What Should You Do In This Volatile Market?

What Should You Do In This Volatile Market

As you know, the stock markets have been most volatile in recent weeks and days. US and China called for a truce on their trade war and the market is up a few percentage points; Donald Trump tweeted that he is a Tariff Man and the market is down a few percentage points. Signs of a flattening yield curve caused a few percentage points drop in stock prices. What should you do in this volatile market?

Some principles never change like the principles of value investing. At this point in time, I am finding a number of good companies with very strong economic moat already selling at a discount and you can perhaps refer to my writings on Facebook and Apple.

Having said so, market can get very very cheap when there is huge fear and big sell-off and while many people feel there is going to be another mini-bull run before the big crash, the truth is nobody knows better. As such, at this point, I personally do the following few things:

  1. Build in more safety of margin when I do my valuation of stock prices to determine the intrinsic values. In addition, I will enter into a position in stages. For example, if I feel Apple is a good bargain at $155, I will first enter at $155, then perhaps at $132 if it drops further with a third entry point at about $112.
  2. Maintain more cash in my portfolio to tap on opportunities offered by Mr Market.
  3. Do more homework, and fewer trading activities. At this time, I actually spend more time analyzing stocks and building up my shopping list with various entry prices for great companies which I have always wanted to own. And I am very patiently waiting for the right time.

I found a good video below explaining the inverted yield curve and also what you should do in such turbulent market.

At Journey With Money, we are practitioners of Value Investing for Singapore and US stocks. We are passionate about sharing our Stock Investment knowledge and experience but the materials we present do not constitute stock recommendations and readers are urged to do their own due diligence for any investment decisions.

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