Uncle8888 has learnt his Lesson 1 in the stock market i.e. illusion of wealth in 2007 Bull Market and then after 2009 GFC his Investing Mind has been fully mindful of this illusion of wealth and he knows clearly the difference between Real and Imaginary Parts of his Wealth in the stock market and develop practical Money Management to safeguard and ring fencing from losing a large part of this illusionary wealth back to the next incoming Big Bear! When will it happen again? or never?
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Hi Uncle8888,
ReplyDeleteAll the "motherhood" statements over the decades have been in response to "illusion of wealth" in risky markets. ;)
Things like emergency funds, diversification, position sizing, asset allocation, risk appetite, loss tolerance, knowing yourself, objectives, controlling greed, what is "enough", getting wealthy versus staying wealthy etc.
What's that saying about old bold traders? LOL!
CW,
ReplyDeleteWe've learnt from "crash got sound" what's the difference between:
1) Theory and Practice.
2) Knowledge and Wisdom.
The trick with investing/trading/doing our own business is to SURVIVE long enough so we can start to PROFIT from our MISTAKES ;)
LOL!
Invested wealth is an illusion indeed.
ReplyDeleteAs I get nearer to retirement, I try to minimise this "illusionary" portion of my assets and channel more and more money into "more dependable" assets including our dear CPF accounts.
The CPF despite its relatively low and boring returns, is one asset class where one can project the savings trajectory into the future with high certainty unlike the illusionary assets where one cannot even tell if it will increase or decrease from one day to the next.
One can set realizable targets for CPF savings to be attained at different ages with confidence (like what some young followers of the 1M65 movement did) but setting targets for equities is more crystal-balling than anything.
cant help to ask question abt this topic on illusionary wealth or 'paper gain' so how? do we stay invested ? or move our fund to safe heaven like cpf? but cpf had got limits or move into bonds? i thk bonds are risker than shares haha
ReplyDeletedo we stay invested?
DeleteYes but we have to be mindful that we don't know when Mr Market will change his mood.
Are we able to know that his mood has already changed and seek to protect paper gains from losing back?
This skill or wisdom we have to build up on own across market cycles and the other skill is our money and portfolio management to relation to our view of Mr Market's mood.
It is up to us to feel our own emotions. Which is less scarier or painful?
To REGRET NOT making more from Mr Market or to FEEL sorry or frustrated for losing back BULK of illusionary wealth to Mr Market.
3Ms - Method, Mind and Money Management. Mind and Money management will take more time and effort to build up across market cycles. Going through one full market cycle will help to understand more.
recently with the CRCT rights issue i started to get de-illusionised by the promise of high dividend from reits. looks like bo hua leh, we get the so call high dividend but then when we play the chasing games of getting of rights issue. it looks like we are paying back our hard earned dividends and there are very limited capital gain and worst some reits price keep dropping. so i searched cw8888 blog and found that he is not a reits investor! i have 40% reits and are going to reduce them. that leaves us to only a few options to buy in the blue chips with high dividend. like that how to receive enough passive income to retire early har :(
ReplyDelete
DeleteRead? Some dividends are not meant for investors to keep forever or spend them off??? (2)
"like that how to receive enough passive income to retire early har :("
DeleteUniquely, Singapore Way of retirement income:
Read? Not Just Financial Independence. Build Sustainable Retirement Income For Life!!! (2)
also i am curious cw8888 do short term trading eg recently sold dbs at $24+ then how do u decide how many lots to keep for long term investing to collect dividend and how many lots for short term trading. i had dbs at $14 i thk i bought in 2016 and $19 bought in oct 2020 too.
ReplyDeleteBuy slowly in Batch/Round and Sell in Batch/Round. When I decide to Sell to lock in gains i.e. fulfilling 1st component of the Secret Formula = N x (Buy Low. Sell High) + N x Panadols + N x Golden Eggs + n x (Buy - Hold), Where n << N and Hold = current stock price. I also already decided on Buying back price. Sell and Buy Back as a pair.
DeleteYou have decide for yourself "dbs at $14 i thk i bought in 2016 and $19 bought in oct 2020" are your Touchstone for keeping or Sardine. $14 is likely a Touchstone. How about $19? You have to feel it yourself!
Still not sure. No harm selling partially in 1/3, 2/3 and 3/3 as it goes higher and buy back in the Reverse 3/3, 2/3 and 1/3. If we are right, hosey liao! N is getting bigger!
Read? Touchstone or Sardine?
complicated formula haha but looks like no straightforward answer haha if the dbs i bought at $14 i treat as sardines i wld had alrdy sold it. there will be no touchstone in my portfolio. sounds like to treat my panadol as touchstone until the bull comes then i treat it as sardines and sold it for a profit
Deletei still must thank u for the generous knowledge shared and the time taken to explain and show us your way :)