Using the rebound to take a breather and reassess

I did my last bit of investing today morning in the Singapore market just to catch the fall then. Mostly to buy the dip on the individual stocks, equity and REIT ETFs in my portfolio. I thought the market would continue to fall in the afternoon but it started to go back up.

And my last batch of limit positions couldn’t go through so I just let them expire for the day. No point chasing an uptrend. When the European markets opened in the evening with such a strong start, I figured it’s probably a rebound so I can stay out from manual investing for the rest of the day.

I had already made funds transfers into my robo-advisor accounts last night that should be invested when the London and New York markets open today evening and night respectively. This is just in case the developed markets continued to fall. But when it rebounds, it’s still fine because these are not large amounts of funds transfers.

Not a bad thing to have what I call a rebound day. Nothing significant has changed with the virus situation and global economy. But just that buyers are piling back in to buy the dip and push up the prices. This is the time for me to stop any manual investing and funds transfers into my robo-advisor accounts.

Take a breather, calm myself down and remind myself to be patient. Most importantly, this is when I reassess how my strategy is working and whether there needs to be any changes. Not in the overall approach but in the way I execute it. Because it’s difficult to have clarity when things are moving so quickly in the markets. It’s easy to fall into the trap of being too aggressive or too passive.

I have been asked about the size of my investment cash after writing about investing my 1st batch of S$100,000 into the markets. I have always said on my blog that I keep a large cash balance but I admit that I haven’t been forthcoming with its size.

If you are a regular reader of my blog, it’s possible to piece together the size of my cash balance. Not because I intentionally drop hints on it but I do write often about my asset portfolio, asset allocation and net worth.

My wife and I have been working for a decade since 2010. We have been investing in bits and pieces from the beginning. Seen some bear markets but mostly bull markets. Went through a few crises but nothing as scary as the Global Financial Crisis of 2007/2008.

In these 10 years, we have learnt these lessons about ourselves. Just a few simple ones that have served us well as time passes:

1. We are bad at individual stock picking. So terrible that we are still averaging down on the shitty stocks in our portfolio in the hope that we can sell them off in the future at higher prices. And hopefully break even.
2. We are good at buying ETFs. They can be purchased automatically using monthly investment plans and regular funds transfers into robo-advisor accounts. Manual purchases happen when there’s big downward price movements.
3. We are good at finding stable and decent-paying jobs relative to hours spent at work and overall work environment. Career navigation is where we spent the most of our time on because we know this is going to have a far more significant impact on our lives. In terms of everything from personal finances, investing to family planning.
4. I’m good at strategising plans and bad at executing them. My wife is good at executing plans and bad at strategising them. Together, we are able to take high risks and make opportunistic moves. We find what works for us and we just keep going at it until we improve. And we learn from everyone around us that we are close to.

We understand that timing is crucial to building wealth. In the Global Financial Crisis of 2007/2008, the markets went into free fall and prices dropped by so much over a period of several months. We were students then and had no cash to invest.

In the subsequent crises since starting work as graduates in 2010, we had some cash savings but nothing significant. As our careers progressed and salaries went up, our cash balances increased gradually over time. In the last crisis of 2016, our pay was decent and we had a big cash balance. But we were too passive with our investing. We bought the dip but didn’t deploy our cash funds sufficiently.

It has mostly been a waiting game since. For a big fall in the markets to coincide with an even stronger earning power and bigger cash balance. With a more aggressive strategy on cash deployment. It’s taken us 10 years of making dumb mistakes to get to this point. I’m 34 and my wife is 32 this year. We still don’t have much life experience in any way. But we are good at learning and improving together.

So here we are at this point in time. We have 3 batches of S$100,000 to invest, one batch for each of the three phases i.e. S$300,000 of investment cash. We have already used up the 1st batch of S$100,000 so we have S$200,000 of investment cash left. And we have an additional S$200,000 of spending cash to keep ourselves afloat for 2 years if we end up losing our jobs in a long drawn-out recession.

No point investing at the right time in a bear market but having to cash out our investments at depressed prices because we have no monthly income to meet our household spending and regular investment plans. We have to get to the bull market for the investments to pay off.

If both of us can keep our jobs, we will invest that last portion of S$200,000 into the markets in the final phase. Because we won’t need the spending cash to survive since our monthly salary income is more than enough to maintain the household spending and regular investment plans.

If one of us lose our jobs, we will invest only S$100,000 instead. Because our monthly salary income will only just be enough to maintain the household spending and regular investment plans. And we may have to draw down on our spending cash to survive.