As goes January, so goes the year, if you believe in the old stock market adage.
This observation has held true about 75 per cent of the time on Wall Street for the past 85 years and it seems to prevail here as well in recent years.
During the past tumultuous decade, as the local market pendulum swung from wild exuberance to deep despair, back to exuberance and now despair again, the general market trend does seem to follow the trading pattern set in January.
So if the turmoil was anything to go by last week, investors had better fasten their seat-belts and get ready for a lot more turbulence in the months ahead.
Right smack on the first day of trading, we were confronted with a 7 per cent plunge in Shanghai that caused its newly minted circuit breakers to trip and shut the market altogether in early afternoon trading.
Then three days later, Shanghai again plunged 7 per cent within the first 30 minutes of trading, sparking another shutdown.
This caused Chinese authorities to suspend the circuit breakers, which were installed to safeguard against such wild price swings following the stock market crash last summer.
Blame for the Shanghai carnage is being pinned on the inept Chinese regulators, for not having a good grasp of the market and for confusing investors with their flip-flop responses to the turmoil.
But the collateral damage spread far and wide, causing Wall Street to tumble 6.2 per cent last week on the Shanghai wobble. Citi Investment Research noted that investors pulled out an eye-popping U$12 billion (S$17.3 billion) from US equity funds alone in the week to last Wednesday.
And despite repeated observations that the Shanghai market is a poor indicator of China's economic health, the fallout even reached the beleaguered oil market with Brent crude hitting an 11-year low as it fell beneath US$33 a barrel on fears that Chinese demand would weaken.
So what is an investor to make of these stomach-churning developments?
Although Shanghai shares stabilised on Friday and brought much-needed relief for the rest of the world, some pundits remain unconvinced that it all boils down to poorly designed circuit breakers and Beijing's penchant for meddling in the stock market.
One obvious inference from Shanghai's meltdown is that the Chinese economy is in big trouble. Why else would investors be in such a rush to dump their shares?
What is worrying investors is the Chinese central bank's vacillating attitude on the yuan. After spending billions of dollars in recent months to prop it up, the People's Bank of China stood aside last week while it weakened.
This is unlike the firm stances it took in the 1998 Asian financial crisis and again in the 2008 meltdown, when it won worldwide kudos for standing firm on the yuan and calming nervous investors worried about a global currency war.
Still, unlike 2008, when the United States sub-prime crisis almost brought the world's financial system to collapse, there is nothing to suggest that China will be unable to handle a debt crisis given the trillions of dollars of reserves it has to rescue its banks if it needs to.
True, there are signs of weakness in manufacturing sectors all over the world. Tumbling oil prices have also sparked deflation fears as people appear to be saving the money they reap from cheaper transport costs and postponing spending decisions.
But even the most bearish economic forecaster is not exactly anticipating a global recession. The World Bank, for instance, expects the world economy to expand this year even though it has trimmed its forecast from 3.3 per cent to 2.9 per cent.
A better comparison would be the year 2000, when there was similar edginess in the stock market as an ageing US bull run finally came to an end with the bursting of the dot.com bubble.
Last year, a similar phenomenon occurred on Wall Street, where the extraordinary gains made by a small group of stocks - Amazon, Alphabet (the former Google), Facebook and Netflix - enabled the S&P 500 to stay almost flat, even though many of its component stocks ended in the red.
But just like the wild price swings encountered in 2000, when the US Federal Reserve took away the liquidity it had provided to combat the so-called Y2K bug, the stretched valuations enjoyed by these four Internet giants may become unhinged as the Fed raises interest rates going forward.
But a comparison with 2000 offers little solace. That year marked the start of three straight years of loss for the Singapore stock market.
The fact that this year sees a US presidential election is itself a big worry.
Those who follow stock market cycles closely would have observed that Wall Street tends to put up a sub-par performance during the final year of an American president's term, even more so if that president is into the last leg of his second term and does not have the option of re-election.
This year, there is the added concern kicked up by the raucous campaigns of various candidates, with billionaire Donald Trump inflaming many Americans with his bigoted remarks and calls for protectionism.
Amidst this talk of gloom and doom, investors may do well to recall legendary financial guru Warren Buffett's advice not to pay too much attention to market volatility.
As he once observed, even though the US has endured two world wars, other traumatic conflicts and a host of financial catastrophes, investors who stayed the course for the long term would still have reaped extraordinary gains.
He has a point.
Even in a bear market, share prices do not move down in a straight line. Traders are likely to reap huge gains if they read the market right and ride on the ensuing volatilities. For value investors, any bad news offers an opportunity to buy blue chips at marked-down prices.
This year may turn out to be a year of living dangerously in the market, but fortune favours the brave-hearted investors.
This article was first published on Jan 11, 2016.
Get a copy of The Straits Times or go to straitstimes.com for more stories.