Never Hit The Panic Button
There are some people who are concern about their investments at this point. Should you hit the panic button and pull out or should they sit still?
Let’s look to the past to see the future. Disclaimer – what happened in the past do not represent what will happen in the future. This is just my observation that I would like to highlight to you. Now, with that out of the way, let’s look at some charts.
This is S&P 500 for a period of 1 year.
Based on the chart above, with the market down trend, it seems it would be a good idea to cash out and wait until the market hits bottom. An investor should have sold around Nov 2007 (in hindsight).
However, if you were investing with a longer term horizon, the chart below tells a very different story. Over a 5 year period, you would still make money!
What about the local KLSE? The 1 year chart is disheartening if you just invested recently. And if my memory serves me correctly, many investors jump onto the bandwagon in 2007.
KLSE 5 year chart below show a different picture.
If you have invested over a 5 year period, even with the recent sharp drop, you can still cash out of the market and still made money perhaps less. You certainly won’t lose money.
This highlights 3 important points when you are investing:
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don’t rush in when everyone is rushing in i.e. market is hot
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invest when most people are not
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know you investment time horizon and then choose the appropriate instrument
When you invest, never hit the panic button. Also note that the KLSE chart above show the KL Composite Index, don’t represent the whole market, only selected counters.