Markets in the Red Today

Everywhere I look I see red now. The STI is down more than 120 points, the Hang Seng Index is down 1158 points, the Nikkei shed 895 points. The Shanghai Composite Index is down almost 8.5%. The Dow dropped 500 points on Friday as well. My own holdings are also down. The strangest part about all this is that I still feel a good sense of optimism, weird right?

(Image source: http://www.davidicke.com/headlines/66843-crash-alert-the-stock-market-is-falling-like-a-stone/)

I'm just looking at a drop in the share prices, thinking that now shares are selling at low prices and better values. Some of the shares that I've been meaning to get previously are now trading lower. Of course, I'll revisit them just to check their fundamentals before I go in. While I do own shares in this possible bear-market (around a drop of 20% since it's peak in April for the STI), I still have a war chest which I kept in fixed deposit, due to a decision made before I started learning about the different ways to invest my money. So, now I'm just patiently biding my time waiting for the war chest to come out and then I can start investing.

Will this decline last long enough until then (it's coming out early next year)? I really have no idea, but it is possible. The decline in China may lead to a decline in the other markets which in turn will have an effect on China, it seems like a vicious cycle that has started, with the China market dropping then the huge drop in the US market on Friday and now the Shanghai market dropping as well. The fears of a market drop may very well lead to a self-fulfilling prophecy.

Now may be a good time to just wait out the storm for a while and maybe pick up some stable companies that will be able to weather out the storm with you. I don't think I'll sell my current holdings but I don't think I'll go out to invest more in the market either (mainly because I don't have much to invest now anyway). The market may drop further but I still have confidence in the long-term outlooks of my investments, mentioned most of them in previous posts. Instead of selling now and buying back later I'll just hold on to my confidence in my choices. This may be a great or lousy decision, but only time will tell, the short-term movements of the market can be remarkably difficult to predict accurately.

Just to round up this post, I'm not so worried about the current drop in the share market. There will almost never be a day where the market is normal so just holding on to the fundamentals of your investments and the belief that the stock market is a weighing machine in the long-term is the best option in my opinion. It really saves a lot of heart ache especially if we keep following the market movements each day.

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