Is your portfolio red recently? There have been relentless selling pressures on the US stock market recently.
Many factors influence this movement, such as persistently sticky inflation, the Middle East escalating conflict, an overbought market, and more.
Should we be worried? Should we sell now and go away?
When In Doubt, Zoom Out
First of all, the correction was only around 5% so far. Generally, we can expect 5-15% corrections even in a bull market. It is normal.
Guess what? If you are worried, feel free to zoom out. The market has climbed so much in just one year that we should expect corrections to come. The market does not go up in a straight line, but there will be waves up and down.
Market Will Climb the Wall of Worries
How about the escalating conflict in the Middle East?
Yes, the escalating conflict is not good news. Should the conflict escalate further, there can be a short-term impact on the market, as the market does not like uncertainty.
But guess what? Although there have been many wars and crises over the past decades, the market continues to climb in the long run. We went through the Great Depression, World War 2, the Vietnam War, the Dot-Com Bubble Burst, the 2008 Global Financial Crisis, and more. Yet the market continued to climb.
Stay Invested
Ask yourself: are you a short-term trader or a long-term investor?
If you are a long-term investor, focus on the long term and don’t get too emotionally affected by short-term market movements. You can ignore the day-to-day market movements and stay invested as long as your investment thesis remains intact.
If we know that the market will likely rebound and rise in the long run, there is no need to panic over a minor correction.
Just stay invested and relax 🙂
Market Opportunity
If you have extra cash, a correction can be an excellent opportunity to add more positions in the market.
There is a saying: “Buy when there’s blood in the streets, even if the blood is your own.”
The stock market is driven by emotions in the short term, while it is driven by fundamentals in the long run.
During a correction, investors may be able to find strong businesses selling at undervalued prices due to poor market sentiment. That’s your opportunity to add more positions! Please make sure that you are investing in companies with solid fundamentals, as those are the ones that can go through any difficult times and bounce back strong.
Happy investing!
If you are interested in investing in the US stock market, you need to use a broker with access to it. You can refer to our list of online brokerage accounts in Singapore and filter those with access to the US market.
