The Straits Times Index (SGX) has been set on frenzy recently. We have seen the serious pitfall of 12% retreat in the last couple of months from its high in May. This hazardous situation makes the scenario creepy for investors to keep calm. Is it now time for investors to dismay or should investors be courageous and grab the opportunity to invest during these unpredictable times? The question sounds tough, but the answer is simple.
The market corrects each time, and investors get a chance to buy a stake in a company of their choice at an attractive price. Investors need to stay calm to make this move, and not yield to the fear and panic seen in the markets.
Pick the companies which are well known to you or you understand its nature of fluctuations in an industry. Buying a stake in a company within an industry you are well familiar with it, which can help you to reduce your perturbation or anxiety. This is because you have a better understanding of the inner activity or business prospects of an industry to give you a sharp edge over the common man on the street and this would give you the confidence in your stock as you are accomplished with the industry or company. It up to your patience, after the purchase has been made.
The most important factors an investor needs to consider is the finances of the company especially its balance sheet. Though, it is most important to buy companies with strong balance sheets because it would be able to tide through dissonant market conditions without any problems and might it come out stronger aftermarket correction. Economic Crisis open new possibilities to take over other other smaller companies, further affix its supremacy in the industry.
The hardest thing to do which goes against human nature is every fundamental way is, determine the price and don’t look back. The foremost way to prepare yourself during a market correction is to stop looking at the stock market. Instead, look at the company’s financials and determine a price which would be willing to pay to buy the company’s stock, and that is what every strong player do. Once you have done this research and set the price, just place an order and don’t think twice about. By doing this, it takes you away from the guessing game of when the markets are in the lowest position and helps you establish an investment position in the companies you like.
The market correction is not a rare event but is something investors should cuddle. The Straits Times Index saw more than 10% falls from peak-to-trough in nine out of every 10 years. This uncertain times provided investors a new chance to invest.
The above tips should provide investors with some ideas on how to conquer on fear and stay calm to navigate the uncertain time., allowing them to make money in unfavorable market condition.