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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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

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Friday, 2 March 2018

Investment Portfolio Draw-down Across Market Cycles


Let see how Uncle8888's investment portfolio performs in the next Bull-Bear-Bull cycle with his rotting cash strategy to time the market?











6 comments:

  1. Uncle8888,

    With 60% cash, you're adopting Buffet-style to the power of 2 (or 3) LOL!

    Or more like Jim Rogers ... mostly in cash & Treasuries ... waiting for safe to drop and break open before going over to pick it up...

    As long as able to invest most of your warchest more or less near the next big bear lows ... even if subsequent recovery is L-shaped like in 1970s or 1930s(W-shape) ... it'll still be very good performance.

    The only "problem" is having to underperform the markets in the meantime... no free lunch! Kekeke!!

    ReplyDelete
    Replies
    1. How do we count our opportunity cost?

      Delete
    2. i think we choose accordingly to what we like than what should be our best economic choice.

      Traders will think why we keep so much cash rotting.
      What a waste of asset.

      We all count our opportunity cost in our own
      ways, in accordingly to how we deploy our cash.

      Should not regret the foregone opportunities if we can prosper or really enjoy from what we have chosen.

      If i don't own a ext 5-year See Ho E car, the money can definitely spends on holidays & restaurants.

      What if i can have both?
      Do I still have to count opportunity costs?
      Yes, of course!
      Can human nature be satisfied?

      Delete
    3. We normally talk about 'opportunity cost'... if we have do something, we will gain something.

      What about the opposite of opportunity cost?
      What about if we are wrong?
      What is the lost of opportunity cost?

      Delete
    4. Easy to measure quantitative opportunity cost on 20/20 hindsight .... just use relative performance to a benchmark e.g. STI or MSCI ACWI. How did you do in 2016, 2017? Or from Jan 2008 to Jan 2009??

      In a strong bull, if I have high allocations to cash or bonds, for sure my overall portfolio will lag the benchmark.

      Vice versa in strong bear, having lots of cash or bonds is a blessing.

      The trick is figuring out when is the big bear before he strikes & getting out.
      And also figuring out when the worst is over & going back in with confidence (80% to 100% invested) --- this is important otherwise the strategy doesn't really work well.

      Important to stick to the strategy that we have most confidence in & not keep changing it whenever market behavior changes .... this is self-defeating behaviour.

      Qualitative opportunity cost?? Well, it's a trade off exchanging time for studying, monitoring, analyzing, reading, thinking about markets/companies versus for career, family, friends, new skills, sports, rest, etc.

      Delete
  2. In short, it's very difficult to have the bests of both worlds.

    Make money selling shorts, in a falling knife market and make money selling long in a North to Alaska market with the same stocks.

    In Casino's parlance, "大 小 通 吃“

    Wow!
    Can or not?

    ReplyDelete

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