How To Survive The Market Sell-Off: COVID-19 and Prolong Recession Fears Maybe Overdone

The STI went into another free fall today and a 10 year low. I find it irritating that many stock analysts begin advising people to sell off all their stockholdings in one’s portfolio as SGX will drop to 2,000 or lower level mirroring the Global Financial Crisis in 2008. They are talking about charting and historical data and making it seemed as if exiting is the only strategy forward. If you have believed them, you would have been one of those many retail investors who had sold off all your shareholdings at whatever low price during this week’s bloodbath. 

Panic selling for the whole week

The game plan for many who had succumbed to panic selling this week, effectively, means you would have sold all your equities when prices are low and then try buying back when prices are even lower . I find it very sad and useless to try to time the market using the bottom fishing method- this is a myth as no one can tell you when exactly the trough will appear. Contrary to the current extreme pessimistic views of most stock analysts, there are a couple of minority folks such as Professor Naoyuki, the Head of Asian Development Bank Institute, who believes that the current panic sell-offs may have been overdone. The COVID-19 issue will not last indefinitely as many vaccine developments are already moving on to the first trial stage in human testing. Hence there is light at the end of the tunnel for the economy to eventually recover. 

For those on leverage/margin- Don’t get into a margin call

For myself, I leveraged using margin at between 27% to 33% of my total assets including deploy-able cash. The worse thing that could happen in such blackswan event is being forced into liquidation at fire-sales depressed prices. The current wave of panic selling saw my margin portfolio dropping close to the margin ratio of 140% at one point in time today. I have since topped up with cash and also injected additional shares into my margin portfolio in order for it to withstand another 20% to 30% plunge in market price that maybe coming up in the next wave.   

Is the worst over? Donald Trump may have contracted COVID-19 and he is in the high risk age group.

Unfortunately, the worst of the panic selling is not over. US and Europe COVID-19 have not even peaked yet. In addition, it was reported that US President, Donald Trump had been exposed to people who have contracted the killer COVID-19. Trump reportedly dined with Brazil’s Press Secretary Fabio Wajngarten who has since then tested positive for COVID-19. Donald Trump is 75 years and belongs to the high fatality aged group. More panic selling will definitely occur if the commander in chief of USA is stricken down with COVID-19. Surely, the great and mighty USA will be thrown into political turmoil should anything untoward happen to the President of the United States. 1st April 2020 (around 14 days from now) maybe a better timing to slowly start accumulating good value stocks once we confirm that Donald is well and healthy.