Monday, 8 Aug 2011 - global stock markets hit badly after ratings agency S&P (Standard & Poor's) downgraded the United States credit rating, the first in history.
Tens of billions of dollars of value was wiped off the value of markets from Sydney to Hong Kong and Tokyo. Singapore's market was among the worst hit, nosediving by 3.7%. The Straits Times Index (STI) tumbled by 110.78 points to close at 2,884, a 13-month low. At one point, it had crashed by almost 5 per cent.
Panic investors are charging for the exit amid growing alarm the US is sliding back into recession although G-7 group of major industrial powers vowing to act decisively.
What does it mean to you, as a retail investor?
To me, on Monday, 8 Aug 2011, I view it as a buying opportunity and I load up more shares to my current holdings - Sabana REIT and Boustead.
One of my objectives by end this year is to increase my monthly passive income to a certain amount. Since I have sold MapleTree Industrial at 1.15 not long ago (thus locking in a sizable amount of capital gains), my focus on industrial properties has shifted to Sabana, a Shariah compliant industrial REIT, apart from AIMS AMP REIT. This is taking into account the low interest rate environment currently. I am delighted to maximize this opportunity through Mr. Market knee-jerk reaction. I may consider averaging down more should the valuation continues to be attractive.
On the other hand, I am on the lookout for another yield-based company to add to my dividend portfolio. Most likely, it will be a monopolistic/postage organization, transport operator or perhaps a telecommunication corporation to "balance out" my exposure to REITS and GRP, a smaller firm.
For my plan on the growth portfolio, on top of my current holdings, I am looking to venture into an industry where the government has solidified a vision in the next few years. For instance, when the Integrated Resort (IR) was mapped out and Sentosa was a chosen location, Ho Bee, a then primary developer in Sentosa Cove was my immediate choice. Of course, other factors were taken into consideration.
If not, there should be a potential catalyst to drive up pent-up demand or a cycle to ride in the next uptrend. I will get the company shares when people are fearful. This is just the tip of the iceberg, as part of my plan.
The fun part? You can label your plan as "ACTION 2020...AND GOALLLL!!!" :)
The point is, a plan helps to keep you confident, well informed and filter out any unnecessary market noises. This plan of yours will go hand-in-hand with your personal investment objective, risk appetite, approach and time horizon. Only you will know the best suited portfolio. No one else because you MAKE the FINAL decision. Along the way, if there are mistakes, you are able to amend the plan accordingly while maintaining the core content.
If you have a plan and Mr. Market gives you the chance, it's time to execute it. Nothing less, nothing more. We can't time the market but certainly we can exploit the many opportunities available in the marketplace. Opportunities come and go.
And yes, you need that extra cash on standby. Cash from your monthly fixed income or free up any cash flow from your assets to buy more lucrative assets. Should you plan earlier, you could set up a personal fund stored in some account. This could be your war chest. But do remember to keep your dollars and cents (for rainy days) in check.
The local, Hong Kong and America markets are going to be interesting in the next few weeks. Will be exciting to be a hunter, to be exact, a bargain hunter...