As the outlook remains cloudy, investors are advised to return to the playbook and discipline of building diversified, long-term portfolios that will deliver superior risk-adjusted returns. For highly leveraged investors, consider prioritising liquidity over bargain-hunting and rebalancing a concentrated portfolio. For investors with sufficient liquidity, be positioned to separate the wheat from the chaff as a dispersion of performance will rise when the dust settles. However, any re-entry into the market should be in phases and make use of diversified instruments such as funds to avoid concentrated portfolios.

The recent selldown in the bond market has presented a relatively better entry point for investors to accumulate more bonds for portfolio stability. Within this asset class, we are slightly overweight on China high-yield bonds as the composition largely comprises Chinese property names, unlike the commodity/energy-centric composition of Indonesia and India. China also enjoys a large and robust domestic economy.

Without a doubt, the recent plunge in global bourses has created some anxiety in the market. The conundrum — whether to buy, hold or sell an investment — is even more prominent as the market continues to trend lower. The stock price is merely a price tag on a share of the business, and it may not justify the value of the business sometimes. Instead of anchoring our investment decision on the fickle share price alone, investors should look through the market turmoil and focus on the true value of the business in terms of its business model, competitive advantage, leadership and financial strength. All investment decisions — buy, hold or sell — should be backed by solid reasons to avoid any kind of herd mentality.

Michael Lai is vice-president of wealth management research at OCBC Bank (Malaysia) Bhd