I think the past few weeks and even now has been a roller-coaster and turbulent period if you are holding a huge portion of your assets in stocks and cryptocurrencies. I do a substantial amount of both stocks and crypto compared to the amount of liquid cash I have. So it’s also been a “lots of thinking” time for me as I assess the risk and proportion of my whole portfolio.
Read more: End of Year Portfolio Review & Reflections | Inching real close to $100,000
To be honest, when the prices dip, I got some fears of how long this dip will be especially when we saw the drop in both stocks and crypto at the same time. But I realised that after the first wave of dip, I started to think why am I so scared, the funds are not what I need immediately but instead now is a good time to scoop up some although no one knows when is the lowest price. With the limited funds I have, I put in limit orders and most them got fill, I definitely did not catch the bottom but happy to pick some things up at a lower cost compared to 2021 where the prices just kept going up.
After I made some buys, you will kinda accustomed to the dip, we are still early into 2022 and I think it’s going to be a volatile year. I will be allocating my funds slightly differently and in the 1st quarter review of 2022, we shall see how it is.
Easy to feel anxious
With such an amazing performance in 2021, I watched a few interviews on Youtube which mentioned that 2022 was not going to be a good year for stocks once interest hikes were to be implemented. I was expecting the drop but wasn’t expecting it to be so soon. It has been pretty crazy handling the dip as every night, we see lower lows.
I think the dips always seem to be at times when I am low on cash haha, or just right after I buy in. Hence, I always don’t seem to buy in at the exact lows. Although we are in a sideway market now, I do find it a good time still to build up my positions even though it can still go lower. I am slowly entering to get Tesla under $1000.
Positioning your portfolio
After experiencing the dip, I did find it important to know when to take a bit of profit and to also position your portfolio for volatility ahead. I tend not to take profit as I DCA my positions and so building up is a very long journey and if you want me to liquidate my positions for a profit, I will keep thinking what if it goes higher. But after this recent crash/dips that have happened, I realised that taking profits can aid in your portfolio growth in the long run.
As shared in my end of year portfolio review, my crypto and stocks portfolio has been doing pretty well (not currently haha) but at that time, I should have taken profits and rotated some of my profits into stable coins or to hold on. From 2021 going into 2022, most people were aware of the interest hikes but of course, no one knew when the dips was going to happen.
Read more: Feeling the burn | What are you doing in this sea of red? Keep calm and buy the dip?
It is easy to say what I should have done at that time but to be honest, I just love holding onto my conviction plays and even though I do not have enough ammo to buy the dip and at the same time build up my cash flow, holding on is also all right, just like what I said earlier, these are not amounts that I require in the short term.
As we buy the dip, we need to be aware that the dip can dip further so really, spread out your buys and for me, as usual, I will DCA and also at the same time, assess my cash flow. I have started using Syfe Trade to buy US fractional shares which is a huge thing as my DCA amount is not particularly huge and hence being able to have commission-free trades and buying fractional shares do help in the long run as I build my portfolio up.
Read more: Experience using Syfe Trade as a Brokerage Account | Buying fractional shares at low or no cost
Not having any experience in market crash
Like I have mentioned many times in my other articles, I haven’t experienced any major sustained crash or years of no return (where stock prices sideways trend for a long time) and so I haven’t really understand the importance of having a diversified portfolio but some times, a peace of mind is so important and I think that is when diversification comes into place if you are someone who is not used to volatility or having a high risk portfolio.
Some of my friends skipped the stock market and instead invested straight into the crypto markets, to them, crypto provides amazing returns that beat the stock market but when a dip/crash happens, we do see crypto suffering too. For those who have no experience, it can be painful but if we look at the Singapore stock market, it has perform relatively well during this period where the STI ETF is at around $3.30 - $3.40 which is a pretty great price and SG bank stocks are also performing pretty well.
It is a great time to assess yourself and see how you react in a market like these and make adjustments to your portfolio if you find yourself in great stress. Otherwise, I think this year is great for getting your conviction plays or just scoop up some index ETFs. Do note that the market dip can dip further so spread your buys out and don’t spread yourself out. Keep your emergency fund safe and buy the dip!
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