As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Click to email CW8888 or Email ID :

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

Sunday, 29 April 2012

Investing Made Simple by Uncle8888 (34)

Read? Investing Made Simple by Uncle8888 (33)

Taking risks, seeing opportunities and riding volatility

When we come to investing in the stock market, we can't never avoid risks and volatility.

We may need to define our own personal risk in the stock market. Every retail investor's  personal definition of risk in the stock market may vary.

What is high risk to one retail investor may actually be low risk for another.retail investor. Risk in the stock market is very personal so we  cannot anyhow imitate other retail investor's investing method and strategies without relating back to our risk profile.

Uncle8888's definition of his risk in the stock market

He defines his personal risk in the stock market as not losing part of his investing capital.

He will not risk more than 10% of his capital in any one stock no matter how attractive or "under-valued" that stock can be. He will also not expose more than 20% of his capital to any one sector. By limiting his risk exposure to stocks based on % to his investing capital he will ensure that his risk level is consistently maintained throughout his investing journey and market cycles.

Volatility and Risks

On the downside, volatility can cause him to lose part of his investing capital.

So how much will he lose in the worst case when he got it damn wrong?

He doesn't leverage so his loss should be around 10-20% of his investing capital when a particular stock or sector goes bankrupt!

Volatility and Opportunities

On the upside, volatility may made his dream of holding more multi-baggers come true.

Does it pay to ride volatility? The answer can be seen in his portfolio.

What is long-term investing means to retail investors like Uncle8888?

In one simple sentence: Long-term investing is someone who has gut and patience to manage his own personal risks to seize opportunities in creating wealth by riding the volatility across bull and bear market cycles.

No comments:

Post a comment

Related Posts with Thumbnails