As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Tuesday, 8 May 2018

The Most Important Rule of Investing???

This Rule :

Never invest money that you can't afford to lose or willing to lose!


Sound investment advice???

Hmm ....  


What if you have already lost what you can afford or willing to lose?


Do you have adequate capital to recover from these losses?

How about changing to this Rule?

Never invest money that you can't afford to lose or willing to lose until you have adequate war chest to recover.

We need a few potential big winners to recover. Do you have those capital to find these few winners after losing?


11 comments:

  1. CW,

    Did you start like that?


    No right?

    Its a bit like the Trading Rule of not risking max 2% of our trading account per trade.

    Fantastic rule.

    But the majority of retail traders can't start like that. Trading account puny follow this 2% rule eat what???

    By the way, that's how we tell the difference between those bloggers who "parrot" theory and those who actually trades ;)

    So comical to see bei kambing trying to teach other even whiter bei kambings "how" to trade!?


    No experience? Our strength is we don't know what cannot be done. (Most fail but some will hit the jackpot as we in the capital accumulation mode)

    Once we know what to do with the hindsight of experience, we become more conservative coming up with rules this and rules that (capital preservation mode) ;)




    Stanley Drunkenmiller has shared that looking back, he's amazed at the risks he dared to took... (He broke the Bank of England with Soros)


    Try telling bei kambings they need to have an emergency fund first...

    No emergency fund how to have recovery fund to make up the losses in opportunity fund?


    Sell side vested interests will never support.

    How to earn fees and commissions when customers are building up cash?

    LOL!


    ReplyDelete
    Replies
    1. Actually I started with large war chest. Decades of savings. :-)

      Delete
  2. CW,

    When you got 50% haircut in 2009, your path to recovery was from this "untapped" war chest?

    Or was it winning back not the same way you gone down?


    Your "enlightenment" wasn't when you started right?

    After 2009, you've learnt the value of cash rotting in the bank.

    ;)


    ReplyDelete
  3. Actually the most important thing for bei kambings is to have job with steady income ... that's how most can recover from bad speculating / investing mistakes. LOL!

    It's probably better for youngsters to try when their savings is $5K or $10K. Even if wipe out, they have long term employability to recover. And they can actually use the lessons learned to improve for future.

    The worse will be those late-30s or 40s that slogged & save $300K or $500K, have mid-life crisis & want to FIRE, and then make big mistakes in the markets / property etc.

    ReplyDelete
    Replies
    1. Spur,

      Exactly.

      The advantage of starting young is not the compounding returns that so many youths drool on with their excel extrapolations.

      The forget the effects of compounding goes BOTH ways. Talk is cheap until you discovered compounding LOSSES for yourself!


      The advantage of starting young is like what you've said - how much can we lose when we are in our 20s?

      Crash got sound learnings cannot learn from books or courses one ;)


      The most dangerous is you have saved (voluntary contribution to CPF) all your whole life. Blur blur become accredited investor in your 50s or 60s.

      Private banker entice you with better yields than CPF, dangle Lehman mini-bonds or Swiber junk bonds to your nose, and you honestly thought you were just "saving" like before!

      Or bought into land banking or ostrich farms :(


      Delete
  4. Ho! Ho! Ho!

    Real scary!?

    i was exactly 39/40 and a BEI Kambing too; that was why i dared to throw everything(except my HDB maisonnette into the stock market and the market tanked in no time.

    The tanked market got worse and worse yet I was abled to keep my faith that the market would see the light one day. Of course while waiting, i got a sickening feelings and wify was quite worried and resigned to whatever it might be.

    Remember this was the 1st bear market i experienced.

    When the market just recovered a bit, i was so relieved and excited to see many of my stocks turning red to black.

    i couldn't stop taking profits that my Remisier remarked which i would never forget in my life.

    He said, "Are U sure U want to sell, the Market just turns".

    Of course i didn't listen to him, remember this was the first time money seemed to drop from Heaven for me.

    As U know,a Bei Kambing can't shed his skin overnight.

    But don't be a Bei Kambing(Merino sheep) that get lost in to the wild.

    A merino sheep can't shed it's skin like a wild sheep in the Wild.

    ReplyDelete
    Replies
    1. temperament,

      This CW blog power or what?

      And thanks to crash got sound sharings by "veterans" like you, its a good counterbalance to the wide-eye enthusiasm of youths ;)


      Sell-side vested interests love Merino sheep; they are bred to be fleeced ;)


      Delete
  5. Merino sheeps are bred for their fleece.

    So much so they can't survive in the wild.

    They need to be fleeced every now and then by humans.

    No wonder the word "Fleece" is used on human too.

    Only SEOW 马 (like me) can survive in the wild.

    And Look Out!

    i think nobody is too smart born not to be abled to be fleeced.

    Only U have not meet your "MATCH"

    Touch Wood!

    ReplyDelete
    Replies
    1. temperament,

      Make no mistake - I've been conned, fleeced, cheated, lied to :(

      That's how I learned the hard way; crash got sound.

      I not smart; I don't learn by listening to others :(


      Delete
  6. Ha! Ha!

    If U not smart then who is that snake-oil saleman i am bantering with?

    What U said above is a given in an equation.

    We just pray we will not meet someone like Bernie Madoff.

    Talk as if we are people with money to burn.

    Nevertheless, everything is in relative terms.

    ReplyDelete

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