uncertainties. Speculation on what will happen next is likely to be rampant. There might be predictions on where the stock market will be at a certain date.
But, if we follow the words of Buffett above, we might look at things in a different way. Here, Buffett makes it clear he is not able to predict how the stock market will move over the short term. But, he believes the odds are in favour of the market moving higher over the long term. If we wait for the clouds to clear, we might then miss the boat.
Keep the faith
Famed fund manager Peter Lynch shared these words in his 1993 book Beating the Street:
“Keeping the faith and stock-picking are normally not discussed in the same paragraph, but success in the latter depends on the former. You can be the world’s greatest expert on balance sheets or P/E ratios [price-to-earnings], but without faith, you’ll tend to believe the negative headlines.
What sort of faith am I talking about?
Faith that America will survive, that people will continue to get up in the morning and put their pants on one leg at a time, and that the corporations that make the pants will turn a profit for the shareholders.”
Lynch was referring to America, but the same could well apply to Singapore too. Even if the stock market would be down, some businesses will still continue chugging along.
A quick look around us might help us notice a few things. People are likely to be still using StarHub Ltd’s (SGX: CC3) mobile services or picking up groceries from Sheng Siong Group Ltd‘s (SGX: OV8) namesake supermarkets. Business – and life – will go on.
As Foolish investors, we should keep our eyes on the business performance of a stock and less on what its price does. If we find a good business, we can then look at the price tag to determine whether it is worth a place in our portfolio.
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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 company mentioned.