As I have always said, investors must learn to “invest in stock markets as if you hold no stocks”. Otherwise, you might risk getting a heart attack.
In fact, Monday’s stock market plummet might have indeed triggered heart attacks among investors who couldn’t take things lightly.
Despite Hang Seng Index’s 530-point slump, Link Reit (0823.HK) still reported an increase. Link Reit is quite a good stock which I have never stopped recommending since its listing. However, investing in Link Reit mainly aims to earn dividends. If the stock price increases further and pushes dividend yield to below 3 percent, its attractiveness will be reduced. Such scenario would result in a selling off of the stock – which is why I don’t really wish to see Link Reit rally further and become a speculation stock.
With the exception of Link Reit, other dividend-earning stocks succumbed to downward pressure and plummeted along with market trend on Monday. When the market reports a slump, this is the best opportunity for investors to purchase dividend-earning stocks at lower prices.
Some investors, on the other hand, took the opportunity amid such market adjustment to speculate on some stocks. The concept of very short-term speculation does exist, as some are betting on the outcome of the British referendum later this month.
In the event that Britain chooses to leave European Union (aka Brexit), stock markets are likely to slide further still.
Contrarily, if Britain chooses to stay in the EU, stock markets would rebound. Last week’s survey revealed a sudden surge in the number of Brexit supporters, and such scenario really caught global stock markets by surprise. Before this, most investors had thought that the Brits were too sensible to vote for Brexit.
But taking a step back, note that the British pound did not opt to join Eurozone in the first place – which means Brexit might not really be so detrimental to Britain. On the contrary, the EU would suffer from a fall in its overall strength, having to run without a heavyweight nation such as Britain.
Should Brexit come true, what would happen to debt-laden EU countries such as Greece, Italy, Spain, and Portugal then? No wonder George Soros said he is now back in the game.