7 Things To Note When Buying Stocks In A Volatile Market

Keep these issues in mind to make a considered decision and not just follow the crowd

- Hau Boon Lai

To buy or not to buy, that is the question all share investors must be asking themselves recently. The markets have been volatile recently, with bulls and bears taking turns to hold sway. Some see the lower prices as a buying opportunity.

Here are some points to keep in mind when deciding whether to buy during stock market dips as uncertainty remains the only certainty in the face of US President Donald Trump's great tariffs and geopolitical experiments.

VALUATIONS
If you are getting excited by the lower price-to-earnings ratio of a favourite stock or upbeat forward guidance for it given at the last results briefing, stop — and reassess. Some companies and research firms have started dropping earnings estimates, so the last projections are no longer valid.

During the reporting season for the January to March results in the US, from airlines and automakers to social media and shoemakers, a rising number of companies are also not providing or withdrawing forward guidance on their earnings and performance. This is due to the difficulty of calculating the impact of tariffs, at a time when they are most needed.

Carmaker Ford, for instance, pulled its forward guidance on May 5 even as it warned of a tariff hit of US$1.5 billion (S$1.9 billion) to adjusted earnings before interest and taxes (Ebit) in 2025. This is on the back of a previously projected 2025 adjusted Ebit of between US$7 billion and US$8.5 billion.

In Singapore, UOB on May 7 said it is pausing its 2025 earnings guidance and will resume it when the macroeconomic situation stabilises. In the absence of guidance, investors are basically shooting in the dark on a best-guess basis.