What do investors do before market fluctuations?

According to experts, the risk factors are not over yet. Therefore, investors need to be calm and have a suitable investment strategy. Photo: VNA

Don't buy too much and avoid sell-offs

In the past two months, the stock market saw a sharp decrease in both scores and liquidity. The VN-Index sometime broke the threshold of 1,200 points. Along with the sell-off by domestic investors, from the beginning of the year until now, foreign investors had net sold about VND1,900 billion on the stock market. The decline of the market came from the impact of domestic information on investor's psychology, and instability in the world economy - politics also contributed to the sell-off of stocks in the market. In recent weeks, the market has started to have positive movements, but the risk factors are not over yet, therefore, investors need to be calm and have a suitable investment strategy.

According to Mr. Le Chi Phuc, General Director of SGI Fund Management Company (SGI Capital), there will be no room for speculative and easy cash flows this year. Many stocks are down 50-70% from the peak, but compared to their true value when they were pushed up 7-10 times in the past one year, these stocks still have potential risks. Therefore, choosing the right stocks in this period is key.

Sharing his investment experience in the current context, Mr. Le Chi Phuc said if you look at a year with a P/E valuation of about 12 times, normally the profit is never less than 30%. In that context, investors must pay attention to two things. First, investors should not be too optimistic, do not buy too much, especially by borrowed money in hot market zones with high valuations. Second, investors should avoid panic and sell-off of stocks at the current low valuation zones.

“Statistically in the last five years, we have only had less than 5% of the time the market is in the low valuation zone as it is now. Our experience in investment, we have to accept the decline in some very special periods to wait for benefits in periods when the market returns to normal and sees long-term growth," said Mr. Le Chi Phuc.

According to Mr. Tran Minh Tuan, Vice President of Smart Invest Securities (AAS), in a falling market, speculative cash flow cannot bring benefits; therefore, investors should not keep speculative psychology as in the previous period, and should not use borrowing money for stocks in this period. Investors should choose stocks that have good growth at a reasonable valuation.

Prioritize safe and prudent portfolio management

According to experts, after a very long uptrend and a very strong downtrend, cash flow will give priority to the stocks of large enterprises. In the current context, speculative cash flows will usually be withdrawn very strongly and only long-term investment cash flows will begin to buy, and when investors have the opportunity to choose stocks at a low price, they should choose good stocks. The stocks of large enterprises are those with a good price base and have better resilience in the coming period. Investors should not be too concerned about large or small denominations, but should care performance of enterprises and products of these enterprises

After consecutive deep drops, many experts said the market has established good prices and this is an opportunity for investors. Sharing this statement, Mr. Le Duc Khanh, Analysis Director of VPS Securities Company, said this year investors should effectively and carefully manage truly safe portfolio. In case investors want to keep underlying stocks and do not want to sell those stocks, they can refer to more tools such as derivatives to hedge that portfolio. Modern investors must learn new financial tools that can make our investment activities more efficient.

“When the market enters a crisis phase or has major corrections, it is an opportunity for investors to hunt for attractive and reasonable stocks. I think there are still a lot of stocks in the market that meet the criteria, offering a great discount at a price, which represents a good profitable investment opportunity, especially in the context that it is very difficult for us to find a more attractive investment channel. Therefore, this period is suitable for investors with a longer-term vision," expert Le Duc Khanh said.