Friday, October 17, 2014

Prepare yourself mentally for bear market

For those of you who had not seen a real mother bear striking down at the market, here's a sneak preview from the past. Unfortunately, I've lost some of the pics when the server I've uploaded them crashed and died. The pictures I saved is meant to serve as a reminder for me when the next bear comes...which might be now.

This one is taken from 2009 Sept 10.



Just look at the Nasdaq and SP500, you'll see why we haven't reached 'there' yet.


This one is for STI. A drop of 5.61% in one day is no joke.



Lastly, this is for the rest of the exchange. As you can see, it's not called the global financial crisis for fun.


Can you stomach this kind of draw-downs in your portfolio value? Surviving is one thing. You must also thrive in this environment. That's how the cash-rich gets richer in every financial crisis. START saving up your warchest now!

11 comments :

B said...

Hi LP

Thanks for this post.

I think it serves a good reminder that the worse can really happen we will just need to enter slowly and really slowly....

Singapore Man of Leisure said...

LP,

That's how I learned the hard way to take some money off the table during a bull market.

No bullets during a bear market very "boring"!

la papillion said...

Hi B,

Np, it's a good advice to get in real slowly. No rush..but the impt thing is to act at some pt, haha!

la papillion said...

Hi SMOL,

Ya, I went through that once but forever remembered the lessons - crisis is only good if you've cash :)

Money Honey said...

Remember of Greed; its presence is in both bull And bear markets.

In a bear market, it is blind spot.

Greed for margin of safety. Everyone want big, bigger, biggest mos.

Greed for the bottom of a long waited correction which is mistaken as market crash. Start to nibble along the way down rather than missing out the opportunity just because of greed.

Greed and totally forgotten of fundamentals; bad mistake indeed.

la papillion said...

Hi Money Honey,

Well said well said. Thanks for reminding all of us that greed can come in different forms in bear and bull market. A very good reminder indeed.

Richard Ng said...

LP : Thanks for sharing some of the crimson historical bear stats.. I guess it is just cycles and it comes and goes, comes and goes, come and goes... ;-)

Sillyinvestor said...

Thanks LP,

I am not sure if my mermory served me correctly, but Bulls climb a wall of worry, and is rather slow, stretching over years.

Bears then to overkill but lasted only 1-2 years.

2008 -2009, the GFC minus the peak and trough about 2 years?

2000- 2003 911 event, SARS and the onset of gulf war 2, also 2-3 years followed by bull run.

AFC -1998. Also a v-shape rebound.

Minus the top and bottom, the windows for u to act is only about 18 months ...

Plenty of opportunities 2-6 years to nibble in bull markets, but window small for bear...

Fully vested school of thoughts of people earn much lesser in bear but more in bull. War chest school of though earn more in bear ...

Super farmer that catch bear bull correctly become legends ...

la papillion said...

Hi Richard,

No problem :) It's especially for those who might have funny ideas of how investing would never results in losses!

la papillion said...

Hi SI,

Yup, bulls climb up a wall of worry and bears slide down in hope :)

I've never seen it in this perspective before, so thanks for sharing with me! I think bears have a narrower timeframe because the market drops much faster than it rises. I think traders prefer to short because the money comes in fast and furious.

Good sharing :)

ntuchartist said...

Yes, I can remember those days vividly. I was vested back in those days and can really feel the fear in the market (or rather in myself)

News were so bearish everywhere and it really feels like doomsday, everyday.

But soon enough, when it really feels like the world will never recover, the market recovering slowly and steadily.

Nonetheless, I feel that holding cash now and waiting for those times to come again will be well worth it!

I'm bearish next year. I got a strong feeling China will be the economy that will trigger it off.