When I read Brexit is very likely at 12 p.m. I did the following:
Consider what size of equity to cash will I be comfortable with. Which are the counters that I am willing to sit through 20-30% loss.
Which are the low-dividends companys with high correlation with STI.
In 10 min, I took the following actions:
1) Take contra loss of Silverlake axis (recently bought)
2) Sold Singapore Shipping at a profit
3) Reduce ST engineering at break even price
4) Reduce SCI at 30% loss.
With earlier sale of FST and CMPH, I am now about 50% cash.
Again, luck played a part. I was ready to start buying if market goes down enough before the vote, but surprising market keep going up and I just start a small position on Silverlake which exited too.
Hey, I panic and sold. I am a bad investor! Hmm, but I did what I plan to, I am feeling excited now instead of depressed or anxious. While I have quite a bit of skin in the game, I have started to hedge against Brexit earlier by selling and holding off my buying. I already have in my mind what I want to keep, and what are the counters that seem to be closely correlated with STI movement -- SCI and ST engineering. I believe they will follow the market down. The rest of my counters hardly fall more than any usual day and some surprising gain. (venture and MIT) I had quite a hard time accepting loss of 30% for SCI, but I let it go partially nonetheless.
Better to sell now, buy later than ironteeth and capulate later. If I am wrong, and Market do a V - shape recovery a few days later, I am fine too.
With my short experince in markets, I believe there is plenty of room for market to fall, at least 5-10% in the coming weeks. Why?
1) News scaremongering. I am not sure what is the real impact. But what will make good stories? Let me look at my crystal ball- "Who's next to leave Euro?"
"Impact on Euro and Germany", "Next currency crisis"
2) Most central banks have already QE, negative interest rate. To intervene in currency markets, u either raise interest rate or use your foreign reserves to intervene, or both. Nuclear option is to introduce curbs. Governments will try to stabilize and come out with joint statements, by short sellers is a force that is beyond governments, and the force is bigger now (according to Soros)
I set alerts on my existing counters and those on my radars. I know I cannot stop looking at the news and the counters, so I told myself not to do anything unless those alerts points are triggered. I am a kanchong spider, i always buy too early.