Fear is rampant in the stock market right now. Investors have taken it on the chin but it is not the time to give up. Singapore’s Straits Times Index (SGX: ^STI) peaked in early May this year and proceeded to fall past the dreaded 10% mark in less than two months to enter correction territory. Today, more than six months after this year’s high, the STI is still down by around 16%. As the downturn drags on, some investors are beginning to feel the strain. In some ways, fear has given way to exhaustion. After all, it’s been a tough year for…
Fear is rampant in the stock market right now. Investors have taken it on the chin but it is not the time to give up.
Singapore’s Straits Times Index (SGX: ^STI) peaked in early May this year and proceeded to fall past the dreaded 10% mark in less than two months to enter correction territory. Today, more than six months after this year’s high, the STI is still down by around 16%.
As the downturn drags on, some investors are beginning to feel the strain. In some ways, fear has given way to exhaustion. After all, it’s been a tough year for any investor to eke out any sort of gain. Consider these statistics:
- Less than a quarter of the 30 companies that make up the Straits Times Index are showing positive returns for 2018.
- The average year-to-date return of a blue-chip stock is negative 9.7%.
Meanwhile, good news is in short supply. Instead, negative developments, such as Asian Pay TV Trust’s (SGX: S7OU) massive dividend cut, are dominating media headlines. At the face of all the mounting challenges, it is not surprising that some investors are feeling fearful — and tired too.
From the above, you can see why it is tempting to take the easy way out and give up. But you really, really shouldn’t.
Courage, Singapore Investors
Investors were feeling weary in April 2008 too.
Prior to that, the US-based S&P 500 index had peaked in October 2007 and had fallen into correction territory in less than two months. By mid-April 2008, there was no stock market recovery in sight and the index had been languishing in the doldrums for more than six months. As investors’ hearts started to waver, Motley Fool co-founders Tom and David Gardner implored our members to stay invested. In April 2008, they wrote in a memo:
“We are all touched by fear: fear of death, fear of failure, fear of what a bear market can wreak upon our retirement portfolios. But courage is forging ahead, taking action, being productive despite the fear that we feel.”
You see, our co-founders understood early on that investing is more than just numbers and a bunch of ratios. Much like today, fear was rampant in the stock market back in 2008. But as investors, we have to find the courage, despite the fear we feel, to invest.
With the benefit of hindsight, we can now see the wisdom in their timely words — that is if we had stayed invested.
From the start of April 2008, shares of companies such as local bank DBS Group (SGX: D05), airline caterer SATS (SGX: S58) and vehicle test inspection VICOM (SGX: V01) have delivered total returns of over 120%, 265%, and over 500%, respectively. Investors that exited the market back then would have missed out on these satisfying gains.
So, like Tom and David Gardner before me, I say to you: Courage, Singapore investor.
Our Promise to You
Even in uncertain markets, there is still a way to invest profitably. It’s about knowing where to find these opportunities.
We do not shy away when markets fall.
That’s why we can consistently offer our members one stock pick every month … Even as the stock market suffers from bouts of fear and exhaustion.
Since we started, we have 24 active stock recommendations. We think they will be able to weather through tough times and potentially make you wealthy over the long term.
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A version of this article first appeared in the 23 November 2018 edition of Take Stock Singapore.
The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore has recommended shares of VICOM, DBS Group and SATS. Motley Fool Singapore writer Chin Hui Leong owns VICOM, DBS Group and SATS.