Investing in 2021

April is coming to an end, which means that a third of the year has already passed. In as little as two more months we will be through the first half of the year. What started out more on the optimistic side is now back to where we were almost a year ago. At least here in Thailand.

But you wouldn’t know that if you would pay attention only to the stock market. Most company shares have recovered, and even grown beyond their pre-pandemic levels.

The explanation for this is multi-faceted, but given what I can see from my own company and competitors, it’s a mixture of pre-mature optimism, and the now all-too popular FOMO. Fear Of Missing Out.

Optimism

Most investors I know are optimists. Most tend to be a little greedy. And, unfortunately, many are trying to time the market. When the crisis started and markets fell by 30% or more, many saw a great buying opportunity. Myself included. The expectation was that a pandemic can’t last that long. Many of us didn’t actually believe it to be real. Or at least not ‘that’ bad.

Plenty of us tried to estimate the lowest possible market point, and then started to get back on the train. The more people started buying, the quicker shares started to stabilize, until demand overtook supply, and prices started to rise. Then FOMO kicked in. People noted the turning trend, and scared of missing out joined in the purchase frenzy. This is how we got here.

So far, this optimism has served us well, but the long-term success will depend on how things play out in the next 2-3 months. The US, Europe, and leading economies of Asia need to show that they can control the situation without sacrificing their economies. Otherwise optimism might turn into disappointment, and drag the market down once again.

What’s the plan?

For the young investor who is not in any financial distress, the simple strategy is to just hold your ground. It’s impossible to predict what and how it will happen, but for the long-term focused investor it doesn’t really matter that much. Stay your ground. When shares go up, enjoy. When they go down again, look out for the next buying opportunity.

For those who might have cash issues, this may be the time to trim some positions for shares which reached their all-time highs. Put some cash aside, re-fill your emergency fund, and be patient. You will sleep better at night.

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