During the course of investing, and it is a long course - it doesn't end after a month, a year or even ten years. My end goal is to never be out of the stock market ever, and to have a stake in a company that will continue well after I am gone - but that's the dream.
Well, because of the long time frame - which I hope will span your entire lifetime - investing can be sometimes a lonely experience and being lonely with your thoughts can sometimes be not a good place to be in - especially when things in both personal and professional life do not agree with each other. Well, more often it is the professional life that gives me problem.
One such time is now - December 2021, when the stock market is going through a correction, crash or whatever. I mean, look at the fear and greed index:
When the needle is in the furthest left section, it means there is a lot of fear in the stock market and what do people usually do when in fear? They sell and right now they looking like they gonna sell more although not as bad as March 2020 which is like what, an index of 10 or 11?:
I can tell you a couple years ago I would have sold everything, curse the stock market, never to touch any form of securities anymore, thinking the global financial markets are just big corporations, multinationals and governments playing with people's money. But that would be the wrong thing to do!
If you read any investment 'guru' advice or warren buffett, peter lynch, or ken chee (no guesses where I got my chops from), they practise the maxim, 'be fearful when others are greedy, and be greedy when others are fearful' (granted it is a buffett saying and I might have paraphrased it incorrectly). This is certainly a good time to buy the stocks of great companies which you have conviction in, provided this current correction is not related to a decrease or degeneration of their fundamentals.
Think of this time or anytime the stock market has a big decrease as an impromptu sales or the great year end sales for thanksgiving/christmas - coincidentally, there is a phenomenon observed by peter lynch where Oct to Dec is typically a period you see share prices go down - one reason, apparently, is that a lot of funds sell down alot, post reporting so that their performance the next year would be a positive one, coming off the back of a lowered performance.
So, this post is really just to tell you I used to be afraid when the market has a huge correction and all my stocks experience wild swings - usually wild drops. But, now, having gone through the cycles and having my hand held through the ups and downs, I fear no drop but the drop in companies which I did not do my homework about. So, it all goes back to buy what you know, make sure you know what you are buying.
Right now, my portfolio is at a -0.64% and I expect further decreases since this looks like its just the beginning. I've already started to buy more to average down - I just do dollar cost averaging, instead of going by margin of safety, because I feel the need to do something every month or I might just do something stupidly big and big stupidly after a few months of just doing nothing.
Good night. All the best. May the peaks take you as high as the troughs can pull you down, and may you and I get better at navigating about them. Or not, you can just do sell puts and sell calls to do a decent 20% p.a but that's just me side tracking. Don't do it if you don't know how or why.
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