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Standing pat, staying put

Thiveyen Kathirrasan
Thiveyen Kathirrasan6/24/2022 08:27 AM GMT+08  • 6 min read
Standing pat, staying put
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The Edge Singapore’s 2022 global portfolio is not immune to the global market selldown. Nevertheless, we’ve beat most benchmarks, and we are staying put with our current picks

So far, 2022 has been a great year for the stock market bears. The performance of almost every major stock index and benchmark has been negative for the year. For investors, especially a newer generation of market participants, this has been a reminder that the stock market cannot go up consistently, indefinitely. After the 2007/08 Global Financial Crisis, the US stock market experienced one of the longest bull runs in history, lasting almost 10 years. Drawing upon historical data, bull markets last almost four times longer than bear markets and new highs are consistently achieved during these bull runs. Does this mean investors should plough all their money into the stock market when they think the bear market is nearing its end?

In reality, no one can call the market top or bottom with absolute certainty. At most, one can turn bullish or bearish. Investors are often clouded by short-term sentiments which significantly affect their investing habit and also contribute to the fact that a majority of investors lose money in the stock market, even during bull runs. Market shocks are much more impactful when there are multiple factors at play. For example, the ongoing pandemic coupled with the war between Russia and Ukraine, plus inflationary pressures, have all combined to incite stronger market sentiments, leading to more profound fear and greed cycles. How should investors approach the stock market then?

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