Connect with us


Finance: Profiting from periods of panic



THERE is a good lesson in handling panic that can be learned from recent events in Thailand.

The SET index, which is a broad measure of the Thai stock market, went on a pretty wild ride in response to the news regarding the monarchy. If you are not aware of what happened, the chart (right) shows the massive sell-off, only to have the market rebound back to pre-panic levels over the following week.

Now, the market had already made a pretty sharp correction in the beginning of September, and then did the standard 50 per cent retracement before consolidating around the 1,500 level.

When a breakout to the upside failed, the Thai market was primed for a move to the downside already. Thus this panic was not solely related to the news, but technically, we were already lined up for a big move one way or the other.

With the news, of course, the direction became very clear.

What is interesting is that the market has already recovered back to the 1,500 level, at least temporarily. I am not making any predictions here, but in the short term panic is almost never the correct thing to do regardless of whether you are a speculator or an investor.

If you did hold a view that the recent events in Thailand had a negative implication for the future direction of the stock market, you would be able to exit at a much better price than you would have mid-panic.

Now I am not advocating sitting through an entire down market if you think one is coming. My opinion is that if there is one coming, it has nothing to do with events inside Thailand, but rather the entire region of Asia.

Even more specifically, global consumption dropping off could hit China very hard and be a catalyst for a long overdue drop in stock prices throughout Asia.

If you look at the last major crisis in the region, it had quite a long recovery period.

You can see that in the few years before 1997, the Thai stock market traded from 1,200 to 1,400 mostly. If you zoomed in to view the break down, you could have easily gotten out on a rebound somewhere in the 1,000 to 1,200 region without selling mid-panic.

Normally bear markets come hard and fast and then retrace 50 per cent before settling into a new range, as I mentioned above.

Usually leaving any money you don’t intend to spend in the next decade to ride through a cycle is not considered too risky. In this instance it took more than 15 years to get back to levels seen before the crisis.

I am not really trying to make any predictions in this other than to show the long term picture and remind you that when markets move fast, panic is usually the worst thing to do.

Of course looking back over the past 20 years on the above chart, you can see that we are still near the top of the range of where this market has traded.

The SET has not been able to make new highs above where it topped out back in 1994. Imagine buying during the hysteria and 20 years later still being underwater on the position.

Panic can be on the upside as well as when things are crashing. You should never chase a market up either. There will always be another opportunity to buy at reasonable levels.

David Mayes, MBA, resides in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. He can be reached at or 085-335 8573. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.

— David Mayes


Get more from The Thaiger

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Malaysia16 hours ago

Malaysian beauty salon gets makeover as dentistry school

Thailand17 hours ago

Northern floods tragedy – Monks unable to help

Tourism18 hours ago

Xi’s Bangkok APEC trip to open tourist floodgates

Pattaya19 hours ago

Police to curb Pattaya Beach drinking after student gun fight

Phuket20 hours ago

9th and 10th monkeypox infections found in Phuket

Coronavirus (Covid-19)21 hours ago

Face masks still required on public transport, in cinemas

Join the conversation on the Thaiger Talk forums today!
Cannabis News21 hours ago

Pattaya man attacked at gunpoint for selling cannabis

Crime22 hours ago

Police seize 60 suspects in online ‘ghost guns’ sting

Thailand22 hours ago

Bangkok Secret Nightlife – Bangkok Red Light District Secret Museum

Coronation23 hours ago

King Charles III debuts on UK coins

Politics2 days ago

Vladimir Putin officially annexed four parts of Ukraine

Transport2 days ago

Phuket Airport officials pulled tourist from van, insisted they use airport taxi

Thailand2 days ago

Thailand’s strange laws – 10 strange laws in Thailand

Politics2 days ago

The long goodbye – Which way now for PM Prayut?

Pattaya2 days ago

Pattaya Police Chief cleared of vice slurs, back on duty

Thailand1 year ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand2 years ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism2 years ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket2 years ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism2 years ago

Phuket Thai food treats you need to try | VIDEO

Thailand2 years ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism2 years ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand2 years ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand2 years ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand2 years ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand2 years ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand2 years ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand2 years ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand2 years ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand2 years ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11