SG Budget Babe Dawn Cher explains how #TheNewNormal changed the investing and trading landscape



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Life as we know it today is very different from what it was before the pandemic. In the world of work, trends such as working from home (WFH) and the big quit have become the focal point of discussion (and disagreement) for many companies and their employees. In education, home learning has taken center stage, with teachers and parents having to grapple with how education is delivered to students.

In the world of investing and trading, notable trends and changes have emerged over the past two years, including the growing popularity of meme stocks (e.g. GameStop and AMC) and the proliferation of cryptocurrencies and NFTs.

Whether it’s the acronym YOLO (you only live once) or FOMO (fear of missing out) often used by millennials, which is driving the market, or a paradigm shift in the functioning of financial markets, there is no doubt that there will be new opportunities and dangers as financial markets evolve.

In this edition of #TheNewNormal, we chat with Dawn Cher, founder of Singapore’s leading finance blog, SG Budget Babyto learn more about how the investing and trading landscape has changed over the past two years.

Read also : Main Street versus Wall Street. Singapore fund manager explains why stock markets are up despite recession #TheNewNormal

Timothy Ho (Timothy): You started SG Budget Babe in 2014 and your blog has grown in popularity over the years. Have you seen an increase in interest and traffic to your site since 2020? #TheNewNormal

Dear Dawn (Dawn): Yes. There have been more people, who are new to investing, following me. It seems that the pandemic got a lot of people interested and started investing and trading.

Timothy: Why do you think many people, including young people, have been attracted to investing and trading in recent years?

Dawn: One of the reasons would be the extra time available. With the lockdown and suspended leisure travel, people have more time to focus on other interests they couldn’t do before the pandemic, or just something to distract themselves. Many also see that starting to invest or trade can be part of self-improvement as one learns how to make their money work for them.

The second reason could be due to the rapid growth of finance influencers on social media platforms like YouTube and TikTok during this same period, leading to greater awareness of trade and investment.

Timothy: What are some of the most popular topics that new investors or traders turn to?

Dawn: Many new investors tend to make the mistake of chasing the hype, hoping for quick gains. We’ve seen meme stocks as well as high-growth tech stocks that bring a sexy narrative to the center of attention. Peloton is an example. It reached an all-time high of US$162 in December 2020, only to drop 85% in January 2022 – back to pre-pandemic levels. (Editor’s note: Peloton’s (NASDAQ: PTON) stock price is $20.39 as of April 22, 2022). There has been less focus on studying the fundamentals and financial health of the company, and valuations have been pushed to dizzying levels based solely on speculation. As such, we have seen a major correction in the share price of these stocks over the past few months.

For traders, it doesn’t really matter as they trade more frequently. So, as long as they put some rules in place on take profit and stop loss action, the fundamentals of a stock (or crypto project) matter less.

Cryptocurrencies have also become increasingly popular, which I believe is due to the high-risk, high-reward sentiments, and generally requires no minimum capital to get started. I used to teach General Paper courses to my JC students, and even they started playing with cryptocurrencies.

Timothy: The financial market is both lucrative and dangerous. What are some common mistakes that new investors and traders make?

Dawn: Chasing the hype, failing to do their due diligence before investing their money, and simply acting on stock tips or “singing” in a crypto project because someone they know (whether in the real life or online) has it shilling.

Timothy: Everyone wants to generate profits, but learning how to invest and how to trade well is not easy and would take time and experience. What advice would you give to someone making their first trade?

Dawn: Take care of your downside, and the upside will take care of itself.

It takes more than a pandemic (or overvaluation) to kill a good company (or crypto project). Focus on quality rather than chasing returns. Often when you’re chasing hot stocks, you could very well end up becoming someone else’s exit liquidity.

Timothy: You launched SGBB Investment Academy in 2020. What were the reasons for creating this online academy and what are some of the most popular courses your readers enroll in?

Dawn: Many of my followers have asked me to teach, so I’ve been hosting an annual workshop for readers on how to invest since 2016. We were about to hold our 2020 workshop when the pandemic hit. Due to the rate at which the virus was spreading at that time, I felt it would be irresponsible to continue with a physical workshop, especially if one of the attendees was asymptomatic and contagious. So I canceled it, much to everyone’s disappointment.

Eventually, I decided to do an online course instead, from which people can join and learn at their own pace and at their own pace. I spent several months fine-tuning the course material and recording the content, even until 4am most days after my child was asleep.

The most popular course is Introduction to Index Investing ($49.90), which many new investors take to better understand how to invest in ETFs and Robo-Advisors. But the all time favorite is the Strategic Investing Masterclass ($799) because I teach six strategies in one course – investing in ETFs and mutual funds, bonds, dividend stocks, REITs, finding undervalued stocks and when to sell them, high-growth stocks, fundamental analysis and behavioral sentiment, as well as portfolio management and asset allocation.

Timothy: Losses are a natural part of our investing and trading journey. How do you handle volatile times like February to March 2020 when markets were down around 30% in a month, or earlier this year when Chinese tech companies took a big hit?

For me, I ask myself this question: what has changed? Does this break my thesis?

If the answer is no, then I remain calm and carry on, because I know that fundamentally sound companies will recover in due course. Oh, and it helps when you’re not looking at the prices every day!

Read also : The Rise of the Millennial Trader: A seasoned trader with two decades of experience shares evolving trading trends in #TheNewNormal

Be an informed investor and trader

More than two years have passed since the pandemic hit us. As Dawn shared, and from what we can observe around us, many people started investing and trading during this time. You might even be one of those people, having just placed your first trade in the past two years.

Wanting to invest and trade to grow our capital is a good goal to set ourselves. However, as we invest and trade, we must ask ourselves how do we learn to become better investors or traders?

A simple way to start is to simply acquire knowledge by reading. Websites such as DollarsAndSense.sg, SG Budget Baby and seed are sites that we can visit regularly to improve our knowledge of finance.

For those who want to learn more specifically about trading, the IG Academy is a good place to start. There we can access for free webinars, online course and live sessions. Thanks to IG, we can also open a demo trading account so that we can practice trading first using virtual funds of 200,000 singaporean dollars before opening a live account.

As a trader, risk management is an important aspect of trading that we cannot ignore. As Dawn shared, we need to take care of our downsides and let the upsides take care of themselves. When we trade using instruments such as CFDs, leverage may be used. Using leverage means we have to manage our risk carefully. For example, we should put guaranteed stop for all of our transactions so that we do not run the risk of losing excessive capital on any particular transaction. CFD brokers such as IG offer such services to help traders execute their trades quickly and accurately. Other risk management tools we may use include trailing stops and KO.

Finally, thanks to IG, we can take advantage of round-the-clock trading in asset classes such as stocks, forex and commodities in more than 17,000 global markets. It is important for us to know the markets in which we trade, and we can do this by following the business news and ideas written by IG market analysts.


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