Market Correction

Market is correcting. STI (Strait Time Index) fell 15% from 3500 in Apr to 2970 on 22 Aug. HSI (Hang Seng Index) fell 20% (harder) from 28,000 in May to 22,400 currently.

No surprises that I am more interested in HK-listed stocks, since HSI has fallen more. Over the past week, I bought some HK stocks e.g. HSCEI ETF (02828). Yes, I am losing money over my purchase in the past week. But it is ok to lose money in a market correction. It is more likely that I will gain in the medium term of 3 years. Hopefully.

Despite the correction, year-to-date (ytd), I am still eking out a minimal gain of 0.3%. YTD, STI fell by around 10% while HSI fell by 5%. I fare much worse than the indices in 2011 correction. Probably it is because I have diversified into more stocks. Or, I am lucky to avoid the worst hit Oil & Gas stocks this time.

I still have bullets to spare. Looking at my cash in bank and my stock portfolio, I am 1/3 cash and 2/3 stock. My cash could have been higher, if I have followed the temptation to cash in some CWT when it was at $2.36. (Now, CWT is at $1.98.)

My strategy is to add to a few of the existing stocks if they fell 10% from my last purchase price. Each addition is not large  -- probably 1% of my stock portfolio.  The existing stocks I am looking to add include HSCEI ETF, Valuetronics,

I am also planning to initiate new stocks (e.g. Singapore bank stocks) if they fell further. If the correction turns heavier into a crash, I will start looking at REITs which may offer high yields then. I recall that First Reit fell to 40 cents in 2009, offering 15% yield then. However, I don't think I will see any 15% reit this time.

I don't feel that this market correction will turn into a crash like 2009. It is more likely to be similar to 2011 correction, especially since the US and Europe economies are improving.

Nonetheless, I will never know when the market will bottom.


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