We all know that US markets have been on a rollercoaster ride lately, the most recent was the US overnight slump on Wednesday where Dow and S&P 500 erased their 2018 gains and Nasdaq entered correction territory. Singapore followed through the next morning, however recovering later in the day.
A number of clients called to ask if it was a good time to enter the market. I had mixed sentiments, in my opinion:
- Yes for short-term few-days cash trade
- Yes for CFD shorting
- Not yet for long term buy & hold, but good to start putting stocks in your watchlist
The bear seems to have an upper-hand on the markets. No, bears aren't cute.
Here's a summary of several pro-bear news which may affect markets now through 2019:
1. Quarterly Earnings Results of listed companies - happening now till November.
2. Mid-term US elections - due to happen in November 2018, where results may have a significant impact on the general political landscape in US.
3. US-China Trade War - where US is pending increase in tariffs on China.
4. Interest Rates Hikes - Fed's intention to increase interest rates a few more times through 2019 to manage inflation in the US.
5. Oil Prices - US sanctions on Iran, leading to a lack of oil supply in the market, leading to increase in oil prices.
A must-read article on Business Times today, to give you a better idea on the current market and which stocks to look out for:
https://www.businesstimes.com.sg/companies-markets/bargain-hunters-on-prowl-as-sti-plunges-following-us-slump
Some highlights of the article:
"Some stocks that touched 52-week lows were Keppel Corp, City Developments, Genting Singapore, Golden Agri-Resources, OCBC Bank and UOL."
"However, should Singapore enter a bear market, like its Asian counterparts, that might open up further opportunities for value investors. Generally, a downturn of 20 per cent or more from a broad market index's peak over a two-month period is considered an entry into a bear market."
"Based on valuations near the levels during the last low in 2016, Ms Goh predicted that the STI could test 2,800, representing about another 8 per cent to the downside."
Stay cautious, observe the markets and get your watchlist ready for the longer term 2019.
General Tip 1: Try to buy stocks that pay dividends (3%pa or higher), so that in the event the stock drops or stay flat after your purchase, you still get to receive dividends while you wait out for your stock to recover or perform. To know how to check stock dividends, please check out my article Dividends: Checking The Stability Of A Stock's Payout.
General Tip 2: Stagger your trades. You can never predict if the stock you buy is going to go up or down immediately, next week, next month or next year. But you can do your due diligence by buying into fundamentally strong and undervalued stocks, followed by staggering your trades at different entry and exit points.
Have questions on your portfolio? Do feel free to give me a call or drop me a whatsapp/email.
