The stock market is not a place where everyone gathers and make money.
The market is brutal and can hurt those who does not take it seriously.
Today’s brutal session in the market shows why people generally fear and avoid the stock market.
The STI index drops about 2.1% today on session close and it is one of the larger drop I have seen in this year.
One of the main cause of drop is due to the announcement
made last night by MAS in a bid to tighten the mass retail market demand by raising the ABSD and tightening the TDSR.
Everyone processes the same common information and outcome and you can see how folks went to rush into buying a unit before the official tightening kicks in.
|No, it’s not a bak choy sale at NTUC for $1.10, it’s a freaking condo worth $1m and above!
Demand from last night units sold alone was this for the 3 main condo launched:
Total = 310 units sold
Total = 511 units sold
Total = 187 units sold
When the market opens this morning, investors were treated to a rude shock when large strong cap companies dropped as much as 16% easily.
We are not talking about some crappy companies but a conglomerate with multiple geographical assets and division.
Even companies like Bukit Sembawang which has a strong balance sheet were not spared, dropping a massive 9% in a day.
This is not just about competency we are talking about here.
Property valuations were cheap and they continue to become even cheaper from now here.
I have a couple of friends who were caught by this news and their portfolio suddenly look heavily in red.
Some of these people are value investors who are depending on Fundamental Analysis to come up with their decision.
I call this day a black swan for property investors, a definition used by Nassim Taleb to determine an unknown-unknown factor that investors cannot avoid from apart from being sufficiently diversified from the sector.
As an investor myself, I can feel such pain when you have to wait a long 5 years of 3% dividend from these developer, only to have it get wiped out in a single day.
This is also the reason why I tend to prefer going the dividend strategy method. Money in the pocket is worth the sum of parts more than paper profits.
This is why folks generally tend to avoid the stock market.
Think of folks that are new to the market and they are exposed to such brutal market in a day.
This is the reason why people fear and avoid the market.
It’ll attack the clueless but also the knowledgable folks.
It’ll attack the poor as well as the rich.
It’ll left scars throughout our body.
Thanks for reading.