When markets are going down, it is easy to say,
Since stock prices are falling, I'm going to sell now and then buy back cheaper later!
Trust me, I've made that (noob) mistake before. And guess what? The markets went up and I lost my chance. If I had simply stayed invested back then, I would have made 300% returns in 2019.

It was a sobering lesson, and taught me that unless I have a super accurate fortune-telling crystal ball, where the market and stock prices move next is truly anyone's guess at best.



The market never works as perfectly as you expect it to. And in crisis periods like the one we're living through right now, the decisions are never that straightforward either.

If it were, then we'll all be millionaires.

Everyone thinks they can buy in low and sell high. In this case, everyone believes they can sell high (now) and buy back cheaper later. After all, that's Investing 101, isn't it?

But it is never that easy.

Hindsight is 20/20. But markets are forward-looking.

My best stock investments were all made when the outlook was uncertain, and when people were losing confidence in the stock / company. 

You have to take (calculated) risks in such moments of uncertainty.

Like what my friend Brian Halim says, "investors never get the best value out of the market only when things start to stabilize. If you think that by watching the news and markets for 24/7, you can time to enter at the bottom, then chances are, you are likely to miss out on the best part of the rebound. Huge opportunities and the best decisions are often made when outlooks are uncertain and NOT when the sky is clear."

No one knows where the markets will go tomorrow. The virus situation in Europe has exploded out of proportion with too many patients and not enough doctors, and many believe the US is next. When that happens, there's no telling what will happen to the stock market even if the Fed steps in again. 

My biggest priority now would be to ensure I space out my funds and stock purchases so that I have enough to last me through the crisis, and who knows how long that will be. It is incredibly difficult to time the market, so I'm just going to average in each time. Even if some of those later purchases are on the recovery, that should still be lower than at today's prices and valuations. 

If anyone is telling you that they're selling out now to buy in cheaper later (and suggesting that you should do the same), then ask them this:

If you're so confident, then why aren't you taking a short position on it?

No one is responsible for your investment portfolio except yourself. So take all buy and sell calls during this period with a pinch of salt; what's more important is that you make the decisions you feel are best for yourself.

And remember, always go back to the basics. Don't try to be a fortune teller unless you really have eyes for the future. If that's the case, then please drop me an email with next week's winning 4D number and I promise I'd split my winnings with you.

I'm excited for the week ahead to see if there'll be anything else I can scoop up, but in the meantime, always be sure to invest safely.

With love,
Budget Babe

3 Comments

  1. if you so-called follow the Warren Buffett style (by the way we tend to think we are WB), then need to put faith in your long term stock.

    If you sell now, later, it’s very difficult to show guts to buy back if market drop! And what if your income is at stake? What if Health problem take place which normally come during crisis.

    Better to learn the hard way through a crisis, if you have been so-called the long term investor.

    Else, you have to exhibit patience and believed that there will be a crisis coming before the crisis! And wait for few years, then now, the market crash and then you buy when all the rest sell.

    But make sure your job income or business income still flow in.

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    Replies
    1. Agreed! I feel psychologically, it is extremely difficult to execute the "sell now, buy back later" method as well as we may be inclined to think the markets have yet to bottomed, and then we wait and wait...until we miss the boat.

      We might also get caught up with other stuff when the market turns, especially like you mentioned, health and job security issues. When that happens, we may not be able to react fast enough too.

      So I would definitely average down and space out my purchases instead, based on when valuations hit a level that I'm comfortable with buying into.

      This crisis is definitely an experience and I hope we will emerge stronger (and richer) from it, instead of living to regret that we didn't make a move then.

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  2. Interesting Article. But I find myself harder to take a physically loss compared to a paper loss. I'll just hold on to the stock until a recovery takes place and maybe some dollar averaging.

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