How to Invest in Today’s Uncertain Market?

Here’s a question: “When was the last time the market was certain?”

Can you think of a year or a period when there was market certainty?

Now, if you look back into time, you may find that market certainty is almost non-existent.

Anything can happen in the short-term.

Fed rates. Trade wars. Tensions. Pandemics. Oil prices and so on and so forth.

Nothing is certain and probably, the only certainty today is – Market Uncertainty.

So, as investors, I find it helpful for us to embrace market uncertainties.

Do we make it a friend or a foe in our journey in wealth building?

3 Common Ways to Handle It

Over years of investing, I found three methods of how people deal with market uncertainties.

The first method is total avoidance.

These are people who avoid investing or choose to invest only in fixed-price funds. Nothing wrong with this approach as I find that it is ideal for one who has no interest in learning about investing.

The second method is to “outsmart” the market.

These are people who want to buy low and sell high. They try to do this via speculation or trading. Speculators make guesses while traders use technical analysis tools to predict market directions.

The third method is to invest for long-term income productivity.

Instead of market timing, they buy income-productive assets. The more income they produce, the prices of these assets would reflect such productivity over time. Time in the market is an ally, not a foe to this group of investors.

Buffett – The Greatest Dividend Investor of All-Time

Buffett, through Berkshire Hathaway, had built a massive stock portfolio which generates billions in dividends per annum.

In 2024 (latest annual report) alone, Berkshire Hathaway had earned $5.2 billion in dividends.

Buffett’s annual reports were widely read by investors worldwide. This is because they consist of a library of wisdom on investing – including how investors approach market uncertainty. Personally, I found that the closest writing to this topic lies in his annual letter for 2013.

Here are excerpts from his letter that I find helpful to dealing with market uncertainties:

1. Focus on the future productivity of an asset.

2. If you instead focus on the prospective price change of a contemplated purchase, you are speculating.

3. Forming macro opinions or listening to the macro or market predictions of others is a waste of time.

Hence, the first key to invest in market uncertainties is to shift the focus onto asset quality and this, in general, is assessed based on its future income productivity.

The Function of Mr. Market

Considering that you own a piece of prime farm land.

It yields good crops (fundamental quality is good).

You have a moody friend who owns a piece of prime farm land next to yours. That’s Mr. Market.

On one day, Mr. Market was ecstatic. He told all residents in town that his prime farm land was an awesome piece of real estate and thus, was worth a “high price”.

Some months later, Mr. Market was gloomy. He lamented to all residents in town on why he thinks that farming is gloomy and thus, willing to offer his farm land for a “low price”.

You know that he is fickle-minded, always changing his opinion every now and then.

But interestingly, he insisted to his realtor that his “offering price” must be displayed openly right at the entrance to his prime farm land.

So how? What would you do?

Logically, if Mr. Market offers a high price, you can go back to farming.

If his price is ridiculously high, you may even want to sell the farm to him.

But, if Mr. Market offers a low price, why not buy the farm land from him with spare cash?

Hence, Mr. Market is there to serve us.

The worst thing that can happen is that you are emotionally affected by Mr. Market.

Will you be ecstatic when Mr. Market was upbeat on his prime farm land?

Will you be equally gloomy when Mr. Market was downcasted on his prime farm land?

The answer is – I hope not.

Case Study: Public Bank Bhd

At this point, I would like to share two contrasting views of a similar event which highlights a major difference between an investor versus the rest who speculate or trade in the market.

Let us turn back time to 2020.

At that time, Public Bank had fallen by more than 40% from RM 25 to RM 13 a share in March 2020.

This was further highlighted in financial dailies as follows:

The Edge – “Public Bank, solid like a rock, but now falling like a rock.”

The Edge – “Rock-solid Public Bank sinks to seven-year low”

For speculators or traders, it was a mayhem, a disaster to be avoided.

COVID-19 started. Global lockdowns drove great uncertainties. Panic selling happened.

But, for real investors, they focus on Public Bank’s true income-generating ability. This can be done by reading its annual reports. Of which, they should find that Public Bank has generated consistent growth in earnings from 2000 to 2019.

Remember – Investors focused on income productivity. Others focused on price & market.

At RM 13 a share in 2020, Public Bank’s PE Ratio (valuation) at that time was 9.15.

That was substantially below its long-term average of 14.70.

Sure, there was COVID-19, a challenge unprecedented.

But, Public Bank had ample reserves with a Total Capital Ratio of 16.8% and a Loan Loss Coverage of 124.1% in 2019.

These reserves were meant for Public Bank to withstand tough times like COVID-19.

By focusing first on income productivity and second on valuation, it was easy for investors to grab, buy and accumulate shares of Public Bank in 2020 at RM 13 a share.

Since then, Public Bank’s earnings had recovered and grew to RM 7.1 billion in 2024.

Now, after a 4:1 bonus issue, the price in 2020 was adjusted to RM 3.25 a share.

From 2020, investors would earn RM 0.957 in dividends per share (up to 8 January 2026).

That is a cash return of 29.4%.

Today, Public Bank’s share price is trading at RM 4.49 a share.

That equates to a capital gain of 38.2%.

Combined, the total returns would be 67.6% in the five-year period.

Was this difficult to achieve?

Not quite as long as you focus on income productivity and valuation.

Was this the best result that one can achieve in the five-year period?

Nope as there are many stocks that delivered greater returns in that period.

But, the steps to attain them are similar.

Conclusion:

In short, market uncertainty is here to stay. As investors, we should embrace them like a friend. It is there to serve us, enabling us to acquire good quality assets at discounted prices. Here, I would list down five common steps to invest in uncertain market conditions and build sustainable wealth via long-term stock investing:

1. Focus on Accumulating Income Productive Assets

2. Mr. Market is to serve us. Use Valuation Tools to take advantage of it.

3. If a portfolio is worth six-figures and above, diversify adequately.

4. Be patient, allowing wealth to compound over time.

5. Repeat, replicate and continue the virtuous cycle of long-term investing.