Random thoughts: Reflection of bear market investing.

Just a log to write down my thoughts. None of these are analysis stuff, just my thinking 

1) I cannot prepare for both a bull and a bear, or can I? I am kind of preparing for a bear, I hold 60% cash and keep telling myself not to go below it unless there is a correction (10%), I wasn't even thinking about bear a month ago. 

On hindsight, for those who took advantage of a bull, they would have piled up on the investments on their way up. But, as u sell you way up, buy high and sell higher is risky business. If u refuse to buy high and sell higher, u restrict your gains in a bull. 

U could also have offload bulk of your winnings earlier, say when market just correct 10 percent and now u huat, bull I win, bear I win. But that is easier said than done, it"s almost like striking lottery. Let us not forget the last 2 years are full of false bears, and a panic of losing out. I am not sure if anyone can convincingly sell out. Also, no one knows if a sell out decision is right or wrong except on hindsight.

Now, I have took the middle approach of investing in tranches... That means as market increase, I sell more. (Was 80 percent cash at one point of time), as market drops, I buy.

However, a company could already drop by 20 to 40 percent because of it"s industry cycle and not due to general market fall. So, I continue to buy when I see such companies, just that I am mindful of the cash level of portfolio. This bear shows me, even those which has already went south by 50 percent, can go further south by another 50 percent. So having the cash to accumulate at 80 percent discount is rather important. Your cost of purchase went down 80 percent, and the cost of AV. Down becomes a lot cheaper. 

As I buy, and accumulate shares, drawing down my cash, CPFand Srs fund on a almost of a daily basis, I realise I will slowly sell when market rebounds upwards ( risk management as the size of investment will be smaller, with better margin of safety), doing this will prepare for bear, but reduce the profits if bull returns. 

* I have no such chance yet to do what I plan. 

Assuming100 percent of your counters fall at least 20 - 25 percent, and 75 percent of your counters fall 35 - 45 percent and 50 percent of your portfolio fall 50 - 60 percent eventually. 

U cannot be more than 30 percent vested before bear starts. Is this an easy call when u see all your friends and bloggers say u are hogging too much money and they are making a splash? 

Also, when u are only 30 percent vested, are u going to sell further ??  My best investment before this covid 19 is MIT and A REIT, MIT is still above waters but A REIT is already in red, (SMOL, if u are reading this, u will say see, never sell), but when u sell to increase cash and left only 30 percent, will u really continue to sell? 

Hence, I think, many theories doesn't really work in real life circumstances. I have no regrets buying and extending my loss, because I believe I could not have done better with portfolio cash level manGement. I could have done better with my entry and exit. But that is second part.

2) I didn't keep to rule of 20 percent fall to accumulate. I bought QAF at 76 cents, just weeks before they announce positive profits guidance. Within days, I sit on 15 percent gains. When the correction starts, I accumulate more at 78 cents, thinking what a steal it is, as I dun think bakery business is going to be badly affected by Covid virus. Supermarket is still doing brisk business. Bread is a staple. 

I could have save some ammo and average down at more attractive price. The same with DFIH, althought it is just a few percentage point off 20 percent. 

As I drawn down my cash, I ask myself to pull the trigger with bigger drop of 25 percent or even 30 percent. That seems to work better. 

Hence, if I ever get a chance at bear again , I will do 20.percent, 25 percent and 30 percent drop accumulation for companies with business visibility and 25 percent and 30 percent drop accumulation with hazy business visibility. 

3) Business analysis is important, as it gives u conviction that the company can survive. Of course, business conviction is based on assumptions and projections, but price fall is not a business assumption. 

What I am fearful, I ask myself, if I get it wrong, do I accept zero, permance loss. What is the odd of that happening based on your analysis. 

Once I have the answer, I realise is still have the balls to squeeze the trigger to buy when the counter has fallen some 50 percent ...

I bought first tranch when it fell 30 percent, and it feel another further 30 percent in 2 days and scare the shit out of me.

I ask myself to calmly think through whatever factors I knew affect the stock. I bought more.

For transparency, that stock is first REIT. I believe the parent company Lippo and Siloam hospital have the financial strength to survive the currency run on rupiah, which is the main factor costing the fall. 

As for 2021 renewal of contracts, those contracts not pegged to SGD doesn't mean they no longer need to pay rent. Assuming they need not pay rent, the loss is 25 percent revenue for the 1 flagship hospital and 3 mature hospitals ... But the fall in price is... ... 50.percent from my purchase price of 96 cents and 70 percent from its peak. Ridiculous.

If they no longer pay in sGD means savings of 30 percent, the fall in revenue for 2021 will be even smaller. 

Ok. That's all for my thoughts.

Finally, u just need to be lucky in stocks. My friend who didn't buy anything until now. Yes the best stock performance than 90.percent of investors lol