Horizontal links

Monday, 30 April 2012

It’s Easier To Learn From The Loser Than From The Winner

My first time in a casino was in Austria of all places! 

We even got free chips to play a few hands… This was part of the “cultural experience” included in the company course I attended. 

It was like in the James Bond movies where the men wore tux and the ladies wore bare-backed evening gowns. I think I spend more time admiring the “numbers” (36, 24, 36) on the ladies than on the roulette tables… 

We even got to visit the vineyards to do some wine tasting. I tell you, that’s the best company paid course I’ve ever attended!

That was at a time when the company was “smaller” and there were less rules and policies... 

Wait a minute… This post is not about less regulations and more laissez-faire; that’s for another day another time…

Back to casinos.  

For those of you who have been to one, have you tried this spot a “loser” and taking the opposite bet against the poor soul tactic?

I know I know… It’s evil; but it usually works right?

Many investors and traders (that includes me) when starting out, will frequently do our best to emulate the strategies and tactics of our favourite investing or trading wizards. 

Legendary investors like Warren Buffet, John Templeton, Peter Lynch; and trading maestros like Jesse Livermore, Martin Schwartz, Alexander Elder, to name a few.

Guess what? Memorizing famous quotations may score points during exams or make you look smarter in discussions, but practical application in our investing and/or trading yields another result…

I wrote about it here in this post: Limitations of imitating others beyond our league

But I did not offer any alternatives…

Instead of just learning from “winners”, perhaps we too can profit from the lessons of the “losers”?

No need to look far. Try family members, relatives, friends, school mates, colleagues, etc. What better than to observe and talk to real live people from their first person perspective?

The road to success is paved with a myriad of possibilities; but the road to self-destruction is paved with only a few stones.

All successful people, not just in investing and trading, have their own individual DNA way of achieving it. What if your blood group is different from your favourite maestro?  

If you pay attention, the usual culprits of “failure” and “self-destruction” have not changed much since biblical times. They are just written and spoken differently across a diversity of cultures and civilisations. 

OK, I give one example. Try greed. 

The rest you figure out for yourselves. Self-discovery works better than spoon-feeding.


Wear my own shoes or the shoes of others?


Successful retail investors and traders have also looked into the mirror for answers. 

Sometimes it’s just a simple tactic to do the opposite of what we have been doing in our past investing or trading journey. 

Mind you. It’s not as easy as it sounds.

It’s much easier to blame the kitchen knife you are using… Time to buy the new set of knives you just saw on that infomercial…

Friday, 27 April 2012

Multibaggers in less than 4 months? Don’t you just love penny stocks!?


Hands up for those who have not played penny stocks before!

Most of us have played with penny stocks starting out – especially when our account was small starting out.

Remember those wonderful and euphoric days? Ah… 

Of course with the highs will come the abyss of abject horror and manic depression…

Nowadays I am a reformed speculator. Although I still dabble in S-chips and penny stocks for a good old swing trade once in a while, I’ve said goodbye to punting on “rubbish” penny stocks.

Recent events reminded me of those good old days:

MDR
Jan 2012 = $0.005  
Apr 2012 = $0.15 
3 bagger in less than 4 months! 
$10,000 will become $30,000

TT International
Mar 2012 = $0.05 
Apr 2012 = $0.17
3.4 bagger in less than 1 month!!
$10,000 will become $34,000

JEL 
Mar 2012 = $0.005 
Apr 2012 = $0.122   
24 bagger in less than 1 month!!!
$10,000 will become $240,000    No, you did not read wrong! Please don’t say SGX stocks hard to find 10  baggers OK?

You can use your broker’s platform or visit SGX website for the charts.

There’s a reason why I ask you to do self-discovery. It’s the same reason why I only mention the “month” in my examples above and not the exact dates.

I hope you can see for yourself whether you have the pre-requisites to play this “punt the penny stocks game”.

You are either the smooth stock operator who knows how to play the pump and dump game, or you are what I wrote about previously:


Have you noticed when you don’t know what you are doing you make money playing penny stocks? Never underestimate beginners luck!

But once you itchy buttocks start to pick-up fundamental and/or technical analysis, you now have no baxxs to play the pennies again. 

It’s like quantum physics – the bloody sub-atomic particles don’t behave like in the real world!?

LOL!


Tuesday, 24 April 2012

The Sheep That Wants To Be Shepherd

In a distant parallel universe where sheep rule the planet Htrae, there was 2 young sheep named Rekcus-bmud and Nepo-seye that dreamt about being a shepherd.

You see, there are only 2 kinds of sheep on that planet – shepherd sheep that lead and sheep that follow the shepherds.

Both these two young sheep, who were the best of friends, have no wish to be like the other sheep, always following and doing what the shepherds demanded or have planned for them.

They too wanted to be their own shepherds. To have a flock of their own each!

“Nepo-seye, do you want to join me in this night seminar I read in the papers?” asked Rekcus-bmud excitedly. “This guru is sharing his secret to shepherd success! And It’s free you know?”

“Eh… OK. You sure it’s free?” Seye-nepo asked with a suspicious look.

After some reassuring words upon checking up, both went to this “free” seminar.

Something interesting happened after the seminar that night. Both Rekcus-bmud and Nepo-seye became converts! 

From only dreaming and talking about how nice if they can be shepherds – to actively doing something about it. No more TALK, it’s now DO for them.

But the paths each took differ.

Although the seminar was “free”, the “real secret” to shepherdhood was only available if the participants were to sacrifice some of the wool on his body for the complete 3 days package. This Rekcus-bmud did most willingly in an almost religious fervour fashion.    

Nepo-seye decided that paying wool to be “told” by shepherds what to do does not make sense when they are already being told by shepherds what to do for free in their everyday lives!?

Nepo-seye was busy researching and observing how this guru shepherd operated:

How many came to this “free” seminar?

How many signed up for the “pay in wool” 3 days package?

How much does the meeting venue cost in wool?

How much did the advertisements in the papers cost?

What trigger words caused the most excitement in the participants? Free is a powerful word Nepo-seye learned!

How the guru used his body language and tone of voice to “sell” beyond the spoken words?

How much roughly did the guru earned in wool that night?

And so on…

Nepo-seye even volunteered to work for free with one of these guru shepherds to complete his research by looking from the inside out, instead of outside in - the path his good friend Rekcus-bmud took. 

Several months later, when both friends meet, Nepo-seye had a shock!

“Rekcus-bmud! What happened to you? Where’s all your wool?”

“I’ve given them all to the gurus as payment for their generosity in sharing their secrets with me. I’ve am trained by 4 gurus now!” exclaimed Rekus-bmud triumphantly. “Next week I’ll be going to my 5th seminar by this guru from overseas!!!”

Nepo-seye peered into his friend’s eyes and offered his most heartfelt advice, “As sheep, the two most important assets we have on our body are our wool and meat.”  

“You don’t have any wool left on your body… Do be careful on what you have signed up for next.”

Rekcus-bmud did not listen and he did not hear… And was heard no more…

Nepo-seye became a shepherd after several years of apprenticeship with shepherds. 

By listening to what shepherd DO, not what they SAY.
 


Saturday, 21 April 2012

When is enough, enough?

Just read a very inspiring post today: What An Old Man Taught Me On The Way To Work One Day

I had a similar experience!

I even blog about it: My meeting with a HK man of leisure

Although I did not explicitly talk about it, this chance meeting in Warsaw was the catalyst that made up my mind to leave the corporate race - when my overseas contract ends.

It's definitely not an impulse moment...

If your opinion of Luck is Preparation meeting Opportunity, then you would understand the epiphany I had.

Sometimes, I do read with amusement the musings of people on cyberspace about quitting the rat race:

If I accumulated this $X amount in net worth... (usually in millions)

If I achieved $X amount of passive income per month...

Some may be thinking of starting their own business or thinking of working for themselves (self-employed consultant, for eg), or even making a total 180 degrees career switch (like from engineering to sales, management to teaching, etc). 

I am sure you would have a list of criterias or conditions similar to the ones on leaving the rat race...

But guess what? When we do achieve the criterias we have set for ourselves, and/or the optimum conditions appear - what do we do?

Yup, it's easier to move the goal posts than to follow through...

For me, I was lucky to have met my HK man of leisure.

Since I have run out of excuses, I can only honour the promises I've made to myself.

 

 

Thursday, 19 April 2012

Is Passive Income Really Passive?

We are living in a flavour of the month and fashion season of the year world.

Now it’s easy to read passive cash flow this, passive income that – as if all we need is to sit under the sky and money will just drop onto our lap?


Rentals from properties

Even if your tenant never calls you to fix the toilet, and always pay on time every month dutifully into your bank account (of course exist! I am one such tenant) – surely there must come a time when you need to re-negotiate a new tenancy agreement on the revised rentals or find a new tenant? 

Check the new tenant is not an illegal immigrant or have a history of financial offences?


Dividends from stocks

Eh… You don’t need to spend active time researching which dividend stocks to invest in? At what price? 

Some who bought Shipping Trusts because they dangled a higher yield, or invest in “safe” Utility Trusts (Citispring?) got more than 50% hair-cut when they overpaid… And please don’t mention the current yield based on their cost of purchase.

Some have discovered not all REITs are the same even if they all have a REIT name in their nice little brochures…

No need to review once in a while whether the company you’ve invested in is still “steady as she goes”? All dividend paying companies can grow their dividends consistently and be around in the future? Kodak anyone?


Yields from bonds

Corporate bonds can be attractive with the higher yields than sovereign bonds (unless of course you have stomach for Spanish and Italian bonds); but companies have been known to go belly up or default… 

If a state-owned company called Dubai World can default on its bonds during Nov 2009, surrounded by their oil-rich emirates cousins, you tell me how your passive bond selection is more superior than full-time institutional bankers who got their fingers burnt investing in Dubai World debt?

As for sovereign bonds, well… some say we are near a bond bubble with artificially low interest rates… If you have bought 10 year US treasuries at 2% yield, a “small” 1% increase in yield to 3% will mean the value of your bonds may get a hair-cut of 15% or more… 


Selling options 

I don’t know about you, but selling multiple contracts every month to earn the “passive” premiums is most "active” to me!

Try taking a month long vacation without internet access and see if you still will get your regular “passive” income ;)


Interests from bank savings account

Before 2008, it may be possible to live off the bank interests… Now?

By the way, you are the “gold mine” to all the ever so helpful and ever so friendly financial practitioners who are eager to help you channel your bank savings - that are earning negative yields after inflation - to the inflation beating “passive investments” above.  

What? Some of their recommendations are still yielding below inflation? There! You wouldn’t know this if you were “passive”, would you?  

Independent thinking is very active work!


Interests from CPF

Ah! You got me!

I think this is the closest to “passive” we can get. 

Risk free? I not so sure…

Every 4 -5 years, I have to do my “active” duty to make sure we don’t elect charlatans into government.

Free is good! But free education, free medical, free this, free that; and promising something you have not earned yourself is another thing altogether. (For those that want to split hairs... Isn't subsidy another word for free?)

On the other hand, spending other people’s money is a lot of fun! I can attest to that! Spending ah kong’s (company) money while on business trips makes me happy. I lie not!


So is passive income really possible?

Yes! But it’s not free. It’s called outsourcing. Must pay for performance. We can hire a property management company or agent, a professional money manager, a private banker, and so on.

One parting word of advice: We can buy passive; but don’t fall asleep on the wheel!

History is full of regents who deny the throne to their rightful heirs.

You smart; others also not stupid.


Monday, 16 April 2012

Failures and Side Effects

Sometimes taking a few steps back can be very interesting to get a perspective of things.
Things are not always what it seems, and if we are not careful, we may even throw the baby out with the bath water!


Failure

Have you ever used the 3M’s Post-it note pads? 

When it was first invented, it was considered a “failure” as what do you do with a “weak” glue that don’t stick? It took 6 years later before a colleague of the inventor found a use for it by anchoring a bookmark to his hymnbook. The rest as they say is history…

Does a Rights Issue sound like the 3M Post-it note?

Most shareholders will moan and groan whenever a rights issue is declared (me included).
I guess most minority shareholders are only fair-weather friends. We will stick around when the company is giving away dividends or rewarding us with capital gains. But when the company has fallen on hard times and need our support with a rights issue, you should read the vitriol we hurl on the management… Ah! Take is easy. Give? Wait long long!

For savvy investors, some rights issue can be an opportunity to increase your percentage share of the company by buying over the rights from other shareholders who are dumping them in dismay. 

The catch word is why you are invested in this company in the first place? If a company you have conviction in is being offered to you at a discount, shouldn’t you be happy? No?

Of course it’s another story if the reasons you invested are no longer valid.

For traders, sometimes there’s a window of arbitrage to make a quick buck off “newbies” who have no clue what are rights offer and how to calculate the Theoretical Ex-Rights Price (TERP). 

It’s weird, but we do see cases where the rights (rights market price plus conversion price) being sold below the mother shares’ price!? A quick fingered trader can sell the mother share and buy the rights and arbitrage on the difference. This is the closest thing next to picking money off the floor…   

It brings to mind the Chinese word for “danger” - 危机. Opportunity in adversity!


Side Effect

I guess the most famous unintended side effect for a drug must go that little blue pill – Viagra!

Originally, Viagra was developed as a cardiovascular drug and for its ability to lower blood pressure. But during the medical trials, the researchers found that the men guinea pigs didn't want to give the medication back because of the side effect of having erections that were harder, firmer and lasted longer. I wouldn’t too! (Did I just say it out loud?)


I made the mistake of focusing at it as a pure yield play. But the pleasant side effect was very evident during the market correction during 2nd half of 2011. 

While Hyflux mother shares fell from SGD $2.19, together with most of the rest of SGX stocks, the Hyflux preference held its ground.

Savvy investors who parked their funds with Hyflux preference shares can leisurely rotate out of the preference shares and buy-in to the Hyflux mother shares at a great discounted price from SGD $1.00 to $1.50.   

I now have another “vehicle” to ride besides going to money market funds or short term treasuries – if I do see rain clouds over the horizon.

Hey! Past performance is no guarantee of future performance! 

Unless you have Viagra (snigger, snigger). What? I’m middle-aged, so it’s probably downhill from here onwards…


Saturday, 14 April 2012

I've Never Been To Me - Charlene



"I've Never Been to Me", a 1982 popular song during my secondary school days, and considered a one-hit-wonder by Charlene-- an American R&B singer .

Depending on how you wear your bias glasses, you may find the lyrics controversial, even racy or sexual.  

My favourite line is: I've been to paradise.. but I've never been to me...

I guess most men when they are having their mid-life crisis will ask the same question.

Especially when you have done and achieved what is expected of you - as a son, husband, and father... But what about me?

Boy, am lucky to be a man in this day and age!

Can you imagine the stress and pressure on a modern woman today? 

On one side there is this maternal instinct and traditional family values where your happiness is derived from the love of  your husband and the care of your children.

And then you have bra burning feminists who encourage you to be who you are without letting these traditional chains hold you back...

I am glad I'll never have to ask this of myself: 

Sometimes I've been to crying for unborn children that might have made me complete


OK, enough new age sensitive man bull-shit! Need to go back to pretending to act tough. Big boy don't cry. Sniff, sniff.


Wednesday, 11 April 2012

What Is The “Norm”?

This morning, as I was queuing up to buy my breakfast at the hawker centre, a pretty and shapely young girl caught my eye. Tank top and skinny jeans – nice! (Ladies, do cut me some slack as I’m only a man – it’s an evolutionary thing…)

Anyway, I was slurping into my bowl of laksa when to my surprise, this young girl sat down beside me!? Light up the fireworks!

Together with what I think is her husband (yes, I am turning him into a thing), and a baby boy in a pram. Houston, we are crashing down to Earth…

The husband looks like doing NS, and the pretty girl looks like a poly girl no older than 18? I am ashamed to admit this instant thought flashed through my mind: “Shotgun?”

As I continue to reflect on my reaction with each mouthful of laksa, I thought I better write it down and share it with you all.


What is the norm?

If we go back 50 years, this young couple would be the “norm”. Girls marrying at 15 or 16, and boys marrying in their early 20s - would the norm. No one would take a 2nd look at them.

When I was in primary school, it was the "norm" to have mothers as housewives whenever we visited our classmates’ homes after school. I remember being envious of the few classmates who have both working parents – they always have the latest toys and more pocket money than us.

But as I grew up, I envy them less. I’ve discovered the meaning of latch key kids.

To have the opportunity to travel overseas for work and/or pleasure was rare in the past. Now an annual vacation overseas is the "norm" for most families…

I’ve many more examples of what was the exception in yesteryear is now the "norm" today. Perhaps you reflect and share your own examples too?


Show me the money

Today, I’ve the presence of mind to remind myself never get married to a stock – that was how I climb out of the hole I’ve dug myself in 2003. By ditching the losers and latching myself to new winners. Zero-based decision making we practice at work; but in our own personal lives… Damn! It’s hard to let go! 

That was the beginning of me being an equities man-whore.

The reflection I had this morning was not to get married to an investing/trading style too. 

What’s normal and works today may not work tomorrow in another business cycle. 

What’s heretic today may be the new normal. 

And don’t be too quick to dismiss ideas that may appear “far-out”. 

I am of course talking about small evolutionary, not revolutionary changes! Too quick changes may mean we have weak convictions to start with...

Be wise enough to tell the difference between “cosmetic” (old wine in new bottle) and “real” (fundamental) changes that may affect my well-being.

It’s about constantly adapting myself to the environment; and not expecting the environment to adapt to me. 

Alas, the world does not revolve around me…

Sunday, 8 April 2012

Why I am blogging - update Easter Sunday 2012

When I started this blog on Christmas eve 2010, I already had the plan to take my "sabbatical from work" by end December 2011.

This blog was the result of reading books and articles on how to prepare for our retirement. The last thing I want was to be one of those old men staring into space at our HDB void decks...

One of the suggestion was to find an activity I liked that allows me to stay engaged with society; and that's how I stumbled onto blogging.

After the initial 2 weeks of "holiday mood" wore off after my return back to Singapore, I did succumb to a sense of "loss". And that's even I've done all my research and preparations!? 

When the tyre hits the road, you can throw the driving manual out of the window!

Some of you reading my Jan & Feb 2012 postings may have sensed it.

But thanks to all of you readers and commenters - your encouragements; your constructive criticisms; your gentle pokings; and your alternative viewpoints - all these are the motivators to keep me posting all through my period of "loss".

I am so glad I've used 2011 as my year of "dry-run" in blogging, so to speak. Imagine if I had waited till when I was on "sabbatical to "try" blogging? I wouldn't be able to hit the ground running back in Singapore... 

I have good news to share with you all.

I've now rediscovered my daily "work" routine! I am now happily managing my own money with a rhythm and pace that allows me to explore new and old interests. I am finding the day ended too fast!

On this Easter Sunday, I have a lot to thank for.

So once again, thank you everyone!


 
 

Thursday, 5 April 2012

Abrupt and Creeping Enlightenment



 



In Zen Buddhism, there are 2 main schools of thought.

Don't worry, I am not here to proselytize. I am agnostic.

OK, enlightenment maybe is too strong a word. Let's call it insight or awareness. 


Ah ha! 

Have you ever had your eureka moment? A problem or conundrum that's been troubling you for days and weeks, and totally out of the blue, a solution or idea just pops into your brain?

Did you notice when and how these little sparks of brilliance came about? I bet most of them came from doing or thinking about something that's totally unrelated to what's bugging you right?

You could be singing in the shower, walking the dog, cooking in the kitchen, or having a chat with your buddies - and bang! The solution just hit you!

A sound, a scene, a smell, an innocuous word can be the trigger. 


I just know 

Were there instances where you just know the answer or the correct course of action to take; but when asked later how you know, you have no freaking idea?

Or have you noticed that you may say and do something today that's totally different from what you would have said or done a few years back in the same situation?

You know there must be a reason but you just can't put a finger to it? 


Show me the money! 

Some of you may know HOW to read financial statements or charts better than most people. Yet you frequently wonder WHY some people just seem to know WHAT stocks to target, and WHEN to buy or sell better than you? 

You may want to ask when was the last time you practiced independent thought?

How would abrupt and creeping insights come to you if you delegate or outsource thinking to others? 

What you buying?

Is this price safe to enter now?

Can I sell now?

You may know the names of the fishes, and the terminologies and functions of different fishing tools; but you suddenly realise you don't actually know HOW TO fish!?






 

Tuesday, 3 April 2012

Is Snow Water?


Contrary to popular belief, most linguists today consider it a myth that the Eskimo language has an unusually large number of words (some say 50 and some others say 100!) for snow. 

It goes to show the danger of accepting everything you read in the popular press or media without first “filtering” via the grey matter between our ears.

By the way, there’s no one Eskimo language too ;)

We don’t have to look far. In the English language, we have: 

"blizzard", "flurry", "pack", "slush," "drift", "sleet," and "powder" 

Each refer to different types of snow, but all are recognized as varieties of "snow" in a general sense.

Now imagine having a debate on whether “sleet” is snow or water?

First there is the British Commonwealth definition of sleet and the US definition of sleet.

After getting through this hurdle, the debate will continue on whether sleet is more rain (water) or snow…

Some of you may chime in now to say: “Isn’t snow also water?”

Exactly! 

What is water?

Most will recognise water in the form of ice, river, lake, ocean, and glacier, etc.

Less obvious would be cloud. Can it be considered as water? How about mist?

Taking it a bit further, how about cucumber and water-melon?

Ah! I bet you know what’s coming next!

How about man? Are we water too? 70% share of body mass does not count?

What’s my point? 

No, I am not mind fxxxing you. I tease you not!
 
Just substitute money with water and pause and reflect for a while. 




Wage slaves, to borrow this terminology from my fellow blogger AK71, only recognize money in the most obvious forms.

But to an investor, trader, and/or speculator, the ability to recognize the less obvious forms of money is an edge in finding hidden gems where others have missed.

Just this evening, I saw on the TV news that one American has bought a sketch, by pop-art master Andy Warhol when he was 10 years old, for the princely sum of US$5 dollars at a garage sale?

The sketch is now valued at a cool 2 million dollars. How’s that for recognising “water”?

Similar tales have also happened in Singapore where some “lucky” karang-guni man (rag an bone) have bought antiques from clueless owners who sold them as junk...

How can these “junk” be an “asset”? They just sit there and produce no cash flow. 

You mean Warren Buffett can be wrong?
   

Sunday, 1 April 2012

The place of residence you bought is not an asset?


Once upon a time, the apartment or house we bought is considered an asset. 

This fact is easily bore out if you enquire on the property your parents or grandparents have paid and its valuation now. Please do it without giving the impression you are eyeing their property before their “departure” – least you get written off from the will… Hey! Don’t blame me!

The arrival of the great salesman in the form of Robert Kiyosaki came along and correctly offered the alternative view of using cash flow as a better guide to determining what should be an “asset”.

Guess what? Some people’s pendulum now moved from the extreme right to the extreme left. 

I scratch my head whenever I read comments that we should not count our place of residence as part of our net worth or consider it as an asset if it’s not rented out…

I wonder how these people value companies they invest in? Do they exclude the land and buildings the company owned if these assets are not leased out?

And I thought this will make a great asset play if the book values on its land and buildings are woefully out of whack with today’s market value… Potential sell and lease back to unlock their “asset” values?

If you bought a private property during the phase 1 launch, and discovered that the price has increased by 5 to 10% during phase 2 and 3 launches, would you feel a little bit smug about your “smart” investment? 

How would you feel if the developer drops the price instead in the subsequent launches? In Shanghai, the irate early buyers smashed the developer’s showroom… It would not happen here as we are more “disciplined”. But I am sure there will be a litany of complaints - our 2nd national pastime after window shopping. 

And if we have a new government, and the new HDB policy is to sell new flats at cost plus. How would you feel if the new BTOs (Build-To-Order) flats are priced at 50% less than the one you bought 5 years ago? Stranger things have happened; never say never!

Why the strong emotions if the property we owned is not an “asset”? 

The little lies we tell ourselves…


Related Posts Plugin for WordPress, Blogger...