Saturday, April 15, 2017

Which Market Should I Invest In?

There has been a few times when I saw people asking which markets should they invest their hard earned money in.

The questions have drawn mixed responses depending on the circumstances of the economic situation we are facing.

The US market has generally drawn many interests because they have companies globally which has plenty of moats, while historically they have proven to trend up and trade at higher valuations. It's a much bigger scale market really, and options are aplenty.

The Singapore market is a very small market in comparison and I've seen people who shun them because they couldn't find a good company to invest in. These people chose to turn to neighbourhood HK and Japan market because it's a much bigger market.




The Truth

People need to understand that there are no right or wrong answers.

If you are an investor who had in the past 2 or 3 years been invested in the US market, do check out for blind spot because the US market has hit a high valuation and all tides ride a series of waves amongst companies, pushing their valuation higher. In other words, do distinguish if the profits you made are because of skills or luck or a combination of both. It is usually that easy to ride the bull run to make money if the environment allows them to do so.

Skills of an investor are often tested during the bear market when markets are generally down and an investor's psychological vision and patience are tested. To be able to make money during a bear market will determine if your skills are good as external factors coincide to come from the opposite direction.

Like an athlete who focuses on specific skills in a particular competition (e.g backstroke swimming), an investor should also focuses on honing their skills regardless of the environment or markets they are investing in.

The truth is it is possible to make money in a bear market environment. It is also possible to make money investing in a bad company with the right valuation. On the other hand. it is also possible to lose money in a bull market environment, just as it is possible to lose money investing in a good company but at an expensive valuation.

Hone your skills, build your competency and know what you are good or weak at because that's what that matters in good investing, regardless the circumstances you are being faced on.



6 comments:

  1. It is easier to make money in the Bull market but to keep it profits safe till the next Bull is another skill set. :-)

    ReplyDelete
    Replies
    1. Hi Uncle CW

      Yes indeed, to optimize profits during bull market and minimize losses during bear market, not as easy to act than to say.

      Delete
  2. B,

    Thanks for sharing.

    Mind to share what's your thought about market diversification? As I noticed you are mainly investing in Singapore market, are you planning of diversifying your investment in HK or US?

    ReplyDelete
    Replies
    1. Hi Seekay

      So far not yet because I believe most companies are diversified globally these days. But to huy and hold long term i think the US market has the best chance of progressing. I'd prefer HK though as their Gaap are similar to SG unlike the US Gaap.

      Delete
  3. Great article, In line with what was previously said is Buffets position on diversification. http://www.cnbc.com/2017/04/17/a-stubborn-investing-rule-shared-by-jack-bogle-and-warren-buffett.html

    ReplyDelete
  4. eToro is the ultimate forex broker for beginning and pro traders.

    ReplyDelete

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