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Saturday, 30 June 2012

The Rain

 
It was a busy
Morning, about 8:30, when an elderly
  gentleman in his 80's
Arrived to have
Stitches removed from his thumb.
He said he was in a hurry
As he had an
Appointment at 9:00 am.
I took his vital
Signs and had him take a seat,
knowing it would be over
An hour before someone
Would to able to see him.
I saw him looking at his
Watch and decided, since I
Was not busy with another patient,
I would evaluate
His wound. On exam, it was
Well healed, so I talked to one of the
doctors, got the
Needed supplies to
Remove his sutures and redress his wound.

While taking care of
His wound, I asked him if he
had another doctor's
 appointment this morning, as
He was in such a hurry.

The gentleman told me no, that he
needed to go to
The nursing home to eat breakfast
with his wife.
I inquired as to her health.



He told me that she had been there
For a while and that she
was a victim
Of Alzheimer's Disease.

As we
Talked, I asked if she would be
upset if
He was a bit late.

He
Replied that she no longer knew
who he was,
That she had not recognized him in five years now.



 
I was surprised, and asked him, 'And you
Still go every morning, even though she doesn't
Know who you are?'

He smiled as he
Patted my hand and said,

'She doesn't know me, but
I still know who she is.'




I had to hold back
Tears as he left, I had goose bumps
on my arm,
And thought,
'That is
The kind of love I want in my life.'

True love is
Neither physical, nor romantic.




True love is an
Acceptance of all that is,
Has been, will be, and will not be.

The
Happiest people don't necessarily
have the
Best of everything; they just make
The best of everything they have.





'Life isn't about
How to survive the storm,
But how to dance
in the rain.'
We are all getting Older
Tomorrow may be our turn.


 
  

Wednesday, 27 June 2012

Average up or down?

I have an ex-colleague who is now the tai-tai of one of the big luxury watch retailers in Orchard Road.

While entertaining overseas clients, she may bring them to one of our casinos.
She never loses money there. OMG! How?

Her system is simple.

She will place a $100 bet on the roulette table on either black or red. If she wins, she got back her $100 entry fee. End of story.

If she loses, she will increase her bet to $200 on the same colour.

Lose again she increase the bet to $300 and so on.

So far, she always got back her $100 entry fee. Of course there was this one time she got a scary 12 rounds of reds against her…

I’ve written a tongue-in-cheek post on this topic of whip cream or leather whip.

But that’s for the “Mind” part.

Today I will be exploring the “Money Management” and “Method” parts (at least I’ll try). 


Money Management

To recover from a 20% loss (paper or realised it’s the same) we need to either hope our existing position goes up by  25%, or sell this loser and switch to a winner that gives us a 25% return.

To recover from a 50% loss we need a 2 bagger.

To recover from a 90% we need a 10 bagger.

Mind you, it’s just to break-even – there’s no profit to speak of yet! 


Method

How many 10 baggers or 2 baggers have you got in your track record?

And please don’t tell me you never got any 25% realised winners before! (If you don’t, you may want to review whether DIY suits you at all. Outsourcing?)

Here it’s not what you intend or hope to do or accomplish using what not techniques or strategies. It’s what you have achieved. Period. 


Average down

Looking around me and at my own speculation journey, I found to do average down successfully, you need the below ingredients.

  1. Lots of new money coming in
Like my tai-tai example, if you have lots of new money coming into your investible funds every year.

You invest $10,000 into a stock from crashes from $1.00 to $0.10.

You average down another $10,000 at $0.10 and you just need the stock to “double” at $0.20 and you will make a small profit from your $20,000 bet.


  1. Good at picking multi-baggers
The above example is about the futility of making plans based on “what-if” scenarios. Mathematically it looks simple and plausible.

But again, look at your track record. It matters more than comparing others’ track records – be it from gurus or your peers. 

If you’ve never got a 2 bagger, what makes you think by putting extra $10,000 on a dead stock will make it miraculously double to $0.20? 

And if you have no new money to invest, you’ll need a 10 bagger just to break-even!

People celebrate when they’ve got a 10 bagger - $10,000 becomes $100,000!

We? $10,000 becomes $1,000 and then back to $10,000. How many years did it take for this wonderful recovery to happen?

We wouldn’t want to tell anyone since anyone who placed the same $10,000 in a savings bank would have beaten us. Shhh….


  1. Luck is on your side (Or you really are smarter than the market!)
I got my answer to whether to average up or down with my Greek tragedy holding in Jurong Technologies.

I could have cut at 20% loss. Huh! I could have cut at 50% loss. Humph! I could have cut at 90% loss. Hahaaaaa!

Noooo… I so very the stubborn and “smart”! Then it got to a big zero when it bankrupted and got delisted from SGX.

That’s a very expensive lesson on buy and hope!

Well, the silver lining is that I did not average down. Phew!

You do the math. Imagine you start averaging down at minus 20%; minus 50%; minus 90%?

Even if you can print money like Bernanke, worthless is still worthless.



Average up

Eh… I think you can fill in the blanks here with your own reflections using examples from your own track record.


Keep losses small

Those that did not have a long enough track record don’t worry. In time, you will understand why Warren Buffet says don’t lose money. And why not having a down year works wonder with compounded returns for Peter Lynch.

Traders learnt very quickly you can’t play when you have no chips.

Investors may take longer as we can hide under the “it’s for the long term denial”…

It does not matter what you call yourself – value, growth, dividend, long term, etc. It’s our track record that determines whether we are successful or poor investor.

How to minimise losses? It’s the Mind part of the equation. There are lots of system tools and hedging techniques. But if the Mind refuses to act, it’s all very academic.

Sunday, 24 June 2012

Analysts - You win liao lor!

I wonder why there are so few analysts out there who can speak with conviction?

Last Thursday, Goldman Sachs told investors sell the S&P 500:
Goldman Sachs says sell S&P 500

But after the "got dragon got phoenix" spiel, they have to spoil with it with their hedge:

"Still they did add a few caveats. The S&P could pop or at least stay flat if the U.S. or Chinese economies start revving up or if European policy makers talk a big game about propping up the market."


It's the same with technical analysts.

We believe after breaking the immediate support of 2800 for STI, the index is likely to test 2740 in the near term. However, this view is negated if STI recovers to 2830. (I made this up but I am sure you have read similar spin)

Hello?

In the words of my Hokkien speaking friends: "You win liao lor! Everything also you say one. Human is you; ghost also you!"

LOL! 


P.S.  Analysts who have conviction have already moved on to being mutual or hedge fund managers or full-time investors themselves.

Friday, 22 June 2012

Heart Of Gold - Neil Young

 



Talking about gold, let us not forget what's really important in our lives.

Let us not dwell on pettiness and small minds. How else to explain the perverse voyeurism nowadays of shooting inconsequential scenes with our ubiquitous hand-phones and posting them on-line?

I hope those who take glee in the mocking and embarrassment of others can pause for a while and reflect - how would you feel if in a role reversal, others filmed you in your own moment of weakness?

If we can't do good, the very least we can do is do no evil.

Have a heart of gold.

 

Wednesday, 20 June 2012

Gold please don't rise above USD 1700 before Oct 2012

I own paper silver (UOB silver account). Wished I had bought more.

The paper and unrealised return for silver so far beats the dividend yield plays that I bought around the same time. 

Silver is 50% industrial use and 50% greater fool.

Guess what? Over the last weeks, I've been itching to buy a 100% greater fool block that just sits there. 

Why?

While all these bailouts and easing by the Central Banks around the world are helping to put a floor and reflate my equities holdings (I not complaining),  but all these money printing will come home to roost one day...

Just visit our neighbouring countries with all the zeros on their bills. It's easy to be a "paper" millionaire!

Another was the realisation that I need to own some physical precious metals. Physical silver would take up too much space. Gold is better.

When there's a crisis, and I need to flee out of Singapore like the South Vietnamese boat people in 1979, maybe some physical gold would come in handy to pay for my passage. I don't think the boat owners accepted paper money. Nor would I believe the banks will remain open just for me. Can kiss my paper silver and cash savings goodbye!

No, I not converting most of my asset to physical gold. Just enough to make me sleep better knowing that I can afford the plan B boat or air-ticket. Put the gold under my pillow like my ang pows when we were young?

I know, I am irrational! Singapore safe like Switzerland. But that's what scientists and government also tell the Japanese public on nuclear energy...

And my fingers were itching during the last few weeks when gold retracted to below USD 1600.

But the 7% GST for physical gold will only be waived this October in Singapore...

Thank goodness the bond markets are signalling bond investors are more afraid of a  deflationary environment. If not how to explain why investors are OK with getting negative yields (US 10 year treasury)?

Hence I am betting that gold would not rise beyond USD 1700 by Oct this year.

Or so I hope.

If I take gold at USD 1600 today, plus 7%  GST is around USD 1700.

This could turn out to be eggs on my face as a great example of penny wise pound foolish. 

Imagine if gold would to zoom back to USD1900 end of this year. 

LOL!

All this to save 7%...

Well, everything is a bet or speculation to me :)

Sunday, 17 June 2012

Cannot Compartmentalize Your Personal Life


In my previous blog post, I’ve written about it can be a good idea to compartmentalize (or ring-fenced) our different investment/trading accounts.

But today, I am reminding myself that in our personal lives, there’s no such thing as breaking it into neat “compartments”. 

It’s also an expansion of this old post of mine: What 5-balls? 

We are one holistic us. One big ball; not multiple balls.


Public and private lives

We may assume how we live our private lives don’t matter to our public personas.

Like having multiple relationships with members of the opposite sex, our dalliance with paid sex, acting out our fantasies behind closed doors.

In some societies, if these private “secrets” are exposed, they are merely greeted with a smile and a wink. Naughty, naughty.

But over here, you get pilloried

I can’t help but draw comparisons with Teflon Bill Clinton and ex-HP CEO Mark Hurd.

Guess Singaporeans need to be world-class in everything. We must be seen to be holier than thou too.

So unless we become more “liberalised” (youth, I am counting on you now), we have to assume we have to be saints also in our private lives when we apply for a job – never mind  if it’s not expressly stated in our job contracts.


Cyberspace personas

It’s also interesting some people found it the hard way that you can’t compartmentalise or separate what we say or do in cyberspace from our real lives.

You found out soon enough that your rants to what you thought were a closed circle of friends is not so “private” if one idiot of your “friend” decides to “share” it along to their other “friends”.

Unless if you are a hacker who can cover your on-line trails, even if you hide under anonymous nick, if you defame, libel, or spread false truths that result in violence or losses to others, rest assured if the determined “other party” wants to find you, they will.

The best policy is to say or do in cyberspace like what we would do in our real lives. 
 

Thursday, 14 June 2012

Compartmentalise or Ring-fencing


If you have watched war movies involving submarines or battleships, you may have noticed the heart wrenching scenes where sailors may “close the hatch” on their fellow shipmates to prevent the whole vessel from sinking…




Naval ships and submarines are designed with multiple compartments throughout the whole vessel. This is so that if the vessel sprung a minor water leak, you can localise the flooding to that particular section or compartment.

In my speculation journey, I use the same technique.

I create separate accounts for each investing/trading activity.

For example: I separate my Margin, CFD, and Futures into three separate accounts.

This way, if I bust one account, I can “close the hatch” like chopping off the gangrene toes to save myself.  


Nowadays, you may hear another similar word called ring-fencing when it comes to Europe’s contagion fears if and when Greece leaves the Eurozone.

If you were around in 1997, you too would have experienced what contagion means. Strange hor? A single event in Thailand can trigger a domino effect that affects the whole of Asia.

Now why wasn’t Europe and US affected during the Asian Financial Crisis?

If you have the answer, you would probably know whether you should (or don’t bother since you believe in Asia decoupling) compartmentalise or ring-fence your portfolio for what may happen in Greece this coming Sunday.

We are living in interesting times!

Who knew 11 million Greeks going to the polls this Sunday – whether they vote with their hearts or minds – will have such an impact on financial markets next Monday.
I wish my Greek ex-colleagues and families well.


I hope Singapore will not meet a similar fate again. Being kicked out of the Malaysian Federation once is enough!  

That’s what happens if we have no growth and flagrantly spent all our reserves. I hope I will not be around when that day befalls Singapore. 

We would probably have a referendum whether to crawl back to the Federation (to be bailed-out) and accept whatever terms they may demand of us.


Tuesday, 12 June 2012

Tank Design and Investing/Trading


When designing a tank, there’re 3 main considerations that need to be balanced:

1)    Firepower – what good is a tank if it can’t punch a hole through the enemy’s defences?

2)    Armour – you want to live to fight another day don’t you? 

3)    Speed – or to be specific, it’s manoeuvrability. You need speed to catch up with the enemy and run rings round them; and at the same time you want to be able to run like hell if you are out-gunned!

Light tanks will sacrifice firepower and armour for speed.

Medium tanks are a balanced of all 3 considerations; it’s the all-rounder!

Heavy tanks will sacrifice speed for armour protection and firepower.

My favourite tank is the WWII German Tiger tank. Its armour and fire power were legendary.




"During a scouting patrol two Tigers encountered about 20 Russian tanks on their front, while additional Russian tanks attacked from behind. A battle developed in which the armour and weapons of the Tiger were extraordinarily successful. Both Tigers were hit (mainly by 76.2 mm armour-piercing shells) 10 or more times at ranges from 500 to 1,000 meters. The armour held up all around. Not a single round penetrated through the armour. Also hits in the running gear, in which the suspension arms were torn away, did not immobilize the Tiger. While 76.2 mm anti-tank shells continuously struck outside the armour, on the inside, undisturbed, the commander, gunner, and loader selected targets, aimed, and fired. The end result was 10 enemy tanks knocked out by two Tigers within 15 minutes"  

The Tiger Tank is surprisingly manoeuvrable for its weight and size. Its main weakness is that it’s high maintenance (all of sudden I am reminded of a girl I used to date). The transmission breaks down often which limits its operational range during combat.

What kind of tank are you?


Firepower

Some investors/traders go for firepower. They don’t over diversify, take big trading positions or investment stakes with high conviction, and if they know they are right, they would leverage up and go for the jugular! 

The outsized profits will be the “fat” that allows them to survive the next winter.


Armour

Investors may seek diversification and spread out their investments to different asset classes that don’t correlate. Some may even limit their own individual stock holdings to not more than 5% of their portfolio. 

Traders may use money management techniques like limiting their trading positions to not risking more than 2% of their capital. And the judicious use of trailing stops and/or stop-loss orders to lock-in profits or limit their losses.


Speed

Academics like to data mine to show “time in the market” is just as important as market timing. Wonderful voodoo statistics were presented to show that if you are out of the market X days, you would miss the big up days by giving up Y% returns. Yeah right! That also means the longer you stay vested in a market, you are equally just as likely to get clobbered by the big down days! 

There’s a Chinese saying that if you go up the mountain often, you will encounter the tiger one day!   

That is why risk goes up the longer the time frame we hold our positions.

Day traders can take bigger trading positions than swing traders since they don’t carry their positions overnight. No nasty gap down surprises for day traders!

Swing traders are more nimble than buy-and-hold investors. They are less likely to be the ones left carrying the baby in a market downturn. 

Traders in general have greater manoeuvrability than investors since they can go both long and short (bisexuals?) 

Long term investors sacrifice speed for either firepower or armour.  


By the way, if you have no firepower, no armour, and no speed – please don’t call yourself a tank.

You are probably cannon fodder or target practice. Ouch!
    

Sunday, 10 June 2012

West Coast Park - My Virgin Visit


Isn't yesterday's weather good?

It's the closest thing to outdoor air-con weather in Singapore after the early morning showers.

So I decided to visit West Coast Park for my daily walk exercise routine instead - a place I've never visited in all my 44 years in Singapore!

My first impression was wow when I saw the kids playground. My time don't have these cool contraptions and rides!




Eh... You mean I am supposed to balance and walk on the rope to get to the other end? Or am I supposed to jump over it? Is there an operating manual? LOL!




Now this space age contraption is more stylo than the metal structure I had in our HDB playground during my time. I remember climbing up to the top and dare not climb down... Malu (shameful) like hell. Have to wait for mommy to come rescue me some more...

I know first hand how the cat that got stuck in the tree must have felt!




This one even higher. Around 2 storey tall? With a awesome slide some more! Would any Singaporean parents allow their children to play on this contraption? So dangerous!




Wrong! Silly me. The young don't know what cannot be done! Good thing too their parents not around ;)

I must get back that wide-eyed innocence I used to know.




Cannot afford Universal Studios' rides never mind. The rides here are free!

It's not how much you have paid; it's more who you are having fun with.




I guess this is the "icon" for West Coast Park. 

There's no "coast" here like in East Coast Park mind you. It's more a "industrial" view - with power plants in the distance and PSA containers along the "coast".

Like they say, beauty is in the eye of the beholder. At least the young couple there at the jetty don't mind. 

Ah... When in love, we only see each other...




How is this for a pictorial on Singapore's gini coefficient?




One of the 3 squirrels I spotted as I walked all the way from the Marsh Garden at one end to the the Dog Run at the opposite end and back.

It's one of those days where everything seems to fall in place. I am happy.
 
If I have any complaints about Singapore, that's would be the burning noon day sun (that's for mad dogs and Englishmen).

Other than that, I am good. 

And contented.

 

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