As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Click to email CW8888 or Email ID :

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.

Think Investing as Tug of War - Read more? Click and scroll down

Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Sunday, 2 March 2014

On risk and liquidity: Volatility is a form of risk

On risk and liquidity: Volatility is a form of risk, but it is by no means necessarily the most important. One of the things we learned in the financial crisis is liquidity is important and if you run short of cash in a period of distress, you end up with a set of options which are all terrible. And without going into all the detail, CalPERS found itself in a liquidity squeeze in the fall of '08, and to get ourselves out of it, we had to sell assets. Well, if you're in the midst of a panic and you're selling assets, what can you sell? You can only sell your best stuff. And when you sell into a panic like that, you're marking your portfolio with real losses. That was an extremely painful lesson for us, and obviously we've taken that to heart in a number of ways. - Joseph Dear, the chief investment officer of CalPERS, US's largest pension fund.

Uncle8888 fully understood this advice coming from US's largest pension fund and has carefully plan to avoid having to sell his best stuff in the midst of a panic to meet liquidity needs.

It is far better to regret not making more than to feel sorry for selling into a panic and locking permanent losses.

No comments:

Post a Comment

Related Posts with Thumbnails