Thursday, October 16, 2014

How do you feel in a jittery stock market?

I noticed a big difference in how I handled the bearish stock market sentiments recently. STI had fallen from a high of around 3300 in early-mid Sept to about 3160 in mid October 2014, roughly about 4%. STI closes on 2nd Jan 2014 (the first trading day of this year) at 3180 and now it's slightly under, wiping all all the gains made so far.


Market is getting more delicious 

How do I feel?


Nothing. Is it calmness or simply bo chup? A bit of both I think. If anything, it's slightly hovering on a excitement, because I can get some company at a bigger discount. I remembered vaguely I was quite agitated when I saw that my portfolio drops a few k per day during the deepest parts of the bear market. I was just trying to see if I should cut loss to preserve my limited capital. From thinking how to survive then, I am now trying to see how I should capitalise and thrive during bearish market. It's a 180 degrees change in mentality.


Just fire slowly. Everyone has limited bullets, so getting it all in isn't going to be good to your psychological well-being. So what should we do?


Shortlist a few companies and do the necessary due diligence. Determine the key levels of support or key levels of acceptable yield to buy in. Look and account for how much capital you have (remember to set aside some liquidity for emergency uses). Apportion your capital into several tranches and buy slowly at these key points, close your eyes, and just wait. It's hard not to do anything, I know. Just imagine you are depositing this amount of money into a fixed deposit and you can only look at it 3 to 5 yrs from now.

20 comments :

Richard Ng said...

So, looks like your war chest is getting ready to come out and play! ;-)

la papillion said...

Hi Richard,

Ya! Still accumulating every month as we speak :)

Createwealth8888 said...

Marathon race. Buy slowly. Really slowly. LOL!

la papillion said...

Hi bro8888,

Agree..worst case might take several months to play out the bear market. No point so fast show hands!

temperament said...

Not yet! Not yet!
Always buy and sell too early one.
Believe me after i bought in a confirmed bear market until i became a "lock tang chi", my portfolio still could lose 30 to 50 %.
It really happened to me more then once. Definitely can go below 25% to 30 % easily even you when buy in a Bear market.
You can don't believe me. That means you are so much better than me in the market.
Congratulations then.
On the hand blame no one but yourself if you misses the opportunity in the market.
Shalom.

Sillyinvestor said...

Hi LP,

So it's confirmed. Even seasoned investors cannot be completely zen about market movements. We no longer lose sleep or get overly excited, but itchy finger urge still come. It is true for me.

I was very surprised when another seasoned investor blogger blog about his dilemma, I thought season investor already as calm as water...

Haha, no matter how good one eyesight is, what can never see the mountain clearly when he is in the mountain. LOL.

Createwealth8888 said...

Depending.

Lightly seasoned, mildly seasoned or heavily seasoned.

LP is heavily seasoned.

LOL!

la papillion said...

Hi temperament,

You don't use charts right? Haha, I use charts to help me aim where to attack. So if it still drops, I'll go down to defend at a lower price level, until I run out of bullets. Maybe can fire 2-3 rounds per enemy, but also depending on how pricey that enemy is lol!

I'm all prepared to sink 50% in portfolio LOL

la papillion said...

Hi silyinvestor,

Different levels of calmness haha! I rmb my first bear, I too stunned to do anything and I tried to sell off to cut loss. Second bear I ignore everything and didn't even look at the market. Hopefully the next bear I can buy to capitalise on price weakness, then IGNORE everything LOL!

la papillion said...

Hi bro8888,

I eat too much salted fish lah, that's why so heavily seasoned HAHAA

Low Paul said...

hi, for me, much the same, using dividends to buy more new stocks, except that can buy more for same amount of dividend.
maybe when ebola becomes an epidemic, then game plan change

la papillion said...

Hi Paul,

I hope the epidemic is not going to materialise! Sure, there's opportunities to make money, but there'll be a lot of suffering...I'll rather make less.

Through sillyinvestor, I read your philosophy in investing. Good sharing!

Kyith said...

hope silly is not talking about me. this is a good article. shows how experience can help a person. for now.

la papillion said...

Hi Kyith,

Actually, let me go through one cycle of bear market where I actually DID capitalise on it, then I can live to tell the tale LOL

temperament said...

Hi la papillion,

Charts?
i use everything i fancy and can understand lol. But still can kena one.
But don't worry (thank God), i don't lose money but don't know whether i have beaten STI ETF or not lol. Or STI INDEX lol? i am still learning.
But even can't beat STI INDEX it's O. K. . DIY is more "Song" then passively buying STI ETF only. As long make some money.
"HUA HEE TOO HO"

My 15HWW said...

Hi LP,

Good for you! =)

I started my investing journey in late 2010 when the STI was hovering at around this level so it's like back to square one!

Admittedly, I haven't gone through a bear market, so I can't say I am "experienced" and I am feeling the tug of greed and fear these couple of days.

Interestingly, I do realise that I was calmer even when STI dipped below 2,700 in late 2011. We are still some way off that even now.

Guess that's because the portfolio was much smaller then and I had proportionally more bullets than I have now.

Still very much learning... =p

la papillion said...

Hi temperament,

Oh, I thought you FA one, didn't know you're rojak investor :) Haha!

la papillion said...

Hi 15HWW,

Well, everyone have to go through this stage. No matter how many books or how many stories you've heard, you've got to try out a bear market to really really know your own risk profile :) Are you the type who gets jittery when the market drops 50%? How you react to greed/fear will shape you for the next bull/bear cycle :)

temperament said...

Hi la papillion,
" Are you the type who gets jittery when the market drops 50%? How you react to greed/fear will shape you for the next bull/bear cycle :)"

Unquote:
You are certainly correct. i know 2 accountants to a top banker to blue collar workers who are not "suitable" to invest in the markets.
i also know some relatives through marriage who follow "The Herd Instinct" every time. Of course the initiators (sharks & buayas) of "Herd instinct" are the people who make money from us - the ikan billis.
Ha! Ha!
This remind me about the Remora
Especially swimming with the sharks specie.

la papillion said...

Hi temperament,

Agree, some pple are just by nature very gan cheong. If the heart and mind is not stable, it's going to be one emotional ride up and down. These pple are better off putting their money in passive STI ETF :)

That being said, I'm very glad that I participated in the market. It taught me many things in life. A lot of things are cyclical :)