Dear readers, the recent sell-off in Chinese stocks, prompted by some Chinese regulatory measures would have caused panic among investors. Think of the recent episodes in TAL Education, TenCent Music. And even notable names like Baidu, AliBaba and Tencent (collectively known as “BAT”) which similarly experienced some Chinese regulatory moves. These Chinese stock counters, registered on HongKong stock exchange and as ADRs on the US bourses had come fairly down from their 52-week highs.
What has happened to these Chinese counters are really beyond what traditional stock textbooks and gurus would have taught you. These Chinese counters would have attracted investors investing in these counters supposedly from the allure of a large Chinese market but now investors in these could have lost their monies either on paper or actual.
No matter how solid fundamental analysis or value analysis are carried out, these are based on theory and assumption. On the other side of the camp, no matter how solid technical analysis are, they are based on past events which are no proxy for the actual stock markets.
That is why, I am a believer in investing in the index ETF that tracks the movement of the benchmark indicator of a stock markets, index ETF like the STI ETF. Such a ETF is not tied to just one stock and we, investors need not worry about what could have gone wrong with any company. ETFs like the Straits Times Index (STI) ETF also tracks the strongest and largest companies in Singapore at any point in time. And the best time to invest in the ETF is when stock markets are trading at a low.
An index-based ETF investing strategy is a sustainable long-term investing strategy.