Pillow Stocks : The Less Stressful Long-term Investing When We Get Some Of Them Right!

Read? Dr Chan: How to Own ‘Zero-Capital’ Stocks

Quote : " How to Own ‘Zero-Capital’ Stocks

Of course, not all stocks can actually appreciate four times its original value. That said, in the event that a stock’s price double, I would not recommend selling half of the stock holding, as the remaining stock might be too little. We should not be holding insufficient amounts of quality stocks that we may come by, so I will impart a different method to make the stocks ‘free’.

Investors can deduct dividend payouts from their initial costs, and also deduct bonus shares from the amount. Over a sufficient period of time, the stocks may actually become zero-capital stocks or even ‘negative-capital stocks’ when the amounts deducted exceed the initial investment, which means that the investor will be in a profitable position no matter what happens next.

Unquote


The above method by Dr Chan is not too different from Uncle8888's way of accumulating his pillow stocks. But, Uncle8888's method may be faster way to accumulate more pillow stocks by seizing those opportunities in short-term trading across market cycle by stuffing more feathers to build pillow stocks.

Total Realized Gains = Net P/L of many rounds of the same stock + Accumulated dividends of the same stock


Read? All articles relating to pillow stocks strategy


Read? Strengthening War Chest From Our Investment Portfolio??? (3)

Taking partial profit and letting the rest of it runs with the Bull to collect dividends???

Commonly seen method of taking partial profit and letting the rest of it runs with the Bull to collect dividends.

Slicing the Cake method of taking partial profit

 

 

Slicing the Pyramid method of taking partial profit


This is Uncle8888's preferred method of pillow stocks strategy.

Accumulating phase ...

 

 

Profit taking phase to make pillow stock ..

After one round

 

























After second round ...

 

 

 

 

 

Keep the Base to run with the Bull to collect dividends while waiting for the market to present opportunity to pyramid up again.

 

 

Round X,

 

Round XX,

 

Uncle8888 hopes to hit Round 100 for the record!

 

 

 

 

 

 

 

 

 

 

 

 

Pillow Stocks Strategy (2)

Read? Pillow Stocks Strategy

What will make an investor feel most comfortable with his investment?

• Firstly, Return of Capital.
• Secondly, Good Yield.
• Lastly, Capital appreciation.

That is the reason why many investors will jump into bonds or perference shares when yield are good and when they become available in the market.

Dividend Investing Strategy

A 10% dividend yield stock will return you your capital in 10 years; and thereafter let you enjoy good yield and capital appreciation

Pillow Stock Strategy

If you believe that dividend investing strategy will work for you; but you may feel that 10 years is just too long to wait. Then think Pillow Stock Strategy. It will help you to:

• Firstly, Return of Capital.
• Secondly, Good Yield.
• Lastly, Capital appreciation.

"Pillow stocks are the best stocks to hold over market cycles." - Createwealth8888

Have you spend enough time thinking on your money management stratgeies? (3)

Read? Have you spend enough time thinking on your money management stratgeies? (2)

From Daryl Guppy's Money Management Rule

Zero Cost Averaging

This is how it works?

Sell 50% of the position once the unrealized profit reaches 100% of the initial invested capital.

For example:

1. Bought 10 lots of Stock A at $1
2. When Stock A reaches $2, then sell 5 lots (50%) and hold the other 50% to run with the Bulls. The remaining 50% is now at zero cost i.e. all invested capital has been taken back. 

Zero Cost Averaging is the money management used to protect capital.
 
From Createwealth8888
 
Standing on the shoulders on these Gurus's money management rules, I have formulated my own money management rule.
 
Pillow Stocks - The money management used by Old Uncle from Hougang HDB Heartland to protect his capital. Money in the pocket is always safer than capital in the stock market.

Any kind of investments by nature are risky as you may lose some or all your invested capital if you get it wrong. Even if you initially get it right, and somehow by over-staying in the stock market; it may turn wrong.

The only safe and risk-free investment in the market is Zero Cost investment aka Pillow Stocks Strategy, where I can sleep peacefully at night regardless of the market conditions as my capital is not at risk.

The Pillow Stocks Strategy

With active investing through re-cycling of investing capital, I ride on number of profitable trades on the SAME stock over and over again, and then slowly accumulate enough realized profits to eventually own a certain number of shares of that stock at zero cost in terms of cash flow, and then let it runs in the stock market to collect dividends as passive income or when necessary for future draw-downs by selling some of it slowly. Absolutely, NO CAPITAL AT RISK and yet passive income.

Concept of OPM (Other People Money)

A guy called KK loves to use OPM - using rental income paid by tenants to cover his property.


On second thought, I agree with him, and actually I have been this concept of OPM without knowing it - Pillow Stocks Strategy.


Pillow Stocks Strategy is zero-cost to me i.e. no capital outlay from me. It is OPM in the market to generate further returns if any.


Similarly, for business owners doing IPO - They are also using the concept of OPM when the business owners recover part or all their capital and continue the game with OPM.


The only difference is that my OPM concept is without leverage. Cheers!

Read? Payback period

Payback period

From Wikipedia, the free encyclopedia

Payback period in business and economics refers to the period of time required for the return on an investment to "repay" the sum of the original investment. For example, a $1000 investment which returned $500 per year would have a two year payback period. It intuitively measures how long something takes to "pay for itself." Shorter payback periods are obviously preferable to longer payback periods (all else being equal)

When come to stock investing, do you really seriously think and care about Payback period?

Any businessman will want to recover his capital quickly and then let the biz takes care of itself to generate future cash flow. He will then look for the next biz prospect to deploy his recovered capital.

For stock investing, why are we not thinking like a businessman? Shouldn't we quickly recover the invested capital and let the stocks take care of themselves to generate future cash flow. This is the similar method which I called it "Pillow Stocks Investing" strategy.

Read? Pillow Stocks Strategy

Pillow Stocks Strategy

Any kind of investments by nature are risky as you may lose some or all your invested capital if you get it wrong. Even if you initially get it right, and somehow by over-staying in the market; it may turn wrong.

The only safe and risk-free investment in the market is zero cost investment aka Pillow Stocks Strategy , where you can sleep peacefully at night regardless of market condition as your capital is not at risk.


The Pillow Stocks Strategy

With active investing, riding on the number of profitable trades on the same stock over and over again, and then slowly accumulate enough realized profits to eventually own a certain number of shares of your desired stocks at a zero cost in terms of cash flow, and then let them run in the market as passive income from dividends or if necessary as future draw down by selling some.

The toughest part is executing the strategy. Get ready, may be the bulls are back.

The Goal of the End Game - Financial Independence

The goal of the End Game is to accumulate enough wealth for you and your family to stop.

Having enough is more important than having more. If you've reached enough, you don't want to be gambling for more. Stop putting your wealth at risk. Stop the gambling and risk taking with investments of any kind. You would finally have enough money and personal power to walk away from the investing game and spend the rest of your life doing something else!

When exactly do you reach the End Game?

When you have enough principal invested safely for your after tax-income to match or exceed your annual expenses on an ongoing basis. This would include budgeting for the lifestyle you truly want.

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So I reach there on time and on target or will I be late? Tomorrow is the new beginning ....

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"Human beings, by changing the inner attitudes of their minds, can change the outer aspects of their lives." - William James