S$50k Loss in a Week: Why Isn’t My Heart Beating Faster?

“话不要说得太早”

I totally jinxed it, didn’t I?

Just last week, I confidently shared how resilient my portfolio was, believing I had safely dodged the ongoing bank stock correction.

This week? The market decided to humble me by wiping S$50,000 off my portfolio. But to my own surprise, I feel completely indifferent this round.

Don’t get me wrong—S$50,000 is not pocket change to me. It’s more than half a year of living expenses, and I could have used it to fund family vacations for years!

Yet, unlike the past drawdowns when I would typically feel a dull ache, my heart didn’t even skip a beat.

Prefer to listen while you multitask? Stream the companion audio here, or scroll down to read.

The Same Old Dance to a Different Tune

Reflecting on this difference, I realise it comes down to the triggers behind this week’s drop.

The market was spooked by the announcement from Chinese memory maker CXMT Corp regarding a breakthrough in next-generation 4F² memory chip design.

Coupled with a higher-than-expected CPI print, fleeing highly-valued AI and semiconductor stocks was the market’s typical knee-jerk reaction.

However, as I shared in my July post following a similar reaction to an earlier CXMT announcement, I simply don’t see how these headlines alter the long-term structural demand for the companies I own.

And if you have been in the market for the past few years, watching Mr. Market dance to the tune of CPI shouldn’t surprise you either.

Beyond Stock Price: Potential Impact on My Vested Companies

I’m not playing down the threat of a technological breakthrough from CXMT, but the broad sell-down across the entire sector feels like throwing the baby out with the bathwater.

Instead of repeating my earlier arguments from July, here is a summary by Gemini (edited by me) analysing the core question:

“What is the potential impact on Arista Networks, AEM Holdings, UMS Integration, and Micro-Mechanics if CXMT succeeds in commercialising 4F² production in two to three years’ time?”

As you can see from the above images, even if CXMT’s technological breakthrough comes to fruition, the net impact on these companies could actually skew positive rather than detrimental.

While there is no guarantee that events will unfold exactly this way, this exercise highlights that the underlying supply-chain dynamics are far more nuanced than the market’s simplistic “China succeeds, everyone else suffers” narrative.

The Market’s Bipolar Love Affair with AI

That said, it’s not hard to understand the market’s love-hate relationship with AI stocks.

On any given day, Mr. Market believes AI is the unstoppable frontier of human civilisation. The next day, staring at heightened valuations, he frets that it’s all an overblown bubble.

It’s a lot like how some Liverpool fans react to high-profile new signings like Florian Wirtz or Bradley Barcola.

While supporters cheered their arrival and adore their talent, their hefty price tags unwittingly created unrealistic expectations for instant perfection.

Just a couple of quiet games, and some fans are already lamenting that they aren’t suitable for Liverpool!

With the world still grappling with where AI is ultimately leading us, we are all currently swimming in a soup of uncertainty.

It’s not difficult to imagine the transformational benefits AI can bring (far beyond today’s LLMs) to our societies. Yet, it’s equally natural to fear its potential unintended consequences.

Much like how nuclear technology can provide clean energy, it also carries the terrifying capacity to disrupt or destroy.

Mr. Market got caught up in the excitement and bid valuations up, but skepticism remains close to the surface.

Until we get greater long-term clarity, any negative narrative or misstep will continue to shake his short-term confidence.

Staying Convicted During Such Periods

Ultimately, this brutal week served as an excellent stress test for two fundamental rules of surviving in the market over the long term.

1. Own Your Conviction

Simply put, you cannot outsource your conviction.

Following a general maxim or borrowing someone else’s thesis will never provide the resolve you need when S$50,000 is wiped out in a matter of days.

While you can draw reference from other people’s research, you must ultimately convince yourself of an investment’s thesis and long-term worthiness.

To be clear, doing your own homework doesn’t mean you will always be right.

However, it ensures you won’t panic and falter in the short term when the market turns against you.

2. Maintain a Robust Cash Buffer or Strong Cash Flow

Equities are inherently volatile.

Whether you maintain a cash buffer or rely on steady, predictable cash flow, having financial runway is your ultimate emotional armour.

It guarantees that short-term market tantrums will never force you into becoming a seller just to meet immediate living expenses.

That is why, even if cash can feel like a drag on returns, having either liquidity or continuous inflows allows you to go about your daily life and comfortably ignore the market’s mood swings.

After all, a good night’s sleep beats a slightly higher return every single time.

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