What to do if recession hits

Joined
Feb 6, 2019
Messages
100
Reaction score
0
I read that most investors have a "warchest" ready in the event/hope of a market crash.

1. How big is your "warchest" in proportion to your total portfolio?
2. How should we invest this lumpsum? If say the market drop by 20%, will you activate all at once? Or "DCA"? Or continue waiting?

Sorry if this question has been answered before.
 

JuniorLion

Supremacy Member
Joined
May 15, 2017
Messages
7,829
Reaction score
39
Convert all your investment cash accounts into margin accounts.

When recession hit, and when you are sure it's the bottom, dump in ALL your cash at hand, your CPF-OA account monies, as well as go borrow as much as you can (use your margin facility to the maximum) into the stocks.
 

Doc Madatay

Master Member
Joined
Jan 22, 2019
Messages
4,067
Reaction score
349
60% cash 40% stock
Waiting damn Long already still no crash
Above inclusive of me invested 5% a few months back when market was near previous bottom
 

Toni90

Senior Member
Joined
Mar 18, 2017
Messages
928
Reaction score
2
I read that most investors have a "warchest" ready in the event/hope of a market crash.

1. How big is your "warchest" in proportion to your total portfolio?
2. How should we invest this lumpsum? If say the market drop by 20%, will you activate all at once? Or "DCA"? Or continue waiting?

Sorry if this question has been answered before.

This warchest thing is ********. just to keep people reading their blogs and hoping to make money some days.

If someone know how to buy at the bottom then he should know how to sell at the top. Keep warchest for what?
 

touchring1

Supremacy Member
Joined
Jul 24, 2003
Messages
5,863
Reaction score
1,557
Talk very easy, buy high is very easy to do. We are famous for this. Remember soon after the financial crisis started, bank stocks started falling, we spent don't now how many tens of billions bying bank stocks. Talking about catching falling knife, the stocks went down even more until like bankrupt.
 

Shiny Things

Supremacy Member
Joined
Dec 13, 2009
Messages
9,415
Reaction score
607
I don’t keep a war-chest. Two reasons:

1) I wouldn’t know when to invest it. Like people have said upthread, how do you know when the bottom is?
2) While it’s not invested, you’re missing out on gains from the market going up, and you’ll probably end up capitulating and buying when things have already gone up instead of buying before things go up.

You’re better off just regularly dollar-cost-averaging in, and staying invested in a mix of stocks and bonds.
 

peacefulday

Senior Member
Joined
Feb 1, 2013
Messages
936
Reaction score
29
During the ex financial crisis, and I started to scoop Lehman bro bank at bottom, fortunately its went bottomed before my entire funds all in. :)
 

focus1974

Great Supremacy Member
Joined
May 12, 2007
Messages
74,349
Reaction score
20,507
Convert all your investment cash accounts into margin accounts.

When recession hit, and when you are sure it's the bottom, dump in ALL your cash at hand, your CPF-OA account monies, as well as go borrow as much as you can (use your margin facility to the maximum) into the stocks.

Wow.. Go Big or Go Home! :s13::s13:
 

limster

Arch-Supremacy Member
Joined
Oct 31, 2000
Messages
11,421
Reaction score
2,432
It also depends what you view as 'war chest'. Some view SSB holdings are part of war chest, and some don't. I feel that SSB holdings are part of warchest as they still easily accessible.
 

revhappy

Arch-Supremacy Member
Joined
Mar 19, 2012
Messages
11,451
Reaction score
2,063
I don’t keep a war-chest. Two reasons:

1) I wouldn’t know when to invest it. Like people have said upthread, how do you know when the bottom is?
2) While it’s not invested, you’re missing out on gains from the market going up, and you’ll probably end up capitulating and buying when things have already gone up instead of buying before things go up.

You’re better off just regularly dollar-cost-averaging in, and staying invested in a mix of stocks and bonds.

Your second point, I have a counter point to it: So you are saying people will capitulate and end up buying at the top, but if people stay invested and you have a long drawn bear market, the same people could capitulate and sell at the bottom.

We have had a straight up going market aberration for last 10 years, so people are trained to BTFD and think it is a sure shot win. It is a bit like the Australian property market, people thought it is only one way and up. Now it is disbelief that property prices can fall too. I see the same thing happen to US stock investors. Won't say same thing for other region stocks, because they didn't even participate much in the upmove.
 

Geeezz

Arch-Supremacy Member
Joined
Sep 20, 2010
Messages
13,243
Reaction score
188
Your second point, I have a counter point to it: So you are saying people will capitulate and end up buying at the top, but if people stay invested and you have a long drawn bear market, the same people could capitulate and sell at the bottom.

We have had a straight up going market aberration for last 10 years, so people are trained to BTFD and think it is a sure shot win. It is a bit like the Australian property market, people thought it is only one way and up. Now it is disbelief that property prices can fall too. I see the same thing happen to US stock investors. Won't say same thing for other region stocks, because they didn't even participate much in the upmove.

talking abt aus property mkt, sg property mkt ppl also think it will only go up:s22:
 

limster

Arch-Supremacy Member
Joined
Oct 31, 2000
Messages
11,421
Reaction score
2,432
inherently, bond investment is the warchest

i assume that most Singaporeans, after paying off their housing loan, will be accumulating some savings in SSBs (up to $200k), which also act as the warchest.

On the other hand, there are probably some that can tolerate a lot of risk... not only no SSB savings, they are leveraging to the max in order to increase their potential returns.

No right or wrong answer, whatever suits your risk profile. having warchest helps me sleep better at night as warchest can also be emergency funds :s13:
 

BBCWatcher

Arch-Supremacy Member
Joined
Jun 15, 2010
Messages
20,129
Reaction score
3,019
We have had a straight up going market aberration for last 10 years....
No, we haven't. The U.S. S&P 500 (roughly half of global investable stock market capitalization) fell 19.8% from September through late December, 2018, which wasn't that long ago. That recent drop is classified as a huge correction and is barely removed from the widely accepted formal definition of a bear market (a decline of at least 20% peak to trough).
 

revhappy

Arch-Supremacy Member
Joined
Mar 19, 2012
Messages
11,451
Reaction score
2,063
No, we haven't. The U.S. S&P 500 (roughly half of global investable stock market capitalization) fell 19.8% from September through late December, 2018, which wasn't that long ago. That recent drop is classified as a huge correction and is barely removed from the widely accepted formal definition of a bear market (a decline of at least 20% peak to trough).

If only that fall lasted long enough, but no we had a v shaped recovery because passive guys did BTFD. So now we are back to overpriced levels.
 

touchring1

Supremacy Member
Joined
Jul 24, 2003
Messages
5,863
Reaction score
1,557
If only that fall lasted long enough, but no we had a v shaped recovery because passive guys did BTFD. So now we are back to overpriced levels.


With US election coming, market likely go zigzag up and down for some time. For those who are waiting very frustrating. Those who HODL also very sickening to see such big swings. Likelihood of cut loss in one of the fake correction is very high.
 
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top