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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Sunday, 8 September 2019

Investing FOMO And Its Real Cost


Alamak!

To every retail investor; theory and practical and reality on ground is so much difference.


How scary is the real cost and risk of cash to catch the next big Bear?

Once we track our investment portfolio and its cash flow generation; we will roughly know its real cost and risk of cash.

Personal Actual
















Theory











































4 comments:

  1. Hi Uncle8888,

    The term FOMO seems to be misused in this article, or just having a strange meaning. I would think the more appropriate term is simply "Fear Of Losing Money".

    The theory presented is simplistic .... but then this article is meant for beginners. It's kinda ok ... provided got 30 years (as indicated in the chart example) or "multi-decade horizons" as in the Buffett quote used ... and you are a psychopath with no heart or feelings.

    The shortcoming of the article is that:-

    (1) it completely disregards human emotions in terms of handling -20% to -25% common corrections, not to mention -40% to -60% bear markets;

    (2) and that stock market returns are lumpy --- totally not like the nice "rocket-launch" exponential graph shown i.e. sequence of returns unpredictability.

    But it's also good as this article shows that stock investing is still not back in the mainstream yet in S'pore (and probably in ASEAN too). Sentiments are definitely not like in 1996 or 1999 or 2007.

    Whether & how much to invest also depends on risk tolerance (90% of people won't have), objectives, lifestyle required, level of income stream desired, safety of profession, job security, number of dependents, severity of dependents, timeline available, etc.

    Many people can meet long-term objectives without investing --- it just requires certain tradeoffs.

    A lot also discovered they can achieve comfortable retirement with just investing 20%-30% of their savings. Middle-class and upper middle-class are usually the ones. Again trade offs required.

    ReplyDelete
    Replies
    1. May be FOMO is Read bite on hardcopy reading. Click bite on Internet. LOL!

      Delete
  2. WB also said, "People who don't have the stomach for 40 to 50% loss in their portfolios, shouldn't be in the stock market."

    Hmm..... Those who have the stomachs, are they psychopathy in Nature?

    So WB must be the greatest psychopath?

    Seriously must have a bit if not a lot.

    Why then so many people BH, SL?

    i tend to think these people just like to follow the trend or the main stream thinking. They can't bear to be the one sticking out of the crowd.

    Another words they are not a bit psychopathic at all?

    Oh dear, i must be quite psychopathic because i always try not to do what everybody is doing in the market.

    Whenever there is an opportunity or the market invited me to do the psychopathic thing.

    YMMV

    ReplyDelete
  3. Actually, must one be psychopathic to do things differently from the main-stream people?

    I have my doubt?

    What about idiosyncrasies?

    ReplyDelete

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