Wise Words Series - Part 2

Wise Words Series - Part 1 <------- Read Part 1 first? "We become what we behold. We shape our tools and then our tools shape us." Larry Williams

Who is Larry Williams?

We become what we behold

You are a Value Investor? So you love eating eggs, don't you?



Value Investor can be thought of a Chicken Farmer. Rearing chicken for their eggs (collect dividends) instead of selling them for their meat.

You are a Trader? So you love shooting or archery?

Then you become a two-face Hunter. You either join the bull to hunt the bear or you join the bear to hunt the bull. But, at times, the bull or bear chases you until you drop your pants.







You are

OR


How is your portfolio doing?

Have you been building your wealth or depleting your wealth since you begin your journey into the world of investing/trading?

If you have been building your wealth successfully, then you already have good tools, and probably you may just need to once a while re-sharpen your tools.


If you have been depleting your wealth instead of building them, you may need to rethink what are you beholding? Your tools may not be right, quickly re-educate yourself to equip yourself with a new set of tools.


Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein, (attributed)
US (German-born) physicist (1879 - 1955)



We shape our tools and then our tools shape us.

Some tools from Larry Williams:

1) Your strategies



Rule 1. It's all about survival.

No platitudes here, speculating is very dangerous business. It is not about winning or losing, it is about surviving the lows and the highs. If you don't survive, you can't win.

The first requirement of survival is that you must have a premise to speculate upon. Rumors, tips, full moons and feelings are not a premise. A premise suggests there is an underlying truth to what you are taking action upon. A short-term trader's premise may be different from a long-term player's but they both need to have proven logic and tools. Most investors and traders spend more time figuring out which laptop to buy than they do before plunking down tens of thousands of dollars on a snap decision, or one based upon totally fallacious reasoning.

There is some rhyme and reason to how, why and when markets move - not enough - but it is there. The problem is that there are more techniques that don't work, than there are techniques that do. I suggest you spend an immense and inordinate amount of time and effort learning these critical elements before entering the foray of financial frolics.

So, you have money management under control, have a valid system, approach or premise to act upon - you still need control of yourself.

8. I believe the trade I'm in right now will be a loser.

This is my most powerful belief and asset as a trader. Most would be wannabes are certain they will make a killing on their next trade. These folks have been to some 'Pump 'em up, plastic coat their lives' motivational meeting where they were told to think positive thoughts. They took lessons in affirming their future would be great. They believe their next trade will be a winner.

Not me! I believe at the bottom of my core it will be a loser. I ask you this question - who will have their stops in and take right action, me or the fellow pumped up on an irrational belief he's figured out the market? Who will plunge, the positive affirm er or me?

If you have not figured that one out - I'll tell you; I will succeed simply because I am under no delusion that I will win. Accordingly, my action will be that of an impeccable warrior. I will protect myself in all fashion, at all times - I will not become run away with hope and unreality.

9. Your fortune will come from your focus - focus on one market or one technique.

A jack of all trades will never become a winning trader. Why? Because a trader must zero in on the markets, paying attention to the details of trading without allowing his emotions to intervene.

A moment of distraction is costly in this business. Lack of attention may mean you don't take the trade you should, or neglect a trade that leads to great cost.

Focus, to me, means not only focusing on the task at hand but also narrowing your scope of trading to either one or two markets or to the specific approach of a trading technique.

Have you ever tried juggling? It's pretty hard to learn to keep three balls in the area at one time. Most people can learn to watch those 'details' after about 3 hours or practice. Add one ball, one more detail to the mess, and few, very few, people can make it as a juggler. It's precisely that difficult to keep your eyes on just one more 'chunk' of data.

Looks at the great athletes - they focus on one sport. Artists work on one primary business, musicians don't sing country western and Opera and become stars. The better your focus, in whatever you do, the greater your success will become.

10. When in doubt, or all else fails - go back to Rule One.





Focus your attention on what you can control (The Egg's yolk) rather than on what you cannot control (The Egg's white)

What you can control is your Strategy, your Money Management, your Emotion, your Risks and what stock you want? You can control to go with stocks that are linked to Temasek that are either too big or too strategic to fail, and Superman will walk out of Temasek Tower to rescue them.

You have control to click or not : http://createwealth8888.blogspot.com/2009/04/safety-net-in-market.html

So before clicking the BUY button, you have control over the stock, but once bought, you have surrendered your control of the stock to the Market and leave it to the market forces to work it out for you. However, if you are feeling so painful in seeing your falling stocks, and keep losing your sleep at night, then it is better for you cut it off; otherwise, take a break and go fishing.

2) Your Money Management




5. Money management is the creation of wealth.

Sure, you can make money as a trader or investor, have a good time, and get some great stories to tell. But, the extrapolation of profits will not come as much from your trading and investing skills as how you manage your money.

I'm probably best known for winning the Robbins World Cup Trading Championship, turning $10,000 into $1,100,000.00 in 12 months. That was real money, real trades, and real time performance. For years people have asked for my trades to figure out how I did it. I gladly oblige them, they will learn little there - what created the gargantuan gain was not great trading ability nearly as much as the very aggressive form of money management I used. The approach was to buy more contracts when I had more equity in my account, cut back when I had less. That's what made the cool million smackers - not some great trading skill. Ten years later my 16-year-old daughter won the same trading contest taking $10,000 to $110,000.00 (The second best performance in the 20-year history of the championship). Did she have any trading secret, any magical chart, line, and formula? No. She simply followed a decent system of trading, backed with a superior form of money management.

6. Big money does not make big bets.

You have probably read the stories of what I call the swashbuckler traders, like Jesse Livermore, John 'bet a millions' Gates, Niederhoffer, Frankie Joe and the like. They all ultimately made big bets and lost big time.

Smart money never bets big. Why should it? You can win big on small bets, see #5 above, but eventually if you bet big you will lose - and you will lose big.

It's like Russian Roulette. You may well spin the chamber holding the bullet many times and never lose. But spin it often enough and there can be only one result: death. If you make big bets you are destined to be a big loser. Plunging is a loser's game; it can only set you up for failure. I never bet big (I used to - been there and done that and trust me, it is no way to live). I bet a small per cent of my account, bankroll if you will. that way I have controlled loss. There can be no survival without damage control.

In each action we must look beyond the action at our past, present, and future state, and at others whom it affects, and see the relations of all those things. And then we shall be very cautious. - Blaise Pascal

Investing can be very risky by nature as you may lose some if not most of your invested capital. You may not be able to retrieve the cash without significant losses from the Market if you happen to need them in the future. We always espouse the importance of thinking long term if you're a stock market investor. But if "long term" means five or even 10 years to you, it might not be long enough. In this great recession, the Long Haul May Be Longer Than You Think.

So you have to plan wisely what is the amount that is REALLY available for you to invest, and still have enough money for future and emergency needs of your family.

Be sure that you understand what is your opportunity cost if not staying invested; otherwise, you might be leaving too much free money on the table and missing an opportunity to build your wealth with little effort on your part when the Bull decided to charge ahead. Keep your eyes wide open in the Market and you may have to figure out who the winners of the next bull market will be and don't miss out owning them.


3) Your Emotion control

2. Ultimately this is an emotional game - always has been, always will be.

Anytime money is involved - your money - blood boils, sweaty hands prevail, and mental processes are short circuited by illogical emotions. Just when most traders buy, they should have sold! Or, fear, a major emotion, scares them away from a great trade/investment. Or, their bet is way too big. The money management decision becomes an emotional one, not one of logic















3. Greed prevails - proving you are more motivated by greed than fear and understanding the difference.

The mere fact you are a speculator means you have less fear than a 'normal' person does. You are more motivated by making money. Other people are more motivated by not losing.

Greed is the trader's Achilles' heel. Greed will keep hopes alive, encourage you to hold on to losing trades and nail down winners too soon. Hope is your worst enemy because it causes you to dream of great profits, to enter an unreal world. Trust me, the world of speculating is very real, people lose all they have, marriages are broken up, families tossed asunder by either enormous gains or losses.

My approach to this is to not take any of it very seriously; the winnings may be fleeting, always pursued by the taxman, lawyers and nefarious investment schemes.

How you handle greed is different than I do, so I cannot give an absolute maxim here, but I can tell you this, you must get it in control or you will not survive.

4. Fear inhibits risk taking - just when you should take risk.

Fear causes you to not do what you should do. You frighten yourself out of trades that are winners in deference to trades that lose or go nowhere. Succinctly stated, greed causes you to do what we should not do, fear causes us to not do what we should do.

Fear, psychologists say, causes you to freeze up. Speculators act like a deer caught in the headlights of a car. They can see the car - a losing trade, coming at them - at 120 miles per hour - but they fail to take the action they should.

Worse yet, they take a pass on the winning trades. Why, I do not know. But I do know this: the more frightened I am of taking a trade the greater the probabilities are it will be a winning trade. Most investors scare themselves out of greatness.


Who is next???? Hmmm........aiyo. Care to buy me kopi-O to think?

Wise Words Series - Part 1

Trading appears deceptively easy. When a beginner wins, he feels brilliant and invincible. Then he takes wild risks and loses everything" - Dr. Alexander Elder, from the book "Trading for a Living"

"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


Who is Dr Alexander Elder?

Then what should I do?

First thing first, hang my EGO at the door as I need to be humble in the Market, put in lots of effort to learn, and ever learning, control risks, practise money management, and formulate my own strategies to sustain and measure my investment success across multiple years, and over bull and bear market conditions.

Who is next?



"If I have seen further it is by standing on the shoulders of giants."
- Isaac Newton, letter to Robert Hooke, 1676

Who is Isaac Newton?


So I will keep searching for Giants, and then stood on their shoulders to see further.

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




If genius like Newton cannot understand the madness of men in the Market, don't think I should waste my effort in trying to understand it. I have learnt to accept the madness of the men in the Market, accept the possible losses, and move on; but I don't want to land myself here in over-thinking. Don't think too much.

Work for money? Forget it.

invest, thesundaytimes April 19,2009

Mr Aaron Sim, founder of Wealth Mentors ..

Q: How did you get interested in investing?
After reading the book Rich Dad Poor Dad by Robert Kiyosaki over one weekend in Oct 1999, I decided I no longer wanted to "work for money".

------------------------------------------------------------------------------
Createwealth8888:

Many years back, my female colleague told me about her hubby was so crazy about this book, reading it over and over again. She was damned pissed off. Out of sheer curiosity, I decided to check it out too. Oh my God, after reading the book Rich Dad Poor Dad, it changed me completely, I immediately realized that "work for money" may not be the best way going forward.


I believe many people have read this book. Not sure, how many people will believe it? You needn't believe in everything he said. He said this: "I am not your Dad!"


He is talking about wealth strategy. His wealth strategy on property may not be suitable for you. I too disagree and not going into Property as wealth building strategy (I have done my own research into ROC on Property, time and effort required. Being a lazy fisherman, I would rather click some buttons on Web Browser without ever leaving home to make some kopi money)


With this recession, many people in US following his wealth strategy of using property as wealth building could be cursing him now.


The critical learning point in Rich Dad Poor Dad that really strikes me is this one: Reduce the time and effort spent in "work for money".


As an Employee and Self-Employed: Make effort to reduce time spent in building wealth in these quadrants, and move into Investing and Business Owner quadrant as soon as possible.


Of course, the good thing about being Employee is that you aren't very much affected by Negative Cashflow, other than having worrying of job security once a while during recessions; but unlike those in the Investing and Business Owner quadrant, any wrong move may be destroying wealth instead of building wealth. The thought of it may really hold many people back and prevent them from going into these quadrants.

However, staying as an employee can be a false sense of job security too.

Read? false sense of financial security?

Being Self-employed mean that you are your own BOSS. But, you may or may not be better than employee, as you now may have more things to worry about. Employee is getting paid for conducting personal disposal task in the toilet, but not sure about self-employed, you are getting paid too?

Working in the corporate world is like climbing the Pyramid of Opportunity, as you move up this ladder, you are given more money, but come with more responsibilities and lesser opportunity to move up to the next level. There is only CEO post, and that few fellows below him/her may be eagerly waiting or plotting to grab his/her seat.

In investing, it is an Inverted Pyramid, you may start off with little opportunity or may even face negative equity if you get it wrong at first. But, when you are successful  in moving up the Inverted Pyramid of Investing, every successful move up the ladder will give you better opportunity.

For example, you have $50K capital and to make $5K from $50K capital, it requires you investing right to get the 10% ROC, certainly it is not an easy task. However, if you become better in your investing skills, and you manage to grow your account to $100K, then to make the same $5K out of a $100K account requires only 5% ROC, and definitely it is so much easier now.

So what you think? Do you get it???

The Fisherman and The Investment Banker

Anonymous, many versions of this story.

An American investment banker was having his holidays and decided to make a stopover at Singapore for a few days. He came upon a small jetty at Punggol Point, Singapore when he saw one fisherman lazily fishing with his 2 fishing rods. Besides him were fishes he has caught. (photo above)

The American complimented the fisherman on the quality of his fish and asked, "How long does it take to catch them?" The fisherman replied: "Only a little while."

The American then asked why didn't he stay out longer and catch more fish? The fisherman said he had enough to support his family's immediate needs. The American then asked, "But what do you do with the rest of your time?"

The fisherman said, "I sleep late, fish a little, play with my pets, look after my marine tank, help my wife with some chores, then I drink abit of kopi-O and spent the rest of time chatting at cbox with my superfriends, surfing the net and blogging articles, I have a full and busy life."

The American scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats.

Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution.

You would need to leave this ulu Punggol and move to a CityLight Condo at the City, and eventually a big landed property at Bukit Timah near your own office where you will run your expanding enterprise."

The fisherman asked, "But, how long will this all take?" To which the American replied, "15-25 years."

"But what then?" The American laughed and said that's the best part. "When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions."

"Millions ... Then what?" The American said, "Then you would retire. Then you would sleep late, fish a little, play with your pets, help your wife with some chores, stroll to the cyber cafe in the evenings where you could drink some Kopi-O and chatting with your friends."

The fisherman said, "Isn't that what I am doing right now?"

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

"Then he said to them: 'Keep your eyes open and guard against every sort of covetousness, because even when a person has an abundance, his life does not result from the things he possesses'" - Jesus, the Christ, Luke 12:15
-----------------------------------------------------------------------------------

So how much is enough? However, the question becomes, once you’ve made so much money? Now what? or like what The fisherman said, "Isn't that what I am doing right now?"

Larry Williams - Trading Rules

1. It's all about survival.

No platitudes here, speculating is very dangerous business. It is not about winning or losing, it is about surviving the lows and the highs. If you don't survive, you can't win.

The first requirement of survival is that you must have a premise to speculate upon. Rumors, tips, full moons and feelings are not a premise. A premise suggests there is an underlying truth to what you are taking action upon. A short-term trader's premise may be different from a long-term player's but they both need to have proven logic and tools. Most investors and traders spend more time figuring out which laptop to buy than they do before plunking down tens of thousands of dollars on a snap decision, or one based upon totally fallacious reasoning.

There is some rhyme and reason to how, why and when markets move - not enough - but it is there. The problem is that there are more techniques that don't work, than there are techniques that do. I suggest you spend an immense and inordinate amount of time and effort learning these critical elements before entering the foray of financial frolics.

So, you have money management under control, have a valid system, approach or premise to act upon - you still need control of yourself.

2. Ultimately this is an emotional game - always has been, always will be.

Anytime money is involved - your money - blood boils, sweaty hands prevail, and mental processes are shortcircuited by illogical emotions. Just when most traders buy, they should have sold! Or, fear, a major emotion, scares them away from a great trade/investment. Or, their bet is way too big. The money management decision becomes an emotional one, not one of logic

3. Greed prevails - proving you are more motivated by greed than fear and understanding the difference.

The mere fact you are a speculator means you have less fear than a 'normal' person does. You are more motivated by making money. Other people are more motivated by not losing.

Greed is the trader's Achilles' heel. Greed will keep hopes alive, encourage you to hold on to losing trades and nail down winners too soon. Hope is your worst enemy because it causes you to dream of great profits, to enter an unreal world. Trust me, the world of speculating is very real, people lose all they have, marriages are broken up, families tossed asunder by either enormous gains or losses.

My approach to this is to not take any of it very seriously; the winnings may be fleeting, always pursued by the taxman, lawyers and nefarious investment schemes.

How you handle greed is different than I do, so I cannot give an absolute maxim here, but I can tell you this, you must get it in control or you will not survive.

4. Fear inhibits risk taking - just when you should take risk.

Fear causes you to not do what you should do. You frighten yourself out of trades that are winners in deference to trades that lose or go nowhere. Succinctly stated, greed causes you to do what we should not do, fear causes us to not do what we should do.

Fear, psychologists say, causes you to freeze up. Speculators act like a deer caught in the headlights of a car. They can see the car - a losing trade, coming at them - at 120 miles per hour - but they fail to take the action they should.

Worse yet, they take a pass on the winning trades. Why, I do not know. But I do know this: the more frightened I am of taking a trade the greater the probabilities are it will be a winning trade. Most investors scare themselves out of greatness.

5. Money management is the creation of wealth.

Sure, you can make money as a trader or investor, have a good time, and get some great stories to tell. But, the extrapolation of profits will not come as much from your trading and investing skills as how you manage your money.

I'm probably best known for winning the Robbins World Cup Trading Championship, turning $10,000 into $1,100,000.00 in 12 months. That was real money, real trades, and real time performance. For years people have asked for my trades to figure out how I did it. I gladly oblige them, they will learn little there - what created the gargantuan gain was not great trading ability nearly as much as the very aggressive form of money management I used. The approach was to buy more contracts when I had more equity in my account, cut back when I had less. That's what made the cool million smackers - not some great trading skill. Ten years later my 16-year-old daughter won the same trading contest taking $10,000 to $110,000.00 (The second best performance in the 20-year history of the championship). Did she have any trading secret, any magical chart, line, and formula? No. She simply followed a decent system of trading, backed with a superior form of money management.

6. Big money does not make big bets.

You have probably read the stories of what I call the swashbuckler traders, like Jesse Livermore, John 'bet a millions' Gates, Niederhoffer, Frankie Joe and the like. They all ultimately made big bets and lost big time.

Smart money never bets big. Why should it? You can win big on small bets, see #5 above, but eventually if you bet big you will lose - and you will lose big.

It's like Russian Roulette. You may well spin the chamber holding the bullet many times and never lose. But spin it often enough and there can be only one result: death. If you make big bets you are destined to be a big loser. Plunging is a loser's game; it can only set you up for failure. I never bet big (I used to - been there and done that and trust me, it is no way to live). I bet a small per cent of my account, bankroll if you will. that way I have controlled loss. There can be no survival without damage control.

7. God may delay but God does not deny.

I never know when during a year I will make my money. It may be on the first trade of the year, or the last (though I hope not). Victory is out there to be grasped, but you must be prepared to do battle for a long period of time.

Additionally, while far from a religious person, I think the belief in a much higher power, God, is critical to success as a trader. It helps puts wins and losses into perspective, enables you to persevere through lots of pain and punishment when you know that ultimately all will be right or rewarded in some fashion. God and the markets is not a fashionable concept - I would never abuse what little connection I have with God to pray for profits. Yet that connection is what keeps people going in times of strife, in fox holes and commodity pits.

8. I believe the trade I'm in right now will be a loser.

This is my most powerful belief and asset as a trader. Most would be wannabes are certain they will make a killing on their next trade. These folks have been to some 'Pump 'em up, plastic coat their lives' motivational meeting where they were told to think positive thoughts. They took lessons in affirming their future would be great. They believe their next trade will be a winner.

Not me! I believe at the bottom of my core it will be a loser. I ask you this question - who will have their stops in and take right action, me or the fellow pumped up on an irrational belief he's figured out the market? Who will plunge, the positive affirmer or me?

If you have not figured that one out - I'll tell you; I will succeed simply because I am under no delusion that I will win. Accordingly, my action will be that of an impeccable warrior. I will protect myself in all fashion, at all times - I will not become run away with hope and unreality.

9. Your fortune will come from your focus - focus on one market or one technique.

A jack of all trades will never become a winning tradee. Why? Because a trader must zero in on the markets, paying attention to the details of trading without allowing his emotions to intervene.

A moment of distraction is costly in this business. Lack of attention may mean you don't take the trade you should, or neglect a trade that leads to great cost.

Focus, to me, means not only focusing on the task at hand but also narrowing your scope of trading to either one or two markets or to the specific approach of a trading technique.

Have you ever tried juggling? It's pretty hard to learn to keep three balls in the area at one time. Most people can learn to watch those 'details' after about 3 hours or practice. Add one ball, one more detail to the mess, and few, very few, people can make it as a juggler. It's precisely that difficult to keep your eyes on just one more 'chunk' of data.

(http://createwealth8888.blogspot.com/2009/04/indebtedness-more-to-add-on.html)

Looks at the great athletes - they focus on one sport. Artists work on one primary business, musicians don't sing country western and Opera and become stars. The better your focus, in whatever you do, the greater your success will become.

10. When in doubt, or all else fails - go back to Rule One.

http://www.ireallytrade.com/freetradingtools.htm <--- visit the Larry Williams here

How to Eat Like An Elephant?

by Janice Dorn, MD, PhD, The Trading DoctorSM | March 13, 2009

The legendary W. D. Gann spent a lot of time describing three emotions that drive most traders and investor—fear, greed and hope. You enter markets on the hope of gains, too often get greedy in expecting profits, and finally liquidate on fear. Your brain has not changed much from the time of the Neanderthal man who greedily hunted wild animals for food, and ran in fear from beasts and neighboring tribes that threatened his survival.

The Neanderthal “rat” brain is still within you--- as powerful as it was over 100,000 years ago. As society changes and evolves, the quality and quantity of threats to your survival change along with it. Yet, the primitive emotions of fear and greed remain the same. The history of panics and crashes in the financial markets since the inception of trade reflects this ever-changing cycle of fear, greed and hope.

This is a large part of your challenge and journey to master the art and science of trading. You must be prepared to wipe away any preconceived notions about what the markets will do or not do, and replace them with what you will do or not do. You must be able to “fade” your own emotions and be unafraid to go against prevailing opinion. You learn that you will almost always feel fearful when you should be feeling greedy and vice versa. To do this successfully and not recklessly requires discipline and practice. Don’t let anyone tell you it’s easy. It just plain isn’t. Simple? Yes. But not easy. It requires counterintuitive thinking and a good understanding of your own psychology and mass psychology. It takes great study of yourself, getting into and through your ego and really knowing who you are. The journey within is the most challenging and profitable trip you will make in your trading career.

Zebra crossing the river

Zebra crossing the Mara River: The path is fraught with dangers with hundreds of crocodiles in the water and lions and other predators lying in wait on the other side. Forced to search for new supplies of grass and water to nourish their growing herd, zebras have to cross the dangerous Mara River. It is a demanding cycle of life and death. Some of the zebras will certainly perish.

Is there any difference in the Market? No. We, retail investors are like the zebras, we need to cross the river (Market) to find better grass (Profit) to eat. The Big Boys (BB)are like hundreds of crocodiles in the water, lions and other predators lying in wait on the other side of the Market, and we may become their food (Losses).

Zebras crossing the Mara River are vulnerable to massive crocodiles. The zebras don't waste any time once they decide to take the plunge.

I am seeing the Zebras in me. ho ho!

Or some may prefer to be this Zebra Crossing.




Oh! This is much safer as there are no crocodiles, but the only problem is that you are letting other people cross over you.

Sunset at the North Pole

This is the sunset at the North Pole with the moon at its closest point last week. A scene you will probably never get to see in person,so take a moment and enjoy God at work at the North Pole.


An amazing photo and not one easily duplicated. You may want To pass it on to others so they can enjoy it. The Chinese have a saying that goes something like this: 'When someone shares with you something of value, you have an obligation to share it with others!'

Copy from http://tankinlian.blogspot.com/

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

As a fisherman, I love watching sunset; sometime, I got to see some amazing sunset.

True, probably I never get to see in person for this one. Gosh!!

Investing - Game of Snakes and Ladders????

When I was young, we used to play this board game called Snakes and Ladders. The heart pain part is that you are near towards the end of winning the game and you step onto a BIG SNAKE, and that there you go all the WAY DOWN. Heart so pain leh and has to start all over again.


Beginning ... ......2007: Total annualized ROC (realized and unrealized P&L)= 15.6%
Beginning ....15 Apr 2009: Total annualized ROC (realized and unrealized P&L)= 6.0%


Trading losses and falling portfolio value can really kill!

That is the reality of investing/trading, just one bad year of recklessness in 2008 has such a drastic impact and erasing years of effort like stepping on a BIG SNAKE and all the way down.

I am taking the advice seriously from the author of this book: Rocking Wall St. : four powerful strategies that will shake-up the way you invest, build your wealth and give you your life back / Gary Marks.

This is my Investment End Goal: All investment by nature is risky.

The Goal of the End Game - Financial Independence


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

Stop putting your wealth at risk. Stop the gambling and risk taking with investments of any kind.

You would finally have enough money and personal power to walk away from the investing game and spend the rest of your life doing something else!

When exactly do you reach the End Game?

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

How does stock price move?

Here is the ANSWER!

Strength of Bear and Bull???

The Bear pushed the bulls down from STI Oct 07 peak to Mar 09 low, down by -62.4% in 515 days. The Bear Velocity down at rate of -4.7

However, the recent Bull pushed the bears back up by +30.8% in 37 days. The Bull Velocity up at the rate of +12.1

The math is like this:

When price is down -50%, it will need to climb up by 100% to get back to the same level. So we are now seeing the strength of the BULL overpowering the bears; but, will the BULL still have the reserve power to push on?

Rational investing in an irrational world

Correctly anticipating the impact of a news report, rather than the news itself, is one of the most useful skills of the accomplished investor

By MICHAEL PREISS


FROM fear to euphoria in one month? In the last couple of weeks, we had the steepest US stock market rally in 70 years.

As we contemplate the investment outlook post-sub-prime global stockmarket crash, it pays to look back and remember that financial markets have an incredible capacity for reacting to news and economic developments in a way that confounds market professionals and retail investors alike - the only difference being the latter will admit to being confused, while the former will quickly come up with a few dusty rationalisations.

Our sell-side friends at many Wall Street banks now preach that it is time to buy cyclical stocks as the worst is over. The more independent-minded, however, such as George Soros or Marc Farber, warned that the market got ahead of itself and that a correction of at least 10 per cent is highly likely.

Economist John Maynard Keynes put it best when he remarked: 'Nothing is more suicidal than a rational investment policy in an irrational world.'

In the long-run, true value is always revealed but in the short-term, the market and individual stocks and bonds get pushed and pulled by a variety of forces - portfolio re-balancing, rumours, news, investment fads, seasonal tendencies - that have nothing to do with fundamentals. Lord Keynes also said: 'In the long-run, we are all dead and, in the short-run, you get a margin call.'

In the long-run, true value is always revealed but in the short-term, the market and individual stocks and bonds get pushed and pulled by a variety of forces that have nothing to do with fundamentals.

Monitoring economic reports is a very important but overlooked area of trading and investing. Nowhere are the advantages and drawbacks of a Blackberry world of instantaneous electronic communications more evident than in the financial markets. A long-term price trend might seem obvious or inevitable in retrospect, but in the short-term, markets are pulled and pushed by a never-ending stream of news-like economic reports, statistics and earnings.

As the speed and range of market news has increased, so has the challenge of interpreting it - or more accurately, managing the market's reaction to it. When deciphering economic indicators and market news, it is important to understand that in an Alice-in-Wonderland world of global financial markets, bad news can be good news and good news can be bad news. The economic context in which a news report is released is the key to resolving these paradoxes.

Correctly anticipating the impact of such news, rather than the news itself, is one of the most useful skills of the accomplished investor. In financial markets, the impact of the data is not always what it should be (or what we think it should be). What initially appears to be a 'bad number' is sometimes followed by a rally of steady buying.

Similarly, a report that seemingly underscores economic strength may be met by frantic selling. Investors who have learnt to survive and prosper in the markets use this flow of information to form intelligent expectations about the market's chances/probabilities of trading up, down or sideways. The macroeconomic flow also plays a key role in determining individual sector trends: Is it time to rotate out of telecoms stocks into banking stocks ?

Having said that, when it comes to macroeconomic news reports that rock the market, the most important thing is to understand that it is not the number itself that counts but rather what expectation has been built into the number and how the market reacts to it. When contemplating how an economic report may affect the market, there are three crucial points to keep in mind. First, all indicators are not created equal. Second, the news is not always what it seems; and third, context is king.

To better understand the often confusing reactions to economic data, remember three points:

- Sometimes bad news can be very good news.

- First impressions do not always last.

- Only deviations from expectations truly move the market.

Investment management is an art, more than a science. The broader point is that assessing the market's reaction is much more a complicated game of chess than simple checkers. The picture is always changing. It comes into play when expectations about the future have a bearing on present behaviour - which is the case in financial markets.

Some mechanism must be triggered for the participant's bias to affect not only market prices but the so-called fundamentals which are supposed to determine market prices. The fundamentals that you read about in newspaper or research reports are usually useless as the market has already discounted the price. However, if you caught them on early before others, then you might have valuable 'surprise-a-mentals'.

When it comes to investing, Albert Einstein's immortal 'imagination is 10 times more powerful than knowledge' holds very true. A good investor cannot be rigid. If you can find someone who is really open to seeing anything, then you have found the raw ingredients of a good investor and/or investment adviser.

When news comes out, the market should act in a way that reflects the right psychological 'tone'. Technical analysis gives an investor valuable information, fundamentals give an investor valuable news. Fundamental analysis creates what might be called a 'reality gap' between what should be and what is. So am I bullish or bearish right now? I do not know. My goal is not to be either, it is to pick up good risk/reward situations. I remain open-minded and flexible.

The past is fixed and easy to analyse. The future is fluid and uncertain. You have to base your decisions on probabilities in an atmosphere of uncertainty.

The writer is a chartered wealth manager and can be reached at: michael@michaelpreiss.net

Fear of missing out?? Fear of losses??

STI closing at 1897. It has recovered +30.2% from its low. 544 days into the crisis. Are we expecting a big correction soon? or have we miss the boat?

My portfolio value also recovered +61.4% from its low. Hopefully, the worst is over for me. Cheers!

Dividends are tax exempt

I didn't really follow the changes in One-Tier Corporate Tax System (Applies to all companies) until today when one blogger mentioned it.

Dividend paid out of "after tax profit" will be exempt from tax in the hands of shareholders (exempt one-tier dividends).

Payment of dividends on or after 1 Jan 2008

Effective from 1 Jan 2008, all companies remaining on the imputation system will be moved to the one-tier corporate system.

All dividends paid on or after 1 Jan 2008 will be exempt one-tier dividends. Companies cannot pay franked dividend on or after 1 Jan 2008 even if there is any Section 44A balance remaining as at 31 Dec 2007.


With the new tax development, Dividends as passive income has becoming more attractive over rental as alternate source of passive income as it is tax exempted.


http://createwealth8888.blogspot.com/2009/04/passive-income-after-retirement.html <-- previous post

Indebtedness - more to add on

Personal Finance Part 12 - Indebtedness <--- From http://sgmusicwhiz.blogspot.com/

Everyday, we are like a Juggler juggling the balls into the mid air and catching them with our hands, and hopefully NOT to drop any ball. To some, dropping of ball might be disastrous, and to others may be even game over. Everybody must do whatever it takes to keep juggling the balls.

The left hand is the Income Hand (active and passive income) and the right hand is the Assets Hand (including saving). Some have 2 bigger hands; some have two smaller hands, and others have only one hand. The bigger the hands, the easier to juggle the balls into the mid air.

One Ball Jugglers

They only juggle one ball called EXPENSES. These jugglers usually have little difficulty in juggling the ball. Some with big hands don't even drop any sweat. They just have fun. They are loving it.

Two Balls Jugglers

They add a second ball called LIVING DEBTS (e.g. housing, car, education, etc). Life is getting exciting in juggling two balls and keep them in the air. They may have to sweat more, and may have to put in more effort. But, they believe life is fun with more balls. They think that they have the necessary skills and don't drop any ball.

Three Balls Jugglers

They add a third ball called INVESTMENT DEBTS (e.g. leveraging to get more returns from borrowed money). Life is getting even exciting in juggling three balls and keep them in the air. They may have to sweat more, and may have to put in more effort. But, they believe life is even far better with more balls. They have the highest skills of all, and hopefully there is no strong wind blowing against them and causing them to drop the balls.


You decide what type of Juggler you want to be. I definitely want to be One Ball Juggler and closing my eyes without having worry about dropping the ball.

http://createwealth8888.blogspot.com/2009/03/debt-free-and-that-to-me-is-richness.html <--- further reading

There are two ways of making money from money:

1) Save money and use some for investment. This is a slow and less risky way of growing money.

2) Becoming a little greedy to take some risks to accelerate more money by borrowing more money to make money. Hopefully, Mr Black Swan doesn't pay them a visit and they will be fine.

http://createwealth8888.blogspot.com/2009/01/understanding-debt-risk-and-leverage.html <--- further reading

Living your life not others

april 12, 2009 thesundaytimes on Mr Chia.

Quote: Asked if he hankers to re-enter politics, Mr Chia said he has always been fond of politics but will not pursue a political career. "Life is so much better now; I can just wear my shorts and slippers and walk to the food court".

-------------------------------------------------------------------------
Many peoples aspiring to live up and thinking that life is much better up there and will try to do whatever it takes to go up there. However, sometime bad things do happen; setback and downfall bought these people back to earth and finally they realized that life at the lower level is not too bad after all.

BTW, I just wear my shorts and slippers and walk to the food courts including taking bus and MRT to the farther food outlets elsewhere. Life has never been better!

Safety Net in the Market?

Once upon a time, in the Land of Unknown, there was a hut. Inside the hut, it was total darkness except for some dim light shining upon a wooden beam which was placed in the middle of the hut from one end to the other. The beam was wide enough with the help of the dim light shinning upon it for someone to see the beam and walked on the beam towards the other end.

One day, Mr. Not Knowing called me for a challenge. He said: "Paid me a fee, and if you could cross the beam to the other end and you would be rewarded". The reward could be handsome depending on how fast I could cross it, but once I stepped on it; there was no refund and no turning back.

I took the challenge from Mr. Not Knowing. Paid him a fee. I had little difficulty to see the beam under the dim light shinning on the beam and quickly walked across the beam to the end other of the room and collected my rewards afterwards. The reward was pretty good for such a quick walk.

Mr Not Knowing asked: "Do you want to play again?". Surely, for such an easy gain, I would be silly not to play. I paid him more fees, and set my feet on the beam again. But, after walking a few steps, suddenly, the hut was brightly lit for a while and went off. To my horrible, I suddenly saw under the beam there were plenty of crocodiles with mouth open wide showing off their razor-sharp teeth and staring at me. Darkness filled the room once again leaving behind the same dim light shinning upon the beam.

I was terribly frighten, but I couldn't turn back. I nervously and slowly walked across the beam. But, I was so scare of falling into the mouth of crocodiles, that I went crawling on the beam instead of walking. Half-way through the beam, I totally lost the courage of crawling, and I sat frozen on the beam. I prayed to the Lord for help.

Suddenly, the light came back, and I saw a safety net cross the the room separating the crocodiles below from the beam. If I slipped, I would fall into the safety net but not into the mouth of crocodiles. The light went off again.

I quickly took the courage, got up but, I walked very slowly and carefully towards the end of the beam as I was still very worry whether the safety net was secured and strong enough to hold me back if fell into it.


So is there safety net in the Market? Were you be brave enough to get up and walk across the beam?

1) STI Greater Bear - Asian Financial Crisis. The Market was dumping the SG companies like there was no tomorrow. STI from the high of 2,504 on 6 Feb 1996 to the low of 800 on 4 Sep 1998 in 941 days, down -68% from its high.

This bear, will it be STI Greatest Bear or one of the Greater Bears?

STI from the high of 3,876 on 11 Oct 2007 to the recent low of 1,457 on 9 Mar 2009 in 515 days, down -63% from its high.

You could see the magnitude of fall in a shorter time. So scary!

However, it has somewhat recover more than 20% of its recent low. So has STI bottom out or more to go?

2) Spare money. Do you have spare money that is NOT needed for at least 3.9 years?

From the high of 2,504 on 6 Feb 1996 to the next higher of 2,583 on 3 Jan 2000, it took 3.9 years.

3) Dividend Yield. What is your opportunity cost of not staying with stocks? Are you putting into FD for less than 1%? The trade off is probably you would be sleeping well at night for next 1-2 years. That is your opportunity cost for sleeping well. The dividend yield of more than 2% is still possible for some strong companies under current market if you could live with some nightmares without the need of visiting IMH.

4) GLC companies. We know that the Govt is the greatest nanny in SG market. GLC companies are very unlikely to go bankrupt. Mgmt and board could be replaced to get the company back on feet again.

Do you believe the strength of the safety net of the Market? Or you still fear the crocodiles with mouth open wide with their razor-sharp teeth staring at you if you ever take a step forward onto the beam?

Passive Income after retirement?

Possible sources of passive income:

1) Dividends from stocks
2) Interests from CPF-OA balance (Assuming one does not withdraw after 55 years old)
3) Rental (Assuming one has some property that can be rented out)

Let me do a case study for myself based on past 3 years data to consider the most likely scenario to have passive income coming from stock dividends and interests on CPF-OA balance.

Now, where and how to find the remaining shortfall of 40%, and also fight the inflation?

Some options as follows:

1) Win more in stocks
2) Save more
3) work harder
4) reduce life style
5) Withdraw some/full CPF for better return
6) periodic drawdown

any more other options? any ideas??

When Market moves, were you be ready?

Remember this in your heart:

"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

How do successful Investor/Trader differ from Amateur?

Some important factors to note:

1) Hard work - They spent their time studying the market, companies, industries, and sectors. They understand their businesses. And, the traders will pay more attention to financial news, and market movement. The traders had a keen eye for how their market might be moving, and how the pricing might be changed and try to take advantage of the occasions when it moved from their benchmark.


2) Strategy - They have their own strategy, money management, and risk control skills. They could enunciate his or her specific edge in their marketplace and, in some way could quantify that too.

4) Adaptation - They knew the details of his or her P/L, but also detailed investing/trading statistics. When the stats veered off course, they were quick to make adjustments or re-capitalize their account.

5) Complexity - They understand the nature of adaptive complexity of the Market but the idea of buying/selling is a simple thing, and many expect to come to the Market to make easy money, but they don't.

6) Passion - They view their investing/trading not only as way of making money but they have great passion. They are in this for the long haul, and through years of experience, they always want to advance their education (could be just self learning) in finance or related fields and to understand the ever-changing adaptive complexity of the market. They also know that they must be able to sustain and measure their success across multiple years and market conditions - bulls and bears.

7) Risk and reward - They know how to quantify risk and reward that match their emotions, their current and future financial obligation and not putting their family livelihood at risks.


Yap. For some cyber friends/super friends here starting off or in their mid of their journey in the world of investing/trading, are you ready for the next new bull and the bear?

Pillow Stocks Strategy

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

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


The Pillow Stocks Strategy

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

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

Four Financial Progressive Stages

State 1: Financial Stability

You have a stable source of active income, and perhaps some passive income to enjoy the life style that you want. But, you have some outstanding debts and you cannot sustain any prolong period of lost income without getting into defaulting your debts.

State 2: Financial Security

You have a stable source of active income, and perhaps some passive income to enjoy the life style that you want. You have significant saving and, you are debt free. You can sustain loss of income over a longer period without any debts payment worries.

You may be moving between these state 1 and state 2 if you paid off your housing loan, but later on upgrade your house and take on a new housing loan.

State 3: Financial Independence

Your nett worth excluding the value of your residential home is more than enough for you to enjoy the life style without ever worrying about losing your active income. You are out of the rat race. You may choose to work, and if you are unhappy, you can FIRE your boss immediately.

State 4: Financial Freedom

Price is never an issue. You just live the lifestyle in whatever way you like.

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

Like Chinese Kung Fu, not many people can reach the highest stage. I believe no matter how hard I try, probably I will unlikely to reach State 4. I only aim for state 3 - Financial Independence. I definitely have no desire to go back to State 1 - Financial Stability as I want to be debts free for as long as possible.

Fear of missing out??? Fear of losses??? Part 2

Captured on camera - the world's most amazing zebra crossing


Zebra crossing: The path is fraught with dangers with hundreds of crocodiles in the water and lions and other predators lying in wait on the other side.

Forced to search for new supplies of grass and water to nourish their growing herd, the current migration route was established. It is a demanding cycle of life and death


Is there any difference in the Market? We are retail investors like the zebra, we need to cross the river to find better grass to eat. The big boys are like hundreds of crocodiles in the water and lions and other predators lying in wait on the other side of the Market.

Be brave, test the water with your toes, but not with your body. So what do you think? Fear of missing out??? Fear of losses??? Cheers!

Great Bear History - Part 4

Interesting Bear Rallies! Hope we don't kena the last leg of Bear Rally - a long and painful one.

Home for Living and not for profit taking

Quote from Albert Yang , Read? Buy your house!

A man is not a man; until there is a house that he may call his castle. A woman is not a woman; until she has a place she may call her home. And neither a man nor a woman can say anything about their house, until they are the masters of it, and own it outright and unencumbered.

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

Many years ago, my neighbour who was staying one floor below me told me he was selling his 4 rm HDB flat and bought another resale 4 rm HDB flat in another part of Hougang. I was quite puzzled that he was not upgrading, but in fact he was worse off as his "new" flat was quite far off from Hougang MRT, and Hougang Mall. Our flat is just five minutes walk to Hougang MRT, Hougang Mall and Punggol Park.

He told me about his handsome profit from by selling his flat, and how nice is to slowly paying off his "new" flat with another 20 year loan. He proudly told me why are we so stupid not to cash out handsome profit. He advised me to do so as the resale price of our flats near MRT was really very good. (We bought these HDB 4 rm unit at $55K many years ago when this area was near an old cemetery)

I never took his advice as I was "stupid". But, I strongly believe that "An ideal Home is for Living, and NOT for profit taking". Unless, one is currently not living in one's ideal home, then one should consider selling and keep looking for one's ideal home.

I have built my castle, and became a Man; and my wife became a Woman as she has a place she call her home.

Honestly, I do love money and create wealth; but that does not mean that I have to sell my Soul, and do whatever it takes to make more money and build more wealth. In Life, there are certain THINGS that no amount of money can be placed in front of us to exchange them. You have to determine yourself what are these THINGS in your own Life, and you haven't find anything yet. It could well mean that you are still living in your own materialistic world, nothing else except money, money, money and money will NEVER BE ENOUGH.

Never put off till tomorrow something that one can and should do today. There may be no tomorrow. (by wei ling)

Fear of being left out??? Fear of loss???

With STI recovering 25% from its low on 9 Mar 09, closing well above 1800 at 1820, it is now testing another major resistance and it has broken resistances easily and many shortists are BBQ. One guru who is expert in shorting, and probably he has returned all his profits from shorting since the last STI plunge back to the market. He has temporary hang up his towel. We are also hearing less shouting on SHORT arh on forums.

With the shortists less aggressive, the retrace from overbought may not be aggressive too. How to re-enter is the big Question?

Greatest Bear History - Part 3

Greatest Bear History - Part 2 <----


Hmm.... possible divergence. This time may not be the same. Do we really learn from history or not? So what will be the strategy?

History of the Greatest Bear to be noted - Part 2

Do you see the parallel or not? Or history will not repeat itself?

--------------------------------------------------------------------------------
The Great Depression was a worldwide economic downturn starting in most places in 1929 and ending at different times in the 1930s or early 1940s for different countries.[3] It was the largest and most important economic depression in the 20th century, and is used in the 21st century as an example of how far the world's economy can fall.[4] The Great Depression originated in the United States; historians most often use as a starting date the stock market crash on October 29, 1929, known as Black Tuesday.

The depression had devastating effects in virtually every country, rich or poor. International trade plunged by half to two-thirds, as did personal income, tax revenue, prices and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by roughly 60 percent.[5][6][7] Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging suffered the most.[8] However, even shortly after the Wall Street Crash of 1929, optimism persisted; John D. Rockefeller said that "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again."[9]

The Great Depression ended at different times in different countries; for subsequent history see Home front during World War II. The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the left or right. In some states, the desperate citizens turned toward nationalist demagogues—the most infamous being Adolf Hitler—setting the stage for World War II in 1939.

The Great Depression was triggered by a sudden, total collapse in the stock market. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929.[10] Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the summer of 1930.

In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing.[citation needed] By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worse in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the US economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.

History of the Greatest Bear to be noted

http://mysmartrade.blogspot.com/2009/03/dow-jones-bear-rally-likely-to-continue.html

The 22% rally on the DOW since March 9th was the fastest two-week advance since 1938. The DOW have fallen 54.5% from it's Oct 07 high. History tells us that in every major Bear market there will be also major Bear rallies.The 1973-1974 cyclical bear market (dropped 47%), had two rallies of approximately 10%. The 2000-2002 bear had three big rallies (19%, 21.4%, and 20.7%). The current bear has had four double-digit rallies (13.1%, 17.7% and 18.3% and the recent 22%).

At the start of the bear market that led to the Great Depression, the Dow tumbled 89%between 1929-1932 and had a total of five 20%-plus rallies over the course if its 34-month decline . The first was a massive 48% rally. The last rally of 24.6% was followed by a final decline of 53.6%.

Since 1900there were 23 bear markets, the average bear market rally is a gain of 15% lasting an average of 50 days

If toxic asset clean up plan and the stimulus package that Timothy Geitner's proposal works and banks start to lend actively again, we may be able to tell ourselves ‘the worst is over and the `Great Recession' will not materialised, we can all start to invest rationally again. Whether this proves to be right (again) , we probably will not know till a few weeks/months later. The next quarter corporate reportings will really put the recent optimism to an acid test. If the market crumbles again under the disappointing corporate reportings, market cynicism will creep back…..and yes, then this will prove to be just another bear market rally. The average bear market rally is a gain of 15% and the major bear market rally average 25%. The average bear market rally would give the Dow a 7,500 upside. However, if we take the average of the major bear market rallies of over 25% we can project an upside target of 8,250

When the Market moves, will I be ready?

STI unexpectedly roars!!! Closing above 1800 is significant. Are the bulls back or the bears scrambling for cover?

STI has recovered from low of 1,457 at 9 Mar 09 by 23.8%, technically, the Bull has appeared and push its neck and horns into the arena, will the bear get killed?

I still believe the bears are scrambling for cover and young bulls are just testing the ground. Will there be money to be made? I will need to go Punggol Park this Sunday morning, and sit under a tree to plan the next move.

Noble - sold $1.30, ROC 34.3%

Hope to gather more feathers for the pillow soon ...


Round 8: ROC 34.3%, 100 day, B 0.96 S 1.30

Round 7: ROC 5.7%, 10 day, B 1.02 S 1.09
Round 6: ROC 3.8%, 1 day, B 1.01 S 1.06
Round 5: ROC 12%, 27 days, B 0.965 S 1.08, (2nd Half)
Round 4: ROC 14%, 8 days, B 0.965 S 1.11, (1st Half)
Round 3: ROC 7.1%, 8 days, B 0.830 S 0.895
Round 2: ROC 31.6%, 20 days, B 0.800 S 1.05
Round 1: ROC 16.3%, 28 days B 0.910 S 1.08

SML - Sold $1.92, ROC 17.9%

Stuff more feathers into this pillow stock and become softer.

Round 37: ROC 17.9%, 29 days, B 1.61 S 1.92


Hope the turkey will come back nearer for me to pluck more feathers.

Olam - Sold @ $1.52, ROC 9.8%

Oh! I have cleared my past sins on Olam, and now sitting on nett realized gain. Goodness!.

Round 1: ROC 9.8%, 161 days, B 1.37 S 1.52


Looking for the next round. Cheers!

Q1 2009 has ended!!! How am I doing???

Hope the nightmare of 2008 will not be repeated and the worst is over for me. Taking a slower approach in building wealth without leveraging is a better strategy without having to wake up sometime in the middle of the nights wondering what the hell am I doing?

As on 31 Mar 09, I have achieved 14.4% of 2009 Goal (In 2003, I set a bullish and progressive goals from 2003 to 2011), Going forward, I believe that from 2009 to 2011, these bullish goals set at 2003 will be extremely difficult to achieve; but, nevertheless, I shall not change them, but will still work towards them. Cheers!

SML - Deal or No Deal?

Sitting on paper gain of 17.8%. Deal or no deal?

I believe SML has been in the prolong oversold. For the past months, there is no indication of any further orders cancelling. Quite quiet in term of bad news and that could mean relatively good news. And with crude staying above USD50, probably the uptrend could be sustainable. Cheers!. No deal.

Does Shorting always win in a bear market?

One honest Guru said that (still many gurus are not telling us much about their losses in shorting the market), he gave back huge bulk of his profits built thus far from the last plunge.

The only Gurus that never lose anything are those who no longer trade; but, just continue to sell and advise Magic Stone.

I always like to remind myself on this ...

Stock picking is part science, part art, part luck, part intuition, and always uncertain - "not precisely knowing."

There is no Holy Grail and Magic Stone on stock picking and will NEVER be as everybody has enough money to buy Magic Stone (but Sharks and Lions have plenty of automated computer aided Magic Stones), and once many people have the Magic Stone, it is not going to be effective as the Sharks and Lions are at the top of food chain will finally eat up those below the food chain such as sardines and zebras; and that is Law of the Jungle and Law of the Sea.

So those who does not know the skills of shorting, are you really worse off???? Think about it.

I think I am better off to be an American cockroach in active investing. Eat when there is "food" to be found, and can survive without "water" for 1 month and without "food" for 3 months. Have strong stomach to go empty and high level of pain threshold will help me through for years to come.

Or alternatively, think like property investors (not flippers) who will never see any unrealized losses throughout their holding period.

or like my late father-in-law he never, ever lost anything in his leftover share holding, and in fact his sons made some nice profit as they got these shares FOC from his will.


previous article <--- if you care to read about it

Noble - testing 200 EMA

Tough test next week?

SML - testing resistance soon?

Will steady crude help to break through the resistance?

STI - sign of melting snow? Part 2

STI - sign of melting snow? Part 1

Since STI has recovered 20.7% from its low on 9 Mar 09 at 1,457 , it is technically just at the gate of the BULL market. Let more bullies come and push the herd in. Is the rise mainly due to end of quarter Window Dressing? We shall see after next week.

One thing is that in forums we heard many shortlists Bear Paws were BBQ yesterday and some began to join the Bull camp.

STI - sign of melting snow?

Is the last low on 9 Mar 09 at 1,457 the bottom or temporary bottom? How STI ends this week will provide the important clue? So watch out, and also end of Quarter window dressing too? Very exciting week liao.

Olam

Noble

Getting ready for next round of play.....

Noble - Sold @ $1.09, ROC 5.7%

Hope to gather more feathers for the pillow soon ...

Round 7: ROC 5.7%, 10 day, B 1.02 S 1.09

Round 6: ROC 3.8%, 1 day, B 1.01 S 1.06
Round 5: ROC 12%, 27 days, B 0.965 S 1.08, (2nd Half)
Round 4: ROC 14%, 8 days, B 0.965 S 1.11, (1st Half)
Round 3: ROC 7.1%, 8 days, B 0.830 S 0.895
Round 2: ROC 31.6%, 20 days, B 0.800 S 1.05
Round 1: ROC 16.3%, 28 days B 0.910 S 1.08

Smart Money Grabbers over dummy investors

Trading 'expert' ordered to refund fees


Here in SG, we also have few of these smart money grabbers over dummy investors promising these dummy investors Magic Stones that can generate money if you faithfully rub the magic stones everyday. If you didn't generate $$$, they will tell you that you didn't rub the Magic Stones at the right angle or at the right spots.

It is always your fault if you can't get the Magic Stones to puke out $$$$.

If someone really have Magic Stones that can puke out $$$ so easily, why they are selling at $X,XXX. They should have secretly pass the Magic Stones to their family members to generate plenty of $$$ themselves and become one of the richest family in Singapore.

Why would someone who has Magic Stone that can generate so much $$$$$$$$$$$ in days, would want to burn their weekends teaching seminar instead of enjoying their life fully.

If you really come across any Gurus, challenge them to post their trades (buy and sell price) online in near real time in their blog, and let us judge their performance for ourselves.

Most of them will just tell you I "long" this and I "short" that. If they can't do it, they are just selling Magic Stone.

Open your eyes, there is always another Clemen Chiang somewhere.

So are you the Ant?

Are you the Ant?

Is your organisation like this one? oh oh!

SIA - What happen to you, Big Bird?

Probably, distribution by Big Boys.


Testing the low of $9.05 soon and will be at mercy of rising crude.

Speculating = Gambling?????

If you call a speculator a Gambler, he/she felt offended and they never admit that they are gambling.

No, I tell you that they are not auntie/uncle type of gamblers, speculators are truly Professional Gamblers and being professional can be a part or full time job.

wealth creation and destruction

In a bull market, there is an overall positive perception of the market's ability to keep producing and creating. Because this perception would not exist were it not for some evidence that something is being or will be created, everyone in a bull market can be making money. Of course, the exact opposite can happen in a bear market. To sum it all up, you can think of the stock market as a huge vehicle for wealth creation and destruction

Smart Money Grabber over dummy investors

Here in SG, we also have few of these smart money grabbers over dummy investors promising these dummy investors magic stones that can generate money if you faithfully rub the magic stones everyday. If you didn't generate $$$, they will tell you that you didn't rub the magic stones at the right angle or at the right spots.

It is always your fault if you can't get the magic stones to puke out $$$$.

If someone really have magic stones that can puke out $$$ so easily, why they are selling at $X,XXX. They should have secretly pass the magic stones to their family members to generate plenty of $$$ themselves and become one of richest family in Singapore.

Open your eyes, there is always another Bernard Madoff somewhere


.......................................
NEW YORK - Court documents released Friday show that Bernard Madoff and his wife Ruth lived a life of high luxury, with exclusive homes, yachts and other assets worth 823 million dollars.

The revelations came in documents filed with the US Court of Appeals due March 19 to hear Madoff's appeal to be granted bail. He was jailed on Thursday after pleading guilty to a multi-billion-dollar investment fraud.

The documents, filed by Madoff's lawyer, show the Wall Street con man and his wife had 22 million dollars worth of real estate at the end of 2008.

Trading/Investing - Are you winning or losing?

Value of time <---- read it if you wish

PiggyBank asked: anyone of you investors are winning or losing?

Well, it depends on the value of time - your time frame.

If you are day trader, at the end of each trading day, you will know whether you win or lose.

If you are not a day trader, probably, at the end of each month, you will either win or lose.

But, if you are die hard value investor, probably, you will have 8-10 years to know whether you make it or not.

You set your own time frame. Only at the end of the time frame, you will know you make it or not. In between you are just fine-tuning your strategies to progress towards your investing goals or depleting your wealth and working for free; or alternatively your opportunity cost is putting your money in fixed deposits.

For me, another 2.5 years will be the final answer for $1M question: What will you be in another 2.5 years:

A) Reach Financial Independence, out of rat race and become a SUPER PIG.
B) Still a PIG lost somewhere in the financial maze.
C) Revert from PIG to RAT or COW.
D) Becoming a BEGGAR

STI closing at 1456.95 on 9 Mar 09

STI closing at 1456.95 on 9 Mar 09. Down by -62.4% from Oct 07 peak in 515 days. It is indeed a long time, hopefully it will have a short rebound for me to re-capitalize.

Noble - Got back at 1.02 to stay in the Game

Previous

Opportunity Cost vs Risk of holding to a falling assets or investing too early or missing the boat

Opportunity cost or economic opportunity loss is the value of the next best alternative foregone as the result of making a decision.

So you have future cash (those extras not needed in 7-10 years time) and should you stay invest now. What is your opportunity cost?

Well. Putting the cash in a Fixed Deposit to protect capital, and the opportunity cost is about 0.5-0.8%, probably going forward is likely to be less than 3-8%. Banks are more risk averse going forward, and unlikely they will be giving better return to you for taking more risks for you.

Now, the tough decision. Is the opportunity cost of 0.5-0.8% ROC worth taking up the risks and emotion stress of seeing a falling asset value day after day for better return in years to come, or fear of missing the boat, or regretting investing TOO EARLY.

If you can meet with triumph and disaster

If you can meet with triumph and disaster
And treat those two impostors just the same; - Rudyard Kipling

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on"; - Rudyard Kipling


Do you understand how to relate to your investing or trading?

You can meet with triumph and disaster in your investing/trading and both are just the same impostors. You may win big now, but may give back all and more later. You may stare at great losses now, but you win back all plus more. Both are just impostors, and you just need to know that and don't unnecessarily increase your emotional stresses.

Have WILL to HOLD ON and you will see LIGHT within years and probably not decades. Cheers!


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

If
Rudyard Kipling

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or, being hated, don't give way to hating,
And yet don't look too good, nor talk too wise;

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build 'em up with wornout tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on";

If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run -
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man my son!

Focusing in increasing income

"Don't focus on how to spend less money. Focus on how to make more money" - Lyndon Forman

If your main focus is on cutting down your expenses, and saving more. No matter how hard you try, you cannot cut down any further as it is always a limit.

If you change your focus to increasing income, then you may realize your thinking may change. You may increase through active or passive income.

Start off with active income, and then progressively bring on more passive income as time flies.

STI closed at 1513 with a new low again - Part 2

Part 1 <------ Read Part 1

Let review with a low STI at 1513, what will happen to portfolio value?

STI 1600 on 24 Oct 08: portfolio value is the lowest
STI 1595 on 20 Feb 09: STI down -0.3% from 24 Oct 08, portfolio value +19%
STI 1513 on 06 Mar 09: STI down -5.4% from 24 Oct 08, portfolio value +17.6%

The review is telling me that one should think of re-balancing, swapping counters to diversify or replacing "dead" counters in the portfolio, as not all counters will fall to new lows or better still some may recover from the previous lows.

So be brave and control your emotion over losses. During the time of market depression, it will also present you with better opportunity for you to re-balance, swapping counters to diversify or replacing "dead" counters in the portfolio at current reasonable price level.

debt-free — and that, to me, is richness enough

My Middle class prison
Tabitha Wang

MY FRIEND from Singapore just emailed me with the dreaded news: She has been retrenched. She could see it coming but even so, it still came as a shock, she said.

Her situation is not so bad, she admitted, with a rich boyfriend and parents to support her. Even so, she said, it felt weird to have no cash in hand. “What I wouldn’t do to be you now,” she continued. “You never had to worry about money.”

How wrong she was. I know poor because I’ve been there.

Being poor doesn’t just mean living in a rented one-room flat with barely enough money to buy one meal a day. It can also mean owning a private condo and a car and still not being able to afford a meal a day.

Hong Kong’s Financial Secretary John Tsang recently came under fire from white-collar workers because the government’s latest budget didn’t make many provisions for them. He defended the decision by saying they could just re-mortgage their homes or live on savings. But what he failed to realise was that you can come from the middle class and still be poorer than a blue-collar worker.

Poor is not being able to sell your assets because their values have fallen so much that selling them would mean getting into bigger debt. And you can’t remortgage your home because no bank would give a loan to the jobless. So you end up living in a condo where you can’t afford to pay even the management fee and owning a car you can’t drive because you cannot afford the petrol.

Poor is when every bill strikes you like a body blow and you cross the road to avoid being seen by your usual bubble-tea seller because that $2 can buy you a meal.

I faced poverty during the Sars period, when my husband’s firm went bust and we were left with no savings and debt of over $200,000. Thankfully, I was still working, but my pay was just enough to service the monthly debt repayments.

It was a miserable time. With no jobs to be found, my husband plunged into despair.

No one wanted to rent my studio apartment. I wanted to sell it but the price had plunged so much that I would be owing the bank another $50,000 at least if I had done that. Keeping it and servicing the mortgage was, ironically, the cheaper option. We couldn’t afford to move back to it for a few months because we couldn’t raise enough money to hire a van.

The worst was praying my husband wouldn’t fall ill because we had no medical insurance. We couldn’t fork out the thousands needed to pay for his premiums.

When I tell people my story, they think I am exaggerating the difficulties. “Why didn’t you borrow from your family and friends?” they ask. Well, we would have were it not for pride (having been brought up by our parents never to beg) and the fact that we knew they didn’t have that much to spare anyway.

It was a time to find out who our real friends were. Some quietly paid for our dinners and offered help in a roundabout way. One pretended it would be a favour to her if we took a bunch of toiletries off her hands as “they were cluttering up my bathroom”.

But there were those who stopped calling us up for fear we would ask them for money. Some lent us money then chased us for repayment so aggressively I sold my only shares at 10 per cent their value so that we wouldn’t be beholden to them.

As the middle-income noveau poor, we were in limbo — we earned too much to qualify for any assistance but not enough to pay off our debts. But declaring bankruptcy was not an option, not if my husband wanted to start another business again.

We tightened our belts, ate lots of egg, vegetables and rice and somehow made it through the year, until my husband found a job again.

Even now, we still don’t have much to show for our 20 years of working but we are debt-free — and that, to me, is richness enough.


Tabitha Wang still gets annoyed when her husband leaves the light on even though they can now afford to pay the bill.

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

From Createwealth8888,

The sooner you get out of debts, the nearer to being wealthy. Think really hard if you think you can leverage to make more money; unless you have Angel above your head.

Contra Noble off at 1.06

Hopefully pillow is coming ...

Round 6: ROC 3.8%, 1 day, B 1.01 S 1.06

Round 5:(2nd Half) ROC 12%, 27 days, B 0.965 S 1.08
Round 4:(1st Half) ROC 14%, 8 days, B 0.965 S 1.11
Round 3: ROC 7.1%, 8 days, B 0.830 S 0.895
Round 2: ROC 31.6%, 20 days, B 0.800 S 1.05
Round 1: ROC 16.3%, 28 days B 0.910 S 1.08

Noble - buy some more at 1.01

Let see tomorrow got kopi money or not?

Live a simple life - lessons from Warren Buffet

Live a simple life

I just naturally want to do things that make sense. In my personal life too, I don’t care what other rich people are doing. I don’t want a 405 foot boat just because someone else has a 400 foot boat. - Warren Buffett

Find happiness in simple pleasures

I have simple pleasures. I play bridge online for 12 hours a week. Bill and I play, he’s “chalengr” and I’m “tbone”. - Warren Buffett

If one of the richest men in the world is doing it, why aren't we?

1. Learn not to be so materialistic because not everything must be of high prices.

2. Learn to strike a balance in life and decide between wants and needs. Needs are easily met, but wants can be unlimited, you probably have to struggle very hard, and spend long hours earning more money to meet your wants.

3. Simplicity is the key to your early financial independence path, but, you don’t have to be a miser to lead simple life

Nobody knows tomorrow

Mar 1, 2009, the sundaytimes, article by Lee Wei Ling

Don't put off till tomorrow what you can do today, for there may be no tomorrow. (by wei ling)

I strongly agree with the writer.

Enjoy your life each day but do remember to plan today for your loved ones. We can't really mitigate emotional shock but for financial shock, we can by all means to mitigate or better to leave behind no debts.

So don't give shock, and better NOT to shock your loved ones and takes out your calculator today and compute the amount of the debts payable by them. Take care of the debts payable while you still can, if possible adequately covered by insurance.

Never put off till tomorrow something that one can and should do today. There may be no tomorrow. (by wei ling)