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Thursday, 10 January 2013

It's not all roses and smiles in investing/trading

Yesterday afternoon, I took mom to People's Park so we can make a new pair of reading glasses for her.

We flagged a SMRT cab there. The cab driver was a Chinese senior in his late 60s. Well groomed. Speaks well too. 

We chatted a bit and somehow the conversation came to what we do.

It turned out this cab driver was a contractor. As we were driving, he was pointing out to me the HDB upgrading works he tendered and worked on in the past. 

He sold his company in 2002 after racking up $10 million in losses "playing" the local stock market. His no. 1 loser was Chartered Semi-conductor Manufacturing... (Being Temasek owned means little if you bought high and sold low...)

Anyway, I didn't want to pry too much; but suffice to say although it's a big step down from his glory days, this cab driver is not exactly down and out.

He told me his wife owns a shop and he drives 10 hours a day without a need for relief driver to share his cab rental.


The first thing I did last night was to review my core holdings (they pay for my sabbatical from work) and reminded myself the reasons I bought them in the first place.

But more importantly, I remembered what happened to my portfolio when I was more than 100% vested (I on margin) during 2000, and how lucky I was mostly in cash during 2008.

It's vitally important to know when to sell too - especially when the reasons I've bought have deteoriated! 

Never assume it's all roses and smiles just because the STI has gone up by 20% in 2012. Don't forget about risk control!


There's another lesson I learned. Life moves on. The future is uncertain. No matter what happens, don't dwell on the past.

If I ever to bust my portfolio again, I am mentally prepared to go back to selling sofas or going back to the selling floor. Glad to know retail sales jobs are not popular with most Singaporeans.


It's always nice to engage with seniors on their life journey.

   








 

12 comments:

  1. thats a good one, mentally prepare for the worst if you want to stay in trading.

    don't look back, don't look forward, try and stay in the forever changing present.

    don't look forward? ya this is a tough call, if i don't look back, then i have nothing to look forward to.

    ReplyDelete
    Replies
    1. coconut,

      I am glad I was shocked out of my "complacency". I did make some money in 2012 to earn another year of "sabbatical from work".

      I was floating a bit off on my "winnings" recently. Now I am back to earth looking at the markets with BIG open eyes!

      I understand what you meant by not looking forward and that's tough! Silly me always try to make predictions and forecasts. It hurt me more than helped by having these bias...


      Delete
    2. ya, looking forward means hope and dreams, we all like them very much, to feel the things we don't have or enjoy, specially when we are down. its very dangerous in trading.

      ofcos we still can make prediction and forcast, but learn to seperate them with actual trading or market movements.

      in fats blog, i predict the yen will weaken, shortly after, they really colllapes, so what? i didn't short any. its just a prediction, no trading don't on my part (no time haha)

      Delete
    3. coconut,

      In 2012, I have a fear bias (forecast); always thinking of protecting my profits in case of a major selloff. It never came :(

      As a result, it has limited my upside profit potential...

      Simsci Dec short = lost $2,500
      Sold stocks in Jan = made $3,000

      Short Yen Mar futures = made $1,500 (1 contract only)

      Overall made some kopi money recently.

      Need to review and improve on my short term long/short tactics. Must focus on price action rather than making short term predictions? (At least now I know I am mostly wrong! LOL!)


      Well, it's my first year being a self appointed nano-hedge fund manager. Made lots of mistakes. Must profit from them!

      Delete
    4. you shorted the yen???

      you are my hero! i almost wanted to kill either the "yen" or myself haha.

      oh yes, thats trading, you gives your winners to your losers and hopefully you got to keep some yourself.

      Delete
    5. That was last week's trade.

      My first Dollar/Yen trade! Hence 1 contract only to test the waters.

      Baby steps.

      Delete
    6. since you are so free, why not think of the reasons why you should (or should not) employed long-short tactics.

      then, think of long-short strategy does it mean hedged? and to what degree you want to hedge your position?

      these are the questions i still asking myself today, everyday cos market conditions changes all the time.

      Delete
    7. Yes,

      Been experimenting with copying the long/short strategies used by Hedge Funds.

      Long stocks exhibiting relative strength and short stocks showing weakness.

      Delete
  2. Stock market is a great distribution of wealth from many to few

    ReplyDelete
    Replies
    1. CW,

      Indeed.

      They say equities is not a zero sum game. Now that's a strange thought.

      I rather give my core equities positions the same respect as with my futures trading.

      Someone will steal my lunch if I take my eyes off it!


      Delete
  3. Jared: Are you sure you could go back to selling sofas? (I assume that is what you did before your sabbatical). Maybe after 1-2 years of time off you would do everything possible to avoid that.. ;-)

    Oh, and for those hedge funds: sounds sexy, but as an industry they didnt make much money recently.. Well, at least not for the investors... ;-)

    ReplyDelete
    Replies
    1. Jay,

      I've mellowed and discovered philosophy :)

      I am not after glamour or sexy. (Although in the mirror I always call myself "you sexy thing"! LOL!)

      It's not the destination but the journey (or process) must be fun. I had fun selling sofas 18 years ago. So going back, albeit with a big pay cut, is not something of drag to me ;)

      As with all things, once a good thing becomes overcrowded, the result gets diluted to the mean. But the top 5% shall always be the top 5% - be it hedge funds or retail traders/investors.

      I call myself a nano-hedge fund just for fun. And to remind myself I am after absolute returns - not tied to a local STI benchmark. I dabble in different asset classes; not just STI stocks.

      Plus I should fly with both wings (long/short)! Although I have not achieved much altitude recently :(

      Delete

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