Horizontal links

Wednesday, 29 November 2017

Can Investing/Trading Be Taught?



Of course can!

That's because you've asked the "wrong" question, silly!



Look, if you have not learned financial accounting or business finance in school, of course I can teach you how to do fundamental analysis - look at numbers that sort of thing. And by calling it Value Investing, I can charge you even more by swapping old wine into new bottle!

Same for technical analysis. If you want to learn Candlesticks, I can teach you Candlesticks. If you prefer the more esoteric like Elliot Wave, I can teach you Elliot Wave too. What's so difficult?



But that's not the real reason you asking, right?

You are asking can we get RICH by investing or trading?

Ah! That's a more intellectually stimulating question!

Now not so easy to answer...



But then again, we all knew the answer already. Whether we want to admit it is another question...

Just look at your class reunions. 



Schools teach you how to read, write, and count. Will you send your children to a school that "promises" your child will be a millionaire after they graduate?



  



33 comments:

  1. Hi SMOL,

    Good question. Very perceptive, as always :)

    ReplyDelete
    Replies
    1. LP,

      When we were young, parents and teachers "sell it" to us if we study hard, get good grades, enter good schools, we will be "successful" in life.

      Evidently, its not turning out too well judging by the number of people in our community...


      So if the first time it did not work, we try harder repeating the same thing all over again!

      Perseverance mah! Don't give up! You can do it!

      Didn't big daddy tell us to upgrade and learn continuously?

      How to learn if someone don't tell us what to do?

      Delete
    2. Hi SMOL,

      That's why for those who are better educated, it takes some time to unlearn some things you are trained during schooling years. One of the first thing I have to unlearn is regarding rules. Rules are set by someone with a particular agenda in mind. I learnt that everything is negotiable, and a 'no' really means a 'maybe, pls try another method to convince me'. Years of having the correct ans tend to inculcate this idea in pple.

      Delete
    3. LP,

      I see you weren't held back by that First Class Honours of yours ;)

      Its quite evident you're a cat person too; judging by your Kungfu Cats Academy landing page... LOL!


      Yes, those of us "less educated" have less of this "unlearning" to do.


      The saddest thing is when I see parents putting inexorably pressure on their children over grades... Its clear these parents have not tasted "success" themselves.

      They have assummed good grades = success; just like financial freedom seekers assume more money = solution to all their problems.


      Its takes a while (and some never will) for us to realise that correlation does not imply causation.


      Delete
  2. Good question. George Soros VS Warren Buffett.

    To each his own!

    ReplyDelete
    Replies
    1. sleepydevil,

      The even better question to ask is WHO am I?

      Once we know WHO we are (which is the Mind part of the 3 Ms), the rest will fall into place quite nicely, and naturally.


      The question was never about whether trading or investing better?

      Or whether active or passive investing better in the long run?


      I feel so sorry for the young graduate who just started work and asked, "How much should I be saving?"

      All that education and he thinks like a factory worker...


      Delete
    2. Sometimes, somethings are only taught based on what the "answers" is.

      In my years of education, which I presume most of the people in Singapore has easily more than 10 years of education (pri+sec sch), things that are taught by teachers in school revolves only around book, paper and pen.

      1+1 gives you 2. And 3-1 gives you 2. You're suppose to use addition, subtraction, multiplication and whatsoever methods to get your answer. Only that you'll get your "answer"

      As such, relating to your example - How much should I be saving?

      That is a "question" that is "taught" to the young graduates in his years of education as a student. So now, they'd be busy looking for the solution. But how? No textbook, no marker, no whiteboard! In addition, the methods won't get them there!

      Paper, book, pen answers (Elliot Wave, Reading numbers from FS etc.) will not be able to solve the problem these people here are experiencing.

      So, "how much should I be saving?"

      Similarly, to those who are looking for a rich and wealthy shifu to "teach" them how to be rich. The essence does not lies behind George or Warren :)

      It's your preference :)

      Delete
    3. sleepydevil,

      Just marry Warren Buffett or George Soros and problem solved!

      Well almost... Warren and George bad choices; they long life :(



      Eh, now Singapore like "Autumn", very nice and cool in the night at 27 degrees.

      You even better! Can sleep under the blankets with "anonei" ;)

      Enjoy youth!


      Delete
    4. Yes, bad choice. They're really really long lived.

      Singapore having "autumn" now? Wow. 27 degree... I miss those temperature. It's 0 here just now and its hovering around the 0 to sub zero regions these days.

      It has turned and evolved. It's winter now and snow is racking up! But, one more day here, will also means that it's one more day nearer to coming back !!

      Delete
    5. sleepydevil,

      That's a nice philosophical way of looking at your attachment in Japan!

      One more day there is one more day closer to coming home :)


      Delete
  3. Can Investing/Trading Be Taught like any academic subjects?

    With examinations, grades and can even with certification.



    ReplyDelete
    Replies
    1. CW,

      Of course can!

      Theory part can be "tested" like our Highway code:

      1) What is P/E?

      2) Explain how you calculate free cash flow from annual reports?

      3) What's the quick ratio for?

      4) Here is a chart. Draw the support and resistance lines.

      5) Circle from below charts which is head and shoulders, double-bottom, triple top, cup and handle patterns.

      6) Give some example of leading and lagging indicators. Explain their pros and cons, and when its best to use which from which?


      See? Can teach and test one! With grading too!


      As for the practical part, can sit next to the trainee in the car. Tell him to turn right, he turns right. Tell him to stop, he stops (method).

      Instill in him the importance of seat belts and checking blindspots and all that (money management).

      The practical test is to test how well the trainee can FOLLOW instructions.


      In a low level way, its just to show how to press what buttons, how to use charting tools and analyst reports provided on the platforms. Don't laugh.


      Once we've passed our driving tests, we have no illusions about being a good driver immediately right?

      The driver licence is just saying we can drive on public roads legally, that's all!!!

      And that's when REAL learning about driving starts - self learning :)



      The trouble is when "driving schools" start promising their trainees they can become millionaire formula 1 drivers after joining their driving academy...

      And there are bei kambings who believed them!?

      Sky wants to rain, mother wants to remarry - what can we do?


      Look, we can teach the tools and techniques of investing and trading.

      But HOW to become a profitable investor or trader? That's another story altogether...

      I am of the view only we can teach ourselves that.


      Those "prosperity gurus" have probably no clue themselves, if they knew, they would be hedge fund managers themselves... Wouldn't you?

      But they know a thing or two about how to be a profitable business owner though ;)


      Delete
    2. One question is, even if a person can be a profitable speculator, should he DIY? Does it make sense to actively speculate the DIY way if his profitable performance is inferior to passive index funds/ETFs? Even if his DIY performance is superior to passive investments and he can indeed get rich from investing/trading, is this the best way to maximize his wealth?

      If the person has a high-paid job working in a company and industry with great growth prospects and he is very good at his job, wouldn't it be more effective to continue striving hard at the job, don't be distracted by investing/trading by outsourcing the investment work to passive funds/ETFs? A better question would be “What is the optimal way to maximize wealth given a person’s strengths and weaknesses, likes and dislikes?”

      When people pay thousands for trading/investing courses that claim to help them achieve financial independence through trading/investing, have they ever considered the potential income lost as a result of being distracted by the speculative activities from their day job? The day job is probably the biggest source of their cash flow.

      Some groups of people that I think is suitable for the trading/investing route. They love the craft. It is a hobby to them. So, if they lose money, they will take it as expense spent on a beloved hobby. Doing it right is equally important as making money even if it means making less. Making money but doing it the wrong way is equally distressing as losing money.

      Just because a person hates his day job does not mean he will love trading/investing. For those who love the money but not the work, better work hard at your day job and outsource the investment work to professional money managers (passive wins today). Nevertheless, try try then know.

      Delete
    3. hyom hyom,

      Hence I kept it simple by reminding the readers to look at their class reunions ;)

      Same school, same teachers, same starting point.


      Or we can reflect on the colleagues who joined the company we worked for in the same batch as us. 10 years on, what happened?


      So why pretend tradiing/investing will be any different?


      Hence I put investing and trading in the same category as "speculation" - outcome is a coin flip.

      You want certainty and everyone gets the same result? That's savings ;)

      Voluntarily put money in CPF is not "investing"...

      :)

      Delete
    4. Some folks who are very active in financial and investment forums also don't understand the difference in saving, lending and investing.

      Delete
    5. Got some money back is investing?

      Delete
    6. High salary followed by discipline to save is a much more certain and safer way to get rich. Investing/trading and entrepreneurship are more suitable for those with passion.

      Simple advice are the best. Unfortunately, it is not applicable to business owners who teach financial freedom for a living. Need to complicate things to justify high fees.

      Delete
    7. CW,

      And they are graduates too... Even business finance some more!!!???

      Buying bonds is "investing" since got capital gain/loss risks just like equities. Pros invest in bonds for capital gains.

      Peer-to-peer lending is not "investing". Zero upside in capital gains but 100% loss if lender defaults. Its low level and soft-hearted usury.

      Jumping through hoops and rings to qualify for extra 1% in bank savings interest is definitely savings! But spending minimum sum every month to earn ikan bilis money back? Someone is weak in math here...


      See? Somebody evidently have studied Consumer Behaviour and put them to good use!

      That's why Marketing and Sales earn more ;)

      Delete
    8. hyom hyom,

      Time. That's the button to press if I'm still a snake-oil.

      The "sell" is to be financially free by 35 instead of 65 ;)


      You think why some millenials are jumping onto Bitcoins? If they can triple their money in one year, think of how many years they can shave off the "Y" years in their "$X amount in Y years" goals?


      You think why we encourage our "prey" to set SMART goals?

      The clearer and more conrete their goals, the easier for us to know which buttons to press ;)




      Delete
    9. Hi Smol

      Your which button to press reminds me of recent massage I went.

      From body massage become gua sha..and pay the same rate.. Definitely had to hand over to the massage shi fu..haha

      Delete
    10. Small Time Investor,

      Its subtle right?

      Good help is hard to get.

      I'm impressed when in restaurants, the waitress after taking my order will recommend a dessert to me ;)

      At department stores, after buying new business shirts or pants, the competent sales assistant would causaly asks whether I need new ties or belts to go with them?

      Now at my weekend gig, they want us to "promote" extended warranties to customers ;)


      Its always a pleasure to see a "pro" excel in their craft!





      Delete
    11. Hi Jared,

      Indeed, time sounds like the right button to press as a snake-oil. You don't even need to try to read the person. Almost everyone hates their job and wants to retire NOW. This button works for everyone.

      So glad a competent snake-oil like you have reached the mountain top. Otherwise, I can imagine you wrecking heavy damage on sheeps while climbing up the mountain. Just curious. Why didn't you use your snake-oil skills to accelerate your mountain climbing during your younger days? I believe you are a bleeding heart now even though you deny it but a conscience is usually grown after people reached the mountain, not before. That is at least how I understand human nature.

      Delete
    12. hyom hyom,

      I thought I did?

      44 not "accelerated" for you? I forgot. You 1 generation behind me ;)

      My generation was 55; those behind wanted to retire at 40. Now millenials want to retire at 35!

      Give chance.


      1. I got head wind in front of me - no papers.


      2. I had a lost decade between 20 and 30. I would be still lost had I not got into IKEA.

      In case you didn't know, first time IKEA rejected me. 6 months later, I tried again and got in ;)

      Snake oil can be persistant!


      3. I got into "investing/trading" at age 32 after career stabilised.

      That's why I hint investing to escape and investing to achieve not the same. I wasn't investing to escape. I had a wonderful 14 years in IKEA.

      Why leave?

      I remembered mom not getting younger...

      I stopped setting life goals.

      I discovered the present ;)


      Delete
    13. Hi Jared,

      Becoming a Man of Leisure at 44 is, by any measure, a crowning achievement. Anyone who are my peers or younger will envy you. If I read your blog correctly, I think you made your pot of gold in supply-chain management in Ikea and not as a snake-oil, even though you have that talent.

      Great achievement as it is to become a Man of Leisure by 44, let me explain why I think it can be even further accelerated for competent snake-oils. For a naturally talented snake-oil razor-focused on making money and totally devoid of conscience, he can accelerate his wealth attainment by selling the right products. The most obvious that come to mind are high-commission financial products. Another would be health-related products distributed by MLM.

      A smooth-talking financial snake-oil can talk big, hit all the right emotional buttons about money and freedom, make incredible claims about high investment returns to sheeps without fear of repercussion even if the investment product fail later. Financial snake-oil can hide behind the fineprint disclaimer "All investments are speculative and involves substantial risk of loss". Meanwhile, he selectively shows the price charts of past stock indices in an uptrend. If you bought here, you can retire there. No need to wait too long. After purchase, if the client suffer losses in the first few years, the snake-oil can appease him by saying "be patient and stay the course. This is normal in investing." If investment fails 10 years later, never mind. Snake-oil has already retired! These financial snake-oils will probably never admit they had evil intentions to start with. Self-deception in the form of "Who would have expected the investments to turn out so badly" is so convenient.

      As a boring engineer, I had no talent in being a snake-oil. Engineers got to earn money the hard way. No way to make big claims to sell because claims can be tested objectively by precision instruments to check if they can meet the specifications. Money already so hard to earn, yet many of us lost money to snake-oil who can't even sell properly except use weapons like short skirt and sexy, long legs.

      Delete
    14. hyom hyom,

      Ah! This is what you meant!

      Don't be too "precise" in looking at things and be distracted by "labels".

      I was still a snake oil in Supply Chain. I was chosen because of my shamelessness in marketing and promoting myself all the time in the organisation. The Masters of the Universe took noticed ;)

      My role was to evangelise and promote Process Thinking and Focus throughout the whole Supply Chain.

      Previously, as in most organisation, it was "silo" mentality where Trading do their own thing, Retail theirs. Transport has their turf war with Distribution, and so on...

      I was well compensated to do the dirty work.

      Money is money - whether you call it commission or annual compensation ;)


      Its not your "label" as engineer that is the limiting factor.

      There are sales engineers who earn big bucks.

      So are engineers who can "let it go" to become Professional Managers managing "messy" people instead.

      People are much harder to manage than machines! Hence Managers are better paid!


      We are who we are. Life is finding our niche. I just got lucky I found mine! I wish you'll find yours too ;)


      I believe I can start a trading course and get bei kambings to sign up at silly prices since I got my 10 baggers in 4 years track record. Especially since I also got selling and facilitation skills too ;)

      But what's the point?

      That phase of climbing up the mountain is over for me.

      I'm now into wine, women, and song!




      Delete
  4. Everything can be taught, of course.

    Only this world can produce one Teng Li Chuen or LKY.

    ReplyDelete
    Replies
    1. temperament,

      Exactly.

      There is only one temperament, one Jared, one CW.


      We can share HOW we did it - our lucky bets, our mistakes, etc.

      But my mileage and your mileage different (feet size different).

      Plus we do admit the role of "luck" in our journeys - at least I do!

      So how do you teach "luck"?


      I am "lucky" to be exposed to and experienced what is coaching in IKEA - supporting others to learn and develop on their own.


      Then I realised its what Zen masters do too!

      This insight alone has made my spiritual path a lot less "winding" ;)



      Delete
  5. Anyone that says Lady Luck or God's blessings has nothing to do with his life should read what WB or Howard M.says.

    If only i am born into a Wang Chuk of this world.....

    ReplyDelete
    Replies
    1. temperament,

      Ah! The inspiration behind this excellent Indian movie on learning:

      The 3 Idiots


      Delete
  6. Can be taught but question is whether can it be learnt?

    ReplyDelete
    Replies
    1. Macroanalyst,

      As facilitators and in public speaking, we "lie" when we say there's no such thing as stupid questions...

      How else to encourage 2 way interactions with the audience?


      Deep down, Singaporeans know "how" we frame our questions can reveal a lot about our mental engine capacities...

      Hence good luck getting a Singaporean audience to ask questions in public!


      From your question, its crystal why you are who you are ;)



      Delete
  7. I think that the investing and trading come with experience. This is supported by the ability to exercise self-control at times. Self control refers to the ability to cut loss when the times come.

    留得青山在,不怕没柴烧

    Ben

    ReplyDelete
    Replies
    1. Ben,

      Our teacher can only show us the entrance to the path.

      We have to walk the path ourselves ;)


      Another word for Self-control is Mindfulness.

      A headless chicken is too busy running around grasping at straws.

      So is the deer frozen by the beams of an on-coming car.

      To act with No Mind requires hours/days/weeks/months/years/decades of practice.


      Many lack the Awareness that the sun we see in the sky is actually where the sun was 8 minutes 20 seconds ago...

      Both Fundamental and Technical analysis - no matter how well taught - is always 8 minutes 20 seconds behind ;)


      Those experienced, will get what we both are talking about.


      I can teach others what is a Mango.

      But I can't teach what a Mango tastes like.

      Delete

Related Posts Plugin for WordPress, Blogger...