Horizontal links

Tuesday, 27 October 2015

An Evening With A Senior Pro Trader



Several months back, I had the pleasure of spending one evening with a Director of Futures from one of our local brokerages.

He's an interesting character! 

Speaks England with heavy Singlish and lots of Hokkien phrases peppered for added spiciness!

Yup, not a graduate by any stretch of the imagination.


Like most street urchins made good, he stumbled onto the then Simex as a local with $30,000 Sing dollars (his life savings) when he heard how much a local could make from his friends working inside Simex.

He was in his late 20s when he became a local.


Fast forward to today, he's one of those locals who have successfully made the transition from the trading pits to electronic trading as a scalper. (Have you noticed most professional traders are intraday traders?)

It's not easy. Many of his local pals have dropped out of trading altogether as they find it hard to adapt in an environment where they can't read the body language of their competition, and where machines from high frequency trading firms are able to run circles round them...

Now he's 50 plus years young; still trades his own account and mentors the other prop-traders working for his broker.
  

Not one to let this opportunity go to waste, I asked him for his views (note: I never said advice, I'll come back to it later on) on what's interesting to both of us:


Is that a flick knife?

Right off the bat he was making fun of those "traders" who think they can "trade" with a tablet or smartphone. Limpeh have a 6 screen trading setup! You want to trade against me on the beach? He roared with a throaty laughter.

I reminded him his brokerage has mobile platforms for retail customers. He rolled his eyes, and I nodded with a smile. 






Free where got edge?

He was sharing with me excitedly how his US based trading platform is able to put a volume condition to his price stops. For example, most platforms only allow us to put our stops at a specific price level - for eg, 1.35.  So even if this 1.35 gets done with one contract, our stop will be triggered.

This US platform allows him to put another variable like >500 contracts at 1.35 - meaning only more than 500 contracts have traded at price 1.35 would his stop be triggered.

And he is paying for this platform out of his own pocket for several thousands a month. 

No, I didn't ask him why he didn't consider the "free" professional trading platforms used by the other prop-traders at his brokerage? That would be a dumb question.


CFDs or Futures?

He was dissing traders who trade with CFDs...

Of course he is biased. Taking into account his Simex background and his current position as Director of Futures.   

How many big time pro traders trade CFDs? He challenged me.

Well, I know my missing-in-action coconut commenter trades CFDs with hundreds of thousands...

But I know what this Futures senior is driving at. 

I started with CFDs before moving on to Futures trading when my trading account got bigger.

The funny thing is next day, I saw in the papers his broker advertising the merits of CFDs. I wonder what the Director of CFDs will think if he knew his Futures colleague is saying behind his back. Talk about internal rivalry! LOL!


2 traders talking shop

Why not advice but his view?

Although this pro trader is many leagues above me in trading account size, we are still 2 traders bantering as peers.

Humility yes. But notice how many wannebe traders and investors advertise themselves as sheep wherever they go?

Do this too often you'll invite the attention of wolves.

I may be less skilled; but I don't let others patronise or talk down to me without me giving them a poke or kick. 

Think about it. Why would land owners want to have a conversation with sheep? 

Want to mix with other shepherds and land owners? 

Respect yourself and your craft first.




Wednesday, 21 October 2015

The River Story if you don't like Up Mountain; Down Mountain



Imagine our lives' starting point to be the snow-capped mountain tops.

As the snow melts, it forms little brooks we can step over; then into creeks we can jump over; blend into streams we can wade across; and finally merging into rivers we can swim across...

 





No, the journey does not end in the warm embrace of the oceans.

That's just a comfortable temporary holding area.

For those droplets of water who can let it go, they'll float into the skies.

And be the carefree clouds ;)

There!

This river allegory is "less taxing" since it's about "going with the flow". The "hard" part though is the "letting go" bit...


As you may have discovered, ants prefer the mountain story, while grasshoppers would prefer the river story ;)






This post was inspired by WolfT during our discussions in my previous post:

The Allure And Alternative Path To Passive Income - Part 2 of 2


This River allegory borrows from what Bruce Lee had said about water and the non-action philosophies of Taoism.


Ever noticed the duality and polarity of Life?

Remember Newton's Third Law of Motion?

For every action, there is an equal and opposite reaction.  

On one hand, there is the delayed gratification exhortations of study and work hard so we can enjoy our later years - Up Mountain; Down Mountain.

Then there is the enjoy the moment go with the flow take it easy bohemian hippie River Story...


Do you remember the angst and behavioural challenges you faced during your teenage years? 

It's a time of discovering your identity and how you would like to fit in with the adult world.... Its either you just do as you were told, or listen to that little murmur in your heart...


And what happens during your mid-life crisis?

You may have second thoughts on the choices you've made, discover you were lied to, or just come to the realisation - is this it?  




Monday, 19 October 2015

How Cats and Dogs Think






Think for a moment how you view your employer.

How you behaved in front of big daddy every election.

Notice your behaviour when you ask others for help?



As an investor/trader, do you behave more like the dog or cat when it comes to your relationships with intermediaries like brokers; analysts; financial advisers; SGX, MAS, banks; insurance companies; mutual funds, etc? 

  

Wednesday, 14 October 2015

The Allure And Alternative Path To Passive Income - Part 2 of 2


I guess some of you have figured out for yourselves what's the alternative path for adopting a passive income strategy really is. Wink.

I wanted to say "most of you", but who am I kidding? 


Coming down the mountain

Yup, your favourite shepherds who have already reached their X amounts by Y years, and where working full time is just an option, they didn't start with a passive income strategy from day 1, did they?

That comes much later. 

Their passive income strategy only starts when they were coming down the mountain.


Climbing up the mountain

So what were the common strategies they have used to reach the mountain top?

Let me list the 2 most frequent ones:


1) Earn more; save more (preferably earn more)

Let's face the facts. It's better to earn $10K and save 20% than to earn $3K and save 50%. 

It does not matter whether you work for someone or is self-employed, if you belong to the higher income brackets, you already have a head-start in earning and saving your first pot of gold!

And that's without any investments needed! How cool is that?


2) Make money from property

If you go round asking your uncles, older cousins, parents, etc; you'll find more of them made money from properties than from equities.

You may be nodding in agreement as that's where your first few hundred thousands came from... You know, the 2 bites of the cherry, upgrade, downgrade... 1st rental/investment property, 2nd rental/investment property... 

The real booster is the 5:1 leverage used. You know it; I know it.


Harder but possible

OK, the next 2 strategies are adopted by many; but few manage to pull if off successfully:


3) Speculation with leverage

Look, if I earn a below median salary, don't have much capital to speak of, how else to acquire my first pot of gold before 55? 

You think why some of us desperately want to withdraw our CPF money at 55? That may be our only opportunity to see something more than $100K in our hands... 

We are dealing with emotions and sentiments here... So please keep your holier than thou financial literacy supremacy to yourself. If you don't mind!

That's where the seduction of derivatives like Options, Futures, CFDs, Spot Forex, etc; and Penny Stocks trading come into the picture.

It's like Toto. Put in little; hope to win big big!

And just like Toto, the majority lose money so the few can win :(

You know the author of the very successful Market Wizards series? Whenever Jack D. Schwager makes money in his futures account over a certain limit, he'll transfer the excess funds into boring US Treasuries - passive income from trading?


4) Business Ownership

You know something funny? Many draw their inspirations from embarking on a passive income strategy from Rich Dad Poor Dad, yet the whole essence of the book is about the benefits of having our own businesses!

Talk about poor reading skills...

Of course the failure rate is high; but so are the rewards!

Is this why financial businesses are so eager to sell us their financial products and services to "help" us to reach our financial goals?  

And why some business owners have so much passion to educate us on financial literacy?

I still can't erase the funny sight of that young Sikh trainer who let slip he made his first million through his Trading Academy... Hello!

You don't find many business owners as financial bloggers. But they do appear in some investing forums. 

If you're observant, you'll find their passive incomes are not restricted to dividends from stocks - they include fixed incomes from bonds and rentals from physical properties. 

Now that's diversification!

If you have several taps of passive incomes (stolen with pride from the fisherman), if one pipe gets choked, the other taps are still flowing!


Alternative path?

Some of you reading here may be reflecting it's not so alternative after all...

Well, that's for you to decide for yourselves.

Whether it's better to EARN our first pot of gold first, then SECURE our passive income flows. (Note: its plural flows)

Or to start with a single gold coin and hope the passive income from this single gold coin will help us turn it into a pot of gold.





Monday, 12 October 2015

The Allure And Alternative Path To Passive Income - Part 1 of 2


There's fashion in investing circles too.

For those of us above 40, we can remember a time (before Rich Dad Poor Dad) where every other investing/trading book,seminar, or workshop will tout Millionaire this, Millionaire that.

Now? It's Passive Income this, Passive Income that...   

Just like low-rise hipster pants were the rage a few years back, its now replaced by high-rise pants that accentuates the waist over the hip, this Passive Income popularity will too be replaced by another flavour of the decade. You just wait.


The Allure of Passive Income

Of course it's attractive! 

Who doesn't want something without lifting a single finger for it? Can someone carry my fullpack? It's so heavy!

Who doesn't want a beautiful body without exercising and dieting for it? Just lie down and upon waking up... Wah lah!

That's where people forget... 

Liposuction and guy Friday do cost money. 


Passive Income is neither special nor elusive

The average working person riding the ComfortDelgro bus upon reaching 55, just need to make 1 out of 3 choices, and upon 65, will have "passive income" for life!!!

No lighting, no thunder.  

That's why I am confident when everyone and anyone has passive income, it will go out of fashion...

A bit like being a Millionaire in Indonesian Rupiah terms.


An exercise on reading skills

Before I share with you the alternative path to Passive Income in my next post, here's a fun exercise for you to try out:

1)  Those Passive Income opinion leaders you follow, can you tell apart those who are climbing up the mountain from those who are coming down the mountain?

2)  If yes, notice the difference in goal setting and strategy employed between them?

3)  Most of those who are coming down the mountain have been quite forthright in how they accumulated their capital from which their "passive incomes" were based on. 

Now try identifying what are the different sources and how much of it were based on a Passive Income strategy?
 

Friday, 9 October 2015

First Seek To Understand; Then To Be Understood


If you are in the community, you would have known about this viral article by one young "ang moh" editor from an overseas website that alluded there's something wrong with you if you have savings in your 20s.

Guess what? Quite a number of those self-proclaimed and self-appointed purveyor of financial literacy, locally and overseas, have taken umbrage and fought back vigorously.

That young editor and the owner of the website she works for must be sipping champagne and giving each other a high five! Now that's how you drive traffic to your website!

No, I'm not giving you the link to that article. LOL!


Don't worry. This post is not about the article. It's about reading people.


Yalor; Yalor 

Readers who came to know about that article from their opinion leaders, did you just read the headlines only - never bother to read the actual article itself - and based on the strength of what your opinion leader tells you, you went "Yalor, yalor"?

You probably do the same with the quarterly results and annual reports of listed companies. Preferring the summaries of others instead of doing your own analysis.  

And in the same breath you call yourself a "DIY" investor.

Feeling a tad more "superior" than those investors who opted for low cost passive index funds; and perhaps a lot more "smarter" than those investors who have outsourced to more expensive actively managed funds by professional money managers...   


You stupid dumbass

Now it gets more interesting!

If we want to win over people who are not in your choir, does it help to call them names like stupid?

Before the elections, at the pro-opposition websites, instead of engaging the rest of the 60% and winning the swing voters over through intelligent discourse, anyone who dares to give any different or alternate viewpoints will be hounded and cyber-bullied out. 

Apparently, 10% switched sides.

And the face palm craziness is instead of asking for feedback on why they left and what must you do to win them back to the fold next election, you start giving these 10% swing voters names!?

Smart. Real smart.

If I'm from the Opposition parties, I'll have a good chat over coffee with these on-line "supporters". Stop and desist! You're killing us!


How to tell a person got high EQ? 

IQ is easy to measure. EQ is much harder to quantify... 

We can't tell what a person is thinking. But from what a person says or do, we can make deductions there. 

Remember your Literature classes? Remember those questions to describe a character from a play or story? What do you do to back up your opinions of this character?

Exactly.

It's not precise and that's where the fun lies! Some will say Macbeth is a victim and not his fault, while some will argue Macbeth got what he deserves for the betrayal of his king.
 
There!

Perhaps now you have some insights as to why your friends and siblings have problems listening to your financial literacy nagging...

The problem does not lie with them.

Have you made the effort to: First seek to understand, then to be understood?




Wednesday, 7 October 2015

Dividend Income (Passive) is a Fairytale?



Investing in stocks for Passive Income = Misleading?

First of all, I must commend GiraffeValue for applying active critical thinking and his willingness to challenge and verify for himself some of the platitudes out there when it comes to investing. 

The strength of youth is you don't know what cannot be done! 

Normally, I would not poke youths since I would rather do cheerleading - who doesn't?

But how boring life would be without some exceptions!


This post is motivated by the "weak" challenges to what GV has written.

I mean, you don't go "you have not proved that dividends are not passive income" when GV has written a whole bloody long thesis on his views already! Duh!

It is you, the challenger, that have to provide the counter arguments to demolish GV's position! 


Thinking like a land owner 

When you are a business owner, it doesn't matter whether you pay yourself a salary, consulting fee, or dividend, in the books, its considered you have taken capital out from the business.

Now imagine you are a business owner, and your business is self-generating so you don't need to add new capital into it other than that first capital injection of yours.

You "reward" yourself with a 5% dividend yield every year.

After 20 years, we would have gotten our capital back.

Will the business collapse or disappear now that you've got your initial capital back?

What do you call those 5% dividend yields you'll continue to get from 21st year onward? 


Passive my foot! 

If you think I have your back all you yield hogs out there, you have another thing coming!

My only critique of GV's post is he is not twisting the bayonet hard enough... You're too gentle!

What Passive Income? 

And what's with all that apologetic preamble anyway?


Good job GV!

Income passive or active not the most critical; having an active mind is!





Friday, 2 October 2015

Medishield Life and Integrated Plans



Last night, I attended this Medishield Life presentation given to Union leaders and activists at NTUC. 

At the reception and registration, I was a bit taken aback when everyone was calling each other "brother" and "sister"?

Is this how unionists call each other?

I would have preferred "comrade". That would put a left wing socialist vibe to the address which I think suits better. 

The presentation started at 7:03 pm when its stated on the programme 7:00 pm - not too bad. Can excuse with my clock and your clock not synchronised mah! I can live with that.

But participants were still strolling in by 7:10 pm... Union leaders? Hmm...

OK, I better stop trolling, least I won't be invited back for the free meals...



Everything you want to know about Medishield Life 

Here you go: Medishield Life 

What? You didn't expect me to spoon feed you, did you?

Don't you find it strange many retail investors like to rely on 2nd hand or 3rd party summaries - when they can go to the source directly?

Isn't it better to do your own homework, form your own opinions, then have a meaningful 2 way discussion with others (preferable just as informed as you), where needed?


  




You don't bitch about the increased premiums if you... 

Here's something to have fun with.

If you have colleagues or friends that like to bitch about the senior citizen cleaners at Changi airport, hawker centres; old folks collecting cartons and beer cans by the roadside, etc; see if they'll complain about the increased premiums for Medishield Life...

No, don't poke them.

Smile knowing they are "bleeding hearts" just as long as others pay. 



What you really cared about is what happens to your Integrated Plans right? 

Makes a lot of sense.

Especially when it was revealed in the Straits Times that 6 in 10 people with an IP for private hospitals opted for a public hospital when they needed hospitalisation!?

And this is even more depressing - 7 in 10 who bought IP for public hospitals A and B1 wards chose lower ward classes when seeking treatment!!!???

Now make a wild guess on these "downgraders" - did they purchase their IPs after doing their homework, or were these IPs sold to them?

Are you one of them?

Take this opportunity to press the reset button and start from zero-based.

Do your own homework on Medishield Life, reassess your needs and circumstances, and especially your financial situation. No one knows them better than you.

Of course I want to travel first class - who doesn't? But can you afford it?

Imagine paying premiums for first class tickets, but when the time comes for you to do the actual travel, you discover you can only afford budget airlines... All those past premiums paid down the drain...

Little lies we tell ourselves are one thing. But lying to yourself costs money when it comes to buying IPs we don't need!

Now armed with what you know, have a talk with your insurance agent.

It could be an opportune time to assess whether your agent is more interested in his own needs or yours.



Related Posts Plugin for WordPress, Blogger...