The Singapore market also plunged on April 7, with the benchmark Straits Times Index (STI) down by around 8% by the midday break. While markets saw a brief respite on April 8, the downturn resumed as higher “reciprocal tariffs” took effect across various countries. The renewed slide left investors questioning whether the worst was over or if further losses lay ahead.
Yet rather than sounding the alarm, The Edge Singapore’s head of research, Thiveyen Kathirrasan, urges investors to view the current climate as a buying opportunity. As value investor Warren Buffett — the “Oracle of Omaha” — famously advised, one should be “fearful when others are greedy and greedy only when others are fearful”.
Kathirrasan adds that bull markets tend to last longer, driven by investors being “continuously greedy”. Bear markets, on the other hand, are typically shorter but marked by steeper declines. A clear example: gains from the past 12 months in US markets were wiped out almost entirely during the early April sell-off.
“When you’re in a greed cycle, stocks are likely overvalued, and you’re paying more for what it’s supposed to be as opposed to what value it can give,” he says. “When markets are optimistic and greedy, you need to be more meticulous because you really need to pick out the undervalued ones. And when a crash like this happens, you’re likely going to suffer more.”
The latest market correction has made stocks less overvalued in general, but ideally, you want undervalued stocks,” he adds. With stocks now trading at steep discounts, the question arises: how should investors time their entry or re-entry into the market?
Look at why the dip happened
“Investing doesn’t need to be complicated or messy,” says Kathirrasan. However, investors will need to look at why the dip happened. Understanding what triggered a market downturn can help shape a more informed investment strategy — and this is where different approaches come into play.
See also: The importance of financial literacy
To navigate such conditions effectively, investors typically adopt one of two main approaches. The top-down investor begins with the broader macroeconomic picture, identifying key trends in the economy before narrowing down to promising sectors and, ultimately, individual companies. Bottom-up investors take the opposite approach. They start with specific stocks or sectors they already favour and then assess how the wider economic environment may impact those choices. Regardless of the approach, thorough research is essential to determine whether the stocks under consideration are fairly valued.
For Kathirrasan, a proponent of the bottom-up approach, Grab Holdings is a key focus. The Nasdaq-listed ride-hailing company operates across Asean. He continues: “Grab’s shares also fell, but only because it is listed in the US, and thus, its price tanked with the rest of the US stocks. However, most of their business is in Asean, and its business has nothing to do with the reciprocal tariffs.”
Another example is luxury brands like Hermes, which are less likely to be impacted by tariffs, given their focus on high-net-worth individuals as their target market. “The stock market is fearful now. Because of that, every stock is getting hammered. The drop in a company’s share price may not be entirely due to its idiosyncrasies. It is also likely due to general market movement and sentiment,” Kathirrasan adds.
Look at cash-rich companies
When all companies appear similar, investors should opt for those with strong cash reserves. “In times of stress, you want liquidity. It is like how investors want to have money to buy into the dip; it’s the same with these companies. You want to ensure they have enough cash to tide them through unexpected emergencies.”
“Conversely, the more debt a company has, the more accountable it has to be to the market, as they have an obligation to pay back its loans. Companies in debt will also have less flexibility to do what they want with their business, such as acquisitions. Even if they can have a plan, they may not be able to execute what they want because they simply don’t have enough cash,” says Kathirrasan.
Market focus
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When facing tariffs and potential trade wars, it is crucial to consider a company’s market focus. For example, a company that primarily operates within the domestic market and has no immediate plans for international expansion is likely to be more defensive than one heavily involved in global trade, where reciprocal tariffs could erode margins.
In such turbulent times, fundamentals become even more important, especially during a crash or severe market correction. Kathirrasan, who has emphasised this point repeatedly in his articles, believes that companies with strong fundamentals are likely to recover more swiftly, particularly if the decline was driven by broader market sentiment rather than company-specific issues.
Suppose investors are already fully invested but still wish to capitalise on the dip. In that case, the analyst recommends selling overvalued or fairly valued stocks and reallocating funds into companies less likely to be impacted by tariffs.
Another strategy is to seek hidden gems — companies with limited coverage — as they may present opportunities to find undervalued stocks.
Buy bonds or fixed income
Rather than chasing a rising market where stocks risk becoming overvalued, Kathirrasan advises investors to buy bonds or fixed income. Older investors, in particular, should focus on high-credit-quality bonds, allowing them to continue receiving fixed income payments while also enabling them to reallocate some of this income to purchase cheaper stocks in the event of a market crash.
However, now is not the time to buy bonds simply because they are seen as a safe haven for fixed income security. “You should always be one step ahead. If a company already begins to look overvalued, it’s time to move away from equities. If everything is going up, it is likely that a crash or correction will happen in the foreseeable future,” Kathirrasan says, referring to the Dutch tulip bulb market bubble of the 1600s and the South Sea Bubble of 1720 — both cautionary tales of speculation and overvaluation.
Be disciplined
Discipline is a crucial principle in stock investing, particularly during a market crash. “Now is not the time to be speculative. It is the time to be diligent,” says Kathirrasan. “There are many stocks that are cheap now, and you have to make sure you pick the right one. Don’t gamble when there are actual cheap stocks.”
When assessing companies and sectors, investors should also ensure they are familiar with the business or industry, as this understanding will help them better recognise nuances and emerging trends. “You are likely to read up more about it, especially if you’re into it,” says Kathirrasan.
“Investors should also control their emotions. If you can do these two things, you can be successful,” he adds. After all, data from the past 200 years shows that markets have always rebounded. Having weathered the Asian Financial Crisis, the dot-com bubble, the Global Financial Crisis and Covid-19, investors have witnessed this cycle unfold time and again.
Disclaimer: This article is for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy or sell stocks, including the stocks mentioned herein. This article does not take into account an investor’s particular financial situation, investment objectives, investment horizon, risk profile, risk tolerance and preferences. Any personal investments should be done at the investor's own discretion and/or after consulting licensed investment professionals, at their own risk.
