Friday, 13 May 2022

Time To Sell All Stocks To Prepare For Upcoming Recession? Heavy losses from Crytocurrencies.

The stock markets have been fluctuating wildly for the last few months. This week is probably another one of the scariest week with consecutive days of stocks free-falling non-stop to another market low. I saw a S$40K of paper loss just in this week alone from my various investment portfolios. Is this just a temporary market correction to take into account the high interest rates to tame soaring inflation or is this just the beginning of a market crash before the deep dive into another global recession just when many businesses are still trying to recover from the recent COVID induced recession?   

1. Luna plummeted overnight and rest of Crypto dragged in. 
The cryptocurrencies market is in turmoil right now. It has been a shocking week for those who own bitcoin and other cryptocurrencies, as they watched billions of dollars in their asset valuation vaporize overnight. Luna unfortunately crashed suddenly due to a lack of confidence by holders. My thoughts are that those affected should continue forward and not let this setback impact their investment confidence. 

2. Sell all stocks to avoid the painful stock market crash?
Well personally, I will not be doing any panic selling despite the sudden S$40K drop in my overall portfolios. My preference is to double down to pick up extra units of the various counters that I have especially those that have reported good results or backed by strong sponsor such as those belonging to the Mapletree or Keppel family. In the event that there are any rights issue to top up liquidity, at least one can be rest assured that Temasek will be able to cough up the money or underwrite such emergency fund raising.   

Since we do not have magical crystal ball, I do not think that there is any point for one to try to time the market. For all we know, this may turn out to be a false alarm should inflation came under control soon and it became the case whereby one misses the market rally.  

3. Major change made by opening Endowus account
I have decided to open an account with Endowus to prepare to invest my CPF ordinary account in event that the global markets crash further. This could very well be another great opportunity to beat the 2.5% in CPF ordinary account.

Parting thoughts
As at 13 May 2022 (Friday) today, we finally seen some respite with stock prices recovering some of the heavy losses this week. But similar to other recessions, this maybe one of the many impending bouts of fake rallies. Panic selling might just ensue again next week. I do think that with my current portfolios (especially with regard to my Margin Portfolio), the tweaking of investment constituents into more Temasek linked companies as well as blue-chip banking giants, should make them more resilient. I will continue to plough back my upcoming S$8K of dividends for May'22 and June'22 into priming the bruised portfolios for post crisis recovery.

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