Investing during Ghost Month
What is Ghost Month?
Ghost Month this year is from August 16 to September 14. The Chinese believe that during this period, the spirits of the ancestors roam the living realm. That is why the incidences of bad luck and unexplained events are likely to increase during Ghost Month. As such, they refrain from doing things such as traveling, starting a business, or moving to a new home as these may upset the spirits.
Should you be afraid of the Ghost Month and stop investing in the stock market?
Using the market’s historical performance from 2003 to 2022, markets were down by an average of -0.44% with a batting average of 65% for August. However, markets bucked this trend in 2021 and 2022 when it was up by 9.33% and 4.24%, respectively. For September, markets were up by an average of 1.06% with a hit rate of 55% for the same period. Even if markets were to go down during Ghost Month, odds are that the markets will recover in the 4th quarter as it has gone up by an average of 3.71% in 16 out of the last 20 years. In short, there is no compelling advantage in avoiding the markets or selling to avoid losses during Ghost Month.
Things to consider during Ghost Month:
Diversification is a key strategy to consider not only during Ghost Month but for the rest of the year. By spreading your investments across different sectors and asset classes, one can mitigate the impact of any potential downturn in the stock market. While some investors may shy away from the stock market during Ghost Month, others see it as an opportunity to buy shares at the cheap like in 2013 when the market was down by 8.49% for the month of August and then subsequently rallied by 8.40% for the next two months. One should keep up to date with the latest market news and developments to make informed investment decisions. This will help the investor avoid making impulsive decisions based on superstition or short-term market fluctuations. The individual should stick to his/her long-term investment strategy and remain focused on his/her goals.
Given that we may have already seen the peak in interest rates, inflation, and USD strength, we believe the domestic markets are due for a rally. We remain optimistic and have our yearend index target at 7,400, which translates to around 14x 2023 PE, below the 10-year average of 16.27x. The way to capitalize on this investment idea is through our domestic equity UITFs namely the SB Peso Equity Fund, SB High Dividend Peso Equity Fund, SB Peso Asset Variety Fund, and the SB Philippine Equity Index Fund.