Investing Made Simple By Uncle8888 (40)

Read? Investing Made Simple By Uncle8888 (39)

The Past is NOT the Present and the Present is NOT the Future!

Short-term trading and long-term investing for passive income across market cycles is simply about picking up and ending up with one of these :

1) Multi-baggers

2) Touchstones

3) Pillows

4) Sardines

5) Salt fishes

6) Zero-baggers

It is all about our account size across market cycles to participate decisively and most important is our strict money management on position sizing; and then moves forward slowly to increase our size of Pillows and Multi-baggers to collect passive income in our retirement.

 

Investing Made Simple by Uncle8888 (6) (Time to refresh)

Read? Investing Made Simple by Uncle8888 (6)

Do we really need to know or bother the difference or characteristic in speculating (i.e. technical or craftsman or professional term used in the market; but at casino or mahjong tables, layman called it gambling)?

When we make money from one another in the market; it is a zero-sum; but we like to make it sounds more technical, smarter or professional by calling it speculating instead of gambling as there is this element of skills or craftsmanship involved in addition to just luck factors. 

Buying ToTo is gambling! 

You just need the capital of $1 and join the Queue. 

Sorry folks! God of Fortune is on long sabbatical. No such luck!

In investing; it is speculating over longer period of time on dosages of Panadol; and more important but less mentioned by investment bloggers - Retained Profits!

Read? How to become rich in stocks??? (8)

Newbies Do Not Earn The Right To Average Down. Never!!! (Refresh)

Read? Newbies Do Not Earn The Right To Average Down. Never!!!

Wa Ka Li Kong!

Never average down. Only for the learned ones or big fat purse!

"You don't need to win back in the same manner as you have lost it." - Createwealth8888


Once you have fully understood Uncle8888's quote. 

Do you still want to average down to 40-60% of your portfolio or capital in a single stock as you can't believe you are wrong? 


Read? Investing Made Simple by Uncle8888 (18)

WHY PEOPLE LOSE MONEY IN THE STOCK MARKET???

Read? Investing Made Simple by Uncle8888 (6)


Less Analyzing. More Investing - CW8888


It is NOT until; you have learnt and discover what works for you in the stock market; you are more likely to continue to lose money in the stock market.

It is not much different from playing Mahjong!

You lose to others who are winning and better at the Money Game!

How To Make Money In The Stock Market? Factors needed to make money in the stock market

Walter Schloss

1. Price is the most important factor to use in relation to value.

2. Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.

3. Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).

4. Have patience. Stocks don’t go up immediately.

5. Don’t buy on tips or for a quick move. Let the professionals do that, if they can. Don’t sell on bad news.

6. Don’t be afraid to be a loner but be sure that you are correct in your judgement. You can’t be 100% certain by try to look for weaknesses in your thinking. Buy on a scale down and sell on a scale up.

7. Have the courage of your convictions once you have made a decision.

8. Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.

9. Don’t be in too much of a hurry to sell. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up 50%, people say sell it and button up your profit. Before selling try to reevaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P/E rations high? Is the stock market historically high? Are people very optimistic? etc…

10. When buying a stock, I find it helpful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it attractive. 3 years before the stock sold at 20, which shows that there is some vulnerability in it.

11. Try to buy assets at a discount than to buy earnings. Earnings can change dramatically in a short time. Usually assets change slowly. One has to know much more about a company if one buys earnings.

12. Listen to suggestions from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money it is hard to make it back.

13. Try not to let your emotions affect your judgment. Fear and greed are probably the worst emotions to have in connection with the purchase and sale of stocks.

14. Remember the work of compounding. For example, if you can make 12% a year and reinvest the money back, you will double your money in 6 years, taxes excluded. Remember the rule of 72. Your rate of return into 72 will tell you the number of years to double your money.

15. Prefer stocks over bonds. Bonds will limit your gains and inflation will reduce your purchasing power.

16. Be careful of leverage. It can go against you.

Schloss was a high school graduate who never graduated college, but learned from the best (Ben Graham) and all he did was implement Graham’s basic concepts over 5 decades and produced one of the greatest investment track records ever.

Investing Made Simple by Uncle8888 (6) - Refresh!

Where does the money from stock market come from?

Uncle8888 thought that regular (silent) readers understand it; but the truth is some still don't.

Retail traders are more likely to understand it!

But, do retail investors likely to understand it?

Read? Investing Made Simple by Uncle8888 (6)


Before we learn to become competent investor through improving our technical skills in investing;  we better be very clear on this : Where does the money from stock market come from?

Where does the money from stock market come from?

For retail traders 

"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


For retail investors

"The Stock market is a financial redistribution system. It takes money away from those who have no patience and gives it to those who have." - Warren Buffet



Blah blah blah in this blog on where does the money from stock market come from - CW8888

Investing Made Simple by Uncle8888 (17) - Reposted!

Read? Investing Made Simple by Uncle8888 (17)

Investing Made Simple by Uncle8888 (6) - About time to refresh it!

Read? Investing Made Simple by Uncle8888 (6)


Uncle8888 has been trying to understand this:

Where does the money from stock market come from?

He thinks that most of the money from the stock market will come from investors/traders participating in the stock market and only some money will be coming in the form of stock dividends distributed by companies and shares buy-back by companies.

In fact, the amount of money coming from companies is nothing compared to the enormous amount of money changing hands in the stock market. 

Uncle8888 also remembered Warren Buffet once said: "The Stock market is a financial redistribution system. It takes money away from those who have no patience and gives it to those who have." 

He believes it is true. So he understands it is important to be patient and disciplined; or else he may end up distributing part of of his hard-earned salary to other people in the stock market as their profits. 

Luckily, his favourite hobby is fishing and fisherman by nature will has more patience. 

With the understanding where does the money from the stock market come from, it will be easier for Uncle8888 to understand why some people may choose to do short-term trading and/or long-term investing.

Home Bias or Away Home Bias???

Sunday, 27 March 2011

Read? Investing Made Simple by Uncle8888 (10)


Any thing seriously wrong with our bias?

It doesn't really matter when we are still making money over decades in the stock market, over market cycles, and over economic cycles in whatever Bias we may have.

The real and truly tested investing in managing diversity and risk is cash and investment.

Make Hay while Sun shines and avoid pulling Weeds during Winter for the next Summer. That will be sad!

Concepts and theories are good; but nothing beat your own practices and results!

Investing Made Simple By Uncle8888 (39)

Read? Investing Made Simple By Uncle8888 (38)


3Ms in investing. Method, Mind and Money Management.

Focus more on Mind and Money Management!

Simply ....

1. Track. Track. Track.

2. Measure. Measure. Measure.

3. Evaluate. Evaluate. Evaluate.

4. Ask yourself! Is this SUSTAINABLE and meeting your investing GOALS?

5. If NO, CHANGE! Revise your investing strategy and Method.

6. If YES, be YOURSELF!

Near Passive Investing By The Way Of STI ETF Through Process and Systematic Investing!!!

Several colleagues told Uncle8888 that they are comfortable with this sort of near passive investing. They are glad that they have learned it from the old horse's mouth. LOL!

Yield Play or Drop Play with X and Y parameters!

What is required is patience and discipline!

Investing Made Simple by Uncle8888 (38)

Read? Investing Made Simple by Uncle8888 (37)

We may have to work harder to reduce our Asymmetrical Thinking over long run to produce better portfolio performance result.

1. Unable to control their emotions over P/L.  They are so worry that their paper profit will soon disappear when market shows some sign of turning against them so they are fast to take quick profit but when they are on paper losses; they are so slow and patient. Their patience can withstand decades of sitting on paper losses without worrying too much.


Do we know that when we are very good and discipline at money management and position sizing (No deadly average down). We can only lose 100% of that position when we are deadly wrong; but when we are right and continue to be right for long time; we will make more than enough to recover that few deadly wrong. 

Uncle8888 is not preaching theory and concepts here!

It is real and has been done!

2. Seduced by high yield.  Is high yield due to high dividend payout? When we are not aware or don't even bother about it. Just happy with the high yield. Shiok! Dividends are coming soon!


 






 

John Wasik on "Keynes's Way to Wealth: Timeless Investment Lessons from the Great Economist" (2)

"I do not believe that selling at very low prices is a remedy for having failed to sell at high ones ... I feel no shame at being founding a share when the bottom of the market comes." - Keynes

CW8888:

How much do we lose when we are terribly wrong?

Just 100% of our capital. No shame! Losing is part of the Game.

How much can we win when we are right and continue to be right?

X%, XX%, XXX% or even X,XXX% 

Why still so many cannot bear to do it?

Panic when they see the market!!!

One good remedial is to stay calm and make Pillow Stocks. We will sleep better across market cycles.

Read? John Wasik on "Keynes's Way to Wealth: Timeless Investment Lessons from the Great Economist"

Long-term Investing can be as Simple as .........

When you have patience ...

When you are investing for your future in the decades head of your time ...

When your human asset is compounding well ..

Use STI Blue chips as our watch-list.

For most of us as retail investors, we better be honest with ourselves. Our war chest is limited. The 30 blue chips in STI is more than enough to deplete our war chest. Right?

Refining Wealth Formula

Read? The most important chart in CW8888's blog to remember on Wealth Formula!!!


Wealth = Asset value + Cash flow!


Where Cash flow = Active Income + Investment Income

Wealthy = Annual Investment Income is greater than living expenses

Wealthy financial independence person has Asset value greater than his lifetime total liabilities and living expenses with annual Investment Income greater than living expenses.



Clearer?


Any more what if. LOL!

Passive Income??? Why must have more of it! (2)

Read? Passive Income??? Why must have more of it!


What is Passive Income?



First, See it for yourself. 

Where does passive income come from?

Second, Measure it.


What do you need to do to get it?


1. Return per Unit Time (What is the dollar value for monetizing your waking time?)

2. Return per Unit Stress (How stressful for you to get paid for doing it?)



Even begging for money is not passive income. Right?

Passive Income??? Why must have more of it!

Read? What Passive Income?

Read? The most important chart in CW8888's blog to remember on Wealth Formula!!!

Passive income is Good; but don't ever forget about Uncle8888's Wealth Formula

Wealth = Asset value + Cash flow

Our cash flow can be in any form.We must have emergency and medical fund available too. And never ever need to liquidate any of our asset during market low. Never ever!!!




Can you see what is Uncle8888's thinking?


Earned income from employment and sometime got f...ked by bosses or customers = ACTIVE



Earning  (not yours yet) from investment; but sometime got screwed by Mr Market; but okay lah. No f..king by bosses or customers = PASSIVE
 


Uncle8888 can count his earned income till Dec 2014. It is already known and can be countable.

Earning from investment is marked to market closing price at last Friday.

See the difference. Predictable vs Unforecastable

Honestly, you tell me!

You want more of what?

Earned or Earning?

Active or Passive?

Tell me!

The most important chart in CW8888's blog to remember on Wealth Formula!!! (2)

Read? The most important chart in CW8888's blog to remember on Wealth Formula!!!

The 37 years life story of Uncle8888 as human asset ... 

Climbing corporate ladder ...

The Door closed after his three months long MCs


 

“When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.” - Alexander Graham Bell

Climbing investment ladder ...

 

This Door will remain open for a long time ...

Investing Lessons From Conversation With Uncle8888 (2)

Read? What did I share with a guy called Noobz on our first meeting?