The Straits Times Index (SGX: ^STI) hit 3,281 points two weeks ago.
Since then, it has been downhill for Singapore’s market barometer, falling 4% over the period.
From its 52-week peak, the STI has tumbled close to 8%.
By numbers alone, the current decline does not look steep.
However, it’s the overhang of the Wuhan Virus that could scare investors away from investing in the stock market now.
As a Smart Investor, you shouldn’t be scared away. Let me explain why.
Worries all around
It’s hard to ignore the fear that is around us today.
Everything from face masks to hand sanitisers and even wet wipes is in short supply at the moment. I am sure that you have noticed that the number of people walking around with face masks has increased.
A simple cough or sneeze can visibly raise the tension around you.
People are afraid. And there is a valid reason for it.
The number of Wuhan Virus cases reported around the world has skyrocketed last week — and it is showing no signs of abating.
The Singapore Government announced yesterday, 31 January, that it will be barring travelers who have been to mainland China in the past 14 days. The government is actively taking measures to prevent and contain the spread of the virus within our shores.
As the situation drags on, Singapore’s economy may be affected. In fact, some sectors, such as tourism and retail, are already feeling the impact.
Companies such as CapitaLand (SGX: C31), which owns multiple shopping malls in China, has been asked to temporarily shutter its doors for six of its malls. Another 45 malls are on reduced operating hours.
Bottom line, the impact on businesses are real. As investors, we shouldn’t ignore the impact.
But it also doesn’t mean that we should stop investing.
Staying focused: What investors can do now
What will happen to the Singapore and international stock markets?
No one can predict with 100% certainty.
What we can do, as investors, is to maintain our discipline. That is the key to enduring through tough times.
But what discipline am I talking about?
Discipline in choosing the right stocks: A market downturn should not be a reason to pick up any cheap-looking stock that passes through your eyes.
Staying focused on what you need: Stocks that suffer a major decline shouldn’t be the only ones that you should be looking at. Buy what you need, and not necessarily what the market is offering you today.
Not a make or break moment: Investors can be stressed out at this is point of time. Some may feel that they need to get it exactly right. From my experience, I could argue that we don’t have to be perfect in every decision we make.
Discipline in how your deploy your cash: No one knows how long it will take to contain the Wuhan virus. So, take your time when it comes to investing. You don’t have to invest all your money at one point in time. If your investing horizon is measured in decades, there is plenty of time to add in the future.
Opportunity for the long term: When it comes choosing the stocks to buy, always buy with the intention of holding for the long term. That still applies. Stay focused.
Understanding risk: Keep your eyes open and your feet grounded towards the potential risks in the business. If the Wuhan virus outbreak lasts for months, the broader economy could be affected.
Get Smart: The Smart Dividend Portfolio
I don’t know how the Singapore stock market will be like when it opens on Monday.
I don’t know if the Singapore stock market next week will be better, or worse.
For all I know shares could be 8% lower — or higher — in a month’s time.
Broader market movements are outside our control. But it doesn’t mean that we should be afraid of what we can’t control. What I do know is that history is, strongly, on the side of the patient, long-term investor.
I’m not selling any of my stock holdings during this period.
Quite the contrary. I will be buying.
I will be buying stocks starting next week for our Smart Dividend Portfolio. We will be buying 15 stocks over the next 6 months to build up the Smart Dividend Portfolio.
Along the way, I will be explaining to you the reasons behind each BUY, and how much of each stock we will be buying.
Our Smart Dividend Portfolio will consist of a basket of 15 stocks that includes some income stocks, growth stocks, and a few speculative stocks.
If you’d like to learn more about the Smart Dividend Portfolio, click the button below.
We are running a special Chinese New Year promo as part of our opening launch that will end tomorrow, Sunday 2 February, at MIDNIGHT. So don’t miss out!
Disclosure: Chin Hui Leong does not own any of the shares mentioned.