Recycling Capital in a Downtrending Market

As everyone might know now, the market has been in a downtrend in the past two weeks, and most, if not all, investors have seen a steep drop in their portfolio values. It is my opinion that we are seeing a lot of panic selling right now, and this has lowered prices in many stocks to an attractive level. Usually in such a situation I'd activate my warchest for use, but in this case, where the fundamentals of the market might have changed, I decided a different way could be more suitable.

As mentioned previously, I had bought into some undervalued S-Chip stocks, and they have done fairly well, even with the massive sell off that everyone experienced. While the fundamentals of these companies are still sound, they remain a speculative part of my portfolio and thus I decided to liquidate them, earning myself a 100% profit on cost. This was then recycled into stable dividend distributing companies (Singtel and ST Engineering) to bolster the cashflow generation of my portfolio. 

This meant that my portfolio has now gone red, with about 3% in paper losses. However, with the diversified and stable stocks I'm holding, and the advantage of a long term view of my portfolio, I'm very comfortable even with the losses, and very confident that I'd come out of the market correction relatively unscathed and in fact stronger for the next 10-20 years.