The bear has come in the worldwide stock markets. Our Kuala Lumpur Composite Index (KLCI) has dipped below 1,400 and might even break the 1,300 level. Luckily, the index increased to 1,344.75 before market closed. Nonetheless, it is still a large decline in one day.
Truth to be told, I did not expect the index to break the 1,400 level so soon. I just mentioned about the breach of 1,500 level not so long ago (two weeks only). This situation might be getting worse, so I have to prepare for it.
Course of action
My portfolio return has turned red this week. The negative percentage is increasing by the day. Though it is painful to look at the market now, I am still going to stay put.
I think there are some views that propound the idea of selling now and buying back later when the market drops further. However, I am not confident with my market timing skill, so I am not going to liquidate my portfolio. On the contrary, I plan to put more money into the market now.
For the time being, I am going to wait for a while more and determine the stocks that I think would have the potential for big gain when the market recovers. I think most companies will see some hits to their earnings for the next few quarters, but most will prevail. Thus, my task now is to identify the potential winners.
Conclusion
My plan can be summarized in these few words: Stay calm and keep investing. I believe that the market will turn around and get to new highs in the future. Just that I do not know when it will happen. By staying in the market, I am hoping that I would not miss the recovery as it has been shown in many books that this time is when most profits are made.
Comments
Hi There, What are the sectors or industry will likely to have big gain when the market recover?
Thanks.
Author
Hi, Guo Xuan.
I do not have a definite answer for your question. I can only tell you the sectors that I am currently monitoring: Banking, Furniture, REIT and consumers. However, these sectors might not turn out to be big gainers in the future. But I believe that if we manage to buy good companies during this time, we should do fine in the future.