I’m glad the weekend is here so we can take some time off to rest. It has been a busy week at work for us while adjusting to a new home living situation. Daily routines have been disrupted and this week is a real eye-opener on what can happen when the family has to go through a medical issue together. At this time, it looks like the most difficult part is over and we may be able to resume our normal lives from next week onwards. I didn’t have time to actively monitor our investments in the past few days and only had time to catch up today.
Seems like both stocks and cryptos are rallying and prices are going higher now compared to just a few days ago when I commented on this topic. I don’t have an issue with markets trending sideways or higher because my regular investment plans ensure I don’t miss out on gains with consistent capital injections. My problem is when markets drop and I don’t have enough cash on hand to buy the dip. Or worse, it becomes a mini-crash and I ran out of cash after buying the dip.
Given the way things are going, I don’t expect a significant market crash to happen anytime soon. Yes, I know there are always ongoing issues in various parts of the world that can negatively impact the markets. But big market crashes tend to happen from something totally unexpected (i.e. black swan event), rarely from something people can see coming and have time to prepare for. A good example would be the current crisis with the China real estate sector that is badly affecting the China property stocks and bonds. While contagion risk is possible and the effects can spread to other parts of the China economy, I will be surprised if their Central Bank and Government does nothing about it and let it happen.
The biggest game-changer to markets in our generation and the ones after us is just how easily and to such a large extent that Central Banks and Governments are willing to intervene to save their economies. While SG did not money-print like US, the SG Government dipped into their reserves to pay for Covid support packages. Essentially injecting money into the SG economy via direct support measures to employees, self-employed and businesses. As a result, it protected most of our livelihoods, especially by ensuring jobs were not lost. There was a concerted effort across industries and Government regulatory bodies to retain as many jobs as possible.
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Even when jobs were inevitably lost, efforts were made to retrain and reskills workers for jobs in other industries. To soak up the excess capacity until the badly hit industries can recover and start hiring again. My view is that this is going to work and I have positioned my investment portfolio accordingly. The road to recovery may not be smooth but it’s more likely to happen than not the more time passes. Anyway, one interesting thing I have noticed about myself is how much less stressed I am after completing my private property purchase end of Sep. I was worried about which investments to sell to raise cash for the downpayment, the timing of when to sell, etc.
I got too eager with buying the fall in Chinese tech stocks and dip on US tech stocks that I ran my cash balance to the lowest point ever since starting work. This was at the start of Oct and I found myself having to check on my bank account balances constantly to make sure I have sufficient money for rent and living expenses. It’s also when the markets started falling for a while so I was monitoring my investments and watching them go down along with my cash after paying bills. It’s a surreal feeling to know that nothing has fundamentally changed, but how much more panic has set in when I have no buffer.
This all changed after the rental income from my new place (currently being tenanted) got credited into my bank account earlier in the month. And I also just got paid my salary income for the month. The cashflow improvement was immediate and I now have a small buffer. My wife is getting her monthly salary income next week and this will give me an even bigger buffer. All of a sudden, I stopped checking the markets because I was less worried. And guess what, the markets started rallying afterwards. I’m not saying all of these are inter-connected. But it does show that the less stressed you are about and the less you need for something to happen, the more the situation can turn in your favour in time. But once you start getting desperate and stressed out hoping for something to happen, the situation can turn against you so much more quickly.