How To Win In Any Situation

It was called a “Once in a Generation” decision. It was an all-or-nothing referendum, with no minimum turnout required.

So last month, Brits went in their droves to the polls. And with a simple cross in a box they decided the fate of their country.

Just a whisker

It was close. But those who voted to leave the European Union won by a whisker. But the thickness of whisker was all it took.

Ahead of the polls, brokers had a field day advising investors and traders where to park their money.

Bonds were a popular destination. It was perceived to be safe. They surged to record highs, driving yields to unprecedented lows. Some investors were even prepared to pay governments to lend them money. Crazy!

Take my money

According to ratings agency Fitch, the amount of global sovereign debt with negative yields surpassed US$10 trillion for the first time in May. Some people must be really scared.

Elsewhere, the Japanese yen had surged to a two-year high against the US dollar. The Japanese government has tried to make it unappetising for people to hold yen. They need to try harder – much harder.

Investor fears were compounded by newspaper headlines that spoke of shock, horror, calamity and disaster. Brexit it seemed was a godsend for journalists bereft of story ideas.

  • Fear and loathing as Brussels braces for Brexit calamity” – The Telegraph
  • Brexit’ could send shock waves across U.S. and global economy” – The Washington Post
  • Brexit Poses Multiple Risks to Europe’s Stability” – The Wall Street Journal
  • IMF says Brexit will permanently lower UK incomes” – Financial Times

Fight or flight

In times like these, it is very easy to lose sight of the big picture. That is not the right thing to do. Not now, not ever.

But it is only human nature to do so. In a tussle between fight and flight, running away normally has the legs.

But to be good investors, we need to always rise above near-term worries and think logically about what could happen.

Don’t waste your time thinking too much about what could happen today, tomorrow or even next week. Try, instead, to think about what your investments could look like five or ten years from now. If you can’t, then you are probably invested in the wrong stocks.

Can you envision what ComfortDelGro (SGX: C52) or Singapore Telecommunications (SGX: Z74) could look like in a decade’s time? What about Thai Beverage Company (SGX: Y92) or Hongkong Land (SGX: H78)?

Rarely disappoints

The market is a great place to see if anyone is prepared to do anything silly. It never fails to disappoint. The world is full of silly people.

In confusing times, I am reminded by three pieces of statistics about the Singapore market.

  • The Straits Times Index has been higher 66% of the time after every rolling 24 month period.
  • It has been higher 85% of the time after every rolling 10-year period.
  • And it has been higher 100% of the time after a rolling 20-year period.

With odds so overwhelmingly in our favour, focus on the things that matters – the long term.

Am I ever worried about near-term events and stock-market volatility? Not at all.

Volatility, as Warren Buffett once pointed out is not the same as risk.

Risk comes from three things. It comes from the nature of certain types of businesses. It comes from the simple economics of the business. And it comes from not knowing what you are doing.

So if you know the business and its economics then it stands to reason that you are not taking much risk.

A version of this article first appeared in Take Stock Singapore. Click here now for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter.

Written by David Kuo, Take Stock -- Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.

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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 Director David Kuo doesn’t own shares in any companies mentioned.