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Friday, 30 March 2012

The North American Brown Bear (and your investment/trading styles)

I’ve always loved watching animal documentaries on TV. 

One animal, the brown bear, comes to mind whenever I think of my speculation style.
See if you can spot the similarities between the brown bear’s seasonal and varied diet and your investing/trading styles.

The North American brown bear, also known as the grizzly bear, is an omnivorous like us humans.

After emerging from its 6 month long winter hibernation around April, the first food it eats is sometimes carrion from animals that did not survive the winter. A brown bear will usually travel to lower elevations to reach vegetated, snow-free areas. Roots of plants, bulbs of flowers, and freshly emerging grasses of early spring are some examples of the vegetarian part of their diet.

Contrary to popular belief, meat only makes up around 10% of a brown bear’s diet.The brown bear is an opportunist. It will sometimes prey on elk or moose calves or smaller mammals whenever the opportunity arises.

By mid-summer, brown bears flip rocks to lick up insects such as ants and ant larvae. Insects are also torn out of rotting logs and trees. Brown bears are also big bullies. They will use their size and strength to intimidate and scare away other predators – like wolves and cougars – from their kills.

By mid-July to early August, the fruits of berry producing shrubs begin to mature. Berries are the important high quality food source for bears. This is when you see the brown bears gorged themselves silly on blue berries! Reminds of that Louis Armstrong song: “I found my thrill, on Blueberry Hill…”

Mid-August to September, its salmon spawning season! The mature and experienced brown bears will stand on the edge of the rapids and catch, with its jaws, the salmons as they leap out from the waters. It looks so easy until you see the young bears fumbled on their attempts at mimicking their seniors.




It will take several seasons for these young bears to master their own techniques of salmon catching. In the meantime, these young bears will have to settle for the less dignified way of catching salmons – chasing after them near the shallows of the river… Making a mess of everything with big splashes of the water! 

The brown bears know that they only have these short months of plenty to build up their body fat as energy reserves for the coming long winter months. The brown bear’s diet has evolved to help it survive in their habitat.

It’s the cycle of the seasons. Winter weeds out those who are not prepared.

There are also the opposite extreme to the brown bears. Like the panda who only survives on bamboo and the koala bear with its eucalyptus leaves. These are the diet specialists.

Of course we can be specialists in our investment/trading. Just as long we are aware what happens when our only food source runs out… 

So, what do you think? Is there a link between our human’s omnivore diet and us overrunning planet earth? 


Wednesday, 28 March 2012

牽阮的手



Recent events have made me realise the importance of holding the hands of our loved ones.

Words are superfluous when all our emotions can be conveyed with a clutch of the hands.

To share our pains and joys. 

To tell her that I will not leave her.

To reassure that come what may, we shall face them together.

If you're lucky to have met the right woman, don't let go of her hand. 


 

Sunday, 25 March 2012

Beware Of The Goody Goody Guy!

When I was selling furniture at IMM and Park Mall during my furniture salesman days in my mid-twenties, I have an older lady colleague who was in her mid-30s.

In her youth (she would probably give me a slap – 30s very old meh), she used to work in the high class fashion boutiques at Orchard Road. That’s why she looked so different from the “normal” furniture sales staff – always fully make-up with branded attire and never a hair out of place.

Oh the stories she would share on what goes on in the changing rooms between bored tai-tais and the male salespersons… (Of course I dare not ask her what she did with her male customers!)

Opps! That should be another post for another day.

This lady colleague was married to an insurance agency manager. And her plan was to retire with her husband in their early 40s. 

She is rich; you should see her Chopard watch – the one with gemstones moving freely on the dial ;) She works merely to pass time.

One day, a drop dead gorgeous lady customer walked into our showroom. After this customer left, my lady colleague asked me who is prettier – she or the customer?

Ah ha! By now I knew how to speak “woman”. So I replied, “Her long hair very nice; but you prettier! Your skin so very de fair and your eyes so big big. Can hook any man’s soul!”

My lady colleague laughed. I can be very over the top!

She later revealed that lady customer was one of several ex-girlfriends of her husband. And on that day, I learned a lot about how some women got use strategy and tactic when it comes to “hooking” the significant other of their choice.

Her husband is very handsome. And together with a good career, it’s not surprising during their courtship, her husband did stray and became a playboy…  Instead of throwing tantrums or breaking off in a huff, she let her then boyfriend “sow his wild oats” and patiently waited.

Needless to say, her brave contrarian bet paid off!? Once the playboy boyfriend had got his “excesses” out of his system, the desire to settle down to start a family and focus on his career took root.

And lo and behold! My lady colleague was there when her boyfriend came to his senses.

Sob, sob. How’s that for a fairy tale end?

OK, foreplay over.


When I read in the news of how powerful or rich guys get themselves into trouble over their inability to zip up, I always recall the above episode and what I’ve learnt from my lady colleague.

For young teenage girls, there’s this “convent girl syndrome” for girls that are too “repressed”.

For men in their 40s and 50s, there’s this lao hero mid-life crisis phase. Especially if they have been always the goody goody guy with no vices during their early manhood.

Imagine being in a position of authority and/or wealth during your middle age and find to your surprise that mei-meis are now “bumping” into you and “chatting” you up?

Never mind if you are short, fat, and ugly (OK, OK, I add in bald if you must insist).

All your life you have done the “right thing”. And now you tell yourself you “deserve” a little bit of fun and reward for all those years of hard slogging to get to where you are.

When I hear people say only buy blue chips, or dividend paying stocks are great, I smile when I recall what I've learned on that afternoon with my lady colleague.

So I’ll flirt with the S-chips and penny stocks today. You never know, one of them one day, may be the next great blue chip and dividend play of the decade!

 

Friday, 23 March 2012

IPO and Arranged Marriage


In real life, most of us believe in the romantic notion of finding the love of our lives ourselves. Who wants to be caught in an arranged marriage in this day and age?

But when it comes to our investments, our actions may betray our hidden need to honour our traditional practices – even though we may speak out against it.

Just take participating in an IPO – what do we do? We swallowed the sweet promotional words of the “matchmaker” hook, line, and sinker!

Now there are 2 kinds of IPOs:

1)      I never heard of you kind

2)     Oh, I know you; you’re famous!


It does not matter. Once you have taken the bait, you will make yourself believe you know the company inside out. You are a believer now!

Like all marriages, once the mundane of everyday living has doused the rose-tinted flames of the honeymoon period, we begin to see the true nature of our partners breaking out.

To some lucky souls, it’s like the beautiful sight of the butterfly emerging from its pupa. Aw…

To others, it could be like the horror of the baby alien breaking out from its host’s stomach. Ah!!!


Dating

Savvy and sophisticated investors will approach IPO investing like they go about finding their dream partner. Go on a first date (invest a little), if the chemistry is right continue on a second date and more dating (scale in slowly).

Anytime during their dating relationship if something does not work out, both parties can walk away (cut-loss) with less emotional and financial baggage than had they got into marriage on the first date!  


One night stands

Some may prefer to have one meaningless relationship after another. The one night stand people. Thinking that since they will leave on the next morning (IPO staging), that should minimise the emotional damaged of being hurt.

That is of course until they got the medical report for that rash or sore…


It’s all about speculation 

Even if you have never gambled before, isn’t life all about speculation?
Like buying your favourite durians (you can substitute with your favourite fruit here). 

Some will taste heavenly, some will disappoint you. We take the good with the bad.


IPOs are no different. (And marriages)



Monday, 19 March 2012

Go for your medical checkups!

Recently for the past 4 weeks, I've been visiting the Alexandra and National University hospitals twice and even thrice a week!

No, I am well and fine, thank you very much. I am now caregiver to the person most dearest to me.

I would like to share my reflections on the most important asset we have - our health.

We sometimes spend a lot of energy and money securing all the medical insurance "protection" to assuage the fear of our own mortality or our concerns on the rising medical costs... 


Two Extremes 

Most of us may have over bought our medical insurance needs under the influence of too much fear (not helped by fear-mongering peddled by agents); or under protected ourselves through a combination of self-denial or over confidence that it could never happen to me!

How much research we have done on our personal and family's medical history before buying all those medical "riders" and supplementary policies?

If we had done our homework, we may realise the odds of us getting some medical conditions are so rare that the odds are like us striking the Big Sweep Lottery!

Of course we can cover our bases and protect ourselves to the hilt; but if we do so, we can't laugh at those who buy lottery tickets -  the odds are the same.

How to know whether you are more susceptible to certain medical conditions?

Go for your medical checkups! Get to know your body. Duh!

This is not enough. We need to know our family's and immediate relatives' medical records too. Especially if the medical conditions are hereditary.

You get the picture.

I just find it strange that we sometimes buy insurance for all medical eventualities, yet do no hedging for our financial investments. And vice versa - hedge our investments, but throw caution to the wind for our own medical needs. 


Insurance Is Not The Medical Cure 

Imagine the willingness to invest in medical insurance, but at the same time refuse to go for our annual medical check-ups?

Let's put aside the discussion that early detection may be less costly to treat. You probably don't care since you got insurance?

Hello! What's the point of "rejoicing" you don't have to pay a single cent for expensive treatments when the discovery of our illness is at the terminal stage?

The point of early detection is so we have a better chance of recovery!!!

Don't over commit to medical policies that you have to skim on medical check-ups. Even if we have no medical insurance, early detection may help us afford the medical treatments. 


It's my own reflection 

I am merely sharing my own thoughts on the recent events in my life. Your life and situation will be different from mine.

But I have one other thought. How on earth did our senior citizens handle their old age during the 60s and 70s? What medisave? What medishield? What medical insurance? Do they just roll-over and die when they have an illness?

Or do we worry too much?
 

Saturday, 17 March 2012

Van McCoy - The Hustle (Investment banks hustling us?)




Growing up during the disco era of the 70s, I remember hearing this tune everywhere. Catchy tune I must say! 

According to  wikipedia:

Hustling is the deceptive act of disguising one's skill in a sport or game with the intent of luring someone of probably lesser skill into gambling (or gambling for higher than current stakes) with the hustler, as a form of confidence trick. It is most commonly associated with pool (and to an extent other billiards-family games), but also can be performed with regard to other sports and gambling activities. 

Recently, a not so happy junior executive of an Investment Bank aired publicly the dirty linen about the "hustling" that goes on in his bank.

I don't know whether to laugh or scratch my head when I read the Rip-Off-Factor (ROF). Who says customer is king?

Now Investment Banks' customers are usually institutions like: Companies (including blue- coloured ones); Pension, Mutual, Hedge funds; "sophisticated" high net-worth investors, etc.

Even professional investors working for institutions had their eyeballs ripped-out by these Investment Banks. I guess pretending to believe you understand complex products or know better than "salesmen" had its pitfalls. Ah! Hustling!

It's interesting to see Wal-Mart got taken for a ride too. But big companies can afford lawyers to sue for their money back. Lucky them! Or not, lawyers ain't cheap... (I think the 2008 credit crisis was boom time charlie for lawyers!)

Whenever I see new "investment products" being peddled to me, my mind will play this  "The Hustle" song.

Sometimes being simple and recognizing one is simple can be a blessing.







Wednesday, 14 March 2012

Minimum Wage In Singapore? On One Condition

Now that Malaysia is going to introduce minimum wage, I guess the call to introduce the same here in Singapore will be even strident during the next General Election.

I myself have no use for minimum wage as I belonged to the generation of workers that started work during mid-80s onwards. We were the job-hopping happy-go-lucky generation. 

The government, employers, and the press frequently lambasted us for our lack of loyalty and patience. For a few hundred dollars more, we would job hop to another employer without any due regard or thanks to the trainings our former employer had invested on us. What? No promotion after 2 years? Bye!

Therefore, I have always preferred the small government approach - believing people can and should take care themselves. No need "Big Brother" interference.

However, I had a change of heart recently when I read that some older workers did not have a pay raise for years... There are employers who preyed on the ignorance and meekness of our disadvantaged workers... Not all workers can defend and negotiate what's fair for themselves.

So on this epiphany, I would vote "Yes" in any referendum that promotes minimum wage in Singapore - on one condition:

It applies to ALL job positions in Singapore. 

Yes, that would mean the same should apply for jobs that are filled by foreign workers. And yes, it should apply to domestic maids too. 

ALL JOBS. Period.

What? Do I hear howls of protest?

Sorry, can you explain why you are supporting minimum wage in Singapore again?


Can you imagine vociferous Singaporean supporters of human, gay, women, and animals rights turn around and whimper that it only apply to humans and animals that are born in Singapore? Huh? Say that again?

I think there's a label for people with such attitudes and mindsets...

(It's so damn hard not to label people. Here I go letting myself down again...)




   

Monday, 12 March 2012

Dividend Trap – How to know if you have fallen into one.

Since I am living off my dividends, I thought it would be fun to share my past mistakes and pains. It should appeal to sadist amongst you.

Before you read further, it’s not a post on how to find good dividend plays. For that, you may to go to other more authoritative business finance sites or bloggers. 

I’ve no clue how to spot stable companies that constantly grow their dividends over many years. Not from year 0 at least. But in year 10 looking back, I can!

My growth and income selections are quite similar to another fellow blogger’s way of finding 10 baggers – by discovering many that are not! Thank you CW8888.

So how do I know I’ve fallen into the dividend trap?

First, a quick painful snap, ouch! Followed by the slow drip, drip, loss of my blood.


Capital loss

This one is easy. After buying my “perceived” excellent dividend play, the market price starts to go below my buying price.

Since I defer to the market, I’ll treat it the market is pulling one eye down at me with its finger. Yup, I’ve overpaid!

I’m not so full of myself that I can convince myself only me that’s got the weight of the company right, everyone else is voting “wrong”. Those silly sellers!

Buying when there’s blood in the street makes sense. But not when the blood on the street is mine! Quick! Can someone call the ambulance?

Like the wolf in the wild, I’ll rather bite my foot off and escape. Better this than to hope the hunter will come and release me from the trap. 

“Oh dear, look at you poor furry thing. I release you. Go. Be safe now you hear?”

Yeah right. Writing fairy tales is one thing. Believing in them is another!


Shrinking dividends

I’ll skip going into yields. No, not just because I hate percentages, give me a break! 

If I go into yields, I’ll go bonkers debating whether we should calculate using the price I’ve bought or based on the current market price. Or should we use the trailing 12 month yield or use the forward 12 month yield.

Let’s keep things simple: Bought dividend stock ABC - kiam chye char roti (Sorry, I can’t help it. It’s a Singapore’s nursery rhyme of sort)

Example                       Year 1             Year 2              Year 3              Year 4
A                                 $1,500             $1,520             $1,550             $1,600
B                                 $1,500             $1,480             $1,450             $1,400

                       
Which do you prefer as your annual dividend pay-check? Assuming the stock price remains the same for the 4 years? 

The slow drip drip loss of dividends is much harder to decide – unlike the quick pain of capital loss. 

I would like to give my investment in this “prodigal child” sometime to recover. We don’t disown our child just because of one stumble do we?

But when do we say enough is enough? Wait 10 years to find out?

That is why I am more a Growth and Income speculator over pure Dividend plays that focus too much on yields or future growth in dividends. 

I rather have some paper capital gains as my margin of safety while collecting my dividends as icing on the cake.

If and when the market crashes 10-20% in a single day, I’ll have a better chance escaping with my money back.





                

Saturday, 10 March 2012

My Poor Math - Lucky Investing Just Need Primary School Math!

I am poor in math during school.

Come to think of it, this "handicap" extends to life after school as well.

How bad is my math?

When doing additions and subtractions, I have to use all the digits of my toes and fingers. Looking down at them, the max I can count is up till 21. Oh behave!

(Clueless female readers may want to remember I am a guy)

I've never learned my multiplication tables. So if people ask what's 7x4, I'll mentally go: 7, 14, 21, 28... Talk about slow processing!

So when mobile handphones come with the calculator function, I was the happiest people on earth! After sms, the calc function is my next most frequently used app!

I hated math so much that when I got streamed into the pure science stream after secondary 2, I switched into the sub-science stream so I can skip additional math for history.

I am better with words and pictures (or imagery).

Of course with that decision, I realised after O' levels quite a few courses were closed to me without additional math - thank goodness for that! That made quitting school all the more easier.

It was years later that I learned about left and right-brained persons. I am more right-brained.

It's true, when it comes to investing, all I ever needed was: + - X /

OK, understanding ratio is also great for making bets on soccer or gambling. I guess the same applies for making risk/reward analysis for speculative trades or investments.

Percentage is another way of representing ratio; but given a choice, I prefer to count in money when it comes to gains or losses in my speculations - thank you very much!

"Only" 10% loss is something else if it equals to $100,000 hair-cut. 500% gain crashes down to earth if it means $5,000 profit in money terms. Statistics and numbers do lie.

Of course being poor in math has many handicaps during my investing and trading journey. For eg, options is beyond me :(

Concept I understand; but once I've looked at the Black-Scholes model, I cried.

So I am limited to simpler "products" and trading/investment strategies. Boo hoo hoo.

But looking back, it wasn't a handicap for me. Simple as simple does suits me just fine :)



Wednesday, 7 March 2012

The Cock And The Fox



  
One bright morning as the sun was rising from the horizon, the Cock flew on top of the barn house. He flapped his wings three times and crowed loudly. 

“Wake up, wake up! First to use the toilet no need to queue!”

But just as he was about to let out another one of his morning wise cracks, his Cock eyes (yes, pun intended) caught a flash of red and a glimpse of a long pointed nose, and there just below him stood the Fox smiling.

"Have you heard the wonderful news?" cried the Fox in a very joyful and excited manner.

"What news?" the Cock asked suspiciously.

"All animals of the forest have agreed to forget their differences and live in peace and friendship from now on forever. Just think of it! I simply cannot wait to hug you! Do come down, dear friend, and let us celebrate this joyful event."

"How wonderful!" said the Cock. "This is indeed good news." But he spoke in an absent-minded way, and stretching up on tiptoes, seemed to be looking at something afar off.

"What is it you see?" asked the Fox a little anxiously.

"It looks to me two Dogs are coming this way. They must have heard the good news and wanted to celebrate with you and me too!”

But the Fox did not wait to hear more. Off he started to run.

"Wait," cried the Cock. "Why do you run? The Dogs are friends of yours now!"

"Yes," answered the Fox. "But they might not have heard the news. Besides, I have a very important errand that I had almost forgotten about."

The Cock smiled and said to himself, “You smart; I not stupid.”

Sunday, 4 March 2012

Traders and Investors – Ebony and Ivory

Traders

When I think of traders, I am reminded of this mental image of the Arabian traders from the 101 Arabian Nights.

Their final destination may be Cathay (China), to source for silk, porcelain, tea, etc.; but the journey is at least a year or more away. To sustain their livelihood along this arduous trek, traders have to set aside a portion of their merchandise for trading with the next village, town, and fortress.

To know what to buy and to secure a good price for their merchandise, traders have to anticipate what the people of the next destination would buy and pay for.

Everything is for sale! There is no emotional attachment to their merchandise.

If a mistake is made, traders know the first mark-down is the least painful. The longer they hesitate, the bigger the mark-downs they will have to endure. It’s pointless to drag along merchandise that nobody wants through the whole journey. Talk about dead weights! 

The focus is not what the traders themselves liked; but what others would like. 


Investors

When I think of investors, the image of parents raising their child comes to mind.
Like all proud parents, they would direct their hopes and aspirations (or failed dreams) to their child.
   
Some parents dream of their child growing up into a bright, successful, and respected adult. Whatever the child needs: ballet, violin, or overseas education, these parents will “invest” in the child’s call for more funds. No expense is too much.

Some parents can’t wait. They prefer to adopt grown-up “children” who from the get go can return their “love” with immediate monthly parental allowance. 

If the relationship sours – the child not living up to the parent’s expectation – one group of parents would disown the child and move forward, while the other group would cling on to the failed relationship and play “victim”.

And if the child exceeds or performs to expectation, now why would any parents “let go” of this child? 

The focus in what the investor want out of this investment.


How to tell which is which?

A good example is when you bought your place of abode. Do you visualize how you can renovate and decorate this place into your personal sanctuary, or do you spend more time checking out the features and selling points that might appeal to the next buyer?

Younger readers may want to infer from your purchase habits – like buying the latest smart phone, branded handbag, or car - which comes to mind more? Is it your personal enjoyment or the 2nd hand resale value?  

OK now look at how you “trade” or “invest”. 


Ebony and Ivory

Does it matter what we call ourselves?

Not really; but to some individuals – everything!

A trader who constantly gets married to his positions and projects his hopes and dreams to his trades…

An investor who can’t seem to sit tight through the volatility and refuses to recognize the reasons for investing in the first place are no longer there…

And then there are musicians who can make great music from Ebony and Ivory:




The right question is perhaps not whether it’s better to be a trader or investor? A better question could be: 

a)    Are you a good or bad trader?

b)    Or are you a good or bad investor?

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