Wednesday, April 8, 2015

My mind during the last 2 bears.

The last 2 bears, GFC, and the early 2000s Crisis (911, SARS, Iraq war, etc) are simply learning curves for me, I did not earn a fortune, in fact, I lost a fortune in the 2000s bear and just break even in the GFC.

911 and thereafter
When 911 strikes, I know nuts about valuation and business. My valuation is "huh? SIA at $9" In the end, I brought 200 shares of SIA at $7.5 and sold it at $15. My thoughts then are: "Why am I so Kiasi", I start reading research report, taking the average of target prices and start buying. I made money for most. Until I fall in love in CAO, and lose everything I earn and more.

Lesson:
Method of the 3M is seriously lacking, I invest based on gut feel. Who says gut feel can't makes you a winner temporaily. I sold all my diverse winnings to invest in CAO, something I will definitely not do now, no matter how convinced I am on a company prospect. (I do think SingShipping is rock solid, but I keep it to only 10-15% of my portfolio, to avoid concentration risk.) Thereafter, the super bull run was missed as I nursed my wound.

GFC and thereafter
When GFC starts, I was just married with a pregnant wife and into the workforce for only 2 years. I just got a car. Money of the 3 M is seriously lacking. Nonetheless, I still bought 3 lots of STI ETF when STI is at 1600. Very soon, it went to 1400. Everyday, I was looking at the paper loss, asking myself how much lower it will get. My initial plan was to accumulate when STI is at 1200 and then again at 800.

When STI is at 1400, I chicken out, I tell myself to only go in for one more tranche at STI 800 points. There is no chance for me, as it turns out 1400 is the bottom.

Lesson:
It shows how weak the Mind and how small my Money is during the GFC time. Nonetheless, the 3 lots of STI double, and my vitamin M improves, as I work. I bought into mainly S-chips I made some and lost some. The 3 lots bought at GFC only allowed me to break even from my past CAO failure.

2012 Euro Crisis
Not many will consider 2013 Greece tantrum as a full Euro Crisis, but market did correct 20% and is also a great bargain period. I remembered watching Singpost at 96 cents, HPHT at 60 cents. The mind then was: wait for it to get lower.

Now
After becoming a Value Investor Wannabe, I having not profited at all from the GFC and 2012 Great Euro Correction, I am impatient. My dilemma then when STI is around 2900 is, I am not sure when corrections will happen, if a correction of 5% happens when the market has risen 5% or 10%, what good is waiting? Also, some counters I am monitoring are decoupled or not directly correlated with the STI. I wanted compounding to work, and for compounding to work, you need size. I was fully vested only until recently, and is more of case of due to circumstances than choice.

Final thoughts:

Of the 3 M, I think the weakest link is Money, follow by Mind.

I am thinking of Bear too now. At 3000, STI is still at good 20-25% from it last peak. At almost 3500, it is dangerously close to its all-time peak. Can it break new high of 4000? Well, It might, but I think I would have divested even more then.

I ask myself how I feel one month ago, when I am almost fully vested, and now when I have a bigger emergency fund and separate opportunity fund and also a "Mother hospitalization fund", I know the answer loud and clear is: I feel much at ease. Although everyday I look at some counters and are very tempted to invest, I keep thinking about the weak Money that will make me vulnerable to bear. I am still reasonably vested to take advantage of a Cheong to 4000.

Now that the Mind is more at ease, I can only try to be better at Money and Method. The only dilemma I have now is: well, Market is at a high, but counters I am watching has fallen from 15% to even 70% from their peak, should I invest? They might not be correlated to the general market.

Maybe the 70% fall counter, I will nimble...


15 comments:

  1. Hi Sillyinvestor,

    Thanks for the lessons / education. I am pretty much the same for the 10-15% for my max amt stock. Maybe 20%, but no guts to bet all in on one.

    Guess lessons make us less silly each time! :-)

    I am vested in CAO now.. haha, hopefully I dun encounter the scary story about this counter u faced.

    ReplyDelete
    Replies
    1. Hi Rolf,

      CAO is a very different animal now. I took a look briefly too, after it got highlight by the edge newspaper.

      But still no vested. In fact, I am looking to divest a bit more...

      Delete
  2. Hi SI

    Thanks for sharing on your experience.

    It's really difficult to profit from the bear market especially when we have not experienced it before. Having some experiences on your side now, you might be better controlled in terms of the 3M you talked about. It's still going to difficult but I think you've grown much more experienced in the market than the previous 2 crises.

    ReplyDelete
    Replies
    1. Hi B,

      I think it is difficult even now.

      Because Mind is a fleeting thought... for example, I am quite sure if market correct 5% or slighly more, I will be asking myself whether to invest/nimble a not.

      Also, the other 2 M... sigh....

      Delete
  3. Hi SI,

    Thanks for sharing your thoughts. I started investing after GFC, so I got no experience going through recession before. One method is to buy in small lots during correction, instead of chiong all in. It works for me. You can check out this article written by an investing guru friend of mine who also suffered from the GFC but came out with sick gains after that :

    http://bfgfmoneyblog.com/portfolio-lessons-learned-from-2007-2008-recession/

    I personally hope I don't get stuck in a situation where I got no money to buy during a crisis, or I chicken out. Now I can talk very easy, think when the time come, it will be very different!

    ReplyDelete
    Replies
    1. Hi BfGf,

      while you might not have the actual experience going through a bear, but with the other 2 M ready, and your mind tune by bloggers of what to expect, I think you are ready when the time comes.

      Delete
  4. Hi SI,

    Surely you are wiser and more prepared in the next bear hunt.

    Farmer.

    ReplyDelete
  5. well-written.

    my mind still fluctuates much with market.
    let's hope i have a peace of mind with market.

    ReplyDelete
    Replies
    1. Hi Yeh,

      Long time no see, how have you been?

      Yes, a peace of mind is priceless

      Delete
    2. Others than work. What else can be busy with?
      Hahahaha.

      ask u. If u have 1M portfolio . For 2 person .
      Will u still continue to work?

      Delete
    3. Assume I have 1 mio portfolio with no home mortgage etc. Only 2 person. I will work, but I will go for flexi-adj.

      I may continue to work as per normal for another 10 years? I will be older then, and port should be 1.5 mio, maybe then....

      I kind of like my job ... So hard to say

      Delete
    4. Yes. I just get my promotion this April.
      Now i feel that I find my meaning in my work liao. I hope this can last long.

      But i am a depressed soul. Suddenly . Probably a while later, I will be emo again. Hahaha.

      U r right. If no working. Probably i will be bored.

      My first plan is to work till 40 yrs old. See how much I can achieve at age 40.

      btw I just bought 2 system 7 for 6.5M toto.

      Hope can tio lo. Then I can have my retirement now. Hahahah

      Delete
    5. Lol,

      Congrats for your promotion, may you 升官发财! win toto too, 双喜临门!

      Delete
  6. Hi SI

    i do not know if the "tapered mini bear " in 2013 counted anot ? Rushed in too early and cutting loss too late . Learned quite abit from there . It's a good way to train discipline. Make use of the waiting time to learn more ( human capital ) , save more ( Account size does matters )...ok sounds familiar. and prepare ( emergency fund , unforseen events )

    ReplyDelete