1/ Thread: Investing only in bull markets
I started investing in 2013. Not in the US, but in Bangladesh.
Bangladesh market reached a stratospheric level in 2010 which is yet to be crossed after 11 years. The index is still ~20% below 2010 peak.
I started investing in 2013. Not in the US, but in Bangladesh.
Bangladesh market reached a stratospheric level in 2010 which is yet to be crossed after 11 years. The index is still ~20% below 2010 peak.
2/ I was a Senior in college in 2013 and decided to major in Finance. I thought I should get into investing.
When I started, the market experienced ~60% drawdown. Even though I had no clue what I was doing, it was hard to go wrong when you invest in such a market.
When I started, the market experienced ~60% drawdown. Even though I had no clue what I was doing, it was hard to go wrong when you invest in such a market.
3/ After graduation, I got a job in research which definitely helped me understand investing a bit better.
Bangladesh market is almost entirely driven by retail investors as institutional investor base is pretty weak. In fact, most institutional investors behave like retail.
Bangladesh market is almost entirely driven by retail investors as institutional investor base is pretty weak. In fact, most institutional investors behave like retail.
4/ While it's not easy to beat the index in the US, even the worst fund managers beat the index in Bangladesh since the index is filled with crappy companies.
In hindsight, it probably was the easiest market to start investing I could ever ask for, especially given ~60% drawdown
In hindsight, it probably was the easiest market to start investing I could ever ask for, especially given ~60% drawdown
5/ Bangladeshis cannot invest outside Bangladesh, so it wasn't a choice that I made.
In US standard, I was earning peanuts, but saved a lot, and made enough money in the mkt after ~3 years that could afford me living expense in the US for 2 years. Broad market was choppy but up.
In US standard, I was earning peanuts, but saved a lot, and made enough money in the mkt after ~3 years that could afford me living expense in the US for 2 years. Broad market was choppy but up.
6/ In 2017, I moved to the US for MBA. A year later when I got my SSN, I finally started investing in the US in 3Q'18.
4Q'18 was tough as a newbie in the market and I started asking question whether it was too big a leap from Bangladesh to the US.
4Q'18 was tough as a newbie in the market and I started asking question whether it was too big a leap from Bangladesh to the US.
7/ And then it all became "easy" again, thanks to the bull market in the US.
Covid's bear market was over even before I could feel anything.
So you see, for better or worse, I have mostly invested during bull markets. While that's fortunate, it is also not quite comforting.
Covid's bear market was over even before I could feel anything.
So you see, for better or worse, I have mostly invested during bull markets. While that's fortunate, it is also not quite comforting.
8/ Without facing an extended bear market, risk has become mostly a theoretical question for me. Of course, it will happen eventually although no idea when.
I spend a lot of time thinking about risk: how to respond and what not to do etc.
I spend a lot of time thinking about risk: how to respond and what not to do etc.
9/ One of the things that have deeply influenced me how I think about risk is this Morgan Housel presentation: "What Other Industries Teach Us About Investing"
10/ Housel talks about how you experience the market in your teens and 20s will leave a deep imprint on your psyche as an investor. 
11/ Housel quoted Eisenhower to explain what Eisenhower thought military genius was: "the man who can do the average thing when everyone else is losing his mind"
"You don't have to have to make a lot of great decisions in investing, you just have to not screw up when it matters"
"You don't have to have to make a lot of great decisions in investing, you just have to not screw up when it matters"
12/ What that speech truly taught me is risk is deeply personal. No degree/certificate can teach you how to think about risk.
Your individual experiences will shape you in a way that may not be easy to alter. But being *aware* of your own experience can help.
Your individual experiences will shape you in a way that may not be easy to alter. But being *aware* of your own experience can help.
End/ My personal background, family, culture, life experiences will lead me to behave in a way that will never be captured in a formula.
I will know what and how I do when I experience it. The greatest joy of investing is you get to know yourself better.
Have a good weekend!
I will know what and how I do when I experience it. The greatest joy of investing is you get to know yourself better.
Have a good weekend!
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