Many Singapore investors would be happy to see the back of July as it capped an awful month for the stock market. A total of $37.4 billion was wiped out and the combined value declined sharply by 3.9 per cent. I also saw an article in a local finance blog where one reader wrote how depressed he was to see his hard earned money evaporated away because of the market correction.
To put things into perspective, I have always advocated readers to only invest in monies that you can really afford to lose. If you have only $30,000 hard cash, you don’t invest all of it in shares. That’s pretty stupid and risky. The worse case is concentrating all your investments on a couple of shares when you are just learning how to invest. Obviously, such an approach is akin to asking for trouble. A market rout would have wiped out all your monies.
The mayhem in the China stock market is not surprising, given that it had surged to record highs for so many years. A correction is inevitable and would of course inflict mighty pains on many investors. Such is the growing pains of an emerging market. On this note, investors worldwide should be cautious of this development because the fallout from the China market, coupled with the Greece debt crisis and the potential adjustment in interest rates, can affect investors’ confidence drastically and induce unstoppable financial crisis. Given the current situation, it would take a very brave investor to enter the market and buy shares which had dropped in value.
One depressed stock is Noble’s shares, which closed at 47.5 cents today. Like a fallen angel, Noble’s share price collapsed and its market capitalization has shrunk to about $3 billion from $7.6 billion. Veteran investor, Michael Dee (who is former Temasek senior managing director) had recently questioned Noble management over the book value of one of its asset, Yancoal and it was reported in The Strait Times last Saturday that the shares held by short-sellers amounted to a scary 600 million. It seems like Noble’s shares will continue to slide further in the coming days.
It is all gloom and doom? I guess not. Cash is king now but if you are already vested in the stock market now, it is time to review your investments. Ask yourself whether the companies you invested in are “emotional buys” or companies with strong fundamentals. If it is the former, it may be a good time to cut losses or cash in the capital gains. If it is the latter, stay invested for the long term and ignore the market noises.
With the money you made from the stock market, it may be better to diversify your asset and park some of your cash in bullion. In Singapore, you can buy a variety of gold and silver bars and coins from BullionStar, one of the leading bullion dealers in Singapore!
SG Wealth Builder