I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


Click to email CW8888 or Email ID : jacobng1@gmail.com



Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"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 the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Wednesday 30 September 2009

Kep Corp: Got @ $7.98


So itchy hand! Why the sell down?

Tuesday 29 September 2009

Find Your Perfect Pitch

Knowing others is intelligence; knowing yourself is true wisdom. Mastering others is strength; mastering yourself is true power. - Tao Te Ching

There is always great debate on TA, FA, TA combined FA, speculation or gambling and none can convince the other.


Do whatever method it takes for you to double your Investing Capital in 5-7 years? If after 5-7 years and you are unable to double your Investing Capital, then you are seriously not doing it right and you may need to seek to know Others.

Let me know if you taking up this challenge.

Gambling?

I think the only big difference in Gambling vs Speculation or Investing if you are ONLY allowed to either WIN or LOSE per transaction and you don't have the option to HOLD if the position goes against you. That is definitely GAMBLING.

E.g.

Contra Trading can be considered as Gambling if some one has no resources to fully pay up for the transaction and the only option is either WIN or LOSE.


Read on for more ...


http://createwealth8888.blogspot.com/2009/09/gambling-investment-speculation.html

Monday 28 September 2009

ToTo - The fastest way to become Millionaire

http://createwealth8888.blogspot.com/2009/09/gambling-investment-speculation.html

Who want to become a Millionaire? Take part in the TV program or buy ToTo.

Buy ToTo whenever it hits Jackpot prize of more than $3M. Mid-Autumn and Hong Bao draw is a must buy.

Last Friday, three millionaires were born but too bad it was not me. Ha Ha!

Sunday 27 September 2009

Gambling - investment - speculation


A comparison can be done as above:
From: Behavioral finance FAQ / Glossary (Gamble)

Read on ...

http://createwealth8888.blogspot.com/2009/01/speculation-vs-investment.html

Olam - Is consolidation over?


Protecting Our Portfolio From The Next Bear

Super Mum asked: "My concern now is to preserve my capital in case of the prolong 'bear' and become 20-30% losses. Any view on how to preserve capital?"


I think she was actually asking: "How to protect my Portfolio from the next Bear?" I believe many investors may be thinking about it too.

Market Truism: Every Bear market is followed by a Bull Market, and every Bull market is followed by the Next Bear market.

You want to ride up your portfolio with the Bull to maximize your gains and protect your portfolio from the next Bear; unless you want to leverage on the Bear to further extend your gains on the way down.

To protect your Portfolio, you may have to train yourself to look at Portfolio (i.e. Stocks and Cash available for investing) , and not just the stocks.

You need to fully understand Market Risks and Market Uncertainty, and learn to mitigate risks and to live with market uncertainty.


In portfolio management, the important thing is for you to use your knowledge and skills to forecast the general market direction; and manage your portfolio according to your plan and your personal investment goals.


http://createwealth8888.blogspot.com/2009/09/stock-market-is-war-part-3.html


So, think about what market is likely to be in 1-3 months in advance, but also know that you could be deadly wrong in your own forecast.


Higher Returns. Higher Risks. Higher Risks mean losses can be very Real.

So what are the risks?

Understanding Stock Market Risks - Updated

What is Risk?

Someone defines Risk in an abstract term:


Risk = (Probability of an Event occurring) x (Impact of the Event)

So from the simple definition above, if we are to protect our portfolio from the next bear, we have to mitigate RISKS.

We want to reduce the Probability of Event Occurring to lowest that we can really control.

One way is to diversify our portfolio with a blend of non-correlated or negatively correlated stocks so the probability of all the counters severely beaten down at the same time will be the lowest.


For example, banks and property counters are correlated, and those stocks that have Mother-Daughter relationship e.g. Keppel Corp and Keppel Land, Semb Corp and SML, etc


In another word, we need an Army of Air, Sea, and Land forces in our portfolio and also to ensure enough Reservists for mobilisation.

Read? http://createwealth8888.blogspot.com/2009/09/stock-market-is-war-part-2.html

Diversification is the key to mitigate risks as not all stocks will fall with the same magnitude and some may even recover faster in the Bear market.

So are your current portfolio blends with non-correlated or negatively correlated stocks?


Next, we want to reduce the Impact of the Event by limiting the risk exposure of any counter to 5% of our capital and any sector to 10%.


If Lehman Brothers, 158-year investment bank, who had survived two World Wars but gone in this Bear. If one man called Nick Leeson could brought down Barings Bank, the oldest merchant bank in London . So it is best to assume that there is another Nick Leeson hiding somewhere and another one company may be facing the similar fate of the Lehman Brothers.

Finally, we want to manage the ratio of Cash and Stocks according to our market forecast and allocation plan.

Again, always remember that we could be deadly wrong in our own forecast, so be flexible and keep reviewing our strategies; but stay focus on our Personal Investment Goals and the reasons why we come to invest in the Stock Market.

Read? http://createwealth8888.blogspot.com/2009/09/your-personal-investment-goals.html

Saturday 26 September 2009

Your Personal Investment Goals


What do you want from the Stock Market?

  • Preserve your Wealth and fight against Inflation
  • Build up your Wealth for future Retirement fund
  • Generate monthly income

1. Preserve your wealth and fight against Inflation

Stay invested in those blue chips that are known to give at least 5% dividend yield and re-invest your all dividends back into the Market. You are most likely to achieve this goal as Stock Market by nature is upward bias over long run.

2. Build up Wealth for future Retirement fund

You have much bigger challenges ahead, not only you have to keep far ahead of inflation, preserve capital, and protect profits. You need to apply the principle of compounding to grow at the fastest rate.

Your timing of market transactions in the possible shortest time that count.

A lots of hard works and guts are waiting ahead for you. and do you have the discipline and energy to fight the Bears and to ride with the Bulls and still be able to stay focused in achieving your goal. You are the Market Warrior!

3. Generate Monthly Income to put foods on the table.

You are a professional trader. You know your stuff. Congratulations!

Business Leverages And Personal Leverages.

Are business leverages very dangerous and disastrous to the business owners and management? 


I don't think so. The fallout from failed business leverages will cause companies to go bankrupt and are limited to the shareholders' fund.  The impact to the  company is  Management and Staff  are to find new job elsewhere.


But, fallout from failed Personal Leverages may go beyond your personal bankruptcy and may cause severe financial and psychological damages beyond yourself and can be extended to your family and your next-of-kins. 

So beware! Leverage is a double-edged sword! And don't always think that you are so smart in using OPM (Other People Money). 


You can ask around. How many people will believe that they could be striked by Lightning? 

Yet, when you read the newspapers, cases of people struck by lightning is not that uncommon hor.





Friday 25 September 2009

Stock Market Is War - Part 3

Read? Stock Market Is War - Part 2

As an active investor you may want to forecast the general direction of the Market and plan on how to allocate your Portfolio - more stocks or more cash to avoid been heavily caught by the Bear or missing the Bull and failing to capture most of the gains.


You are responsible for your own Market Forecast and plan accordingly, and there is no right or wrong way to do it. It is for you to decide and do your own money management - more stocks or more cash?




Bringing Your Portfolio Back to Even

by Douglas Rice
Thursday, September 24, 2009

Even the recent gains in the stock market haven't made a dent in many portfolios, leaving many investors wishing for the good old days of 2007. After all, it's only natural to want to get back to a point of profitability.

Most investors have muttered to themselves at one point or another: "I just want to get back to even." This is a poor strategy as it mandates a return to the past in the same strategy that got you to the bottom. If it's just one stock, a shock could lead to a rebound, but if it's the entire sector trying to regain past glory, it's likely that the strategy that took you down will not be a good strategy to get you back to even.

The Numbers

Many investors make an assumption about the amount of return that they need to get back to even. They might quickly do the math in their heads, and that can lead to major mistakes. For example, the common assumption that an equal percentage gain will offset the same percentage loss shows a significant shortfall.

For example, if a portfolio falls 50%, then gains back 50%, the portfolio isn't back to even; when $100 falls 50%, it equals $50, and a 50% increase in $50 is $75. So, while the portfolio went up and down the same percentage amount, the result is a 25% loss.

From a 50% loss, the math to get back to even requires a 100% return. This is not exactly what most people think or what they want to hear. If this is spread out over several years and eventually the portfolio gets back to even, the opportunity cost is tremendous as the time value of money has been lost, never to be recovered.

Remember, it takes at least twice as much return to get back that initial loss.

Economy Matters

Even though stocks have a mind of their own, the overall economy still matters. Sure, stocks can race ahead of booms and collapse in front of recessions, but the economic conditions are still the bedrock for the overall situation. Currently, we may be moving out of a recession, but no one is predicting stellar growth.

If we look at that in context of getting back to even, then stellar growth is paramount to getting back to market highs. Until we boom again, there isn't any fundamental reason to push stocks prices back to their previous lofty levels.

One other concern is inflation. While not typical, there is an economic condition where inflation rises but stock prices don't. In that case, not only will the portfolio not get back to even on a nominal basis, but on an inflation-adjusted basis the portfolio will be still be losing ground even when stocks rise.

For example, if a portfolio rises 5% and inflation hits 6%, then the gains are welcome, but the purchasing power of those gains shows a loss. If this continues for any length of time, getting back to even on an inflation-adjusted basis could prove to be very difficult.

Vary Your Investing Techniques

If this wasn't enough, there is one more big piece of bad news: The is no guarantee that a portfolio will ever get back to even. Those that invested in boom firms may have invested in the horse and buggy just before cars became the norm.

For example, the dotcom boom-bust took the Nasdaq index up to over twice as high as it is now, and that was almost years ago.

So, the strategy of holding on and thinking it will come back wouldn't have worked very well in that index, not to mention with a portfolio of dot-com stocks. And there is no reason for that index, or those stocks, to get back to all time highs any time soon.

We find another example if we look to Japan's boom and bust; the Nikkei was at 40,000 in 1990 and today, more than 20 years later, it's less than a quarter of that. Does anyone really think the Nikkei is going back to 40,000 anytime soon? Buy and hold in that market has provided nothing but misery over two decades. When will we go back to the froth of the mid-2000s? No one really knows, but it's possible it's not anytime soon.

Summary

If you are thinking that you just want to get back to even, then make sure you understand how much return you are going to need, consider how robust the economy is going to have to be to get that return, and then update your investment choices in the portfolio to reflect the new situation. It's important to avoid blindly thinking that the same strategy that took you down will take you back up.

Thursday 24 September 2009

Stock Market Is War - Part 2

Read? Stock Market Is War - Part 1

In modern war, being a General is not enough, you need to be the Commander-In-Chief of three forces - Air, Sea, and Land.





Is your Portfolio also consists of Air, Sea, and Land - diversified forces of power so that you can endure attack from the Market from any corner and still survive without badly damage.

Not all stocks will be hit with the same degree of destruction, and surprisingly, some of them may even rise in a down market - this is known as Sector Rotation in play.

When you have Holding Power, it can only help you to prevent panic selling and exit market with big losses. But, Holding Power may not necessary enable you to recover back to the previous level of fall.

Just like your three forces - Air, Sea, and Land are all engaged at the battlefield; they are fully exhausted, and really unable to push forward anymore. You as the Commander-In-Chief will then need to activate your Reservists - your fresh reserve force to help you to push forward and to recover lost battleground.

So to really recover from your losses besides your Holding Power, you will still need fresh Firing Power - your Reservists.

So have you been keeping your Reservists ever ready when the needs arise?

Noble and Olam

Noble and Olam are my favourite mistresses of 2009 if you have been reading this blog. With the strong hand of CIC in Noble and Temasek in Olam. Noble and Olam have become golden pillows that are best to nimble at them ONLY to stuff more feathers.

Hard lessons learnt for destroying past pillows in 2008 due to GREED. Know What Is Enough and control GREED!

Got to work harder to look out for next pillow...

Stock Market Is War - Part 1


If Stock Market is War so are you aware of The Art Of War?

Sun Tzu: The Art of War

The Oldest Military Treatise in the World!

The Priciples of Warfare: Calculations!

Sun-tzu said:

Warfare is a great matter to a nation;it is the ground of death and of life; it is the way of survival and of destruction,and must be examined.

Therefore, go through it by means of five factors;compare them by means of calculation,and determine their statuses:

One, Way, two, Heaven, three, Ground, four, General, five, Law.

1. The Way is what causes the people to have the same thinking as their superiors; they may be given death, or they may be given life, but there is no fear of danger and betrayal.

2. Heaven is dark and light, cold and hot, and the seasonal constraints.

3. Ground is high and low, far and near, obstructed and easy, wide and narrow, and dangerous and safe.

4. General is wisdom, credibility, benevolence, courage, and discipline.

5. Law is organization, the chain of command, logistics, and the control of expenses.

All these five no general has not heard;one who knows them is victorious,one who does not know them is not victorious.

Therefore, compare them by means of calculation, and determine their statuses.

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When you come to invest or trade in the Stock Market, you are the General and so are you aware of The Art Of War?
There are two books available in NLB:
  • Sun Tzu on Investing by Curtis J Montgomery
  • The 36 Strategies of the Chinese for Financial Traders
    by Daryl Guppy

Wednesday 23 September 2009

Will We See A STI Butterfly Today?

STI hit 13-month high @ 2,685.63 on Tuesday closing!

Tuesday 22 September 2009

Active Investing, Passive Investing, and Active Monitoring

Investopedia explains Active Investing

Active investing is highly involved. Unlike passive investors, who invest in a stock when they believe in its potential for long-term appreciation, active investors will typically look at the price movements of their stocks many times a day. Typically, active investors are seeking short-term profits.

What Does Active Investing Mean?

An investment strategy involving ongoing buying and selling actions by the investor. Active investors purchase investments and continuously monitor their activity in order to exploit profitable conditions.

What Does Passive Investing Mean?

An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long-term appreciation and limited maintenance.

Investopedia explains Passive Investing

Also known as a buy-and-hold or couch potato strategy, passive investing requires good initial research, patience and a well diversified portfolio. Unlike active investors, passive investors buy a security and typically don't actively attempt to profit from short-term price fluctuations. Passive investors instead rely on their belief that in the long term the investment will be profitable.

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

Some Value Investors think that by active monitoring of their portfolio made them Active Investors when actually they are not.

Can They Comfortably Afford Them?

Very often we hear some people saying these:

1) When they are sick; they need private medical care.

2) When their child is sick; they need paediatrician.

3) When their wife is pregnant; they need car.


Are these real needs? Can they comfortably afford them?

Trust me, some 22 years have passed, I happily went through without them. Maybe you need them badly, I don't know.

Noble - CIC as new Investor.

SEOUL/SINGAPORE - The Noble Group said on Tuesday it had agreed to place 573 million shares for a total of approximately US$850 million to China Investment Corporation ('CIC'), at a price of S$2.1137 per share

Monday 21 September 2009

The Story Of The Duck

Imagine that there were 100 people participating in a guessing game of only 3 probabilities. The richest and smartest amongst them played the banker, the rest of the 99 were just players.

The 99 players had to board a huge machine that the banker had control over. The players had to guess which direction the banker would move the machine -- either UP, DOWN, or STILL. To make the guessing easier for the players, the banker gave them one hint, and the rest was up to them.

Each of the players had only to pay $50 to join the game for a grand prize of $1,000 each if they guessed correctly. After analysing and weighing the odds, they were all convinced it was a pretty good deal. The hint went this: "There is a duck in the middle of a pond floating peacefully. An alligator is coming silently from behind it. How do you think the duck would react?" said the banker. The players were laughing inside their hearts, thinking: What a straightforward hint! Everyone was busy writing down their answers on pieces of paper provided to them earlier. "OK! Time's up. Please raise your answers so that I can see them clearly," instructed the banker. They all displayed their answers joyfully -- 80 of them chose UP, 15 of them chose STILL and only 4 chose DOWN.

The banker looked at their answers and gathered that in order to win, he had to move the machine down, so that 95 of them would lose, and only 4 would win. And so he moved the machine DOWN. The 80 of them who chose UP became furious because they found the answer ridiculous. They stood up voicing their objections: "Even the stupidest duck would fly for its life!" The other 15 joined the opposition: "Weren't you trying to fool us with a plastic duck? Why would a duck dive into the water knowing very well it would never out swim an alligator?" The banker answered smilingly: "I quite agree with all of your theories and analyses, but unfortunately, the duck was at the moment unaware of the approaching alligator, and so happened to dive into the water to catch its meal: A fish."

Moral of the Story:

The market's predator have learned, understand and now know very clearly the habits and weakness of their ever-naive. They are just like a fisherman who knows exactly where he can find his fish, the various baits he should use for different type of fish and the best time to fish by observing the tides to ensure a fruitful trip full of catch. No matter how many times he goes back to the same place with the same bait, the same load of fish fall into his net.

CreateWealth8888:

The Market Makers play the role of the Bankers and especially true for markets such as covered warrants and retail forex.

The market sharks are also waiting at major technical charting points, turning points or levels and they have all the resources and expertise to know the charts better than anyone here and we are so naive to think that we can beat the market sharks at their game. So just open your eyes wide and understand why sometime market moves unexpectedly in the opposite direction - The Sharks are in Action!


Investing in Stock Market As Your Business Or Your Pension Fund

Do you invest in stock market as your "Business" or "Pension Fund"?

Most Value Investors are likely to treat investing in stock market as "Pension Fund". The objective of a Pension Fund is long term investment, and hopefully with regular dividend income , re-investing dividend income, and capital appreciation for future draw down.

But, if you treat investing in stock market as "Business" as I do. The approach to investing is completely different. As a "Business" owner, you have to actively manage Revenue, Stock Inventories and Cash flow.

You have to set average monthly Revenue target to ensure that you can meet the Yearly Revenue target.

Sometime to meet the average monthly Revenue target, you have to trim the inventory level by doing a clearance sale on stocks for lesser realized profit than expected.

You may have to maintain sufficient inventories to meet your short, mid and long term business goals or even change the mix of inventories by disposing slow moving stocks that are not going anywhere or stock up with more exciting stocks.

You are very active on cash flow management to ensure that you have sufficient purchasing power to pick up your inventories when discounted assets are available for sales in the market.

As a "Business" owner, your main objective is to keep expanding the business further and to achieve higher and higher revenues as possible and to ensure future business growth is achieved within your risks management to meet your final investment goals.


Be Far Better At Selling Than At Buying?

Samuel Johnson - "Between falsehood and useless truth there is little difference. As gold which he cannot spend will make no man rich, so knowledge which he cannot apply will make no man wise."

Knowing what is enough for us will help to set profit target and understanding that paper profit will make no one rich so we have to be far better at selling than at buying.

Realized profit is real money and can be used to buy more stocks when stocks pullback or buy more lower price stocks to achieve compounding effects.

When stocks are more volatile, it is even more important to learn the art of selling and to overcome seller's remorse and price volatility may actually help to provide us with good opportunity for buying and selling.

Sunday 20 September 2009

Understanding Prospect Theory

By Albert Phung


Traditionally, it is believed the net effect of the gains and losses involved with each choice are combined to present an overall evaluation of whether a choice is desirable. Academics tend to use "utility" to describe enjoyment and contend that we prefer instances that maximize our utility.

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However, research has found that we don't actually process information in such a rational way. In 1979, Kahneman and Tversky presented an idea called prospect theory, which contends that people value gains and losses differently, and, as such, will base decisions on perceived gains rather than perceived losses. Thus, if a person were given two equal choices, one expressed in terms of possible gains and the other in possible losses, people would choose the former - even when they achieve the same economic end result.

According to prospect theory, losses have more emotional impact than an equivalent amount of gains. For example, in a traditional way of thinking, the amount of utility gained from receiving $50 should be equal to a situation in which you gained $100 and then lost $50. In both situations, the end result is a net gain of $50.

However, despite the fact that you still end up with a $50 gain in either case, most people view a single gain of $50 more favorably than gaining $100 and then losing $50.

Evidence for Irrational Behavior



Kahneman and Tversky conducted a series of studies in which subjects answered questions that involved making judgments between two monetary decisions that involved prospective losses and gains. For example, the following questions were used in their study:

  1. You have $1,000 and you must pick one of the following choices:
    Choice A: You have a 50% chance of gaining $1,000, and a 50% chance of gaining $0.
    Choice B: You have a 100% chance of gaining $500.

  2. You have $2,000 and you must pick one of the following choices:
    Choice A: You have a 50% chance of losing $1,000, and 50% of losing $0.
    Choice B: You have a 100% chance of losing $500.


If the subjects had answered logically, they would pick either "A" or "B" in both situations. (People choosing "B" would be more risk adverse than those choosing "A"). However, the results of this study showed that an overwhelming majority of people chose "B" for question 1 and "A" for question 2. The implication is that people are willing to settle for a reasonable level of gains (even if they have a reasonable chance of earning more), but are willing to engage in risk-seeking behaviors where they can limit their losses. In other words, losses are weighted more heavily than an equivalent amount of gains.

It is this line of thinking that created the asymmetric value function:





This function is a representation of the difference in utility (amount of pain or joy) that is achieved as a result of a certain amount of gain or loss. It is key to note that not everyone would have a value function that looks exactly like this; this is the general trend. The most evident feature is how a loss creates a greater feeling of pain compared to the joy created by an equivalent gain. For example, the absolute joy felt in finding $50 is a lot less than the absolute pain caused by losing $50.

Consequently, when multiple gain/loss events happen, each event is valued separately and then combined to create a cumulative feeling. For example, according to the value function, if you find $50, but then lose it soon after, this would cause an overall effect of -40 units of utility (finding the $50 causes +10 points of utility (joy), but losing the $50 causes -50 points of utility (pain). To most of us, this makes sense: it is a fair bet that you'd be kicking yourself over losing the $50 that you just found.

Financial Relevance



The prospect theory can be used to explain quite a few illogical financial behaviors. For example, there are people who do not wish to put their money in the bank to earn interest or who refuse to work overtime because they don't want to pay more taxes. Although these people would benefit financially from the additional after-tax income, prospect theory suggests that the benefit (or utility gained) from the extra money is not enough to overcome the feelings of loss incurred by paying taxes.

Prospect theory also explains the occurrence of the disposition effect, which is the tendency for investors to hold on to losing stocks for too long and sell winning stocks too soon. The most logical course of action would be to hold on to winning stocks in order to further gains and to sell losing stocks in order to prevent escalating losses.

When it comes to selling winning stocks prematurely, consider Kahneman and Tversky's study in which people were willing to settle for a lower guaranteed gain of $500 compared to choosing a riskier option that either yields a gain of $1,000 or $0. This explains why investors realize the gains of winning stocks too soon: in each situation, both the subjects in the study and investors seek to cash in on the amount of gains that have already been guaranteed.



The flip side of the coin is investors that hold on to losing stocks for too long. Like the study's subjects, investors are willing to assume a higher level of risk in order to avoid the negative utility of a prospective loss. Unfortunately, many of the losing stocks never recover, and the losses incurred continued to mount, with often disastrous results.

Avoiding the Disposition Effect



It is possible to minimize the disposition effect by using a concept called hedonic framing to change your mental approach.

For example, in situations where you have a choice of thinking of something as one large gain or as a number of smaller gains (such as finding $100 versus finding a $50 bill from two places), thinking of the latter can maximize the amount of positive utility.

For situations where you have a choice of thinking of something as one large loss or as a number of smaller losses (losing $100 versus losing $50 twice), framing the situation as one large loss would create less negative utility because the marginal difference between the amount of pain from combining the losses would be less than the total amount of pain from many smaller losses.

For situations where you have a choice of thinking as something as one large gain with a smaller loss or a situation where you net the two to create a smaller gain ($100 and -$55, versus +$45), you would receive more positive utility from the sole smaller gain.

Finally, for situations where you have a choice of thinking as something as one large loss with a smaller gain or a situation where you have a smaller loss (-$100 and +$55, versus -$45), it would be best to try to frame the situation as separate gains and losses.

Trying these methods of framing your thoughts should make your experience more positive and if used properly, it can help you minimize the dispositional effect.



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CreateWealth8888:


Now, you understand how this Great Bear has impacted the retail investors behaviors and some may have become overly conservative and park excess cash in fixed deposits or money markets. To recover losses from the Bear Market, one has to be in the market to ride the Bull; or may be some are thinking of recovering losses through the property market.

Understanding Stock Market Risks

You often hear this - Investing in Stock Market is risky.

In fact, investment of any kind including setting up your own business by nature is risky, and can potentially cause you lose some or all your investing or initial capital.

Actually as a paid employee you also face similar risks of losing your job when you approach 40s or 50s. It is a well known fact that HR department update this list of employees in these age groups during annual budget exercise.

So what are the possible Stock Market Risks and how can we as retail investors mitigate these risks?

1. Price Volatility Risk
  • Need to learn how to time your Entry and Exit points
  • Buy in batches by Average In (different from Average Down)
  • Sell in batches
2. Companies Risk
  • Select top tier blue chips that are likely to be rescued by Temasek.
  • Limit your exposure to any stock to less than 10%, and for bigger account size less than 5%
  • Limit your exposure to any sector to less than 20%, and for bigger account size less than 10%
3. Currency Risk

  • Invest in Singapore only
4. Lack of Knowledge and Skills

5. No Time for Research & Monitoring

  • You mean other people got more than 24 hours? Time is the fairest commodity of all and everybody has the same amount of time, no more or no less. 24 hours a day!
  • Wake up if you don't have time and stop dreaming.

Earning More Than Your Boss?

Can you earn more than your boss?

Yes, Can be possible if you invest well by taking regular or monthly profit from the stock market. (assuming your boss doesn't invest well to earn more than his/her boss)

If you want to make money,” Jim Cramer said, “you need to take a chance. Sometimes you will be wrong, but if you never try…you'll never be right.”

Alternatively take up part time job like relief taxi driver, property or insurance agent, or tutoring, etc..

Buy-and-hold with capital preservation?

This strategy addresses the increasingly wider swings between booms and busts in the stock market. [similar to CreateWealth8888's strategy]

by Sani HamidDirector, wealth management(economy & strategy) Financial Alliance

MAKING money is relatively easy. What's difficult is keeping it. A key lesson many investors would have learned from the financial crisis is that the market can easily give (profits) and just as easily take back whatever it has given. This is actually nothing new, as many seasoned investors would attest.

Take, for example, the 20-year period September 1989 to today. An investor in the Singapore market would have had four key rallies or opportunities to make a killing. First was the run-up from October 1992 to January 1994, when the Straits Times Index rose from 1,400 points to a peak of 2,500.

Second was the astonishing rally from 800 to 2,500 points between September 1998 and February 2000 as the market recovered from the 1997 Asian financial crisis. This was followed by the recent mega-rally from 1,200 to 3,900 between April 2003 and November 2007 after the dotcom crash, and finally the rally we are in now, which began in March.

Investors who hung on and rode out the initial three rallies would have been repaid handsomely as markets doubled or tripled during the run-ups. But at the same time, one cannot ignore the fact that we have also had a fair share of declines over the past 20 years, mainly represented by three major crises - the Asian crisis, the dotcom crisis and now the sub-prime financial crisis.
When we pair up these up and down cycles, one thing becomes clear: relatively speaking, making money is easy - it's keeping it that is difficult. In each case, the four rallies since 1989 were followed by retracements that virtually wiped out all or a large part of prior gains.


The Asian financial crisis, which came after the October 1992 to January 1994 rally, wiped out not only all of the gains made during the rally but much more. Correspondingly, the dotcom crisis resulted in the market retracing almost 80 per cent of the September 1998 to February 2000 gain, while the recent sub-prime crisis saw a 90 per cent retracement of the April 2003 to November 2007 rally.

This tsunami of liquidity - effectively amplified by the leverage created by our fractional reserve banking and loose monetary policies - will continue to cause the pendulum to swing even further to extremes, as large inflows and outflows of liquidity result in higher market volatility. In a wider context, one can also see from the 20-year STI chart that an investor who had bought the index at 1,500 at the beginning of 1990 would have endured a roller-coaster ride over this period, revisiting that level almost a dozen times before finally ending back at square one in March this year. And it is exactly this which gives the long-standing principle of 'buy and hold' a bad name.

So why bother with the buy-and-hold strategy, one may ask. I personally believe it's a strategy that still works. However, buy and hold cannot be used in isolation, as circumstances have changed. While time is clearly the cornerstone of the buy-and-hold strategy, it would be naive to think that one can make money by purely holding on to a portfolio long enough - which has probably given rise to the tongue-in-cheek maxims 'buy, hold and regret' and 'buy, hold and forget'.

Instead, the buy-and-hold strategy has to be reinforced by another principle - capital preservation.

Anecdotal evidence suggests that capital preservation does not figure highly on many investors' lists. For instance, investors from the large pension funds to the man-in-the-street have all surrendered profits made over the years and in some cases even allowed their principal to be affected. Both the Yale and Harvard endowment funds, for instance, lost 30 per cent of their value in the recent meltdown, while many smaller investors have lost a large amount of their savings and retirement funds that will take years to rebuild.

Without a capital preservation strategy, many will find themselves in a bind, as the available time horizon for their investments to grow will have narrowed sharply, leaving them with little time to make up for such losses.

I believe capital preservation has become paramount, especially as we will have to deal with the same or even greater volatility in the future versus what we have seen in the past two decades. In my view, since the collapse of the Bretton Woods currency system in 1971 and the proliferation of derivatives in the 1990s, after they were first introduced in the mid-1980s, economies and markets have seen their boom-bust cycles become much shorter and much more severe.

This is due to massive shifts in liquidity, as the demise of the Bretton Woods monetary system effectively removed the shackles on the US and many other governments, allowing them to print money out of thin air. While ever-increasing liquidity in the global system provided the fuel, it was the proliferation of derivatives that provided the spark to ignite this global liquidity, as it took leveraging to new heights. It is estimated in some quarters that the amount of outstanding derivatives worldwide in December 2007 was in the region of US$1.144 quadrillion - some 22 times global GDP or roughly US$190,000 for every person on the planet.

This tsunami of liquidity - effectively amplified by the leverage created by our fractional reserve banking and loose monetary policies - will continue to cause the pendulum to swing even further to extremes, as large inflows and outflows of liquidity result in higher market volatility. Because of such swings, I believe capital preservation is now essential to growing capital over the long term.

Capital preservation rules are used extensively by shorter-term traders to limit their risk and preserve their capital. One can also extend this to not only preserving capital but also a portion of gains or profits made so far.

Unfortunately, many wrongly confuse capital preservation with trying to time the market. Instead, capital preservation should be considered a part of money or risk management, in contrast to efforts to time the market, which seeks additional returns for a particular asset. Hopefully, after the present crisis, investors will begin to appreciate that managing the downside risks to one's portfolio is very much a part of making it grow. I will not be surprised in the slightest if investors start asking 'what strategy do you have to preserve my capital?'.

Oh!. Use CreateWealth8888's Pillow Stocks Strategy - same principle as Buy-and-hold with capital preservation.

http://createwealth8888.blogspot.com/2009/04/pillow-stocks-strategy.html

Saturday 19 September 2009

Think of Investing in Stock Market as Game of Tug of War


By Jeffrey D. Voudrie, CFP

Think of investing in the stock markets as a game of tug of war. We all remember playing this game in gym class, with people pulling on either end of a rope, with a flag tied in the middle. The goal is to get the flag to your side as quickly as possible, and of course, to embarrass the other side by your superior display of strength. Of course, it didn’t always work out that way and I have been on the side of the falling team more than once!

This is how investing works in the stock markets. We often think that the value of a stock is based on the company behind it, but that is only partly true. Think of the company as the rope in a game of tug of war. It’s not just the quality of the rope (cw8888: fundamental analysis FA) that will decide which team wins, it’s the players competing on each side (cw8888: technical analysis TA) .

On one side of a ‘stock’ rope, you have investors who believe the stock is going up in price. On the other side is another group of investors equally convinced the stock price will go down. The side that puts up the most money will determine the direction of the stock price.

Unlike in real tug of war, the players in the stock market can change the amount they have invested and even the side they are on at any time. Some players might change several times in a day. Others might stay on one side for years.

This switching of sides is what results in huge swings in the stock price. If one side of the rope becomes overloaded, then they have the power to quickly pull the rope their way. If you have a lot of people and money on one side it’s not going to be much of a contest.

In the real game of tug of war, the game is won once the flag moves a set distance. Then both sides quite and move on. The stock market tug of war is much more fluid. Players can come and go. Some might quickly take their profit or cut their loss short. Others may wait until it looks like one side has won before joining the game on the opposite side.

Moreover, each player may have a different strategy that determines what side they play on—or whether they play at all. Some focus on the quality of the company (the rope). Others look at the statistics of what’s happened in that tug of war in the past . And there are some that just seem to walk up and pick a side without any rhyme or reason.

Outside events also play a role in the quality of the rope and the decisions of the players. There might be a hurricane affecting the oil supply. The expected outcome of an election could impact regulation. Housing prices can go up or down.

The decisions made by professional players have a much greater impact on the outcome of the game than do those of individual investors. That’s because they have a lot more money to invest. If all the professional investors switch to the same side, the individuals on the other side are going to get embarrassed!

Looking at a single game of tug of war allows us to get a general understanding of the underlying dynamics involved in the movement of the price of a stock. The movement of a market or a market index is really the sum of all the underlying battles taking place.

The S&P 500 index represents the result of the tug of war occurring in 500 specific companies. The Dow Jones Industrial Average represents 30 select companies.

Successful investing isn’t solely about choosing which rope, but also choosing the right side. And it’s vital that you take into account what the other players are or will do. You won’t always get it right (nor should you expect to), but understanding why markets move will help you make more logical and informed investment decisions.

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CreateWealth8888:

Well said. Successful investing required both fundamental (right rope) and technnical analysis (increasing the chance of choosing the right side).

To share some of my thoughts, learning and experiences.You may wish to read more articles on the left under "To share some of my thoughts, learning and experiences ..."





Your Lifestyle and Your Children's Lifestyle

Your Lifestyle and Your children's Lifestyle may be completely different and may have serious impact towards your own Retirement Financial Planning.

You can be very cautious and track your expenses carefully and save as much as possible; but sadly and true fact of life, your children's lifestyle may seriously counter or slow down your effort towards accumulating wealth for the retirement fund. Your children may find it difficult to live your kind of lifestyle and you may have no choice as most parents are willing to spend more on their children's lifestyle out of their love for children.

So do consider your children's lifestyle when doing your own Retirement Financial Planning and make more provisions for higher expenses till they start making a living for themselves.

Investing Is Never Ever About The Past

Many investors may be hurt by this Great Bear and still living in the past.

Investing is never ever about the Past. The past is past. It's gone and doesn't really matter anymore.

You may want to seriously review your own investment strategies and then moves on.

Staying too long and too much in CASH may actually hurt you in your future and beware of possible higher inflation rate, and let us hope that history will not repeat itself so soon and we will have enough time to build up some wealth before the next Bear comes. Cheers!

Investing Knowledge and Skills

Peter Lynch said: "In the Long Run, it's not How Much Money You Make that will determine Your Future. It's how much of that Money you PUT TO WORK - by SAVING It and by INVESTING It."

Even though you may be good in saving lots of money through careful tracking of daily expenses, but if your investment strategies didn't get you anywhere. You might as well save less and spend more to enjoy yourself.

You can increase your investing knowledge through reading investment, finance, and trading books. There are plenty of such books available at different NLBs. Do borrow them to read. Sometime, I do borrow them back again and again to do a quick refresh.

(BTW, if more and more people borrow such books, NLB will likely to allocate more budget to bring in more new books. Kindly help to borrow as many such books as possible as I am running out of new books to read. LOL)


Investing Skills are different from Investing Knowledge. You can judge yourself whether you have good Investing Skills or not from the results of your Investment Strategies. If you are not progressing well towards your Investment Goals, or not getting anywhere, then you are less skillful, but you can still be very knowledgeable. Your views on investment or trading can be quite impressive but your personal investment goals are not achieved.


Similarly, one can be a skillful investor who is progressing well on target towards one's own Investment Goals; but, may not be so knowledgeable to participate in discussions on investing and trading.

Your investing skills come from real life experience in investing or trading, learning from your own mistakes and also from other's mistakes. The Internet space is never short of people lamenting on their own investing mistakes and we just need to google from times to times.

You need an open mind to be able to realize your own mistakes, keep reviewing and refining your investment strategies if you realize that they are not working for a while.
Benjamin Frankin said:

An Investment in Knowledge Pays the Best Return.

So are you planning to visit NLB to pick up your next investment book today or on Monday?

Thursday 17 September 2009

Gambler's Losses and Investor's losses

When a Gambler goes to Casino with $50K to gamble, he knows that due to bad luck he will lose all his $50K. The Gambler can live with the $50K losses. He knew it. It can happen!

But, when an Investor goes to Stock Market with $50K to invest, he will never expect that he will lose all his $50K. If the Investor ever lost $50K in the Stock Market, he may not be able to take it. He may be traumatic about his losses.

Gamblers know their losses while Investors are shocked by losses. See difference.

It's when you sell that counts


If you really have difficulty in selling your stocks, you may want to learn about selling. The book is available in NLB.
An investor's success depends far more on when they sell a stock than on when they purchase it. And yet, most investors have a tendency to hold on to a stock far longer than is profitable. Brokers, too, have their own hesitations about advising clients to sell.

Buying or Shorting?

When we bought stocks and if the market moves against us we can hold for a very long time and there is no way for the Market to force us to sell.

But, when you short stocks (CFD or SBL) and if the market move against you, it can at certain point of time in the future will force you to cover.

See the difference.

Wednesday 16 September 2009

Medi Shield or Private Shield?

You can argue on the merits of Medi Shield and Private Shield until cows come home and none go home satisfied with the answers.

One thing for sure that there is no doubt that Private Shield will cost much more than Medi Shield. Can you live with it?

Let me ask simple question.

Are you counting your dollars and cents to save as such as possible in your daily life?

If the answer is YES, then choose Medi Shield.

Why?

Because for 365 days in XX years you are living your lifestyle in B1/B2 or C Ward look alike, and what made you think that when you are sick that you need to stay in A Ward?

You tell me does it make dollars and cents?

9 in 10 S'poreans do not feel well prepared for retirement


SINGAPORE: Ninety-one per cent of Singaporeans do not feel well-prepared for retirement compared to the global average of 87 per cent, according to an annual report by Oxford University's Institute of Ageing on Wednesday.


It is suggested that the low level of preparedness is linked to the lack of access to financial advice. Although Singapore has a wide range of retirement products available, the report said more could be done to educate families to plan for the long term.

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Some ideas for retirement planning ..

You may be able to retire with $1M Retirement Fund at 55 if your yearly expenses is at 4% of your retirement fund i.e $40K with the following assumptions as follows:

1) Inflation rate at 3%.

2) CPF Life providing yearly income at $12K (assuming minimum sum)

3) CPF OA balance at $300K to earn compound rate at 2.5%

4) $500K to invest in stocks with success rate at 40% of $500K providing 5% return

5) $200K cash as liquidity earning compound rate at 1%

You begin your yearly draw down from your CPF OA, and after exhausting your CPF OA, then the draw down comes from liquidating stocks, and lastly draw down comes from Cash fund.

It is enough to last you from 55 to 78. Cheers!

Using CPF Investment Fund For Investing

Your money in CPF Investment Fund is compounding risk free at the rate 2.5%. If you ever want to use this fund for investing, think over it carefully, are you able to generate much more than 2.5% return on your investment strategies to justify for trading off a risk-free compounding instrument.

If you can't do it, it is better for you to leave your CPF Investment Fund alone.

Tuesday 15 September 2009

Adding The Magic Of Compounding

http://createwealth8888.blogspot.com/2009/09/multibaggers-and-compounding-their.html

To add the Magic Of Compounding ...
  • To trade and not invest
  • Measuring ROC per trade over the your entire investing time frame
  • Approach close to 100% of available fund most of the time
Good in Theory - but how to do it? Yet some manage to do it. Amazing.

Sunday 13 September 2009

How much has the price of Kopi-O went up?

After 27 years, my cup of kopi-O doesn't really increase as compared to pay increase if I drink my cup of kopi-O at the coffee shop. Now, kopi-O is served in glass instead of cup so it is actually 20% more. Of course one must be prepared to pay more for better comfort and environment and for premium standard of coffee drinking. [oops. Need to clarify, comparing $0.30 kopi-O in 1982 to 2009, but now we have choice to drink kopi-O in food court or Starbuck, and not saying the price of kopi-O at food court and Starbuck in 1982 is $0.30]

Are Women Better Investors?

By Doug Hirschhorn

In fact, there are five reasons why your wife or girlfriend may be a better investor than you:

  • Awareness : Women are generally more comfortable going through the process of gaining self-awareness than men. And self-awareness is critical to successful trading.
  • Ego : Typically, women get far less wrapped up in the “I/Me” involved in the decision-making process. Remember, trading is about making money, not being right.

  • Strategy : Men react, while women tend to reflect. It’s reacting that leads to impulsive trading and sloppy mistakes. Reflection, on the other hand, leads to game plans and process.

  • Growth : Women are often more comfortable going outside themselves to find information. They have a growth mindset and are more open to learning from their mistakes.

  • Stability : Let’s face it, men are driven by greed, while women are more likely to be driven by comfort and stability. [CreateWealth8888: Greed can kill. Know the Concept of Enough. Know when to take regular profit to trade off for comfort and stability rather than aiming for home run by holding till the next sunset]
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Guys, are you making money in the market? If not, consider handing over this task to your wife, she may better at it. Alternatively, seriously think over the five pointers.

Saturday 12 September 2009

Don't Forget Your Dividends

I realize that the past dividends income range from 22.6% to 32.6% of the total yearly realized profits from the stock market.

As some companies pay quarterly, semi and final divivdends at different calender month so don't forget to pick them up before XD as it does help to ease pressure from active trading during directionless market where we hesitate to trade, but still can have some income coming from dividends for that month.

Know Your Interest?

Do you always up size your Burger?

Do you always max up your whatever loan you take? Car loan or especially Home loan can be up to 30 years. If you opt for a 30-year home loan, your banker loves you most.

Why not you try to borrow this book from NLB? Know your interest : a guide to loans and investment / Tse Yiu Kuen.

or quick visit to http://createwealth8888.blogspot.com/2009/02/my-no-leverage-principle-why-part-1.html

Repayment of a home loan is usually made in monthly instalments. Each instalment consists of two parts: principal repayment and interest payment.

Do ask your bank to provide you a full details of home loan repayment schedule, then you would know how much of the monthly instalment goes towards paying the principal and how much towards paying interest, and the total amount of interest payable for the whole loan tenor.

Sometime, I feel that your banker is just better than Ah Long (Loan shark) as your banker allows you to pay small part of the principal in the first few years while Ah Long doesn't, and you always seem to owe them full principal even after paying for some years.

A 30-year home loan??? 30 years is a very long time and your future is full of uncertainties but only certainty is your monthly mortgage and must not fail.

But you think your job is secure; you are doing well and there is no problem in servicing the monthly mortgage. Don't ever forget that you are PERCEIVED to be good only by your current bosses and that about it. Remember PERCEIVED.

Over the next 30 years, anything can happen will happen, your current bosses may leave or be replaced, and your new bosses may not PERCEIVE you as "GOOD" as your previous bosses or your new bosses may want to bring in their lieutenants or generals to replace the old guards. Sadly, this is the truth in the corporate world. Your value is somehow just PERCEIVED by your current bosses.

But, the smart investors will tell you even if they $1M cash to pay for $1M property upfront they will not as home loan is the cheapest loan in town. The smart investors may just pay 20-40% and borrow the other 60-80% and they think they are better off investing 60-80% of the cash available.

Alas, the smart investor may have forgotten the Dark Side of Compounding Interest if you have a 30-year Home Loan that you are compounding 60-80% of this "capital" at confirmed losses due to interest payment. But, are you so sure that your returns on your investment using the saved 60-80% of this "capital" will exceed your losses due to interest payment?

As a smart investor, I can't believe you will deploy your entire 60-80% of your "capital" at your target investment at all time after taking up your home loan. I believe most likely you will be deploying a faction of 60-80% of your "capital" at a time as you now have huge debts and likely be more cautious and more risk averse.

For a 30-year Home Loan, you are compounding confirmed losses at 60-80% of your "capital"; but, you may potentially earn compounding returns on fraction of your 60-80% of your "capital" throughout the 30 years period.

May be you are thinking that you will be an idiot for not taking advantage of the current low mortgage rate at less than 2%. If the mortgage rate goes up in the future, you will redeem and refinance or even pay up the outstanding loan in full.

Don't you ever think that your bankers are a bunch of idiots and you are smarter than them. They already know what you are thinking. You better find out what are penalty fees for partial or full redemption of the loan. How much it will cost you?

Think again and do your maths. If it is a GOOD DEAL, then GO for it.

http://createwealth8888.blogspot.com/2009/08/will-you-try-to-pay-off-your-housing.html

Friday 11 September 2009

The Concept of Enough



Source: Michael Josephson, Josephson Institute of Ethics

Have you heard about the man who was feeling sorry for himself because he couldn't afford new shoes until he met a man with no shoes? And the man with no shoes was almost overcome with grief about his lot in life until he met a man with no feet?

Comparisons can help us put our lives in perspective and know what we ought to be grateful for. But they can also build barriers to happiness. For some, it's not enough to have something good. It's important that no one has anything better. So the man who was happy to have a warm place to sleep will become discontented when he meets a man who owns a house. Why is it that our happiness is diminished when we think someone may be happier?
 One way to deal with the seduction of comparisons is to develop the concept of "enough" by thinking more clearly about the difference between our wants and our needs. It's OK to want and enjoy comforts and pleasures beyond the necessities, but when we convince ourselves we need whatever we want, we mount a treadmill that can never take us to happiness.

When we confuse our wants with our needs, we diminish our ability to appreciate and enjoy our lives. And when we feel cheated in life, we are more likely to become cheaters, sacrificing integrity, the one thing we can all have in abundance. And when integrity goes, no amount of material success will make a difference.
 Knowing what is enough need not sap ambition to get more than we have. It merely frees us from the sense of deprivation that could cause us to be less than we can be.

What Is The Consequence Of Making Investment Mistakes That Counts

http://sgmusicwhiz.blogspot.com/2009/09/can-we-afford-to-make-mistakes-in.html

http://fivecentstencents.com/blog/2009/09/10/to-err-is-human-to-learn-is-divine/#more-898

Remember Murphy's law:
"Anything that can go wrong will go wrong."

So someday and somehow we will make one or more very serious investing mistakes and cause us to lose money. It is the consequence of losing this money that counts.

Can we afford to lose this amount of money without waking up in the middle of night and wondering how to get through this crisis?

So does your investment strategy allow you to make a few serious mistakes and still allow you to get back into investing with new capital and hopefully to recover all your losses after learning your mistakes? If it is not, then you can't afford to make any mistakes.

Thursday 10 September 2009

Use Your Common Sense In Investing?

Use your common sense in investing? When comes to investing your money, the GREED can overcome all your senses and common sense can go down to the drain. Just remember this: when someone promises you LOW RISK AND HIGH RETURN or GUARANTEE you GOOD RETURN.

There is no need even for common sense. You only need to remember Warren Buffet's No 1 Advice and then run quickly.

Warren Buffett, the man known as the "Oracle from Omaha" because of his history of successful investments, shared his top three pieces of advice for average Americans who want to grow their savings and keep their money safe.

Number one: "If it seems too good to be true, it probably is."

Number two: "Always look at how much the other guy is making if he is trying to sell you something."

Number three: Don't go into debt. "Stay away from leverage," he said. "Nobody ever goes broke that doesn't owe money."

A Brief History of Nagging Wife

Weekly column in The Post on 27 August, 2008.

The nagging wife is the universal villain of married life. From the earliest pages of human history there is perhaps no literature and folk tradition where the character of the nagging wife is not found widely. Along with the sacrificing mother, forsaken lover, tragic hero and evil lord, the nagging wife will be found in all societies and cultures at all times in history. Even in today’s world, irrespective of the differences of race, wealth, religion, culture, language and social reform, the character of the nagging wife is universal. She keeps popping up in jokes, films, songs, novels and other cultural cultural creations.

Socrates, the famous Greek philosopher, is supposed to have had a nagging wife who drove him to spend his time in the city squares and gymnasia, much to the benefit of philosophy. The figure of the nagging wife finds mention in the Bible, (indirectly) in the Quran and is a crucial moment in the story of the Ramayana. She is to be found in renassaince Italy, in medieval England, on the expanding border of America’s “wild west”, in the bedrooms of colonial India and in the sit-coms of post-modern Europe.

What is interesting about this figure of the nagging wife is that it is one of those few characters who transcend history. Like the sacrificing mother, the unrequited lover or the tragic hero, the nagging wife can be found in ancient, slave owning agricultural societies, in prosperous trading medieval ones and in post-industrial wastelands of contemporary West. What is it about the nagging wife which makes this character so universal and transcendental?

Before we explore this question, it would be necessary to make one caveat. Literary and cultural archetypes are almost always caricatures and stereotypes of the real people who live within those societies. Despite this they are based on a certain reality of experience.

In the case of the character of the nagging wife, there is enough reason to accept that it is grossly stereotyped and caricatured since all societies we live in are inherently patriarchal and female figures, specially those in relations of contestation with men, would not be represented without malafide distortions. Yet, despite all the caricatures and mis-representations, it would also be difficult to argue that nagging wives do not have a reference in reality. This is not to say that wives always nag or that nagging is a central aspect of their relation. But the fact that nagging, and specifically the nagging wife, has survived much of recorded history attests to the reality of its experience.

The most common explanation of nagging rests on psychology and its related idea of “human nature”. People accept nagging, specially from wives, as an unavoidable feature of the married condition. This brings us to the first real basis for the origin and continued existence of nagging.

Nagging, as a form of inter-personal interaction, is confined within the walls of the institution of marriage. Throughout history, marriage has been largely structured around female monogamy.

This means that women have only one husband. Men have, depending on the historical, cultural and economic context, one or more wives. But women, irrespective of historical context, have only ever been allowed one husband. There have been family forms which have group marriage and polyandry, but these are to be found, almost without exception, outside the boundaries of civilised society. So the first condition for existence of the nagging wife is the marriage with strict monogamy for the wife.

Families which have grown out of such monogamous marriages have also, invariably, been patriarchal families. This means that power inside the family rests with the paterfamilias – husband, father, head. The husband owns, not only, the economic assets of the family but also the name and lineage. The wife has historically been powerless in this relation. She has had only two crutches to hold on to. One is her indispensability as the progenitor of the lineage. She has the womb which births the sons who will inherit the name and property of the family. It is this attribute of the wife which gives her some leverage within the family.

Her son is her defender inside the family. The second crutch for a wife inside a partriarchal family is the relations of love and attachment that may get built up. As would be evident, the first of these two crutches is of greater resilience while love and attachment are notoriously effervescent.

This condition of the wife has remained largely constant over history. Whichever the country or region, whichever time in history, the family has been based on a patriarchal, monogamous (for the wife) marriage where the wife is totally dependent on the head of the family who is her husband.

It is this utter powerlessness of the wife which is the source of nagging. The dictionary defines the word “nag” as “To annoy by constant scolding, complaining, or urging.” Bereft of economic, physical or political power, women only had words to defend themselves. They have had to walk the thin line between nagging enough to get their point across and nagging which got them thrown out of the house or beaten or worse, killed.

Nagging was the only weapon the wife had, whose constant grating could cut some of the bonds of oppression under which she lived. By its very nature of being constant and repetitive, nagging also becomes unbearable for the person it is directed towards – the husband.

If the woman has been a prisoner of the patriarchal cage, her constant scratching at its prison bars with her nagging words, has been her husband’s scourge. Marx’s famous saying about nations, ““any nation that oppresses another, forges its own chains”, can easily be transposed in this context to argue that any human who oppresses another forges his own chains (of nagging).

It is not only the wife who deploys this weapon of the weak. Children use it to excellent effect. In that context (parent – child) it is not generally called nagging but rather ‘pestering’. It too emerges from a similar context of powerlessness of children within the family, where the only way for them to get their point across is to ‘pester’ their parents till they accept defeat. Today, the power of children to pester their parents into taking decisions is an important weapon in the arsenal of advertisers who use “pester-power” to sell everything from groceries to cars.

In the contemporary world, many families have moved out of the context under which nagging by wives exists. Women own property, often they are in positions of power and are effective decision makers. Nagging does not automatically end in these contexts, just like it does not automatically exist in all patriarchal families.

Today nagging is not necessarily confined to the patriarchal family and has been, in a sense, freed from the context of the patriarchal family under which it originated and survived. It has become a cultural archetype which women (and men) absorb into their personalities in the process of socialisation. Where it exists outside the immediate context of the patriarchal family, it exists only as a weapon of offence and not as a survival skill of the weak wife and it “forges its own chains” for those who deploy it in inter-personal relations. The question arises, are we courageous enough to surrender this weapon?

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CreateWealth8888:

Men, before you marry your sweetheart; be mentally prepared and to accept your nagging wife as she may come sooner than expected as an unavoidable feature of the married condition.

Congratulations from running away from a nagging mother; but, soon there will be another nagging woman in your life, man!
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