Did you take advantage of the best investing periods Mr. Market offered the last 20 years? Did you take advantage of Mr. Market or did you fall victim to Mr. Market during these times?
My first recollection was 1987. It would have been wonderful to have invested then, but my priorities were elsewhere and not in stocks then. I recalled the big fall in October 1987. Those invested in the stock market were stunned by the rapidity of its fall in a day. Many predicted the collapse of brokers and investment bankers. But the recovery was quick. Those who sold would have lost. Those who held or bought more were better off.
The next period was in 1997. It was the Asian Financial Crisis. It started with the Thai Baht being sold down. In its initial phase, it was thought that this could be contained to Thailand. Soon it spread to Indonesian rupee, and very soon after, Malaysian ringgit. The tremendous bull run of the decade had created a huge bubble which popped. The shares in many companies were trading at ridiculously high valuations at the peak of the bull market prior to the crisis. By 1998, the stock market had lost by a huge amount. The index plummeted to a low of just above 300. There were panic sellings by big investors, above all, the foreign funds. What did you do as an investor during this period?
Another fantastic period was in 2001. This was when the SARS epidemic hit Singapore. The broad market was sold down. Those who bought during this period would have profited.
This brings us to the present period. The best prices were seen during the October 2008 to March 2009 following the post-Lehman crash. By then, the bear market has been in place for more than a year and a half. Many stocks were already lowly priced and the post-Lehman crash led to even lower prices of these stocks. What did you do during this investing period?
These were the 4 periods from 1987 to 2009 when the market sold off by a huge amount. Many stocks were priced at low valuations. What did you do during these markets?
Did you buy?
Did you sell?
Did you hold?
Buffett is right. "Be greedy when everyone is fearful and be fearful when everyone is greedy."
What further lessons can you learn from these four periods?
No comments:
Post a Comment