Most stock markets have experienced bull run after recovering form the Global Financial Crisis in 2007-2008 and for some stock markets, this is the longest bull run in history. Will the bull continue to run ? Will the market turn to slow growth instead? Or will there be a crash coming soon? When will that be ? Frankly, I don't think anyone has an answer for this billion dollar question.
I have taken a short break from reading all the market news for 2 days and trying to plan ahead for 2018, from holiday, things to achieve and of course, my stock portfolio. So, a tough question that I am struggling with is - what is my biggest fear if /when stock market crash (of course it may or may not happen, it may be only a minor correction or could be another bull run next year). I am not going to predict what will happen but just to prepare myself if there is a crash, what could sink my emotion?
I started to list down the possible scenarios that could happen to my stocks, and I basically see it from 2 aspects, emotion and real financial impact :-
1. Company goes bankrupt and I lost all my investment - though the risk is there but I see stocks in my portfolio have relatively less bankruptcy risk as either they are in net cash position or lowly geared companies with sound financial position. But if that happen, I am emotionally affected and worst, financially hit as my assets are lost and cashflow from dividend is affected. I believe I have mitigated this by selecting only companies with healthy financial position and a diversified portfolio.
2. A painful paper loss - as long as the companies I invested in are profitable with healthy cash flow and also dividend paying company, I am not overly worried though still get affected emotionally
3. Unrealised gain wipe out - similar to 2 above but emotionally not that bad ( I guess)
4. I have too little cash to buy cheap stocks during carnival sale - I hate missing out great opportunity to buy good companies when they are selling real cheap.
No 1 is my biggest FEAR, hence I spent most of my time reviewing my portfolio to minimise the total loss of capital. I reckoned I am prepared for 1 to 3 but not 4, so my next course of action will be focusing on 4 by realising some gain to increase further my cash holding. If that opportunity comes, I would be very happy and if it doesn't, I suppose my opportunity cost won't be too high.
.png)
No comments:
Post a Comment