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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"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

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Monday, 16 March 2015

Your War Chest For The Next Big Bear???



Deploying your big war chest for the next big Bear?


Hmm ....



 













Let Uncle8888 shares his thought based on real experience on the ground with some real retail investors in those cyber encounters ....


Depending on you how build up your big War Chest?

1. Bulk of it comes from your saving  

or 

2. Bulk of it came from fear of market crashing and liquidating your holding as War Chest. Cash is King!

Thinking ..

If it is 1, most likely you can deploy your War Chest 

But if it is 2, not sure how many can actually do it.


Read? What was I thinking and feeling in Mar 2009 Bear market low? (2)




8 comments:

  1. Hi bro8888,

    Jackpot! I think you hit it :) (1) is offensive and predatory in nature, while (2) is defensive and made out of fear! So now, not only must we have war chest, we must have the right quality of war chest!

    At the end of the day, account size still matters. If you have a big account, you don't have to sell your holdings to fatten your war chest and then you can deploy them more readily when it's needed!

    ReplyDelete
    Replies
    1. LP,

      You mean have the right quantity of war chest instead of "quality".

      Delete
    2. Hi Rayne,

      Haha, I really meant quality :) even though ultimately I think quantity affects the quality of the warchest!

      Delete
  2. Sorry. i think differently
    i think it is not that simple. i think we will or may swing like a pendulum between 1 and 2. We will learn after @ every Bear/Bull cycle, we still commit some of the mistakes due to fear & greed. Very few of us can escape. i don't know about you but i know i can't.

    In fact scientists had experimented with people who invested better in the stock markets because they had lost some "feelings of fear or greed or which part of their brains that can not feel some of the emotions when investing. (Anyway, scientists have nothing much too do but we know we must invest with our emotions in check before they turn us into panic freaks-- pressings panic buttons for self destruction. Or abandon the mission half way. i did in the last Bear due to fear and doubts.)
    Warnings:- Not all act the same under FEAR AND GREED!

    ReplyDelete
  3. Hi Uncle CW,

    My balls will shrink during bear. Not because my portfolio halved or less, but because I will see people around me losing jobs, having economical problems... country as a whole not well...

    Maybe only me laughing very loud because I have a huge warchest???

    Another problem is when is the time we call bear? If u says its bear, maybe just beginning of a bigger fall. Time of entry?

    I do not have war chest. I accumulate rainy funds. Do not like bear... hate to see people out of jobs... Do not know exactly how to deploy war chest also during the so call bear... you teach me?

    I still be consistently investing now, but more rainy days funds than investment funds.

    ReplyDelete
    Replies
    1. Sometime in the past when I recalled the past images of weeping senior ex colleague who was retrenched, my ball shrunk. Probably that is why my emergency fund is about three years worth of household expenses and much bigger commonly advice of 0.5 to one year. :-(

      Now, at least 67% of household expenses till 80 years will come from fixed asset drawn down. I want to feel extra secure with some certainty. of liquidity regardless of market.

      Delete
    2. “A man is rich in proportion to the number of things which he can afford to let alone.”
      Unquote:-
      Now how many of us can afford this kind of WAR CHEST during a bear?

      CW,
      Can you share what are considered as Fixed Asset? $ in CPF, shares, etc
      i agree we should not be forced to sell (anything) because of liquidity or our cash flow has run into problems.
      But for me "planning" is one thing, "If the horse dies, we just have to walk lol". Somehow we can survive with less. Actually have been practising surviving with less since when we have much, much less. Now we have much more, it's kind of funny we still worry we can't survive with less. Isn't this is what in most of our hearts? We always worry we can't survive with less. So we keep on "investing" even in our "deaccumulating" phase. Maybe you are still in your accumulating phase?

      Delete
    3. Excluding residential home and shares which are so volatile (non fixed value).

      Delete

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