Someone who is sitting on a 2 or 3 baggers feels different with a 10% correction than someone who has bought the recent high and is taking a 10% unrealised loss.
Someone who has taken back his capital and is only risking his "unrealised profits" in the market is not feeling the same stress as someone who is using 50% margin and risking 2 times his capital when a correction hits...
Someone who only has max 25% of his networth in equities is a lot more sanguine than someone who is 100% vested in equities.
Someone who bought shorter duration bonds like 1 year or 5 years government bonds is not suffering capital losses when interest rates rise, just as long he can hold the bonds till maturity. Those bei kambings who bought into bonds funds or ETFs will suffer capital losses...
Someone who got sugar daddy/mommy to bail them out when things go horribly wrong can sleep better at night.
Hi SMOL,
ReplyDeleteI think that it will not be wise to be 100% vested in the equity at all time. Diversity is the way to go with some percent in hard cash.
Ben
Ben,
DeleteYup. But for youths starting their journeys, usually not enough money to play the diversify game :(
But cash is a great counterbalance to our investments - no matter what our poison.
Cash is like the ballast in a submarine. It helps us to dive and surface.
Cash rotting in bank is only parroted by youths who have never experienced a bear market yet...
No cash?
Wait sink all the way to the ocean bottom... Always good to have some cash to float back to the surface!
LOL!
Hi SMOL,
DeleteYou hit the right spot. It is always good to have some cash hoard in hand. One will not be forced to sell in time of crisis due to the livelihood. The cash hoard works in two ways. It can be used to sustain the livelihood as well as be utilised to buy more well established stock in the massive selldown.
Ben
Any investment or trading plan shld have risk & money mgmgt, consider liquidity needs, emergency stash etc.
ReplyDeleteMost impt is having mental discipline to follow the plan.
If can't sleep or worse not able to follow plan ... that means mismatch between reality / mental capacity & plan.
Buffett can remain 99% invested at all times ... his 1% cash is enough for a few of his lifetimes! LOL!
There have been 3X in his life when Berkshire dropped -50% ... the last 2 times within the last 20 years. Even he will be sweating then if he has to depend on his risk money to pay bills.
Rule 1 - don't lose money.
Rule 2 - refer to rule 1. LOL!
Unknown,
DeleteThat's something we learn as we get older, wiser to the ways of the markets, and have more money to "protect"...
There's a reason why the panda and koala bear are on the endagered species list ;)
Too specialised can be quite risky. Humans have thrived because we are omnivores. We even eat insects and spiders!!!
I don't want to preach to youths as I were young once ;)
What emergency fund? Like that how to have opportunity fund?
Just go all in lah! What can go wrong? Just buy the freaking dip!
Average down has worked for the past 8 years what?
Those who survived a -50% drawdown like 1997, 2003, or 2008 will know what to do next time.
Those who didn't survive, well, there's always voluntary CPF contributions as plan Z ;)
But must pray no regime change...
Nothing is risk free one!
It is vain for you to rise up early,
ReplyDeleteTo sit up late,
To eat the bread of sorrows;
For so He gives His beloved sleep.
Yaruzi,
DeleteAh! The King James version.
My one is the New Living Translation; simpler in layman language:
"It is useless for you to work so hard from early morning until late at night, anxiously working for food to eat; for God gives rest to his loved ones."
You find your spirituality in religion; I find mine in poetry and art ;)
Its refreshing and humbling to receive this comment from you.
We are definitely not one of those who put down others for their "accumulation" of things, yet don't find the irony we ourselves are into the "accumulation" of money...
Isn't that more crass?
LOL!
Everyone needs bread, and nothing wrong with gathering the bread we need (the WHAT).
DeleteHowever, there are those who believe that their sole purpose of living is to gather bread (the WHY). They believe the harder (or "smarter") they work, the more bread they will have and the happier they will be (the HOW).
I'm just those who believe that my bread is given unto me even when I sleep :-).
Yaruzi,
Delete“That is why I tell you not to worry about everyday life—whether you have enough food and drink, or enough clothes to wear.
Isn’t life more than food, and your body more than clothing? Look at the birds. They don’t plant or harvest or store food in barns, for your heavenly Father feeds them.
And aren’t you far more valuable to him than they are? Can all your worries add a single moment to your life?"
Your sound sleep every night is testament to your faith ;)
temperament,
ReplyDeleteYou romantic you!
Eh... I got my ikigai.
So I can't wait to wake up in the morning :)
temperament,
ReplyDeleteOf course have lah!
With her in my arms, totally spent...
Of course we are enjoying the MOMENT. Its called BLISS. And we don't want that moment to end ;)
You are indeed weird. (OK, more probably bad england)
Where got anyone want to never ever waking up again?
That's language used by depressed people who can't stand the thought of suffering another waking day of pain again...
Life is about enjoying every moment. Cherish the moment!
ReplyDeleteBen
Ben,
ReplyDeleteNamaste.
Hmm Temp and Smol,
ReplyDeleteWho says those with igaki roaring to get up of bed? I every morning struggle to get up of bed. But will be ok when the first class start.
As for perspective, the young ones who lose it because they have very little cash might be a good lesson. I did that
What I am trying to say is, those who hoot 100% when young, lost all their savings, can recover in a year or 2. Imagine they hoot big big in bear and think they genius and keep booting big big ..
DeleteSillyinvestor,
DeletePerhaps the better question is why you "struggle" to get up in the morning?
I don't poke you further as I see some "dark" poems coming back in your blog...
The best thing about starting young is not the compounding effect like so many think.
When we crash and burn starting young, how much can we lose? And there's so many decades ahead of us to make a comeback - if we ever do!
The most dangerous "newbies" are those in their 50s or 60s - conservative savers all their adult lives - become overnight "entrepreneurial" and imbued with "risk taking mojo" injected by ever so helpful vested interest snake oil seminars and workshops.
The worst is when you try to makeup for lost youth but lose big time :(
Peak career earnings behind us, going to retire soon, how many more decades do we have left to "breakeven"?
How useful is it to beat "inflation" when the more we "invest", the more we lose?
No choice but to continue to work 70s and beyond :(
Thank you big daddy for raising the retirement age! Employers can't force us to retire now!
Lol,smol
DeleteU say until.like that. Dark poems...
Like some cult. People get tired and when tired, struggle.
I good ship sail despite headwinds or tailwinds
Sillyinvestor,
DeleteYou are strong!
Run! Run Sillyinvestor run!
Against the wind ;)
Yup SMOL, you said it!
ReplyDelete1+ week ago when I was 80+% in risk assets ... hoping for markets to continue cheonging.
Now 90% in cash ... hoping for markets to drop further LOL!!
When I know better that I shouldn't be feeling anything... Markets do what they want to do ... just follow investment / trading plan!
But horr ... knowing my luck ... global markets will suddenly make a giant U-turn & run up 10% within the span of a week ;)
I will have been better off sitting on my hands instead of crystalizing drawdown! Kekeke!!
Spur,
DeleteWow! You are very nimble!
The volatility is very high. I have a suspicion next week we will break 3400 first than 3300 ;)
Friday was so funny! I am puzzled why our banks got whacked in the morning, especially DBS.
Finally someone decided its not right and pushed DBS back to positive terrioty at the close. I mean DBS holders in the morning not happy with the bumper dividends?
Throw fundamentals out the window when people are trading sentiments ;)
I wouldn't mind trading the 100 points move in the STI though ;)
Large whipsawing volatility is a characteristic of markets trying to find a base ... the cliché battle of bears & bulls... :)
DeleteBut who knows how long ... and who will win in the end??
My gut tells me bulls kekeke!!
Here's wishing you more 100 points moves over the next week or so ... collect more ang pao money! LOL!!
Spur,
DeleteIt was fun for me last week.
Hope the volatility lasts for a while ;)
Smol,
ReplyDeleteIt's better not to monitor the stock movement on regular basis. I think that it's enough to monitor on weekly basis.
Having the cash hoard which is enough for at least two years of living expenses will keep me sleeping soundly every night without worry. Such approach works for me.
Ben
Ben,
DeleteWe have the same idea ;)
I have 2 years of emergency fund locked up and sequestered from my opportunity fund ;)
Most textbook financial analysts would say 6 months of emergency fund is "enough".
Its like buying a PC for gaming. There's the minimum hardware requirements, and there's the recommended requirements for a better gaming experience ;)
Hi SMOL,
ReplyDeleteLemme try.
Someone who does not hate his/her job, die die have to retire by 35, and take on more risk in order to eke out an additional 5% return to boost their FF date nearer are more accepting of cash drag.
I think that it is up to the mindset on whether to work in the retirement.
DeleteI think that not having to work for money is considered as the retirement. One will not have to worry about losing his/her full time if he/she has secured the portfolio which will last him/her for a lifetime.
I think that this is the best possible circumstance the individual is in. No matter how demanding the existing work environment requires from the individual, he/she can immediately walk away if the situation becomes unbearable without hesistation. He/she will also has the comfort of back-up in time of such demanding requirement.
Ben
Unintelligent Nerd,
DeleteThat's the drawback of goal settings without "imagination" :(
Let's say one is one year away from financial freedom at 34 during 2007.
A mindful person not a "slave" to goal setting would have taken some money off the table in 2007 when he saw the signs the market is turning. "F" his arbitrary goal of FF by 35!
He would have avoided the -50% haircut, and in 2009 would have the gun powder to reload and double or triple his networth by end 2017 ;)
Land owners and shepherds use goal settings to make sure their flock of sheep do as they were told.
Sheep use goal settings to ....
;)
Ben,
DeleteI'm democratic.
I'm not a believer of one size fits all.
And the notion if its good for me, it must be good for others!
(Tyrants and fanatics think that way)
I like diversity :)
Panda and Koala are also perspective. No?
ReplyDeleteCW,
DeleteLive by the sword, die by the sword ;)
"人在江湖, 身不由己"
DeleteAfter 17 years of investment, i have learnt to be humble and respect the mr market.
ReplyDeleteStill having fun
AT_AT,
DeleteThe "secret" of investing - for those of us who have experienced a full bull/bear cycle - is all about risk management and capital protection.
Just as long we take care of the downside, the upside will take care of themselves.
Those of us who are still having fun meant we have "slack". Its always good to have "surplus" ;)
temperament,
ReplyDeleteTo die in our sleep is a blessing.
No pain; no fear.
What better way to go?
Lucky I not a warrior. Then I would have wished for a glorious death in the battlefield. To a warrior, to die peacefully in bed is a life "wasted"....
I'm a bard. I would prefer to go after a night of wine, women, and song!
LOL!
Focus on the positives in life. Ditch the negatives.
ReplyDeleteLife is too short to be miserable. Be happy always!
Ben
Ben,
ReplyDeleteI am so amazed and enthralled by our universe.
I'm made of star dust. I'm one with the universe.
Cosmology is so fascinating!
Once I've woken up to my place in the universe, my troubles seem all so insignificant.
Zen and Science good match for my philosophy in life! Very liberating :)
temperament,
ReplyDeleteAnd that's perfectly OK!
Stay in your cozy bamboo grove.
Why join the African plains (trading arena) where there are lots of predators like lions and crocodiles?
Know ourselves. Choose our own poison.
P.S. Your own heart you don't know where, who else would know!?