Why You Must Be Better At Selling, Buying, Holding, Buying Back And War Chest??? All Are Equally Important!!!

Read? Mind-blowing math animation explains why stock market wealth is an ILLUSION that vanishes in a crash

Almost no one really understands the basics of how the stock market works, and they suffer under the illusion that EVERY stock share is worth the same price as the last share that was traded. (If you’re confused why this isn’t the case, you’ve been lied to… watch the animation below to learn the truth that Wall Street doesn’t want you to ever realize.)

Thus, in a rising stock market bubble, people who hold shares that were purchased at far lower prices suffer under the illusion that all those shares are “worth” the current high price.

As my animation video reveals below, that idea is nothing but illusion. In truth, share prices are only transmuted into real wealth when they are SOLD. Yet it is impossible for all the holders of the shares to all sell at the current price for the simple reason that selling shares causes their price to fall.

Thus, the mathematical reality is that all the outstanding shares of any given public company are really only worth a fraction of the current market price. This is easily demonstrated in any given market correction or crash where share prices plummet. Ignorant investors falsely believe their “wealth” is being “destroyed” when, in reality, that wealth never existed in the first place.



CW8888:

Taming that Illusion and getting nearer to real and lesser illusion of wealth or net worth in the Land of Distribution or going down Mountain.

We can't eat on Illusion of wealth in the stock market!

The Truth About Multi-bagger : Real And Illusion

Read? DBS : Sold @ $19.88

Alamak!

Sold @ $19.88 and today DBS hit day high of $22.63

The truth about holding a multi-bagger : Time in the market or timing the market?

Time in the Market

Your realized gains started off as Panadols; and after Point X, Panadols turned into Golden eggs.

Your multi-bagger is an illusion until you have realized your gains somewhere near historical high stock price; and also you have retired from the stock market and never look at the stock market  ever again. Otherwise, your multi-bagger is just an illusion of wealth in the stock market!

17 years of holding DBS

Real ROC on total dividends collected is 171%

Illusion of wealth ROC : 192%

Time in the Market and timing the Market

Timing the Market will make your multi-bagger gains real!

The moral of the story : We have to be good at time in the market and then be better at timing the market.

Illusion Of Wealth In Your Investment Portfolio

Are you consciously aware what is real wealth and what is illusion of wealth in your investment portfolio? 

Money already spent is real!

Capital injection is real!

The rest is somewhat or somehow illusion?

No?



Read? The Stock Market ILLUSION Explained

Track And Measuring Investment Portfolio, Cash Flow and Net Worth. No Illusion And No Ego Boasting!!!

Read? CAGR, XIRR simplified

With the above blog post; it has saved Uncle8888 from explaining the difference!

Uncle8888 has tracked and measured whatever that can be measured and mathematically presented so that he is fully aware what has happened with his investment in the PAST and what can be possibly done better in the future; and what should be avoided in the future.

No illusion. No ego boasting measurement. It is as comprehensive as possible e.g. XIRR, CAGR since portfolio inception in 1 Jan 2000, ROC, cash flow, win-loss, net worth, paper gains lost back to Mr. Market etc. All have been measured!

ROC is good measurement for each transaction.

CAGR/XIRR is good measurement for investment portfolio including idle or rotting Cash. No illusion over long measuring period e.g. over one or two decades of investing period.

Cash flow level is good measurement for sustainable retirement income for life.

Net worth Pie is good breakdown to forecast sustainable retirement assets for draw-down as cash flow when it becomes necessary.

Portfolio Management Pie is good indicator what could have been done better to achieve higher performance and what should be minimized or avoided in the next market cycle.

Cash is rotting in the War Chest earning little return; but it is premium paid to seek better opportunities or future multi-baggers.

Read? DBS : Sold @ $19.03


Read? Kep Corp : 478% ROC And Still Counting!!!

Why doing these extra?

It is all about knowing ourselves better, our PAST; working on the PRESENT for better FUTURE and avoiding or reducing those mistakes made in the PAST so the FUTURE won't be worse than the PAST.


It is worth Uncle8888's effort to do it as his outcome so far has shown it!

Who is still laughing now?

Portfolio Management Across Market Cycles : Real and Illusion in the stock market

After 20 years in the stock market across several market cycles of Bull and Bear; Uncle8888 learnt something differently on portfolio management.

Read? Can You Afford To Be Greedy When Others Are Fearful?


Long term investing is all about recognizing market cycles exist and then figure out for ourselves how much money from the stock market we can comfortably received and keep it safely from giving back at the next Bear. 

Patience, discipline and financial capacity to accept this trade off and expecting larger and better outcome when that opportunity finally strikes!



Get real and don't be fooled by illusion of wealth in bullish stock market!

Read? My Own Psychology Of Losses: Losing Money And Deploying Cash Is Not The Same!

20 years in the stock market; probably Uncle8888 had seen what is real and what is just an illusion!

STI, Stock Value and War Chest across past market cycles

STI, Stock Value, War Chest and Cash Flow across past market cycles

One Nice Example Of Illusion Of Wealth In The Market

SINGAPORE (EDGEPROP) - Rumours are that liquidators are trying to seize the assets of Singapore-based crypto hedge fund Three Arrows Capital (3AC), which became the latest victim of the crash in cryptocurrency. Two partners at advisory and consulting firm Teneo have been appointed to handle 3AC’s liquidation.

3AC was put under liquidation by a court in the British Virgin Islands on Monday, June 27, after 3AC failed to repay creditors. On June 30, the Monetary Authority of Singapore (MAS) reprimanded the firm for providing false information and for breaching fund management industry licensing rules.

The firm was co-founded by former Credit Suisse traders Su Zhu and Kyle Davies at the kitchen table of their apartment in 2012, according to a Bloomberg story last year. The two of them are only in their mid-30s.

Zhu is co-founder, director, CEO and CIO of 3AC, while Davies is co-founder and chairman of the firm. Their crypto assets had reportedly been worth several billion dollars at one point.

CW8888: One of our tasks as investors is to recognize or acknowledge this illusion of wealth in market during bullish market and has strategy in place to keep part of this illusion of wealth in the market really safe from the next market crisis. 

So my sifu is right!

It is far better to regret not making more money than to feel sorry of losing your hard earned money.

My sifu started trading and investing at age of 18 following the foot-steps of his father into the stock market. 

Choose Regret or Sorry?

It is in our own hands. It is our own making!

Read? Lesson NOT Learnt in 2007 STI Bull and Lesson Learnt in GFC Bear And Then Applied Along The Way To COVID-19 Mini Bear and Continue ...

Is Bull Market Always Creating An Illusion Of Wealth In The Stock Market???

 Uncle8888 has learnt his Lesson 1 in the stock market i.e. illusion of wealth in 2007 Bull Market and then after 2009 GFC his Investing Mind has been fully mindful of this illusion of wealth and he knows clearly the difference between Real and Imaginary Parts of his Wealth in the stock market and develop practical Money Management to safeguard and ring fencing from losing a large part of this illusionary wealth back to the next incoming Big Bear! When will it happen again? or never?

Illusion Of Wealth In The Bull Market

CW8888:  Another data point in the history of stock market to prove this illusion of wealth in the stock market!

Read? Stock futures point to more losses after Thursday’s massive tumble amid coronavirus fears

U.S. stock futures pointed Thursday night to more losses after the major indexes suffered a tumble that sent them more than 10% below their record highs.

Dow Jones Industrial Average futures were up 16 points, but indicated a loss of more than 150 points at Friday’s open. S&P 500 and Nasdaq 100 futures also pointed to a lower open on Friday.

The Dow plummeted nearly 1,200 points on Thursday — its biggest one-day point drop ever — as worries over the coronavirus possibly spreading sent stocks spiraling lower. The 30-stock average closed in correction territory along with the S&P 500 and Nasdaq Composite.

The Dow had closed at a record high on Feb. 12. It only took the S&P 500 six days to fall from an all-time high into correction levels, marking the broad index’s fastest drop of that magnitude.

“People have been so preconditioned to buy the dip and to always expect the market to recover that people can get smacked around with moves like this,” said Patrick Hennessy, head trader at IPS Strategic Capital. “No one knows how this thing ends.”

Thursday’s declines also put the Dow and S&P 500 down more than 10.5% each for the week, on pace for their worst weekly performance since 2008.

The sharp drop came after California Gov. Gavin Newsom said the state is monitoring 8,400 people for coronavirus. Meanwhile, the CDC confirmed on Wednesday evening the first U.S. coronavirus case of unknown origin in Northern California, indicating possible “community spread” of the disease.

The number of confirmed coronavirus cases outside of China has also jumped. In South Korea, more than 1,700 cases have been confirmed along with over 600 in Italy.

“The timing of this was just the worst with respect to investor sentiment being elevated,” said Doug Ramsey, chief investment officer at The Leuthold Group. “I’m not sure that the market has really priced in the potential economic impact of this.”

Concerns over the coronavirus have also led several companies to issue earnings and revenue warnings. Microsoft said Wednesday one of its key divisions may not meet the company’s previous revenue guidance. PayPal also warned about its outlook on Thursday.

Goldman Sachs’ David Kostin warned U.S. companies will see no earnings growth this year. “Our reduced profit forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for US exporters, disruption to the supply chain for many US firms, a slowdown in US economic activity, and elevated business uncertainty,” said Kostin, the bank’s chief U.S. equity strategist.

Mind Your Market Timing and Market Cycles

Rising Bull market may give us an illusion of wealth in the stock market and made us feel richer.

Falling Bear market may make us feel uneasy or sick or even depression depending on the strength of our financial security during those time!

What is real and what is illusion?

Real and Illusion Of Wealth In The Stock Market. It is selling that counts! (2)

 Read? Real and Illusion Of Wealth In The Stock Market. It is selling that counts!

Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.  ~Warren Buffett

Read? GameStop falls 42% more despite easing of broker restrictions, down more than 80% this week

Of course; there are real winners taking money off the hard earned savings from pitiful losers who will be sitting on unrealized paper losses for how long! Sigh!

There is always buyers and sellers in the market! Always keep this in our Mind! We won but someone lost it. We lost but someone won it!

"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

Which Theory of Market Behaviours to believe?

Source: The Universal Principles of Successful Trading - Brent Penfold.


I will briefly summarise it here.

Three Broad Groups:

1. The Predictors

They are:

• astrology
• cycle analysis
• Elliot wave theory
• fractual analysis
• fundamental analysis
• geometry
• W.D. Gann

Practitioners of these schools of analysis believe they can determine where the markets or stocks are heading.

They hold out the appealing notion that you can know the market or stock's future direction and there control your own trading or investing destiny.

They project an appearance of certainty for the future. The predictors present an illusion of knowledge, which in turn presents an illusion of control. These illusions lead to surplus of optimism and confidence and then fall into intellectual trap.

2. The Dreamers

Dreamers are those use indicators, just some examples of indicators and there are too many of them

• ADX
• DMI
• enevelopes
• ratio analysis
• MACD
• moving averages
• ROC
• RSI
• Oscillators

These practitioners are dreamers because most of these indicators are derivatives of the price and contain adjustable parameters. Consequently, they represent second-hand curve-fitted information. Dreamers believe they will make money trading this type of second-hand adjustable data. (Createwealth8888: the key word is adjustable, the promoters of these indicators will always win their case. If you haven't been making money using these indicators, you haven't learn to adjust it correctly. Not a big joke meh?)

3. The Pragmatists

They are those use some of the following:

• breakout analysis
• chart analysis
• DOW theory
• intermarket analysis
• market profile
• pattern analysis
• pivot point analysis
• seasonals
• spread analysis
• statistical analysis
• tape reading
• volume analysis

The pragmatists focus on raw price and raw volume. They have no interests in looking into the future. They prefers not to deal with substitutes such as indicators but focus on the real thing - price.

--------------------------------------------------------------------------------

Now, I realize I more inclined towards the Pragmatist camp.

Read? Fundamental or Technical Analysis? - Revisit 3

Read? Technical Indicators? - Part 2

Real and Illusion Of Wealth In The Stock Market. It is selling that counts! (4)

 Read? Real and Illusion Of Wealth In The Stock Market. It is selling that counts! (3)

Panda is still surviving while Lion is seriously down!

First time trying ETF and HK market kena hit!  Sigh!

Back to sucking Panadols in local SGX is much better!

Real and Illusion Of Wealth In The Stock Market. It is selling that counts!

Book : It's when you sell that counts

CW8888 : GameStop is great example real and illusion of wealth in the stock market. Uncle8888 truly learnt the truth from this book in Nov 2008! It's when you sell that counts if you happen to buy them at good entries! All are equally critical, entries and exits and holding; but to optimize the profits is NEVER that easy!

Read? Reddit user who helped inspire GameStop mania says he lost $13 million on Tuesday, but is still holding on

Keith Gill, AKA Reddit’s DeepF------Value, apparently lost more than $13 million on Tuesday alone from his GameStop bet as the shares dropped 60%.

Despite the losses, the investor is holding onto 50,000 shares of GameStop as well as 500 call options in the brick-and-mortar video game retailer.

At GameStop’s record high last week, Gill’s total return in the name ballooned more than 2,000% to as much as $33 million, according to his Reddit posts.

Read? MARKETS GameStop short sellers are still not surrendering despite nearly $20 billion in losses this month

Track and Measure : No Illusion hor!!!

Want to track and measure?

Mai illusion. Made it swee swee!

You can see the amount of paper profit flying away from the peak. 

Counting The Opportunity Costs Of Not Staying Fully Invested In The Stock Market

What it will take for the War Chest to cover those missing (illusion) wealth in the stock market from 2010 to 2023?

Tap 3 : Yearly Return (War Chest Interests, Dividends and Divestment Gains/Losses) on Own Investing Capital (since inception on Jan 2000)

Plan and Goal is useless???

Grasshopper or Ants?

What it will take for the War Chest to cover those missing (illusion) wealth in the stock market from 2010 to 2023?


It is about 75% cash flow return on current level of War Chest over the next 4 years!

Hmm ... market crash over the next 2 to 3 years should help to narrow down this Gap!

Real and Illusion Of Wealth In The Stock Market. It is selling that counts! (3)

Read? Real and Illusion Of Wealth In The Stock Market. It is selling that counts! (2)

Read? Lion HST vs CSOP HS Tech (3)

It is selling that counts!!!

It is always about Entries and Exits otherwise; it will be Panadols!

Excellent Entries on potential Touchstones can then be retained for farther observation to be Freehold generating passive income for the next decades!

Lion turning Kitty liao! No Panadols! LOL!

Illusion of Wealth In The Stock Market

 

It is nothing but an illusion of wealth when the Bull charged ahead!

A short moment of happiness of hitting All Time High; and then the mood in the market changed so fast! Bear coming? LOL!

The Truth About Multi-bagger : Real And Illusion (2)

Read? The Truth About Multi-bagger : Real And Illusion Share

Read? Oceanus : Bought @ $0.02 for Round 1

Read? Thirty Years Reflections on the Ten Attributes of Great Investors

Oceanus is the latest illusionary multi-bagger added; BUT it is just for fun play and doesn't help to add any wealth. It is bo lampar punting (i.e. fun play) after badly burnt previously for catching falling knives in 2008! But, itchy hand is always there. Just controlling the itch so that it doesn't get hurt badly! LOL! 

In long-term investing; it is always about position sizing and also our gut too i.e. size of our lampar!

Dividends As Panadols To Ease An Investor Heartache???

For the past two weeks; Mum and her daughter kept mum about it. It was only on last Friday; after he has stopped taking Panadols to check whether the pain is tolerable or not. Mum finally said it out.

The ward nurse told his daughter that Hernia is minor operation but painful and she advised to take pain killers timely as the pain killer will take one to two hours to become effective. No wonder Mum kept telling him "Time to take medicine!"

To think about it why it can be painful because of the location; it is at movable point of our body whether lying, sitting, standing or walking; that part was operated would be likely to be stretched or pressed against.

Uncle8888 has repeated many times in his blog : Dividends as Panadols to ease an investor's heartache.

This time; he personally experienced the illusion of NOT feeling the pain from Panadols as he thought that Hernia is just minor operation how painful can it be since there was no pain at all when he discovered something not right. 

When under the illusion of painkillers; we don't feel the pain. Right?

How about dividends as Panadols?

Setting New Record in Asset Price? What Really Happen To Our Real Wealth After Point X???

New Record High!!!

So what?

A moment or a short period of an illusion of happiness and pride as retail investor!

Then what?

Uncle8888's Three Little Pigs have set their own historical record high and so what?

Kep Corp at $13.73 

Sembcorp Ind at $6.90

DBS at $31.28

Did he lock in any profits anywhere near their record historical high and kept them safe from Mr Bear?

NO!

Dumb!

Suck!

Nothing but just an illusionary period of happiness and pride as retail investor! That is true!

Until we have mastered the skills and foresight to lock in paper gains somewhere near historical record HIGH and kept them safe from returning these gains back to Mr Market. All these paper gains are just an illusion of wealth!