We are into the final week of the October month and it seems forever since we last had such a volatility in the market. The month of October has historically been the most volatile month for stocks (such as the 1929 crash, credit crunch 2008) and it has proven itself right once again, at least this year.
I remembered the time I was in Spain while watching the Dow dropped over 400 points in a single day and I was watching the STI stocks dropped quite a bit as well, especially for oil and gas related (Keppel, Sembcorp) and commodities stocks (Wilmar, GoldenAgri). The brief correction keeps quite a number of people on the toes for quite a while, some panicking while the others are excited about an opportunity to put their investment funds to use.
Personally for me, I was hoping for a correction for sometime now. I see the stock market as a cycle where it goes up and down and it is only healthy that it did what it does because it will reverts back to the long term average mean, which keeps going up over time. Sure, my net portfolio worth might goes down during the correction, but having a cheaper market means I will use lesser funds to buy the same stock that will yield a higher dividends in terms of percentage returns. And to be honest, when you set yourself for financial independence, all that matters to you at the end of the day is cashflow cashflow cashflow, not networth.
Take a classic groceries example for a second. You had $100 to spend on groceries for the weekend to buy a couple of meats, fruits and some snacks and drinks for the party. Now, assuming that the supermarket is holding an anniversary and are dishing out discounts to the items you are buying, should you be happy or sad that the worth of your meats and snacks are now lesser than before? Of course, you would be ecstatic as it either means that you can buy more items with the same $100 or you can buy the same number of items with lesser amount of money. Fantastic either way if you ask me.
Here’s the truth, a bull market will bring butterflies to your stomach and make you feel good on the outside but a bear market will make you rich over time. My plan is to reach financial independence by the time I am 35 years old and it all depends on the amount of cashflow I would have at the peak of the journey, so the longer the bear market persists, the faster I am going to reach my financial independence, all caveat taken. So while most people are worried about their portfolio, why not take the bear market as an opportunity to increase your exposure accordingly, focus on the business and reach financial independence earlier?