So, the inevitable has happened.

With the fear and pressure from Covid-19 pandemic and drop in oil price, the market has gone real bad.

As an example, Dow Jones has just dropped by 20% from its previous peak and entered a technical bear market earlier today.

At the same time, for the first time since 2008/09, the VIX (Market Volatility) Index had a daily close above $53. Also known as the Fear Index, this means that the market is generally in fear and expects huge volatility moving forward.

In short, just like the story of ‘The Boy Who Cried Wolf’, the wolf has, in fact, arrived at our doorsteps.


The VIX Index

At times like this, it is not rare to see (more and more) social media stock investment gurus/influencers posting about the stocks that they are accumulating at low for ‘long-term investment’.

However, I am of the opinion that these posts, if not conveyed properly (as discussed below) are deeply irresponsible and you SHOULD NOT be taking 99% of these posts seriously.

If you have been consuming the content from these stock investment gurus/influencers for tips to get over times like this, this is the cold, hard truth that you need to hear:

  1. 99% of These Posts DO NOT Tell You the Whole Picture

Yup, I know that this stock investment guru has posted about accumulating Tesla at low. Perhaps, this guru even shared about why and how he entered the trade.

But this post only covered 1/3 of the whole investment plan.

Do you know their exit plan? Do you know the If/Then statement that the guru has in mind should certain changes in fundamentals happen? And more…

  1. Do You Know How Long is this ‘Long-Term Investment’ Going to Be?

“I am holding this long-term.”

But how long is ‘long-term’ for this guru? Did he/she mention the timeframe at all? How long is this guru going to hold this investment?

Weeks? Months? Years?

Even so, without knowing the basis of the investment plan, do you have the courage to hold these investments if the price keeps tumbling after you follow this guru’s entry?

  1. YES, You are Going to have a Different Risk Tolerance Compared to this Guru

This guru/influencer that posted this stock that he/she just got in may have the patience and risk tolerance to hold through a 20 – 30% further drop in price.

But can you do so? Can you handle the mental pressure of price going against your favor for even, say, 10%?

Know your investment plan: Do Your Homework and Due Diligence.

  1. Heck, Some of These People May Not Even Know What They are Doing

The irony is, it is much easier to write and spread bullshit investing ideas and concepts nowadays via social media platforms.

Spot for Facebook and IG pages that ONLY show off about how much they’ve earned – this is the biggest red flag that you should stay away from these pages or individuals.

Instead, What Should You Do?

  1. Formulate Your Own Investment Plan

If you have any prior (proper) experience in the market, learn to be independent and formulate your own investing plan.

What’s your entry plan? What’s your exit strategy? What’s your If/Then statements if X or Y happens?

Having all of these processes done properly will give you the confidence on when (and when not) to take action and stick through your investments at tough times.

Shameless Plug: For those who are not familiar, I share about how to formulate your own investment plan and processes in my upcoming REIT Investing Workshop. Details HERE.

  1. Focus on Reliable Passive Investing Solutions

If you are not familiar with how to manage your investment actively, definitely check out reliable passive investing platforms like StashAway and Wahed.

These platforms use financial algorithms to invest on your behalf and rebalance your investments according to the market situation.

(p.s. I highly recommend StashAway for the general public, and Wahed for those who are looking specifically for Shariah-compliant passive investment.)

  1. Focus on Wealth Preservation

Of all, make sure you have enough cash flow while not simply pouring them into the market based on tips!

Once you learned how to formulate your investment plan, this cash will act like bullets for you to take advantage of when the time is right.

No Money Lah’s Verdict

Stay calm, stay rational, and be healthy.

Last Updated on May 2, 2022 by Chin Yi Xuan