Wealth impact of stock market movements

Is it I or are people feeling stingy?

The gloom that accompanies with each sell-down in the stock markets was keenly felt. Almost everyday, we hear bad economic news that feed back to the stock market performance. When oil prices decline, the stock market declines. When the PMI for China is below 50.0, the stock market declines. When China as the world number 2 economy slows, the global economies worry. The impact gets to the stock markets.

January saw stock markets declined. Even as I held on to my stocks and not selling out at a loss, I still feel “poor”. The dollar losses on stock investments amplify the feeling of loss of wealth of individuals. I do not want to spend if I can help it. I count my spending (especially during this Chinese New Year) and see how I can reduce spending in the next few months. I postpone some non-essential expenditure to a later date. Maybe the economic climate will get better in the second half of 2016.

From an economic angle, reduction in domestic consumption reduces economic growth of a country. So we have a vicious cycle of downward spiral of economic growth. Deflation, the feared economic phenomena, is hard to arrest once it took hold. Singapore should not let this happen at all cost. What kept us going is that our labour market is still tight and unemployment rate is still low. If this goes down, it will be disaster and recession will be inevitable.

For a retiree like me with no constant income (e.g. employment income), living within our means becomes critical. Therefore tightening of our belts and spending wisely is necessary. Hopefully, we can ride out this market turbulence.

Copyright © 2016, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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