CY09 portfolio

[CityFarmer]

So yes, a bear market and severe market plunge will test everyone's process, and also everyone's mettle and resolve.

IIRC, VB was incepted in 2010 and its 'only major' crisis to date was the Euro and US fiscal fiasco that seemed to be like ages ago. Looking forward to the interesting REAL time case studies in VB that will present itself when depression hits (especially on what happens to those who are adamant to be 100% invested at all times as their stock picking/diversification or whatever competitive moat they believe to possess, will provide the hedge...in other words, my question is 'what would be your emotional hedge?)

I am probably one of those highlighted, who are "adamant to be 100% invested"

I have gone thru the 2008/2009 cycle, with portfolio value slumped to half. I am glad I survived, and have a good feel on what a crisis like

Emotional hedge? Good point raised...Hmm...

[corydorus]

So yes, a bear market and severe market plunge will test everyone's process, and also everyone's mettle and resolve.

IIRC, VB was incepted in 2010 and its 'only major' crisis to date was the Euro and US fiscal fiasco that seemed to be like ages ago. Looking forward to the interesting REAL time case studies in VB that will present itself when depression hits (especially on what happens to those who are adamant to be 100% invested at all times as their stock picking/diversification or whatever competitive moat they believe to possess, will provide the hedge...in other words, my question is 'what would be your emotional hedge?)

I am probably one of those highlighted, who are "adamant to be 100% invested"

I have gone thru the 2008/2009 cycle, with portfolio value slumped to half. I am glad I survived, and have a good feel on what a crisis like

Emotional hedge? Good point raised...Hmm...

If u r fully invested. It will be trying to sleep with half portfolio down won't it be ? Would having significant portion in some fixed returns help buffer this emotional impact ?

[CityFarmer]

So yes, a bear market and severe market plunge will test everyone's process, and also everyone's mettle and resolve.

IIRC, VB was incepted in 2010 and its 'only major' crisis to date was the Euro and US fiscal fiasco that seemed to be like ages ago. Looking forward to the interesting REAL time case studies in VB that will present itself when depression hits (especially on what happens to those who are adamant to be 100% invested at all times as their stock picking/diversification or whatever competitive moat they believe to possess, will provide the hedge...in other words, my question is 'what would be your emotional hedge?)

I am probably one of those highlighted, who are "adamant to be 100% invested"

I have gone thru the 2008/2009 cycle, with portfolio value slumped to half. I am glad I survived, and have a good feel on what a crisis like

Emotional hedge? Good point raised...Hmm...

If u r fully invested. It will be trying to sleep with half portfolio down won't it be ? Would having significant portion in some fixed returns help buffer this emotional impact ?

Will you sleep well with portfolio value downed by half?
I slept well during the last crisis, and continue to buy with new money. I don't know why I slept well. I guess may be the conviction that the vested companies wouldn't bankrupted due to the crisis, although I had no idea when was the recovery then.

Why not buffer the emotional with fixed income allocation?
I don't brush off the merit of asset-allocation on different asset classes. I started off with WB's style, then Peter Lynch's. Both believe in equities over fixed incomes. Why not buffer the emotional with it? I guess I have more emotional issue, with the opportunity cost of fixed income, over crisis. One is a sustained pressure, while the other is one in a long while.

[weijian]

So yes, a bear market and severe market plunge will test everyone's process, and also everyone's mettle and resolve.

IIRC, VB was incepted in 2010 and its 'only major' crisis to date was the Euro and US fiscal fiasco that seemed to be like ages ago. Looking forward to the interesting REAL time case studies in VB that will present itself when depression hits (especially on what happens to those who are adamant to be 100% invested at all times as their stock picking/diversification or whatever competitive moat they believe to possess, will provide the hedge...in other words, my question is 'what would be your emotional hedge?)

I am probably one of those highlighted, who are "adamant to be 100% invested"

I have gone thru the 2008/2009 cycle, with portfolio value slumped to half. I am glad I survived, and have a good feel on what a crisis like

Emotional hedge? Good point raised...Hmm...

I slept well in 08/09 crisis too. But on hindsight, i think it was more because of ignorance rather than 'sage-like' confidence. From then to now, personally, alot of things have changed. For one, my own portfolio size has tripled in absolute amount with all the capital injection in the last 6 years - It is harder to sleep well with a 50% lost on 100dollars, over a 50% loss on 10dollars. Pride has exponentially multipled and so I thought it is really easy now for me to fall into what Musicwhiz termed as the "hot-cold empathy" gap (hey! all the books and training i have had, is going to hold up when the Fat Lady sings!) Finally, external conditions like the amt of leverage and commitment levels (wife, family, kids, elderly parents, expensive wine) have all changed over the last 7 years.

In other words, i consider the next crisis a whole new ball game, even though i had survived the last one in 2008. Of course, some fundamentals principles remain but i recognize that the risk is always in the things that i have not prepared for/thought of.

[starcraft_76]

I failed badly during the last crisis in year 2008/2009, and end up having negative equity due to over leverage.

Thank to my family support, I had since recovered from the loss and manage to make some nice profit purely due to some good luck.

Time will tell whether I am any wiser when the next crisis come..

[Temperament]

"It is harder to sleep well with a 50% lost on 100dollars, over a 50% loss on 10dollars."

Unquote:
i think this is the gist of sleeping well at night or you are psychologically prepared.
Yes, it is another way of saying you are prepared for whatever the market is going to do to you before it can do anything to you. Why of course your asset allocations comes into play.

Sorry, i have to admit the first time i put almost all our wealth into the market (never read about asset allocations then) and the market tanked i did not press the panic button though i was apprehensive because i might be wrong in my principles of belief that the market always survives and comeback.

My wife was quite sad and resigned herself to "fate". So i remembered when the market started just recovering, i quickly took some profits (aka due to fear then i suppose and lack of knowledge and experience). My 1st remisier (Edmond Wong IIRC) who was the CHIEF of Remisier Association remarked then, "Why sell, market just moves". These were all part of mine paying "tuition fees" to the market when i was a green horn. The funny thing is i am still paying though the amount may be lesser (i hope only).
My wife not interested in investing at all till this day. But i always let her tag along in our investment journey. That she may not be caught by surprise if i leave this world first.
Pardon me! All OLD MAN have a lot story to tell. Hope you are not bored by OLDMAN
Shalom.

[corydorus]

Ha Ha Each go through their own battle scars. I was kind of "shock frozen" in 2008 to do much. So i did not sell much nor buy much during that intense period.

As the market was recovering, due to recurring saving and strengthen portfolio, i ploughed more into the markets and ends up stronger.

With much higher asset today and nearer to retirement, I may find myself even harder to sleep on 50% portfolio down on full equity investment. Hopefully i will "Froze" again if another major crisis happens at least i won't lose. To gain from it is another matter.

[shn]

There is time to be aggressive and fully vested and there is time to be conservative and keeping more cash. With the bull running for close to 6 years (since February 2009), I am more conservative now.

[Temperament]

I failed badly during the last crisis in year 2008/2009, and end up having negative equity due to over leverage.

Thank to my family support, I had since recovered from the loss and manage to make some nice profit purely due to some good luck.

Time will tell whether I am any wiser when the next crisis come..

We all know leverage is like a double edge sword. It is not so easy to use.
We were a below average to a slightly above average wage earner during our later years of employment. We very rarely used leverage unless it was an employee's benefit. Meaning as long as you worked in the company, the company would bear (pay) the loan's interest for you. That was how we used "leverage" to buy a new car. i tried to use it for buying a private house but there were too many rules and regulations and our own fear.
Of course if you use it correctly, you will be double or triple richer, quicker then those who don't use.
Till today, i still can't figure how to use leverage (OPM) without jeopardzsing MOM(my own money).
We are like the tortoise in the "Tortoise & the Hare" fable.
But it is only a fable.
There are many successful hares too.

[CityFarmer]

I slept well in 08/09 crisis too. But on hindsight, i think it was more because of ignorance rather than 'sage-like' confidence. From then to now, personally, alot of things have changed. For one, my own portfolio size has tripled in absolute amount with all the capital injection in the last 6 years - It is harder to sleep well with a 50% lost on 100dollars, over a 50% loss on 10dollars. Pride has exponentially multipled and so I thought it is really easy now for me to fall into what Musicwhiz termed as the "hot-cold empathy" gap (hey! all the books and training i have had, is going to hold up when the Fat Lady sings!) Finally, external conditions like the amt of leverage and commitment levels (wife, family, kids, elderly parents, expensive wine) have all changed over the last 7 years.

In other words, i consider the next crisis a whole new ball game, even though i had survived the last one in 2008. Of course, some fundamentals principles remain but i recognize that the risk is always in the things that i have not prepared for/thought of.

That are valid points. Things change with a crisis cycle of 7-8 years. A new crisis will never be the same again for each individual.