In the waves of correction
This week has been an intensive and challenging week, as tumbling of US stocks caused the global market correction, which dived on average 5% in a week. This quick dive has totally erased the gain of bullish January, and the market has become hugely volatile again.
But it was a really good battling experience for this as I had to plan my strategies and execute my plans in the dynamic battlefield. When Dow plunged 666 points on 2 Feb, I pondered on what should I do on the coming Monday. During the last correction in Nov-Dec 2017 led by China market, I virtually did nothing and saw my stocks fell one after another. Then now another correction seems to arrive after a brief spell of bull rally.
So I have decided to be more conservative and exited 25% of my portfolio on 6 Feb, in anticipation of correction ahead. If the plunge on 2 Feb is just an one-off pull back, perhaps I will miss a bit of gain; but if it continues to dive further, then I had at least protected part of my profits; of which on hindsight, a correct move. Of course if I exited more % of my portfolio I would be much better at this moment, but no, I am not prophet.
Same like last time, I chose to realize mostly profit instead of losses, except for some stocks that I think will fall heavily during correction, based on past stock performance. Unfortunately, this time round, it wasn't a wiser move, as % drop of my unsold stocks are larger than % drop of my sold ones throughout the week.
But it was a really good battling experience for this as I had to plan my strategies and execute my plans in the dynamic battlefield. When Dow plunged 666 points on 2 Feb, I pondered on what should I do on the coming Monday. During the last correction in Nov-Dec 2017 led by China market, I virtually did nothing and saw my stocks fell one after another. Then now another correction seems to arrive after a brief spell of bull rally.
So I have decided to be more conservative and exited 25% of my portfolio on 6 Feb, in anticipation of correction ahead. If the plunge on 2 Feb is just an one-off pull back, perhaps I will miss a bit of gain; but if it continues to dive further, then I had at least protected part of my profits; of which on hindsight, a correct move. Of course if I exited more % of my portfolio I would be much better at this moment, but no, I am not prophet.
Same like last time, I chose to realize mostly profit instead of losses, except for some stocks that I think will fall heavily during correction, based on past stock performance. Unfortunately, this time round, it wasn't a wiser move, as % drop of my unsold stocks are larger than % drop of my sold ones throughout the week.
| 6-Feb | 7-Feb | 8-Feb | 9-Feb | |
|---|---|---|---|---|
| % drop of sold | -3.20% | -2.00% | -1.70% | -5.50% |
| % drop of unsold | -4.70% | -2.50% | -3.80% | -6.60% |
The comparison, as usual, is inconclusive; but from what I observed during these blood baths, pennies were the ones dropped like flies because there were much less willing buyers available. On the contrary, super bulls like AEM and China Sunsine holded up quite well.
Another thing that I learn is that to deploy war chest in such a volatile markets really needs courage and speed, and I shouldn't be too greedy if it rebounded quickly to a few % gain, in view that the market is still trying to figure which direction to go forward.
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