As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Value Investing
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Saturday, 1 January 2011

My War Room (6) - The Lost Years

Read? My War Room (5)

"Sometime we may learn from other people's experiences but at times we may have to re-look at our own experiences and learn from them as well." - Createwealth8888.

"There are two ways to learn a good lesson: one way is to learn it through the hard way by getting yourself hurt badly or the other way to learn it through the soft way by understanding why the other guy was so badly hurt." - Createwealth8888

The Lost Years

Especially, when you are a GROWTH investor who is not focusing on growing a steady stream of dividends.

The lost years effect and its impact to a growth investor can be really bad. So after 3.2 years, I am back to the same spot with no progress at all and that means 3.2 years or more are lost!



A -33% plunge in net worth is SCARY!




What is the important lesson to learn from the Lost Years Effect?
 
To be a successful growth investor over multi cycles of bull and bear markets, you must be reasonably good at market timing and be far better at selling than at buying as selling will help to raise your capital level for the next buying opportunity or just accumulating for the next bear.

However, some may argue that they can add monthly capital from their saving; but I believe adding capital from saving can be slow and limited unless one is a super high earner and saver. Market crash can happen within weeks and you may not have the required capital level to accumulate fairly large positions to benefit from its fast recovery within weeks. That is why selling to raise capital level is still very important factor in our portfolio and money management strategies.

Read? Be Far Better At Selling Than At Buying? (Re-visit)
 
Looking back, I wasn't particularly good at selling and not having a CLEAR EXIT plan.

I still feel that despites years of experience in the market, I still have great difficulties to tell Pull Back from Correction; Correction from Bear; and Bear from Market Crash!

So these are the areas for me to think deeply and to improve on them before the next lost years effect comes along.


3 comments:

  1. Hi CW,
    I am wondering what the famous Rothschild family saying, "Always leave the last ten or fifteen % to the market", really mean?
    How do they know?
    So far, I always buy too early and come out too early. But profit is OK lah.
    This time (by my own standard) I am staying a bit late already. Still about 70% of stock portfolio in the market.
    May I know what's is your opinion of the market now?

    ReplyDelete
  2. Of course! Of course! Base on current economic conditions it seems to be this way.(Provided, no sudden appearance of you know who.)

    ReplyDelete

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