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

Tuesday 25 December 2012

12 Years of Christmas and Two Lessons in Investing.

12 years of Christmas .....

Two Lessons in Investing: Liquidity and Permanency
Lesson 1: Liquidity
Liquidity for expenses
Investment  axiom: "Always invest what you can to afford to lose."
BUT, how many retail investors have discipline for this?
When chasing the Bull market, it always look silly for any extra cash to be rotting in the bank earning tiny returns. The lure of the Bull will be so strong that we will soon begin to deploy these extra cash "temporary" into the market.
No worry!
We will know how to take them back soon.
BUT, the Truth... Market can turn faster than our self-denial

The moment we have accepted the truth and overcome our self-denial. It is often too late. Big negative returns are locked once we have liquidated our investment at market low or near market low

In Jan 2009, Uncle8888 finally realised the liquidity for expenses issue and accepted the "truth" that the daily bombardment of Great Depression 2.0 news might be real.

What about losing his job? Living expenses. How???

What about his two kids university fund starting from Jul 2009? Taking a gamble???

He bited the bullet and liquidated them at big losses to maintain Liquidity for Expenses and locked in negative returns. Painful lesson learnt when market recovered two months later.

Never, never invest money that may be needed in few years even when the Bull Market is running fast!

Risk is the permanent loss of capital and not price stock volatility. We really cannot take stock price volatility anymore when we really need the money soon.

What Warren Buffet said is so right!

What is risk? The conventional definition of risk in finance literature is price volatility. But to super-investor Warren Buffett, risk is the permanent loss of capital.

Lesson 2: Permanency of staying invested at all times

Market volatility is something we as investors have to live with it across market cycle of Bulls and Bears.

It is hard for us to exactly time the market to execute meaningful and significant Exits and Entries of our positions in the market.

But, we must always remember that for every 365 days of Liquidity of Cash in the bank; we are eroding the value of these idle cash at the rate of inflation.

Over long-term can we afford to lose them to inflation???

Permanency of staying invested to fight inflation.

Get it?

Merry Christmas!

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