The Greasy Panda crash of 2016

As I type out this post, STI is down another 47 points to 2650. Everyday you'll see the oil and gas sector, as well as the banks going down and down and down. For every bear, there's always a name attached to it. In my little group, we call this the greasy panda - greasy because it's oil related and panda because the last straw that broke the camel's back seems to start from China.


For those who had the cash to capitalise on this, it's a dream come true. Such events, should we survive, will propel us a few years forward. The key word is that we need to survive through it. I think now we shall see whether you can take the risk that people talk about in the stock market. If you're a Kepcorp investor, seeing your holdings drop 5% everyday is not funny at all. In order not to panic sell and capitulate, I think it's important to sit tightly in your 3 legged chair.

There's a lot of bargains out there. Singtel and Starhub are around the same price now, battling each other to see who can go down more. Since they are at the same price, which would you buy? All the banks are priced below their book value now, which means they are really at a very good valuation. The problem is whether the book value (Asset minus liabilities) can be trusted upon. The banks hold debts for oil and gas companies, as well as their bonds, so if one topples will it drag the rest down with it? Reits are priced at ridiculously high yields now, but between a blue chips at near reit yield vs a reit at super high yield, which would you rather buy? And then there's the oily stocks like semb corp industries, semb corp marine and kep corp. Do you catch a falling knife and hope for mean reversion to kick in? Or is this time different?


These and many other questions are not easy to answer because nothing is clear. If you wait until it's very clear, you'll likely miss out the initial reversal. But if you don't wait until things are clear, you might risk entering too soon. Again, more questions and no answers. More doubts and not enough cash.


What would I do?

1. Proportion each investment with a fixed %. If things go sour, it won't drag your entire portfolio down with it. Do not average down blindly.

2. Stop staring at the watchlist if it affects you. Life goes on with or without the stock market. If you didn't do point (1) properly, you'll get unduly worried, then perhaps you should reduce your holdings. Sell down your holdings to sleeping point. Don't lose sleep over such things.

3. Work hard and save up more. If stock market is a precursor for the economy at large, it doesn't bode well for sg economy in the next 6 months to a year. If your income stability, one of the legs of your 3 legged chair, is threatened, then things will get even harder for you. So save up for both your emergency funds and also your warchest. Survive first, then we can talk about prospering. Be robust first, then we talk about anti-fragility.

4. Buy something in the stock market. We're at this stage where the odds are that in 5 yrs times, we will wonder why we didn't put in more money in the market.


For the uninitiated, welcome to your first bear.