My first bear market and I'm sleeping tight

[europeanwizard]

Hi folks,

When I started freelancing about five years ago, I knew I had to step up saving and investing. First for the inevitable drought in work, and second because I'd no longer have a employer-provided pension.

A lot of blogs were touting Buy & Hold 100% stocks portfolios. But from what I read about investing, the big problem with Buy & Hold was the human factor. I read some more and saw people mentioning anxious partners, ulcers and sleepless nights during the '08-'09 crisis. When I found out about the PP, I figured this might be worth a shot.

I started with an EU PP, and later moved the stock portion to 25% global stocks, then added a VP with some bitcoin and P2P lending. Last week, I calculated my losses YTD, and it was around 9%, and I just shrugged my shoulders.

Now to be clear, I am definitely worried about whether my current client will retain my services. It's a heads-or-tails situation whether they will. But in the meantime, due to the huge cash portion in the PP and the relatively limited losses, I slept like a baby.

Thanks everyone, and stay healthy!

[Hal]

Happy it's working out for you so far

You are in a much better position than many others - good choice on the PP

https://www.abc.net.au/news/2020-03-24/ ... s/12080612

[AdamA]

Now to be clear, I am definitely worried about whether my current client will retain my services. It's a heads-or-tails situation whether they will. But in the meantime, due to the huge cash portion in the PP and the relatively limited losses, I slept like a baby.

The cash position in the PP is genius. Takes a black swan event like this to truly understand why.

[dualstow]

Glad to hear it, Wizard.

2008-9 events made me really pay attention to CraigR's posts at bogleheads and then, the Crawling Road blog* (anagram of his name) and eventually this forum. I went from mostly stocks to the PP**. I spent the next ten years wondering if I shouldn't have gone all stocks instead. Of course I wondered that: it's been a bull market the whole time!

2020: starting to wonder if I should go all stocks again....nah. The pp has been good to me. It's time for me to be good to the pp, to stick with it.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
*Now defunct
**And, admittedly, a stock-heavy VP

[I Shrugged]

I agree, wizard.

[Smith1776]

Indeed, the cash position adds stability to the PP beyond just the fact that it reduces volatility.

It also gives the investor a large source of liquidity to draw down from before needing to touch the volatile assets in the strategy. This prevents one from having to potentially "lock in" losses during a big downturn. General tax management is also improved.

Sleeping like a baby, just as the OP is, thanks to the PP.

[Xan]

Indeed, the cash position adds stability to the PP beyond just the fact that it reduces volatility.

It also gives the investor a large source of liquidity to draw down from before needing to touch the volatile assets in the strategy. This prevents one from having to potentially "lock in" losses during a big downturn. General tax management is also improved.

Sleeping like a baby, just as the OP is, thanks to the PP.

Uh-oh, saying that is one of mathjak's triggers!

[dualstow]

It’s like saying “Beetlejuice” 3x

[Smith1776]

lol which part is the trigger? Or is it the whole thing?

[mukramesh]

It’s like saying “Beetlejuice” 3x