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Tuesday, 6 December 2016

Where are the Retail Growth Investors?

In my previous post, I wrote in the comments section that most retail investors began their journey as a Trader, then as a Value Investor, moving on to Dividend Investing, and finally capitulating towards Low Cost Passive Indexing when all things fail...

What about Growth Investing?


That was deliberate.


Because most retail traders and investors behave like Growth Investors - no matter what they call themselves.

Verification 1: When you made a trade to buy (long), and/or you invest in something, were you expecting the price to go up higher?

Verification 2: When equities prices were low in 2009 and end 2011, did you do most of your buying then? Or looking at your entry prices, most of them were bought near intermediate highs?

Verification 3: How many of you waited for the dip to scale into your position (let the price come to you)? You chased the market didn't you?

So tell me, how are you not a Growth Investor by default?

P.S.  For those who are not familiar with Growth Investing.

The father of Growth Investing is Thomas Rowe Price, Jr.

Most retail investors are more familiar with Philip Fisher and his book "Common Stocks And Uncommon Profits".

This post is a parody.

Although most of us act like "Growth Investors", there is a reason why most retail traders and retail investors lose money.

And for those who like to do reflections and 2nd level thinking, ask yourselves why there are so few seminars/courses on Growth Investing?

If you think you have the answer, buy me kopi and we can exchange our thoughts over drinks. Wink.

Saturday, 3 December 2016

Tuesday, 29 November 2016

Bernard Baruch - 10 Rules of Investing 

If you ask retail and professional traders alike, most will agree one of our all time favourite trading bible will be:

Reminisces of a Stock Operator by Edwin Lefèvre.

It's a thinly disguised biography of Jesse Livermore.

A lot of trading's popular adages came from that book. If you have not already read it, I would highly recommend it. It's not your typical trading book. I promise you that!

However, there's a fly in the ointment. Jesse Livermore blew his brains out...

A fitting reminder to all traders out there, I guess.

This post is not about Jesse Livermore.

I would like to introduce to the newer traders out there another one of the great traders during Jesse Livermore's time - Bernard Baruch.


Well, for one, he speculated himself into a great fortune before 30 (a bit like those young 20 somethings start-up millionaires of today).

Escaped the Great Depression.

Became advisor for economic matters to 2 US Presidents.

Lived to a ripe young age of 95.

Evidently he is more than just a speculator.... Wink.

Bernard Baruch's 10 rules of Investing 

“Being so skeptical about the usefulness of advice, I have been reluctant to lay down any ‘rules’ or guidelines on how to invest or speculate wisely. Still, there are a number of things I have learned from my own experience which might be worth listing for those who are able to muster the necessary self-discipline:”

1. Don’t speculate unless you can make it a full-time job.

2. Beware of barbers, beauticians, waiters — of anyone — bringing gifts of “inside” information or “tips.”

3. Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth.

4. Don’t try to buy at the bottom and sell at the top. This can’t be done — except by liars.

5. Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.

6. Don’t buy too many different securities. Better have only a few investments which can be watched.

7. Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.

8. Study your tax position to know when you can sell to greatest advantage.

9. Always keep a good part of your capital in a cash reserve. Never invest all your funds.

10. Don’t try to be a jack of all investments. Stick to the field you know best.

OK, point no.8 is not applicable to us Singaporeans. What must we do? 1, 2, 3, ready?

Thank you Big Daddy!

Retail investors and traders just starting out, you'll probably read and shrug.

No worries, just remember to refer to Bernard Baruch again when you have several more years of track record, then you may appreciate the meanings better.

Especially when you blew your trading account or experienced a devastating meltdown in your investment portfolio....

Veteran retail traders and investors out there, how?

Whether you agree or not is the question right?

You and I will agree the secret sauce is:

"for those who are able to muster the necessary self-discipline.”


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