Thursday 5 November 2020

Buying Tesla Changed My Investment Strategy/Outlook

Today's topic is going to be about how buying Tesla Changed My Investment Strategy/Outlook. I used to only buy Singapore stocks and I liked it as it was stable and price fluctuation wasn't large. I knew of US stocks and it's volatility and I was at one point sure that I wasn't ready for it. I kept growing my SG portfolio, adding on STI ETF and REITs which are definitely what most other Singaporeans like in their portfolio as the dividends looks really attractive.

At one point, after my SG portfolio was over $10,000 I was looking at faster growth and more so on capital growth as dividends was slow due to my small capital. Looking at the growth of the US stocks and coming across Chicken Genius channel who really really advocates and support Tesla's innovation and growth, I decided to read up on Tesla and bought 1 share of it at US$989.

It turned out to be an amazing buy, as it rose and even split to 5 other shares. I added another 3 shares after the split and my average cost of Tesla is now US$290.55 which means with Tesla currently being about US$420, I have gained about US$1000 in all. In such a short span of time, I have never experienced such huge growth in any of the SG stock I bought.

It brought a new perspective to me as definitely, Tesla is not the only growing company, there are lots more out there that are growing at a rapid rate. Of course, with companies growing so fast, some due to hype and some due to innovation or some just based on their 'future' growth, everything is quite speculative and there are companies that drop as fast and crazily as well. I think after you have built a portion of stocks in SG, you will be more willing to venture out and try something more exciting.

Tesla changed my whole perspective as I am now more focused in the US stock market and there is so many more companies and different concept businesses that SG do not have. Considering my capital is not huge, investing in the US markets means that now if I do lose some money, it is not as risky or as scary as I can earn it back although I don't aim to lose money.

Risk and volatility is something the US market is about, one moment the company is all hyped up based on being the competitor of a company and next, news of it's CEO or failed partnership can change the stock price. The US market is really sensitive to news and that's why it gets so exciting for some. I am definitely still a newbie but will continue to dabble in both the SG and US markets. Here are some reasons why you should enter the US stock market when you are young:

  1. Largest and Most Liquid Market
  • The US is the top most country in the world in terms of market capitalization. The market capitalization of the US is nearly five times that of China and fifteen times that of India.
  1. FAANG
  • The acronym FAANG represents five stocks which are Facebook, Amazon, Apple, Netflix and Google. Traded on the NASDAQ, investors turn to technology companies when they are looking to invest in growth stocks and a large amount of media attention and investors’ portfolios are concentrated around FAANG. These companies have changed the way we live and have reshaped the world whether it comes to how we purchase goods and services, how we watch movies and play video games and even communicate with our family and friends. FAANG shareholders have no doubt been well rewarded.
  1. Performance
  • During this year, many people have noticed the lacklustre performance of the Straits Times Index as compared to the S&P 500. If you had put in the same amount of money in the beginning of the year in STI ETF, it was priced at $3.306 on 2 Jan 2020 and currently, it is $2.517 on 28 Oct 2020 meaning you would have lost some money as the drop is quite significant.

On the other hand, if you had invested in S&P 500 at the beginning of the year, you would have gained as it was $298.42 on 2 Jan 2020 and currently it is about $311.80 on 28 Oct 2020.

The above factors all contribute to why I am slowly moving to invest more in the US markets.

Beside investing in individual stock occasionally, I have a fixed monthly regular savings plan to buy index funds and in a way, this keeps me disciplined and not so emotional swayed.

In conclusion, I am not saying that you cannot grow your wealth in SG stock market and that you definitely will profit if you invest in the US stock market but that the movement of both markets are very different. You will need to find out your risk appetitie, investment style and the amount of volatility you can handle. Both sides have their pros and cons and need to fit the individual. But if you are young, I would say to try out the US stock market as well, after you have your basics like emergency funds to ensure you have the holding power to ride out the waves.

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