The Chinese stock market has been very volatile recently due to the regulatory concerns clouding the fundamental business of the company.
While personally I think the worst is now behind us, the continued regulatory concerns surrounding some policy changes have increased the volatility nature of many Chinese tech related stocks.
Like most investors, I am watching the markets fluctuate up and down on a daily basis, but has little concern for now as we wait for the bad sentiments to subside and for investor’s confidence to return back. It will pass, at some point when we have other more pressing matters to attend to. The regulatory concerns will not steal the headline forever so we just have to be patient with how things are at the moment.
This occurrence will not just happen to the Chinese tech stocks, it will some day happen to all the different markets at a particular point in time.
It can be difficult for many investors who have not experienced volatility to continue to invest with confidence when the markets are volatile. At one moment, they are reeling the excitement of the upswing and then the next thing they let fear dominate them on the downswing.
That’s why it’s important to keep market volatility in perspective—don’t let short-term market swings cloud your thinking, or cause you to make changes that affect your overall investment objectives. Staying focused on the longer term of the business, being methodical in your execution, steering away from emotional decision and sticking to your investment discipline can help you come out ahead in the long run.
Volatility – is always going to be part of the markets, and the amount of emotions you will have in the volatility of the market as an investor can be controlled by the experience you have gone through. The more you have tried to understand your emotions the better it is at dealing with future volatilities.
If you scroll your chart wide over the very long term, most good fundamental companies trend upward over time but there will still be periods of volatility in the intermediaries that can make for a bumpy ride along the way. Doubt can creep in and question your original thesis and cause you to make short-term changes that can hinder your long-term goals. But it is important to keep things in perspective, and often times you are better off improving on your execution strategy to pull it off.
Here are a few ways that you can understudy to deal with a volatile market.
- Review your overall broad asset allocation, particularly with respect to the amount allocation for cash and equities. If you are worried about volatility, simply keep in a larger amount of cash in the sideline to help you overcome these turbulent periods.
- Understand your risk tolerance and risk appetite and regularly stress-test them. I wrote about this concept back in 2017 in this article here which is so important in order not to over-stress and lose sleep.
- Take advantage of volatility in the market. Understand that volatility is not equal to risk and it is an investor’s best allies if you can tap into them effectively. I highlighted how products such as options and DLCs thrive on volatility in the market.
- Own high quality companies and understand their business moat over their competitors. These are the opportunities you want to take advantage of when there are volatilities that hit these companies. One example is JD.com which I’ve written their model and valuation here.
- Tune out the noise you read from your social media and news. Journalists love to take advantage of such situation by reporting the highest amount of interests generated during that particular period to create fear (or excitement). If there is anything I’ve learnt from the recent SEO class I took, it is that most people fight for attention when it comes to key words and media journalist is the best example to showcase that.
Conclusion
The truth is there is no real secret to avoiding market volatility if you are here to stay as an investor over the long term.
Sure, there might be some little tweak in your strategy if you are a shorter term hybrid of investor and trader but you will still face the grudge of volatility, perhaps even more, in your years of trading.
Ultimately, it’s time in the market that generally leads to success.
Maintaining perspective, and focusing on the suggestions given above will help you weather the storms that you will inevitably encounter as an investor.
We believe, and history has proven, that the best way to navigate a choppy market is to have a solid investment strategy and well executed process. In the longer run, this discipline approach will help us reach our long-term goals better and faster.
Great piece! Very relevant all the time
Thank you Garudadri.
Key sentence: “This occurrence will not just happen to the Chinese tech stocks, it will some day happen to all the different markets at a particular point in time.”
Hi Robin
That’s what makes the stock market an exciting and fearful place to be.
uncle168,
“Of the 6 who had been in the ICU, 4 were not fully vaccinated and 2 were fully vaccinated.”
7 icu as of 11 sep.
4 part vax.
2 full vax.
1 unknown.
86% in icu are vaxed.
the vaccine is useless.
3 days to lockdown as predicted by uncle168
god speed
keekeekee
Looks like we may have an extended period of high rising cases.
uncle168,
the problem now is 600k mostly migrant, frontline workers and elderly vax 6 mths ago are now getting infected.
the recent community clusters shows our effective vax rate has dropped from 80% to 70%.
every month it will drop 10% if no 3rd dose, in 7 mths time or april 2022 our vax will drop to 0%.
the oxygen case has increase a lot by 10 or 30% yesterday, it is likely the gov will tighten by sep 15 by banning dine in and 100% wfh which is very effective to bring down infection rates.
if the gov don’t lockdown by sep 15, the situation will be out of control as 600K vax expired people are at risk of serious illness and death plus 1 million unvax people.
we could end up with no doctor and nurse in the hospital as they all test positive for covid without 3rd dose and have to be quarantined.
the gov should vax frontline workers first instead of elderly to break the community spread cycle.
god speed
keekeekee
Hey Brian,
First-time commenter but long time reader, I do believe it’ll serve you well to quell misinformation from “Uncle 168” – his broad stroke and simplified view of “the vaccine is useless.” is not helpful when Singapore is working hard to push up vaccination rates.
Cheers,
JW
uncle168,
JW ah sg vax rate is 84% soon.
10% cannot vax because young children.
only left 6% because got medical reason cannot vax.
if children can jab 94% already, what i post will not affect oyk goal of 100% kpi and his upsized bonus leh.
the health minister from his own mouth say the vax only 40% effective leh.
if you take exam get 40/100 is it pass or fail?
i vax already 1st shot because i need to visit relative in hospital and 2nd shot soon as next month only full vax can visit ward not because i think the vax is of any use.
i wear mask to avoid getting fined as mask is quite useless against delta, as long as u can breath means the virus can also go in right? you wear plastic bag as mask 100% virus cannot go in because cannot breath.
JW when you buy stocks you don’t follow blindly, you listen to what the gov is saying, you observe what is actually happening then you use your brain to reach a conclusion.
like i read brian thg analysis then i go and dig their annual report and history then i used all my cash and cpf to buy, all my eggs in 1 basket and made over $200k in 2 years by cashing out a few months ago.
i tell you even if the vax rate is 100%, every 6 months you have to vax again or it will drop 10% every month as our vax rate is about 10% a month.
when you vax bcg it last forever leh.
small pox also vaccine also last forever.
you got see tb case surge after bcg vaccine?
no right?
sg no more small pox and tb leh.
very effective these 2 vaccines.
then why this covid vax must jab every 6 months leh?
if you believe that fully vax will not get serious illness or die from covid then how come the gov don’t allow fully vax to take off their mask?
how come fully vax make up of more then 80% of infected cases?
how come oxygen case 50% is fully vax?
icu case now 6 out of 8 is vaxed leh?
i got use statistics to back my point leh.
i not bluffing without any statistics leh.
how do you prove the vaccine is effective?
just because the gov say you believe?
you got read the emperor”s new clothes?
the gov tell you to eat cow dung you go eat?
use your brain lah.
look at all those idiots buy hyflux bonds and sph thinking follow gov sure huat.
now sph no more newspaper, keppel swap its reit of office and sph mall which is worthless if covid is permanent
sph never send out the proxy form to the elderly shareholders who don’t know how to use the internet leh.
most of sph shareholders are elderly, if they voted confirm reject the spinoff and liquidate the newspaper instead as most of sph cost is labour cost, immediately profit goes up no need to give away assets to the newspaper also.
who will go mall when can shop online and daobao safer?
who will rent office when wfh safer and cheaper?
use your brain to think and not grow grass in it.
if indeed the vaccine was effective, it has been almost 6 months since our vax program started and 80% has been fully vaxed, our mask should be off now and all restriction removed but why do i feel we are worst off even before we started vaxing last year when cases were less than 10 and now heading towards 3,000 per day?
please enlighten me on your rational on why the vaccine is not useless?
you see all the frontline workers getting infected spreading to the community and they are giving the 3rd shot to elderly staying at home.
you should vax the 3rd shot to the frontline first and community cases will stop for 6 months.
then cases will surge again and need 4tb shot.
the vax now like taking drugs addicted liao every 6 month must take.
like that is called effective meh?
keekeekee
You all in and only make 200k over 2 years is very little…
Well, did not bother to read the full ramble, but for other readers, please always check your facts from reputable sources such as (i) The Lancet or (ii) The New England Journal of Medicine.
What the poster above me wrote clearly shows he doesn’t understand:
(i) the meaning of efficacy; and
(ii) how COVID mutates
For other readers, even with a 100% vaccination rates we would still get COVID as the efficacy is not 100% – just a lower number vs. if the country was at 50% vaccinated.
Therefore we would still get fully vaccinated people in the hospitals, especially those with comorbidity.
Brian, I repeat, it will be better for your readers if you remove vaccine misinformation from your website, cheers.
Thanks for the feedback JW.
Will take note of it in the future.
I actually quite enjoyed his inane ramblings though. Quite interesting to see how a siao lang views the world lolol
Haha, sometimes I read skim through it too myself.
Hi.. may i know what is your view on US market now? U didnt consider invest in US stocks e.g tesla apple n FAANG n ?
Hope to hear u soon 😉
Hi Jess
I did some of them through an options play rather than direct long at this point in time as I think the overall US market is a bit over extended at this point in time.