20 years across market cycles of Bulls and Bears; Uncle8888 is finding harder and harder to understand these common investing lessons/wisdom prescribed by many investment writers!
1. It’s impossible to predict the market
2. Stay focused on long-term returns
It may be true for someone who has accumulated some investing capital from their savings and just begins to invest for the first time.
Don't try to predict the market and start investing!
But; for veteran retail investors who have been through one or more market cycles themselves may know that that these two lessons may not be really wise!
1. It’s impossible to predict the market
2. Stay focused on long-term returns
Yes. It is impossible to predict the market; but the next market crash will certainly and definitely happen!
Unless some Gurus can come out with a solid model to construct a defensive investment portfolio that will NOT plunge 30% to 50% from the last peak value of our investment portfolio during market crashes; then (1) and (2) are worth believing!
Hmm ... nowadays; no Gurus are conducting courses on Permanent Portfolio. How come?
After embarrassing investing method, strategies, and money management from 2006 to 2007; Uncle8888's understanding on (1) and (2) has changed.
(1) It is impossible to predict the market; but we can still choose to earn very low return and preparing large fire power to achieve Barbell return at the next market cycle!
(2) Focus on long-term returns over market cycles is NOT about taking those plunges during market crashes and then recovering back to the previous peak value of investment portfolio or higher during the next Bulls with positive returns over long-term.
We may take years to accumulate those paper gains but losing them in just one to two years; and then will take another more years just to recover back these paper losses.
Those financially stronger retail investors may recover differently and faster from these paper losses by injecting more and more capital into their investment portfolio.
Stay focus on long-term returns???
By looking at the charts, the long-term returns over market cycles obviously looked okay on surface; but it is NOT!
By taking the plunge and then recovering back to the previous peak or higher and long-term returns remaining positive is okay ah?
By looking at the charts, the long-term returns over market cycles obviously looked okay on surface; but it is NOT!
By taking the plunge and then recovering back to the previous peak or higher and long-term returns remaining positive is okay ah?
Winning by NOT losing is NOT viable investing strategy???
Posts
CW,
ReplyDeleteThe 2 motherhood statements are used by snake oils to protect their arse:
1. It’s impossible to predict the market - then you take up guru course and talk to financial advisor for what?
2. Stay focused on long-term returns - this is so you won't blame the guru/financial advisor/fund manager and continue to contribute in fees and commissions mah! Like all good sheep do ;)
Sometimes, we learn the best from our own crash got sound moments :(
:-)
DeleteMerry Christmas CW,
ReplyDeleteAlways prepare dry gun powder so you can buy yourself a Christmas present during the great sale
10 years without Xmas gift is terrible. :-(
DeleteEndowment bias effect?
ReplyDeleteTo know the effect of measuring wealth in term of stock value; we just look at US list of top 10 richest men. Their names in the list are moving up and down whenever there is an update of who are the richest.
ReplyDelete