What To Do in Current Market Situation.

At this point of writing, KLCI has already fallen to 1430 points, tumbled down 50 points on a single day as a result of Saudi's all-out oil war with OPEC to cut down crude oil supply for AT LEAST 10 months, they said. What an eventful year of 2020 right? Covid outbreak on early January, lowest GDP and EPF interest announced in 10 years, government transition, and now Saudi's oil war.. I guess we value investors don't need any drama as these incidents keep our heart racing up and down throughout these months. So what would I do in the current market situation?

1) You thought its a good chance to get in

"Be fearful when others are greedy, and be greedy when others are fearful" is a quote that all value investors implant in their heart. So like all investors, we buy some cheap stocks that we have been watching over the counter for few months as everyone began to sell down.

After you bought over some cheap stocks and began to picture yourself harvesting your fruitful return in the next few months, the next incident happen: Government transition between Mahathir and Muhyiddin, and your stocks fall another 20%.

2) You tell yourself not to panic

What to do? If there's someone out in the market telling you that they have something that can predict this event, 99% of the time they are probably bluffing. Benjamin Graham said "Never try to time the market". It has been proven for decades that those who don't time the market tend to outperform those fund managers, who actively manage their funds. So can this rule be applied to our Malaysian market?

Personally, it all depends on the availability of your cash and your investment plans and strategy.  You should always keep 50% cash in your portfolio when the market is unstable given its current volatility. Its difficult these days to look at stock market. Its heartbreaking staring at your hard-earned money vaporizing 30% in one day (Like today). 

What about cutting losses? When it comes to cutting losses, always evaluate whether the incident affect the operating core and value of the company. If its no longer the same as what made you bought at the first place, you can ask your "technical analysis" friend for the best exit points and cut loss (That's what I always do!). 

You should never try to time the market, but you also should also understand that the entry points of your market is very important. A difference in few days could cost you a big fortune, taking MASTERS (7029) as an example, it has been growing for the past few years but all its gains for years were wiped out in ONLY two weeks. 

Today itself the Dow Jones Index (DJIA) has fallen -7.79% to 23,851 points, falling 2,000 points in a single day. It was the first market-wide trading halt since the 1997 crash and I would expect our KLCI to fall further. I seek this as a buying opportunity and I will continue to buy more as I expect the market to recover in THE NEXT FEW YEARS. 

Before You Buy In, Ask Yourself " Can you buy and not look at the market for a year?", If the answer is yes, just hold and wait for your return!

All the best investing!
-MoneyThoughts

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