Bear Share

Bear Sharing - (02/13/2023)

Hello, Teacher James:

After experiencing the rise after buying during the COVID-19 pandemic, and the correction that began three days after going all-in on credit at the peak just as the Russia-Ukraine war broke out, this has truly been an amazing experience, because in such a short period of time I have tasted the full range of sweet, sour, bitter, and spicy moments. I also often observe my inner feelings and thoughts. Having come through this journey with the guidance of my mentor, I will have stronger abilities, knowledge, and psychological resilience for future investments!

In the future, my case can definitely help many hardworking laborers and inspire both young people and middle-aged and older individuals! First, I did not come from a wealthy family that could help with a house down payment or starting a business; I had to earn everything through my own efforts. Second, my job was not in the high-paying semiconductor or finance industries; it was just an ordinary managerial salary to support my family. Third, I did not have a favorable network background to help start a business. Fourth, I started investing in indexes with very limited funds. Fifth, I am already middle-aged in the workplace and cannot compete with younger colleagues. Sixth, I do not possess extraordinary intelligence, eloquence, or appearance. Seventh, I often suffered from office politics and was taken advantage of in the workplace...

Optimistic people see opportunities and wealth. Amid a bunch of adverse factors, I see life over the next 10 years and even after retirement. These adverse factors can be overcome by diligently executing strategies such as saving and investing in indices, holding firmly without selling, managing capital risks, and using credit pledges, leading to successful cases of a prosperous retirement life. This will provide powerful motivation and examples for many office workers. Even after I retire, I can teach index investing everywhere, bringing hope and knowledge to many hardworking salaried employees, helping them emerge from the collapse of labor insurance and exploitation by capitalism.

In the situation of retiring in approximately 12 years, the strategy I plan to implement is as follows. I would like to ask the teacher if there are any omissions:

1. Continue to hold the QQQ position that has already been sub-delegated without selling.

2. Place an order on the first trading day of each month, continuously increase by NT$6,000 to buy 00662 (QQQ) and 00646 (SPY), totaling NT$72,000 per year.

3. Additionally, save 200,000 each year starting in January of the following year, and invest it gradually at the beginning of each month over a period of 6 months. This can also help avoid having no money available in case of an emergency.

4. Additionally, prepare an account that always has household savings for more than six months. I think this will make you feel very stable when facing market corrections.

5. In the future, when there is a market correction of more than 25%, moderately borrow from the bank to invest in the stock market, but it is essential to ensure that after deducting monthly expenses and loan repayments, there is still enough money for daily living without affecting the usual lifestyle. Additionally, the investment should be spread over 6 months to complete the deployment, because I don’t know when the market will bottom out.

6. When the asset position rises to 10 million, I will already qualify for being 'supported by the bank,' allowing me to pledge 4% per year, about 400,000, for living expenses, which is roughly 33,000 per month. At the same time, I can appropriately use this 400,000 to increase my investment in QQQ/SPY. After five consecutive years, when the pledged amount reaches 20% of the total assets in the first year (2 million), I should no longer take excessive risks.

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7. As assets continue to grow, when they rise to 20 million, pledging 4% annually amounts to 800,000. With statutory retirement pensions added, it is estimated that the monthly income will reach over 90,000. Without the pressure of a mortgage, life in Taiwan can actually be quite comfortable.

Thank you, teacher, for your guidance since I started attending classes at Fu Jen University.

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Reply

Hi Bear

At market highs, try to reduce the proportion of staking as much as possible or avoid borrowing altogether and hold cash positions; only at market lows will you have the strength to increase your positions.

The lower the market, the greater the market fear. Investors should be proactive, cash positions can be reduced, or the pledge loan ratio can be increased. At market lows, one should bravely increase positions, invest all available funds, and the pledge ratio can be up to 20%.

1. Usually at the market fear lows:

Conservative Investors (Cash): (Stock Assets): 0%-10%: 100%-90%

Aggressive investor (highest cash liabilities to total liabilities ratio): (stock assets): 20%: 80%

2. After the market rise goes through several years of fear-induced lows, it rises more than double from the bottom:

Conservative Investor (Cash): (Stock Assets): 10%-20%: 90%-80%

Aggressive investor (cash liabilities total liabilities): (stock assets): 10%:90%

3. When the market rises, it increases more than four times from the bottom (the probability of the market falling by more than 50% increases).

Conservative Investor (Cash): (Stock Assets): 20%-30%: 80%-70%

Aggressive Investor (Cash & Liabilities / Total Liabilities): (Stock Assets): 0%-10%: 100%-90%

The above ratios are only for reference in principle; everyone should find the investment asset allocation that they are comfortable with.

Be brave to buy at the market lows; reduce borrowing and increase cash holdings at the market highs.

James