The Big Bear

Focus on the individual stock, the business, the management and it's fundamentals. Buy only when it fits your own set of criteria and sell when it no longer fit those same set of criteria.

The index is useful as a reference (for those not investing in Index ETF) on whether to wait for additional discounts when buying or additional premiums when selling...

(08-10-2012, 07:07 AM)yeokiwi Wrote: How much drop is considered a bear? 10%, 20% 50% or 80%?
http://stockcharts.com/freecharts/histor...a1900.html

Bear market investment is certainly very profitable but there is a also a thing called super long bull market.
US dow jones rose continuously from 1988 to 2000. Subsequently, the market tanked 30-40%.
But, for those investors that were waiting for the bear to strike since 1988, it did seem a bit too long and the index had risen too high.
The subsequent major drop to 7300 pts was still much much higher than 1738 in 1988.

I certainly would not want to be the investor that was holding to cash in 1988 and waiting for a major drop.

There are 2 schools of thought

- Holding cash and wait for grand sales during bear market
- Fully invested at all time. Rotate fund for grand sales during bear market

IMO, both have their own merit. I have chosen the later

Hi Cityfarmer,

May I ask what you mean by "Rotate Funds" yet staying fully invested? I don't quite understand, sorry.

(08-10-2012, 10:42 AM)CityFarmer Wrote:

(08-10-2012, 07:07 AM)yeokiwi Wrote: How much drop is considered a bear? 10%, 20% 50% or 80%?
http://stockcharts.com/freecharts/histor...a1900.html

Bear market investment is certainly very profitable but there is a also a thing called super long bull market.
US dow jones rose continuously from 1988 to 2000. Subsequently, the market tanked 30-40%.
But, for those investors that were waiting for the bear to strike since 1988, it did seem a bit too long and the index had risen too high.
The subsequent major drop to 7300 pts was still much much higher than 1738 in 1988.

I certainly would not want to be the investor that was holding to cash in 1988 and waiting for a major drop.

There are 2 schools of thought

- Holding cash and wait for grand sales during bear market
- Fully invested at all time. Rotate fund for grand sales during bear market

IMO, both have their own merit. I have chosen the later

I think my method lies in between. always not fully invested. but not holding a lot of cash, either.

to rotate funds is not an easy decision. You buy normally means you see value.

Successful Investors – Risk Limit
(Proper Asset Allocation Can See Your Portfolio Survive All Types of Market)
All successful investors know their personal risk limit, though they may describe them differently.
1) Warren Buffet invests within his circle of competence.
2) Benjamin Graham only bought stocks that had a high margin of safety.
3) John Templeton does not invest in a country until there is “blood in the street”. (Market Crashed).
4) As i know I am not of high IQ, i try very hard to follow No. 3.
5) So what are you doing? You may have very high IQ, don’t you?
These people thought long and hard about controlling risk. As Warren Buffet reminds us, “Risk comes from not knowing what you are doing”.

NB:
Once we are in the market for some years, i doubt most of us can be completely out of the market when the bear suddenly pounces. So the question is how much cash you always stash away from the bear's pounce? i think this is one of the strategy not bad to practise. MHO

(08-10-2012, 10:50 AM)Musicwhiz Wrote: Hi Cityfarmer,

May I ask what you mean by "Rotate Funds" yet staying fully invested? I don't quite understand, sorry.

Rotate funds means cash-out existing ones, to invest into "better" ones. It can be done during bearish period or any other period when opportunity arises.

The strategy required a pre-designed portfolio allocation.

The mentor is Peter Lynch

(08-10-2012, 11:29 AM)CityFarmer Wrote:

(08-10-2012, 10:50 AM)Musicwhiz Wrote: Hi Cityfarmer,

May I ask what you mean by "Rotate Funds" yet staying fully invested? I don't quite understand, sorry.

Rotate funds means cash-out existing ones, to invest into "better" ones. It can be done during bearish period or any other period when opportunity arises.

The strategy required a pre-designed portfolio allocation.

The mentor is Peter Lynch

Sometimes, i did it even in very severed Bear market. Especially at the time i chickened out from injecting "fresh fund". i wish i had not chickened out like when i were much younger. Then this last "cycle" i would have profited at least 2 to 3 times more. Getting old is "no fun" investing in stock market. Can't afford to take more risk when we should. Kiasi liu?

(08-10-2012, 12:44 PM)Temperament Wrote:

(08-10-2012, 11:29 AM)CityFarmer Wrote:

(08-10-2012, 10:50 AM)Musicwhiz Wrote: Hi Cityfarmer,

May I ask what you mean by "Rotate Funds" yet staying fully invested? I don't quite understand, sorry.

Rotate funds means cash-out existing ones, to invest into "better" ones. It can be done during bearish period or any other period when opportunity arises.

The strategy required a pre-designed portfolio allocation.

The mentor is Peter Lynch

Sometimes, i did it even in very severed Bear market. Especially at the time i chickened out from injecting "fresh fund". i wish i had not chickened out like when i were much younger. Then this last "cycle" i would have profited at least 2 to 3 times more. Getting old is "no fun" investing in stock market. Can't afford to take more risk when we should. Kiasi liu?

Be "Kiasi" is a blessing in value investment, applies to both old and young investors

With advance in age, i hope i remain as "kiasi" if not more, but able to spot perceived risk over real risk, thus avoid missing real gem

(08-10-2012, 12:53 PM)CityFarmer Wrote:

(08-10-2012, 12:44 PM)Temperament Wrote:

(08-10-2012, 11:29 AM)CityFarmer Wrote:

(08-10-2012, 10:50 AM)Musicwhiz Wrote: Hi Cityfarmer,

May I ask what you mean by "Rotate Funds" yet staying fully invested? I don't quite understand, sorry.

Rotate funds means cash-out existing ones, to invest into "better" ones. It can be done during bearish period or any other period when opportunity arises.

The strategy required a pre-designed portfolio allocation.

The mentor is Peter Lynch

Sometimes, i did it even in very severed Bear market. Especially at the time i chickened out from injecting "fresh fund". i wish i had not chickened out like when i were much younger. Then this last "cycle" i would have profited at least 2 to 3 times more. Getting old is "no fun" investing in stock market. Can't afford to take more risk when we should. Kiasi liu?

Be "Kiasi" is a blessing in value investment, applies to both old and young investors

With advance in age, i hope i remain as "kiasi" if not more, but able to spot perceived risk over real risk, thus avoid missing real gem

i mean i started to invest in "Bonds" rather that all my investible fund in stocks. By the way, my "Bonds" investment is actually CPF. Actually i could have used all my CPF's investible money into stocks during the last severe Bear Market. Then like i said i used to do it when i were much younger. So i made 2 to 3 times more during those times. Now it seems protection of capital is more important then growth. That's the classic textbook's advice.
What say you?

(08-10-2012, 01:29 PM)Temperament Wrote:

(08-10-2012, 12:53 PM)CityFarmer Wrote:

(08-10-2012, 12:44 PM)Temperament Wrote: Sometimes, i did it even in very severed Bear market. Especially at the time i chickened out from injecting "fresh fund". i wish i had not chickened out like when i were much younger. Then this last "cycle" i would have profited at least 2 to 3 times more. Getting old is "no fun" investing in stock market. Can't afford to take more risk when we should. Kiasi liu?

Be "Kiasi" is a blessing in value investment, applies to both old and young investors

With advance in age, i hope i remain as "kiasi" if not more, but able to spot perceived risk over real risk, thus avoid missing real gem

i mean i started to invest in "Bonds" rather that all my investible fund in stocks. By the way, my "Bonds" investment is actually CPF. Actually i could have used all my CPF's investible money into stocks during the last severe Bear Market. Then like i said i used to do it when i were much younger. So i made 2 to 3 times more during those times. Now it seems protection of capital is more important then growth. That's the classic textbook's advice.
What say you?

What i say is to put all investible money into stocks during the last severe bear market (at right stock and price) is less risky than putting them into bond (in term of capital preservation due to inflation over long term)