I just wanna share some takeaways and thoughts from observing the whole campaign and results.
1. What goes up will come down
Since the independence of Singapore in 1965, the PAP has held 100% of the Parliament seats until 1984, the first time it lost 2 out of 74 seats to opposition parties. Nevertheless, the PAP has held more than 90% of all the seats till the 21th century. This 2020 GE is the first time PAP has less than 90% of all the seats as it lost 10 seats to the WP.
Similar to the stock market, strong resistance will be experienced by the index and stock price at high levels. A retracement or correction to the next support level is a natural process of a moving indicator. Just like how a stock price or index is reflective of expectations of the buyers and sellers on the value and earning prospects of the underlying company business, the number seats or votes obtained by a political party is testament of its popularity and mandate given by the people.
2. Risk management
With a clear mandate given to the incumbent government, it is obvious that Singaporeans are risk adverse and prefer stability over volatility. By sticking to the proven and existing government to lead Singapore out of the crisis, it is a lower risk investment decision compared to overhauling the government into unproven hands of opposition political parties that have no experience in governance which is too high risk to bear.
However, by swinging more votes towards the opposition parties, it is a clear signal that Singaporeans are willing to hedge their portfolio by taking on more risk to order to provide more balances and checks on the PAP government.
In investment, we should also manage the risk of our portfolios, adjust our equity to cash to bond ratio according based on varying risk appetites in various circumstances.
3. Quality is more important than Quantiy
While there are 11 political parties competing in the GE, only 2 managed to get seats in the Parliament. Singaporeans are shrewd to elect only the high calibre politicians into the parliament and not Tom, Dick or Harry.
In investment, we should focus on choosing quality stock and reits with high earnings visibility to invest instead of having a large number of mediocre counters in our portfolio.
4. Character
While there have been varying character reviews and assassination attempts on some candidates during the process of election campaigning, some candidates with outstanding character traits such as exuding humility, humbleness, hardwork, compassion, intelligence, grit eventually prevail and achieve positive results deservedly.
In investment, it is important to possess the positive character traits to achieve to achieve great results. By being disciplined to stick to own investment plan and philosophy, hardworking in research of company financial, being humble to accept all opinions and criticisms even after attaining financial freedom or success, one will continue to learn, improve and eventually reap more fruits of own labour.
5. Minimal impact of polls on stocks as government and economy are status quo
The Singapore government remains the same. Economy is still sluggish. We should not forget that we are still in the midst of a health pandemic.
As past trends of STI shows, after a GE, there will only be minimal volatility on the stock market as the fluctuation of STI before and after GE is within 10%.
The utmost and most immediate task by the newly elected government is to lead Singapore out of the present crisis and economic slump.
In life, the only constants are death and taxes. This GE has very little bearing on our lives as everything is status quo. Thanks for reading.
With Love & Peace,
Qiongster
No comments:
Post a Comment