Upon a time; there were two men from time to time when they have the opportunity they would poke each other over trading and investing. One man was the late known "Guru" who has avoided to answer even simple question of Yes or No by stating the fact that even audited companies could hide frauds and not detected. In another word; even audited statements cannot be trusted. "Guru" has been advocating faith and trust and you need to believe! Trust since you can't really Verify! You can't! The other man is still currently trading for a living.
One day; late "Guru" poked back with a good response. Positioning Size and Risk Comfort Level Guru : When I have full conviction over one company; I dare to build up positions up to 5 to 10% of my net worth. In your trading; you dare or not? Uncle8888 fully agreed with Guru!
Successful retail investors can have very high level of risk comfort when they see opportunity and seize them; but successful traders will have to fall back to their risk control and risk management even they have full conviction. How many successful retail traders dare to build up their positions to 5 to 10% of their net worth? That is the difference between retail trading and retail investing. Right?
Uncle8888 today has completed his round the coast (accessible) of Singapore walking trail.
With completion of this walking trail: (1) He has walked across all rivers in Singapore (2) He has visited all public Ferry Terminals and Jetties (3) He has walked ACROSS three small islands that part of Singapore.
Saturday, 28 March 2009, I wrote this post: One honest Guru said that (but still many gurus are not telling us much about their losses in shorting the market), he gave back most of his profits built up from the last plunge. This Guru was not any ordinary trader but the Chief Trainer and Strategist in one of the Kung Fu School of Trading in Singapore hor. CW8888: "Guru" after "Guru" will continue. New retail traders and Chartists are born every other day.
So you are a retail trader? How about these wise words? “Markets are actually set up so that most traders must lose money” ― Alexander Elder, Trading for a Living: Psychology, Trading Tactics, Money Management The Elder Method Dr Elder uses a money management (position size) algorithm based on 2% of trading capital. Dr Elder's 6% rule is that you can only lose 6% of your trading capital in a month. So, you add up what you have already lost and the risks on your open positions and once they reach 6% you cannot take any more trades in the month until one of your open positions moves higher so that you can raise your stop-loss level or you take some profits. Once you have lost 6% in a month in actual losses, you must stop trading. - Dr Elder's book Come Into my Trading Room. “Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocket book and to the soul.” - Jesse Livermore So you are a retail investor? How about these wise words? All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out. - Peter Lynch What about Uncle8888? So far so good. He is on track to become successful retail investor by Peter Lych's wise words. That right. With his two big winners and the pluses from those have overwhelm the minuses from the stocks don't work out. The Hallmark for a lifetime of successful investing.
What is this difference to lay man deciding to become lifetime retail trader or investor?
In trading; you are playing Winning the Losers Game to become successful traders with control over their Entries and Exits; but in lifetime investing; successful investors are playing Winning the Earning Game. They let the Management and their Staff do the heavy lifting while these successful investors may sit back and relax. These companies are giving them back part earning and retain the rest of their earning to grow, evolve, innovate, differentiate and diversify or scale up horizontally and vertically. In real world, real economy, some will become great; some will remain great; some will become greater; some just so so and some will eventually disappear.
All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out. - Peter Lynch
Getting an education in University of Stock Market is like this: Successfully completed one cycle of a) Bull-Bear-Bull
or b) Bear-Bull-Bear Awarded BSM (Bachelor in Stock Market) Made tons of money - 1st Class Hons with Distinctions Successfully completed two cycles of a) Bull-Bear-Bull or b) Bear-Bull-Bear Awarded MSM (Masters in Stock Market) Successfully completed three cycles of a) Bull-Bear-Bull or b) Bear-Bull-Bear Awarded Ph.DSM (Ph.D in Stock Market) Have you graduated from the University of Stock Market?
We will know we have arrived at high level of competency on personal finance and investmentwhen we are able to build up our own self-insured fund in addition to our existing medical insurance coverage to replace those expensive premiums in our 60s and above. Once above 60; the premium is just too costly to transfer those risks to insurance companies. So, can we underwrite those risks on our own terms since many of us are aiming to be competent retail investors? Can right?
Younger ones while you work on your investment portfolio to reach your Financial Independence stage; you may want to think about self-insured funding in your 60s too.
CreateWealth8888 27 February 2014 at 08:27:00 GMT+8 When to start buying? One grand old uncle (80+) told me this. The same old uncle who held APB for XX years and lost count of how much money he has made. When you see both ST and Zaobao showing at the same time large graphical of global market crashes at the front page. This is the time to start buying slowly. Ah Peh, you chun bo? LOL! ReplyDelete
With several insurance policies, CPF saving, investment portfolio and a fully paid 4 room HDB flat; the counting of money showed that it was not that bad. His family should be able to "tong" through the next 15 years without too much financial hardship.
In fact his CPF saving, investment portfolio and a fully paid 4 room HDB flat already made him a Millionaire in asset value; but he couldn't afford to take 1 to 2 months no-pay leave after using up his 90 days hospitalization leaves. This life experience has taught him experiential wisdom to see the difference between Rich and Wealthy.
A million dollar in asset value can make us feel rich; but not necessary we are wealthy enough to afford thing that we want even it is just about $X,XXX in value.
Rotting cash does have other explicit value and become priceless when the circumstance becoming so urgent and necessary! The conventional wisdom of advocating 6 months of emergency cash is enough? Well. It is all depends on one's age and state of health. In the 40s and 50s, 6 months is enough? How sure? If the state of health is not that good. 6 months is enough? Really? Before Uncle8888 reaching 55; his emergency cash is term of years because his life experience has taught him Cash is King!
That day when we were talking about trading ... CW8888: The secret of winning for much longer time is to become Trainer to earn course fee and selling reports/materials on top of some selectively sample trades of " I Can. So You Can!" When one stays too long in the battlefield and then one day got killed also didn't know how and why?
(1) It is about knowing our past household expenses history and adjusting for inflation for the future years till 8X, 9X, or 1XX. Use the historical highest annual household expenses as benchmark or reference level for the future years. (2) Setting up some cash buffer with self-insurance funding in addition to our existing medical insurance coverage (3) Home as Asset of Last Resort (4) Is cash flow sustainable over the future assets?
With all these preparation and planning and still fail; then accept it as Fate.
Uncle8888's way of retirement planning using his Three Taps Solution model: Knowing his household expenses On monthly basis Oct is almost there but Nov and Dec 16 are estimated; but should be slightly lesser.
On Yearly basis
CW8888's Wealth Formula Wealth = Asset Value + Cash Flow From Oct 2016 as retiree without any earned income from his human asset; his personal Wealth formula is now like this: CW8888's Wealth = Financial Asset Value + Cash Flow The important thing he has achieved in his pursue of financial literacy over last 16 years; he fully understood the difference between Good Asset and Rich Asset in relation to Cash Flow. This is something slightly beyond Rich Dad Poor Dad teaching of Assets and Cash Flow. You think you know the difference? This is where he differs from the main stream's loud voices over CPF OA to SA Transfer and SRS.
CW8888's Three Taps Solution model to build sustainable retirement income for life Financial Asset Value against projected Total Liabilities till 2038 (his future household expenses at 2.5% inflation rate)
Is his Financial Asset value sustainable to support his Total Liabilities (Household expenses) till 2038? Even without factoring the future cash flow from his financial assets; this graphical showed that it should be enough and sustainable.
CW8888's Cash Flow
He is tracking and watching his cash flow closely. It has to be sustainable over future years with asset draw-down when necessary. The next few years of deploying his current War Chest in the stock market will determine the amount of wealth he is leaving behind as legacy.
That day; we were talking about one investment property for rental income as "passive" income. Of course; during good times it is passive income ; but during bad times rental income may drop to ZERO for X or XX months. Still passive? But for portfolio of stocks for dividend income; it will not drop to ZERO.
Does it help that I am not selling you anything? Perhaps. What I am selling you is a story, based on 18 years of experience of what works for the common investor, one that I am already starting to sell to my 7 year old. I prefer he start a business, several businesses for that matter, rather than get wrapped up in trading stocks. How about applying it to Investing?
For retail investors and "Gurus"; it is mostly likely to base on Hindsight Wisdom! Why? They pick a few stocks; all those stocks with TSR (Total Shareholder Return) of XX% over X or XX years become their evidence or proof that Value Investing or Deep Value Investing did work! Those stocks that never make it; they are either mistakes or fairly valued. Then they will move on to pick another few stocks. This value investing or deep value investing process will repeat all over again! And then more evidence or proof that Value Investing or Deep Value Investing did work!
CW8888 : Something in the cyber world ... how good are you at reading every word or you read in sentence?
Quote : "In the end, I lost a huge sum of US$50,000. Unfortunately, it was supposed to be my wedding money. Boy, you could imagine how disappointed my wife was then. In fact, I felt like I have failed her at that point of time… Fast forward a few years later, I have now managed to find the secret sauce that allowed me to build a 7 figure investment portfolio." Clue : Investing advice for 20 somethings - that's how I have done it too! Same same like the late Guru?
When they rode past Uncle8888 on their two-person bike with a carrier; the guy shouted "Hello" to him and the woman smiled at him. Probably; they have noticed him walking alone when their bike was still far away.
Walking My Father's Road! until when Uncle8888 reached the end of junction road where there is a small guard house at the road junction. The younger security guard came out and asked:
Younger security : Where are you going?
CW pointed to the junction to left : Going there!
Younger security : No entry. Go back!
Older security also came out
Older security: Hey; you have entered project site. You are walking around without helmet. It is an offence!
CW : Huh?
Changi Village Jetty
End of Loyang coast.
Right side is the army camp and left side is the industrial park.
This is the dead end to the left where it is Loyang Industrial Park.
Uncle8888 will have to find a new resume point outside Loyang Industrial park where the coast is accessible by public.
I am 60+ yrs old uncle living in HDB heartland who has retired @ 60 on 30 Sep 2016.
I have been doing long-term investing and short-term trading in Singapore stock market only since Jan 2000 and now becoming full-time retail investor. So I am that Panda or Koala in the investment world; but I am still surviving well in the wild.
I have two sons and one daughter; two working adult children and the youngest son is currently in his 1st year SUTD.
I am currently executing my Three Taps solution model to maintain sustainable retirement income for life till 2038
Last updated: 16 Oct 2016
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