Normal
i initially wasn't sure about posting in this thread, even with (i would hope) some anonymity, since answering this question with full context does need delving into some personal stuff as the question asks "what would you do". but seeing as Sdajii has already done so (which was a very interesting read), i thought i might as well too, as mine is a bit of a contrast.to be totally honest, if that sort of scenario became reality, i may well end up contemplating suicide.to explain why, i have to go into a bit about my background. i'm Australian born Chinese, so unsurprisingly i got tiger parented as a kid, "failure" was not an option and was treated with disdain. basically anything short of top 1% (no typo there, that is top ONE percent) in the HSC was considered a "failure". there were no beatings or any kind of physical abuse, my punishment for not excelling at school was, in true tiger parent fashion, a total ban on recreational activities and hanging out with my mates until my scores got back to an acceptable level.i didn't see it this way at the time, but now that i'm older i've grown to appreciate that they do this because they want their kids to have better lives, and the only route they know to get there is the traditional study hard, get a good job etc, so that is what they force onto their kids. it's a well known phenomenon that happens in America as well. i'm hardly unique in this regard, my Asian schoolmates all had to go thru pretty much the same thing. some of them got off easy though, their families were fine with a mere top 5% result!an unfortunate aspect of how we get brought up is that your self esteem tends to become tightly and irrevocably linked to your wealth. to lose your wealth (or to not have much to begin with) is a source of extreme shame, you get shunned and looked down upon as a "failure", sometimes even by your own family, and almost certainly by your more distant relatives. hard to change that way of thinking once you're an adult, what shapes you as a child tends to stick with you for a long time. that's why i suspect that a total loss of wealth would be a disaster of suicidal proportions for me.another issue with that sort of regimented upbringing (study, study and study some more, forget about other activities, you need top marks or you'll never get anywhere in life), is that i never developed any sort of entrepreneurial skill. fostering a mentality where you second guess everything you do and are constantly plagued by fear of failure is simply no good for entrepreneurism.my net worth (i became a self made millionaire at 32, i'm 40 now) was built on a fusion of the stereotypical tiger parent teachings (excel at school, find a high paying professional job) and the teachings of the FIRE movement (save at least 50% of your income, start investing early in life, keep investing regularly), though of course it wasn't widely known as FIRE back then. only a small fraction of that would be from trading, i would not rate my trading skill as being particularly good at all. i had to do it the slow reliable way, which takes years. if i lost it all overnight due to some mysterious catastrophe, i don't think i could build it back up quickly again via entrepreneurial activities, or via trading for that matter.i also lucked out big time at the start of my investment journey. i scraped together about $2K by age 15, most of it from prizemoney awarded by those state/national maths/science competitions we all did in school (because of all that forced study, i got crazy good at those, ranking in the prizemoney bracket almost every time). i threw most of those winnings into the CSL IPO... for all my resentment towards those insane academic expectations, i have to give my parents credit there - subscribing to that IPO was their suggestion. and now that i know how CSL turned out, i am "sort of" grateful for the forced studying after all, as that CSL position - which i still have today - is essentially the fruit of my academic mastery as a teenager. but if i had to build up my net worth from nothing a second time, it would be foolish to count on doing that again - finding the next CSL is rather hard!my trading style (mostly selling cash covered puts and covered calls, sometimes with a div strip in between) needs a lot of capital, as collateral for the short gamma and for stripping divs. with just $5K of trading capital, that sort of trading is virtually impossible. i don't think i'm all that good at the long gamma trading style, so if left with just $5K i probably wouldn't consider it.i guess the first thing i'd have to do is look for someone to help talk me down from the precipice of the proverbial cliff. forget about the financial side, just focus on getting the psychological side sorted out first. try to break my childhood "programming" and sever this unhelpful mental connection between net worth and self worth. i've been trying to get rid of it my whole adult life, i think i have made some progress but some of it is still there. probably need that gone before being able to properly rebuild.the original post describes a scenario where your trading capital/net worth suddenly vanishes. it doesn't say anything about job loss. so assuming that i get to keep my current job (between the super low Singapore tax rates and the depreciating AUD, i'm clearing around $200K AUD equivalent), i'd fall back on that to rebuild.immediately strip back lifestyle and go full on minimalist mode. go back to doing the flatmates thing that we all do as a "rite of passage" when we're young adults, go back to eating beans and rice, whatever's necessary, chop down living expenses like mad. i probably fall into the "Fat FIRE" school of the movement these days, with living expenses at ~$100K/year. but i grew up poor, so i'd like to think i'd be fully capable of dropping to $20-30K if i had to, i am quite familiar with the notion of doing without from my childhood years. hard to say for sure though, as i've been reasonably well off for a few years, maybe i've gotten too used to this lifestyle now.assuming that the near total loss of net worth described in the original post was a factor of some mysterious personal disaster, rather than caused by a total meltdown of markets, and also assuming that i am in fact able to take a scythe to my living expenses, i'd do no investing/trading for the first couple of months, focus on my day job, save up ~$30K (= ~$27K SGD).use DCIs (dual currency investments) to try and get that $27K SGD converted to AUD at spot and pocket an elevated interest rate in the process (typically 1 week AUD/SGD DCI struck at spot pays around 10-25% annualised, though it fluctuates wildly based on the FX derivatives market. was well above 25% in the early days of this current crisis).keep doing that until one of them gets exercised and converted to AUD, repatriate it home, refill my account with the CHESS broker and start dollar cost averaging into index ETFs again. if my current portfolio was wiped out, i probably wouldn't include direct ASX holdings as part of the buy & hold component of the rebuilt portfolio, and of course there is no more buying CSL for 76 cents a share the second time around. i'd probably go for a 10K/10K/10K split between VAS (or A200)/IVV/VEU.alternatively if spot is close to the DCI strike at expiry, and the DCI rates being offered at spot are at or around the upper bound of that range, i'd probably roll the DCI instead and keep bouncing back and forth between AUD and SGD while those conditions last. 0.5% a week is pretty good when you don't really care which of the two currencies you take delivery of.work another couple months, save another $30K. repeat the DCI - repatriate tactic, refill my IB account and fire up the short gamma option trading again. would have to think carefully on this component though, as i may well be in terrible shape emotionally due to the loss, and you don't want to be doing active trading in that state of mind.and finally the next 2 months pay goes into SREITs, maybe some other SGX listings. long term buy & hold. SREITs were yielding 4-6% before the current crisis but they had gone on a huge run up in the preceding 18 months or so, prior to that they were yielding around 6-9%. no point assessing projected yields now with so much uncertainty about. residents don't pay tax on capital gains or dividends here, so i'd make use of that to help rebuild. even if i moved back home i'd still want to retain a good chunk of investments in SGD, the long term trend is SGD appreciation (which is very pronounced vs AUD) and it's a very stable economic environment here, sometimes referred to as the "Switzerland of Asia".i'd keep rotating between those 2 or 3 components (index ETF / options trading - maybe / SGX) every 2 months and build up that way. going to be a long hard slog to rebuild the slow reliable way all over again, but it's the only way i know. constant depression over the massive loss would no doubt be my companion along every step of it, at least until i made my first million all over again. after reaching that, things might improve from an emotional standpoint, and probably returns will follow once i get into a better frame of mind for trading.but if i've misinterpreted the question, and it's asking "what would you do if you time travelled back to when you started investing" as opposed to "what would you do right now, in 2020, if all your current assets were magically stripped away overnight" as i took it to mean, then my answer's pretty simple: buy CSL again at 76 cents!!!
i initially wasn't sure about posting in this thread, even with (i would hope) some anonymity, since answering this question with full context does need delving into some personal stuff as the question asks "what would you do". but seeing as Sdajii has already done so (which was a very interesting read), i thought i might as well too, as mine is a bit of a contrast.
to be totally honest, if that sort of scenario became reality, i may well end up contemplating suicide.
to explain why, i have to go into a bit about my background. i'm Australian born Chinese, so unsurprisingly i got tiger parented as a kid, "failure" was not an option and was treated with disdain. basically anything short of top 1% (no typo there, that is top ONE percent) in the HSC was considered a "failure". there were no beatings or any kind of physical abuse, my punishment for not excelling at school was, in true tiger parent fashion, a total ban on recreational activities and hanging out with my mates until my scores got back to an acceptable level.
i didn't see it this way at the time, but now that i'm older i've grown to appreciate that they do this because they want their kids to have better lives, and the only route they know to get there is the traditional study hard, get a good job etc, so that is what they force onto their kids. it's a well known phenomenon that happens in America as well. i'm hardly unique in this regard, my Asian schoolmates all had to go thru pretty much the same thing. some of them got off easy though, their families were fine with a mere top 5% result!
an unfortunate aspect of how we get brought up is that your self esteem tends to become tightly and irrevocably linked to your wealth. to lose your wealth (or to not have much to begin with) is a source of extreme shame, you get shunned and looked down upon as a "failure", sometimes even by your own family, and almost certainly by your more distant relatives. hard to change that way of thinking once you're an adult, what shapes you as a child tends to stick with you for a long time. that's why i suspect that a total loss of wealth would be a disaster of suicidal proportions for me.
another issue with that sort of regimented upbringing (study, study and study some more, forget about other activities, you need top marks or you'll never get anywhere in life), is that i never developed any sort of entrepreneurial skill. fostering a mentality where you second guess everything you do and are constantly plagued by fear of failure is simply no good for entrepreneurism.
my net worth (i became a self made millionaire at 32, i'm 40 now) was built on a fusion of the stereotypical tiger parent teachings (excel at school, find a high paying professional job) and the teachings of the FIRE movement (save at least 50% of your income, start investing early in life, keep investing regularly), though of course it wasn't widely known as FIRE back then. only a small fraction of that would be from trading, i would not rate my trading skill as being particularly good at all. i had to do it the slow reliable way, which takes years. if i lost it all overnight due to some mysterious catastrophe, i don't think i could build it back up quickly again via entrepreneurial activities, or via trading for that matter.
i also lucked out big time at the start of my investment journey. i scraped together about $2K by age 15, most of it from prizemoney awarded by those state/national maths/science competitions we all did in school (because of all that forced study, i got crazy good at those, ranking in the prizemoney bracket almost every time). i threw most of those winnings into the CSL IPO... for all my resentment towards those insane academic expectations, i have to give my parents credit there - subscribing to that IPO was their suggestion. and now that i know how CSL turned out, i am "sort of" grateful for the forced studying after all, as that CSL position - which i still have today - is essentially the fruit of my academic mastery as a teenager. but if i had to build up my net worth from nothing a second time, it would be foolish to count on doing that again - finding the next CSL is rather hard!
my trading style (mostly selling cash covered puts and covered calls, sometimes with a div strip in between) needs a lot of capital, as collateral for the short gamma and for stripping divs. with just $5K of trading capital, that sort of trading is virtually impossible. i don't think i'm all that good at the long gamma trading style, so if left with just $5K i probably wouldn't consider it.
i guess the first thing i'd have to do is look for someone to help talk me down from the precipice of the proverbial cliff. forget about the financial side, just focus on getting the psychological side sorted out first. try to break my childhood "programming" and sever this unhelpful mental connection between net worth and self worth. i've been trying to get rid of it my whole adult life, i think i have made some progress but some of it is still there. probably need that gone before being able to properly rebuild.
the original post describes a scenario where your trading capital/net worth suddenly vanishes. it doesn't say anything about job loss. so assuming that i get to keep my current job (between the super low Singapore tax rates and the depreciating AUD, i'm clearing around $200K AUD equivalent), i'd fall back on that to rebuild.
immediately strip back lifestyle and go full on minimalist mode. go back to doing the flatmates thing that we all do as a "rite of passage" when we're young adults, go back to eating beans and rice, whatever's necessary, chop down living expenses like mad. i probably fall into the "Fat FIRE" school of the movement these days, with living expenses at ~$100K/year. but i grew up poor, so i'd like to think i'd be fully capable of dropping to $20-30K if i had to, i am quite familiar with the notion of doing without from my childhood years. hard to say for sure though, as i've been reasonably well off for a few years, maybe i've gotten too used to this lifestyle now.
assuming that the near total loss of net worth described in the original post was a factor of some mysterious personal disaster, rather than caused by a total meltdown of markets, and also assuming that i am in fact able to take a scythe to my living expenses, i'd do no investing/trading for the first couple of months, focus on my day job, save up ~$30K (= ~$27K SGD).
use DCIs (dual currency investments) to try and get that $27K SGD converted to AUD at spot and pocket an elevated interest rate in the process (typically 1 week AUD/SGD DCI struck at spot pays around 10-25% annualised, though it fluctuates wildly based on the FX derivatives market. was well above 25% in the early days of this current crisis).
keep doing that until one of them gets exercised and converted to AUD, repatriate it home, refill my account with the CHESS broker and start dollar cost averaging into index ETFs again. if my current portfolio was wiped out, i probably wouldn't include direct ASX holdings as part of the buy & hold component of the rebuilt portfolio, and of course there is no more buying CSL for 76 cents a share the second time around. i'd probably go for a 10K/10K/10K split between VAS (or A200)/IVV/VEU.
alternatively if spot is close to the DCI strike at expiry, and the DCI rates being offered at spot are at or around the upper bound of that range, i'd probably roll the DCI instead and keep bouncing back and forth between AUD and SGD while those conditions last. 0.5% a week is pretty good when you don't really care which of the two currencies you take delivery of.
work another couple months, save another $30K. repeat the DCI - repatriate tactic, refill my IB account and fire up the short gamma option trading again. would have to think carefully on this component though, as i may well be in terrible shape emotionally due to the loss, and you don't want to be doing active trading in that state of mind.
and finally the next 2 months pay goes into SREITs, maybe some other SGX listings. long term buy & hold. SREITs were yielding 4-6% before the current crisis but they had gone on a huge run up in the preceding 18 months or so, prior to that they were yielding around 6-9%. no point assessing projected yields now with so much uncertainty about. residents don't pay tax on capital gains or dividends here, so i'd make use of that to help rebuild. even if i moved back home i'd still want to retain a good chunk of investments in SGD, the long term trend is SGD appreciation (which is very pronounced vs AUD) and it's a very stable economic environment here, sometimes referred to as the "Switzerland of Asia".
i'd keep rotating between those 2 or 3 components (index ETF / options trading - maybe / SGX) every 2 months and build up that way. going to be a long hard slog to rebuild the slow reliable way all over again, but it's the only way i know. constant depression over the massive loss would no doubt be my companion along every step of it, at least until i made my first million all over again. after reaching that, things might improve from an emotional standpoint, and probably returns will follow once i get into a better frame of mind for trading.
but if i've misinterpreted the question, and it's asking "what would you do if you time travelled back to when you started investing" as opposed to "what would you do right now, in 2020, if all your current assets were magically stripped away overnight" as i took it to mean, then my answer's pretty simple: buy CSL again at 76 cents!!!
Hello and welcome to Aussie Stock Forums!
To gain full access you must register. Registration is free and takes only a few seconds to complete.
Already a member? Log in here.
