Get Smart: Phase III Confirmed, Should You Buy into the Recovery?

2020-12-21     thesmartinvestor
Get Smart: Phase III Confirmed, Should You Buy into the Recovery?

Last Monday, Prime Minister Lee Hsien Loong delivered the long-awaited news.

Given the progress that Singapore has made in containing the COVID-19 virus, he said that the country is now ready to enter Phase III of reopening from 28 December onwards.

The announcement was welcome news for Singaporeans, residents and businesses alike.

Several restrictions will be loosened just in time for the festive season.

In short, Phase III marks another key step towards a return to normalcy that many have been craving.

Buy, Sell or Hold

As a country, we can look forward to a year of recovery in 2021.

But for all the optimism, investors can’t seem to agree on what are the best stocks to buy and when to buy.

For instance, some investors believe that companies such as ComfortDelgro Corporation Ltd (SGX: C52) and Genting Singapore Ltd (SGX: G13) will be beneficiaries of Phase III, making them good stocks to buy today.

Others may be looking at airline-related stocks such as SATS (SGX: S58), with the hope that travel will return once vaccine use becomes widespread.

Yet another group could be hunting for beaten-down stocks such as Sembcorp Marine (SGX: S51) with the hope of catching a rebound in the share price.

Here’s the thing.

Buying the right stock at the right time isn’t the most important thing in your investment journey.

Sounds surprising? Let me explain.

As a start, you should have an idea on what you want to achieve from your investments.

Buying a beaten-down stock, for instance, could reward you with capital gains in the future.

For the value investor, these gains are a just reward for the effort.

But if you are investing for a regular income, the capital gains achieved from catching a rebound is nice to have, but ultimately would not contribute to your aim if the stock does not pay a dividend.

As such, even a positive result here may not be as satisfying as it does not bring you closer to your financial goals.

An investor does not succeed in investing by simply doing better than others.

You succeed when your personal financial goals are met.

That, I submit, should be your measure of success.

Hit and miss

Similarly, some investors may put too much weight on their shoulders in getting every decision right.

First, they agonise over whether a stock should be a buy, sell, or hold.

After picking a stock, they sweat over the right time to buy into the stock.

Inevitably, these investors tend to buckle under pressure as the stress overwhelms them.

But it doesn’t have to be that way.

The truth is, investing rarely comes down to a single decision.

We’ll be making many decisions in the future, and not just for this very moment.

Some investors might wonder if they have already missed the opportune time to get into the market.

In fact, some have been wondering that since May this year.

Well, here’s a fun fact for you.

The best performing stock in the Smart Dividend Portfolio, which has scored almost 200% in gains for us, was picked in May 2020, more than a month after the stock market bottomed in March this year.

The example above reinforces what I have learnt from investing for more than 15 years.

Get Smart: Investing for your future

When it comes to investing, reach for your own goals, and not other people’s goals.

Investing in the right stocks for you makes the journey worthwhile when you make the right choices.

The results will contribute bit by bit to your financial goals.

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Disclosure: Chin Hui Leong owns shares of SATS Ltd.

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