Taking risks

Throughout our lives, it is normal for us to take some risks, whether consciously or unknowingly. If the risk we took turns out to be a bad choice, the severity of the consequences is relative to your individual unique circumstances.

The way I personally weigh the risk as far as investment decisions are concerned is by asking myself the questions, 'If i turn out to be wrong, what is the very worst that could happen?' and 'If I turn out to be right, will it make a significant impact in my life financially?'. 

Its a buy for me if the answers are;

1. If the very worst that could happen is that the investment tanks, I sure better find an investment that pays me dividends while waiting for the market to reprice it again, presuming the company bought has been assessed and re-assessed to be a great business and unlikely to go to zero. In contrast, going to the casino and making a risky bet involving large amounts where your money can literally go to zero, I personally avoid. 

2. There is a high possibility that the investment is a 'multi-bagger' (at the least double, but ideally between 3x up to 10x). Conversely, if the risk taken will not lead to any positive life changing financial impact, then why adopt the risk in the first place? 

To be sure, everyone needs to come up with their own model based on their own unique situations. 

Global economy grinds to a halt, Covid-19 rescue package and is the worst over?

The Covid-19 virus shock triggered one of the fastest and sharpest market corrections in history, with global stock markets sinking about 30% in a matter of weeks.

Wall Street's "fear index" (VIX) at one point, surged to a record close of 82.69, exceeding the previous peak of 80.86 reached on 20 November 2008 (during GFC). This extreme, unprecedented volatility could be reflective that the markets are anticipating a global recession and the risks of a potential economic crisis have increased.

Recent data suggest that as segments of the global economy are synchronously shut down, the global recession might be a very deep one. The US, Canada and other European countries have reported a spike in claims for unemployment benefits.

Meanwhile, the daily number of confirmed Covid-19 cases continue to rise globally. How successful will the "circuit-breaker" policies be, in bringing the global pandemic under control? There are also concerns of a second wave of imported cases.

Is this a buying opportunity?

Savvy and experienced investors do not let a bear market go to waste and will certainly view this as a wonderful opportunity to buy quality businesses (shares in companies) at cheaper valuations during this virus induced sell-off.

Panic selling 09 March 2020

Today is the STI's worst trading day since Oct 2008, where investors/traders rushed to sell everything. The catalyst? Oil rout and covid-19 fears! The STI is technically into bear market. It was literally a sea of red in the equity markets today.

It is in times like this, if you did your homework, you choose the right stocks and have the nerve to buy some, fortunes could be made when eventually the stocks turn around and turn north. If you want to do well, stay stoic and adhere to your investment principles and plan. So...what's on your watch-list (shopping list)?