The Get Smart in 60 seconds series is designed to be like an espresso shot, a concentrated article dedicated to the Smart Investor on the go, with ideas or concepts delivered in 250 words or less.
On Monday, the Straits Times Index (SGX: ^STI) fell by over 6% in a single day.
After a mild reprieve on Tuesday, we are officially in a bear market.
For investors, the current level seems ripe for bargain hunting.
But is it the right time to invest?
Could the STI decline further? Will you be missing out on an upturn?
The thing is, no one knows whether stocks will be going up or down next week or next month.
History, though, can provide us with some odds.
Today, the STI is down over 20% from its 52-week peak, popularly defined as a bear market.
Source: S&P Global Market Intelligence
Between 1993 and 2019, a period of 26 years, there were 10 instances where the STI has declined 20% or more.
That’s four out of every 10 years.
But deeper declines have happened before.
So, what now?
Your investing success does not come down to the single decision that you make today.
If there is a great company that is on sale, it is always possible to buy some today and add more the next quarter.
When we spread out our investments, we avoid having our wealth riding on one decision at one point in time.
If a company is destined to be a winning investment, the gain will happen over years, not months.
As such, we will have plenty of time to add in the future.
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Disclosure: Chin Hui Leong does not own any of the shares mentioned
