BrennenPak Verified user
Any time is a good time to invest
- Original Post from BPWLC BLOG

We often heard colleagues or friends mentioning that they were right now on the sideline waiting to pounce aggressively into the stock market when the stock market crashed. It was as though they were seeking a revenge that the stock market owed to them for the past 18 years. There were also individuals trying to study the leading signs of past crashes as they were trying to draw parallels from the past crashes in hope to find a coming one for them to punt on. Then there was also another group trying to discourage the others from investing, quoting the reason that most of the major markets are trading at around their all-time high. Over the past few years, it was also quite common to come across people who mentioned in social media that they would get into the stock market only when the STI hit a low of 1,800 points. If all these people have been staying out of the market due to their respective reasons, they probably have missed out big time.
An article featured on the Sunday Time last week entitled “The time to invest is now.” As I read through article, I must say I agree with the writer 110%. The article revealed that a famous investor said the market was going to crash within a year in the midst of European crisis in 2011. Should we have followed that call and stay in cash, we would have lost plenty of opportunities hiccupped by stock markets from time to time in this relatively long rally from then till now.
One noteworthy point in the article is the following
a.       If $100k were to stay in cash since 2011 till now, the return would have earned $300.38.
b.      If the $100k were to invest in ST index, the return would have been $46,243.36.
c.       If the same $100k were to invest in MSCI All-Country World Index, it would have made a return of $111,869.96 or a return of more than 110%.
 
Speaking from my own experience, we often thought that the timing was not right to invest, but after a few months, we regretted for not investing because stocks that we were interested in simply got higher. I cannot agree more with the writer that stock investing is not a binary decision, that is, to be totally in the market or to be totally out of the market, and not somewhere in between.  But essentially, in stock investing, it should be somewhere in between. Periodically, we should put some percentage into stocks while another portion to remain as cash depending on our comfort level. It is this periodic allocation that probably wins the race even if one is just a medium performer in stock picks. The cash portion, by itself, is a good cushion against any crashes or significant meltdown that can occur from time to time.
 
People who are serious about in stock investing would agree with me that it is like managing a business. And like in a business, we simply do not get into it because the time is good and out of it when time is bad. Most of the time, we have to steer the business as it moves through the good and bad times. In the past twenty years, we witnessed at least two major stock crises that saw the STI tanked 60%. Apart from these major crises were numerous smaller ones that had depressed the STI of somewhat between 15% and 30%. If we look back in history, the time period between all these crises was not that long, at most 3-4 years in between. Each time when it occurred, we do not know the real bottom until it had passed us convincingly. Only then, we start to regret in hindsight. 
A very good example was the marine and offshore industry. Just 18 months ago, we saw everywhere is bad news and the two major oil rig producer SembCorp Marine and Keppel Corp were hitting their lows. But by today, the share price of the two stocks has already past their lows. For those companies whose stocks have been either suspended or still struggling to get out of the problem that plaque the industry, it is because they had over-stretched themselves during the good times.
 
To date, the Dow hit its all-time high in 30 of the 54 months since the global financial crisis. Within a year since Donald Trump was inaugurated as the president of US on 8 November 2016, the Dow advanced more than 5,000 points to 23,400.86 as of market close on 26 October 2017. Whether we are trading via HKSE, Nikkei 225, any European markets or the STI, we are either at the respective all-time high or near to it. Perhaps, I may have selected a wrong time to write about this because all these markets are at their all time high, and may be in for a huge fall in the near term. However my personal experience in my investing journey showed that cashing out can sometimes be worse than simply stay on course. My ill-timed sell-out and inability to carry out a re-purchase program during the Asian financial crisis was a costly mistake that I wish to forget. In the other 4-5 crises into the new millennium, it seemed that I had done better. True, when a crisis was in the midst of gyration there was a lot of fear, but it seemed that things got better than it originally started when things were over. So, actually anytime is a good time to start our stock investing journey.
   
Brennen has been investing in the stock market for 28 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

Read more
28 people like this.
theintelligentinvestor :

My simple plan to stay invested:

- Buy undervalued stocks
- Have the patience to let the price catches up with the business value
- Collect dividends and reinvest
- Build up a sizeable warchest
- When market corrects, buy undervalued stocks
- Repeat the above

akwl88 :

hindsight is always 20/20

same thing goes for pple who buy at the peak to find out that it is the start of bear winter

stay vested, have a warchest, game on!

BrennenPak :

Reply to @akwl88 : I actually had a stock C&C (before it became Jardine C&C) bought at the peak nearly $11.00 before the AFC. It was a sole distributor for Mercedes Benz. Imagine when the crises strike, who buys MB in such a deep crisis, right? The stock went into tail-spin and later lost its sole distributorship. At its lowest it was about$2.50 (can't exactly remember).and hovered about $3.60. Later, it went to buy ASTRA in Indonesia from 2000-2003. At the maximum, I had 15,000. If only I have kept all the 15,000 shares, today, it would have been $600k just for that stock alone, apart from the dividends collect over all these years. Unfortunately, I was not intelligent enough, also quite fearful because of the AFC experience. Sometimes, peak becomes no peak after a long time because good stocks keep breaking highs. Today if Jardine C&C were to sell at $12, it will sell like hot cakes!

weehohup :

Hi Brennan, I concur with your view that there are still people negative and sceptical of the market as they view the market is too high and predicted that the market crash can come anytime. Examples of well known investors who are sceptical of the market are Jim Rogers and Marc Faber. My view is that if there are still people who remain uninvested and worried that the market will crash, the market will not crash yet. However when the majority of the people are very confident the market will go higher, then there is a likelihood that the market will crash.

BrennenPak :

Reply to @weehohup : Agree with you. Sometimes worry too much can be costly. Invest and watch, and watch and invest. Over time should be OK

TUBInvesting :

I also always say just stay vested. Totally agree with you. It was easier said then done.

Bluechipfan :

Agree. If we bought the shares at the low when the company is growing, we have cushion when bad time hit as by then, the share price would be higher. The share price may retreat but the fundamentals of the company did not change and the share price should recover when the broad market sentiment improve and bull returned. For example Singtel after so many market crises the share price now is still above IPO. If we have been holding the shares, the dividend received would make our average cost negligible. Another example is Boustead, if one hold the shares long enough,the dividends would have already covered the cost. However, who would hold shares for 20 years nowadays? The mindset seems to be 'got profit, take profit'.

BrennenPak :

Reply to @Bluechipfan : Generally good stocks can hold value over time. Can increase if possible.

  View More Replies Small loading
clim :

wao a great read about your experience again. Absolutely 120% agree lol

yes i think investing at this moment requires even more skills in building portfolio that fits own risk appetitie, managing position sizing to mininize risk.

of course carrying 100% is risk free, but by doing so is missing out so many gains.

One interesting view I read recently is, the bear is near when all the permabear cannot take it after it rises so much and decided to join marketdips of say 10%... that signals virtually all $ is in the game and no more $ to push it further. When those gains much along the way start taking profit one after each other, the most recently joined 'bear' become 'crab' (蟹货, cantonese) that is stucked at the top.

Small loading

There are more for you ...

View more and participate in our discussion now. It's FREE.

Creating an account means you’re okay with InvestingNote's Terms and Conditions