And I'm sitting here just chilling. No its not because I'm loaded with money and can afford to lose all my money. Nor am I an investor with the 'magic touch' and everything I buy turns to gold. In fact, my portfolio is down by about 10% so far. Though, to be fair, much of these losses were due to the speculative stocks I had bought previously trying to bank on capital gains. Accounting for these, the entire portfolio is about 3% in the red.
Still, these losses are bearable and I have not engaged in any panic selling so far. The key reason here is due to the investment thesis of "stable cashflow". Much of my holdings are either large stable blue chips (Singtel, ST Engineering), or high quality REITS (First Reit, Capitamall Trust, Keppel DC Reit). These provide stability and buffers in the event of a market decline, as they are able to provide good cashflow in dividends in both good and bad times. While the amount of dividends can vary in accordance to company performances, they are unlikely to stop, providing a much welcomed respite from the shock of the declining market. to put this into perspective, once dividends are accounted for, the portfolio is down only by 5%, a significant buffer from what we saw previously.
High quality defensive companies are also more likely to have a price support even in times of market decline, putting a lower bound on the drop in your portfolio value. Other than Singtel, which has seen a precipitous drop in the past 1 year, most of the defensive stocks I hold have actually increased in value since I bought them, proving the value of such an approach.
tldr: Buying high quality, defensive stocks which give stable dividends can buttress your portfolio in times of market decline, steeling your balls.
