Sunday, 5 April 2015

Past Bear Attacks (Part 2)

Actually I have intended that this Part 2 follows Part 1 immediately.  But it was delayed due to the national mourning for the passing of our founding father Lee Kuan Yew.  I felt that it would be disrespectful if I talked about bear at that point in time.  

Now, to carry on from Part 1:

3. 2003 - SARS
The defeated bear of 2001 returned with vengeance just two years later and this time it was not only financial threatening, but also life threatening. This was the SARS bear, rumoured to be from China.

Market/Economy:
The economy was scary this time.  Orchard Road was a dead city.  Everyone stayed at home. Good only for family bonding.

At the office, everyone was issued a thermometer and the department managers were to report employee temperatures to HR on a daily basis.  All visitors had temperatures taken at the guardhouse before allowed to enter the company compound.

Lesson learnt:
No retrenchment this time, but pay increment was frozen.
This was also a turning point for me.  I realised that I cannot be "Moonlight tribe" (月光族) any more and started saving and also brought into some unit trusts.

4. 2008 - Lehman Brothers
This time the bear escaped from Uncle Sam's private zoo.  I was on an overseas project at that time.  About half year back, I had sold my UTs and have invested into some stocks.  Everyday I watched depressing news from CNN/CNA at the hotel cafe over breakfast.

Market/Economy:
When I returned to Singapore after the project, Uncle Sam's problem has escalated and became the Global Financial Crisis.  I was asked to submit names to the management.  Yes, that was another cost cutting exercise aka retrenchment.

After meeting with my team individually, first I had proposed for pay-cut for our whole group to save the jobs, but was rejected by management.  Then, I had submitted the names for the "soon-to-retire", which would mean "golden handshake" for them.  This was also rejected as management wanted those who are in the 40-50 bracket, which cost less in retrenchment payouts but also cost effective in the cost cutting exercise.  So, more or less the management picked who they wanted rather than me choosing.

However, less than half a year after the retrenchment exercise, our company got a big project and went on recruitment overdrive.  Can't imagine the quantities of application letters that were received.  Working at Jurong? No problem! Need to work three rotating shifts? No problem!  Peoples just wanted to grab whatever job they could.

Lesson Learnt:
It was indeed very sad that I had to see several of my colleagues left.  It was also very depressing to learn that some people could not afford to lose their job even near retirement age, as there is still the matter of housing loan to service.

This time I have my warchest. But I did not deploy all at one go and perhaps unfortunately, I just happened to catch the trough.  And I did not chase after the retreating bear.  So, in this round of bear hunt, I got the cub rather than the bear.

5. ??? - The Next Bear
Judging by the time frequencies of previous bear attacks, we are certainly overdued for the next bear.

Now, I have a warchest and I would like to think that I am more prepared this time.  However, now I also belong to the high risk group that the retrenchment axe might strike.

Although I have no more housing loan to worry about, but I have not reach the Kingdom of Financial Freedom yet.  

Therefore, how best to deploy the warchest will still need careful consideration... 

8 comments:

  1. With your war chest, you may reach Kingdom of Financial Freedom after Bear - Bull cycle near the next Bull peak.

    ReplyDelete
    Replies
    1. Hi CW8888,

      Yes. Having conflicting wishes at the moment. Bear come. Bear don't come. Haha.

      Cheers,
      Farmer.

      Delete
  2. Let me tell you i usually have the highest dividends income from stock in a severe BEAR market. i think you know the reason.
    In fact, someone said, "You can live on your dividends income B or B markets." i suppose the portfolio must be large enough while the daily living expense is simple & elastic enough to be manageable with the dividend incomes.
    i may try his advice.

    ReplyDelete
    Replies
    1. Hi temperament,

      Right. Hope one day I could live on my dividends and get out from the rat race.

      Cheers,
      Farmer.

      Delete
  3. Great, join me when you have attained freedom like I do at age 36, i.e. Dividends > Expenses

    ReplyDelete
  4. Hi Farmer,

    Did you notice how short these bears seem to be? Aggressive, but they seem only around for 1-2 years before they retreat, 2003 is another bear coming into the territory.

    I wonder if we have a internal bear to stay? The L shape bear? Singapore in the past crisis go all out to capture recovery, we allow FTs, lower taxes, CPF contributions etc.

    We have lean left. I am aware it is always a trade-off, but it is clear cut we are are not rebounding like what we should have with the US economy doing better than usual.

    Also, unlike previous crisis, where there is clear growth to pursue, like the financial center growth story etc, our story is like that of productivity and innovation and the 3 years drive seem to give very feeble results.

    Just a silly worry.

    ReplyDelete
    Replies
    1. Hi SI,

      Just be prepared for the bear hunt.

      Cheers,
      Farmer.

      Delete