And truth be told, I don't feel very much panic.
I do have some fears and doubts, but generally, I'm pretty chill.
Maybe cos I have zero losses at this point in time.
My main concern is just when to pull the trigger.
I already said, I've been waiting for this event for 6 years.
So yes... I have "lost" 6 years of potential returns.
And the question is, would I rather have lost potential returns for the past 6 years.
OR would I rather be invested and be sitting on losses now?
I wrote about Defending My Position here.
I'm not sure if I wrote about this before... but...
In 1998, I watched the Asian Financial Crisis. I was 16. I saw markets get smashed. And I thought, "If only I had an investment account and money, I'd put all my money in, cos it's so easy to make money. Everything is sure to recover."
Fast forward to 2008, I was 26, I had an investment account and some money, the market dropped 20%, wahhh Great Singapore Sale... ALL IN!... I put all my money into the markets and the markets continued to fall. I was sitting on 40% paper losses. I don't know if there were more losses cos after 40%, I didn't dare to look at my portfolio total so I never knew if it dropped further. I just didn't look at it anymore and went on with my daily life. Few months later, I looked at my portfolio and it was positive.
I told myself, NEVER AGAIN.
Here's the maths.
Let's say Stock X is $100 before the crash. If you invest $1,000, you get 10 shares before the crash.
If you invest when it has dropped 20%, you will be able to buy 12.50 shares.
If you invest when it has dropped 50%, you will be able to buy 20 shares.
5 years later, the market has recovered and Stock X is now worth $130.
For someone who bought before the crash, they earned 30%.
For someone who bought when the price was 50% down, their return is 160%.
Of course no one is able to perfectly predict the bottom, so you have to pick your own % where you think is reasonable to buy.
The lesson that I learnt in 2008 was, I was too early. And instead of earning >116%, I only managed to get 62.5%. (This is an example)
So now, the year is 2020... I'm 37+.
I think I'm probably one cycle ahead of my peers. Cos I was watching the markets when I was 16 cos of my dad. That's the first time I was exposed to a market crash. So that's my theory lesson.
And in 2008, it was my first practical lesson.
Whereas for most of my peers, their theory lesson is 2008, and this Coronavirus crash is their first real practical session.
Whereas this crash is my 2nd practical cycle so I'm a bit more chill.
This made me feel really "Uncle", cos I think my mental state is closer to the 47+ year old folks.
So when my friends ask me, "Eh why like that ar? How? Will it get worse?"
Truthfully, I don't know and I don't care. To me, the market movements don't mean anything. I've set some price targets and I'll buy it they get hit. I don't think about WHY.
Cos it's not something I can control.
I only think about WHEN, cos that's something that I am in control of.
Now, by all means, don't think that I'm absolutely "yaya" (arrogant) about this.
I still am excited and nervous about the whole crash.
I'm still fearful and doubtful about the downturn, and when it will recover.
And when I will be deploying my capital.
We all have the "same" information. But the execution will differ.
I may end up being wrong. Or maybe my execution wasn't done well. Or I may buy the wrong things?
For most of us, we know that this is short term. It will eventually recover. The question is WHEN and HOW LONG?
Every time we go through one cycle, we are supposed to learn and gain more experience, so that we can handle the next cycle better. Maybe be in a better state of mind, better at timing, better at execution, better at whatever, maybe sleep better as well.
It's the same for any other lesson.
First you take a theory lesson, then you have your first practical lesson. Then you may do well or not so well. Then you get a second practical, then a third...
And hopefully, we all get better after each lesson.
But in the meantime... Relax la... Don't so ganjiong.
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