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Your Investing Game Plan for 2019

Sudhan P.

Since the start of 2018, the Straits Times Index (SGX: ^STI) has declined quite a bit.

With just a couple of days left to 2019, the 30-stock index is likely to finish the year in the negative territory. And the poor showing could well continue into 2019.

If you are thinking of abandoning ship right away, don’t. Here’s why.

Stocks do their thing, always

“The key to making money in stocks is not to get scared out of them.”

– Peter Lynch

The stock market is volatile.

From 1993 to 2017, there were a total of 6,411 trading days, and the Straits Times Index more than doubled during that time frame, excluding dividends.

In that period, there were 870 days when the index lost 1% or more; 242 days with a loss of more than 2%, and 90 days when the daily decline blew past 3%. I think you can get the idea: The stock market does throw a tantrum from time to time. But it is exactly during those times when we should not run away from the stock market. Scary short-term declines are necessary to earn those impressive long-term gains.

Your game plan

Earlier in 2018, I had written an article on preparing oneself for the next market crash. In it, I listed three points and they are:

1) Have some opportunistic funds;

2) Create a shopping list with the exact trigger price; and

3) Take action during a market crash.

Those pointers are still valid right now.

I would add that instead of selling your shares and fleeing from the stock market, what you should be doing instead is to determine if the reasons you had bought the shares in the first place still hold water. If they do, then you should be buying more of them if their prices have fallen to a level where valuations are compelling.

The Foolish takeaway

The stock market is where wealth is transferred from those who are undisciplined to those with discipline. The stock market could get more volatile in 2019, but if you can stay the course with utmost discipline, you should be rewarded handsomely when the stock market recovers.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn't own shares in any companies mentioned.