Uncle8888 has truly learnt this Lesson in GFC 2008. Of course; he was not afraid of unrealized losses due to strict position sizing of NOT more than 10% of his total capital in any one counter. He knew he would not be wiped out due to losses in any counter. BUT; when unrealized losses in his portfolio started to escalate and escalate faster in mid 2008. His ball dropped and nightmares began when he realized the next few years of higher expenses for his two children university education! Lost his job! Money how?
Read? Soon ... The Greatest Relief Is I have Sold!!! (2) --> Uncle8888 has learned this painful lessons in 2008 GFC for his two children university fund where he was forced to cut his losses in Nov 2008 due to fear of Depression 2.0 to raise $80K in cash to ready this uni fund for his children starting their first semester in Jul 2009.
Read? More money probably won't make us significantly happier???
Read? Turnaround from your chart 2008-2012?
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Hi CW, thanks for your open sharing.
ReplyDeleteNot many people like to talk about their losses. Thats why many new investors will have to learn from going through "crash got sound" by themselves.
And yes as people get near to retirement they should start to reduce their exposure to equities and move their money into safer investment such as the CPF.
I am now at a cross road wondering if I should start to reduce my exposure to equities, now that I am nearer to retirement. But the problem is finding where to place the money that can generate the equivalent cashflow that equities is giving me.
We have not altered our asset allocation since we turned 50 yo, 11 years ago. We are now very conservative with CPF savings occupying quite a big slice of our assets. This CPF savings provide a great emotional stabiliser in the face of market crisis and even gives us confidence to deploy our warchest in a market meltdown.
Should the stock market really unravel, it would be my last window of opportunity to buy stocks at a discount before I go into retirement.
I have a simple target to meet. To get $200,000 a year in passive income. Almost hit this target in 2019 at $196,800 and almost hit it again in 2021 at at $196,700. Keeping my fingers crossed this year to hit the target.
Uncle8888,
ReplyDeleteHmm, hence the old adage of not putting money you need in 3-5 yrs in risk assets?
Simple statement, but probably distilled from generations of investors over the last 100 yrs going thru "crash got sound" ... and oh SO HARD to follow the advice in a BULL market! Lol.
"Don't put your eggs in the same basket." Another rule of thumb, or is it motherhood statement? :P
But often we gravitate towards industries & companies that we're familiar with & overweight into them e.g. cryptos, tech, reits, value stocks, growth stocks, commodities, industrials, banks, property, certain country, etc.
So although we have 20 various counters, they are different different but same. ;)
And in a contagion, correlation all goes to 1 & almost everything deep dives.
I was in my early-30s back then, but so far 2022 feels very much like dotcom crash in late-2000 - 2001.
Back then, 6 fed rate hikes in the face of rising inflation. And higher interest rates killing all the high valuation assets. Many "new economy" startups with zero profits & unsustainable business models collapsing.
There wasn't a financial or currency crisis. Nor an exogenous shock (until 9/11). It was a long, slow motion, meat grinder 1-step-up-2-steps-down decline. :)