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Monday, 3 February 2014

You mean you can learn from other people's mistakes?

Maybe it's just me.

You mean you really can learn from other people's mistakes?


If you are a smoker, what do you see when you buy a pack of cigarettes? Do you learn from the mistakes of others that's pasted in graphic gory details screaming right in your face?

If you are trying your luck at the casinos, you mean you never read or heard about stories how careers or families were ruined by excessive gambling?

If you are contemplating borrowing from "ah longs" (illegal money lenders), please don't bluff you never saw the O$P$ (owe money pay money) "works of art" at our HDB estates? Not even in the media?

When you ventured into investing, you never heard of people losing most of their life savings? And I don't mean speculators. These are honest to goodness salt of the earth savers who dollar cost averaged into equities. They just happened to need to draw on their investments during 1997/98, or 2008/09 for their retirement, immigration, or to bail-out their grown-up "children"...

When you quit your job and jump into the sea of entrepreneurship, surely you must know 90% of new business fold during their first 2 years? You mean these "failed" or "bankrupt" entrepreneurs never learned/read/attended a seminar about the common mistakes of starting a business? 


So what do we really mean when we say we can from the mistakes of others?

Or is this more about say say only? Regurgitating what we know instead of what we knew personally?

Just look back to your most memorable epiphanies, mind-flips, or "ah-ha!" moments.

Were the catalysts something you have read, saw, or heard?

Or were they more likely to be when you got your fingers burnt, or when the needle finally pricked your own skin?

9 comments:


  1. I hear and I forget. I see and I remember. I do and I understand.

    Confucius


    The best learning experience in the market is when we burnt our ass!

    ReplyDelete
    Replies
    1. CW,

      Indeed. I see some complacency in our little community.

      And that's because they most probably have not experience a 75% draw-down like you and I had.

      I've no clue whether this recent market decline will be a 5%-10% buy-the-dip trade that has worked so well for 2013, or can it be a 20% full correction like in end 2011 (that wasn't fun)?

      Or perhaps its the start of 2008 all over again (choy, choy, choy)?

      You have your own preparations - STI what level how much % vested ;)

      I have my hedging instruments.

      On thing in common is we ain't doing the same thing we did the last time we feel asleep at the wheel listening to too much other people's experiences - hope is not a strategy.

      LOL!

      Delete
  2. Some of the peoples' experiences(mistakes) you know you don't have to try it yourself to understand it's damn harmful to yourself.

    Like chasing "Puff The Magic Dragon".
    Or jumping into bed with someone who has been confirmed HIV Positive.
    Or for this matter it is always "dangerous" sleeping with some strange bedfellow.

    Of course, on the other hand, you have to jump into the water to know what is swimming.
    So is jumping on to a bicycle to learn what is peddling in order to move forwards.

    So what's the difference about the stock market?
    Puff the Magic Dragon or jumping on to a bicycle?
    i think the market is even much, much more.

    But we can't deny practical is often so much different from theory.
    So theory evolves because of practical experiences or practice evolves because of theory changes?
    It's always the chicken or egg first question.

    It can not be deny most people learn by practical methods even though some of the things they can learn by knowing someone's experiences(mistakes). Aka they don't have to learn by doing it themselves.
    Some of the things of course they have to learn by practical methods(aka get their backsides burn in a Bear market).

    ReplyDelete
    Replies
    1. temperament,

      When we are offered free "white powder", those who refuse it - are we learning from other people's mistake or are we listening to ourselves more?

      I came this close to gaming addiction playing Counter-Strike at my friend's LAN shop for 12 hours straight. What saved me was probably the fact I was in my early 30s., and what I saw:

      1) Kids almost getting into fights just because of one "song bo" taunt...

      2) Mother pleading with my friend to ban her son from playing as the primary school kid had been skipping school...

      If I were in my teens, I think I could be one of the statistics.

      We always feel we are different from other "losers" or holier than thou - until the needle pricks our own skin.

      Addiction is addiction - it could easily have been gambling, alcohol, womanizing, and yes - even Trading or Investing.

      I'm sure we know of people who were "addicted" to the markets.

      And that's the trouble.

      Insanity and genius - how to tell the difference?

      Same goes for passion and addiction...

      Anyone spent Christmas or CNY thinking more about the markets than spending time with people that matters?

      I caught myself... Thank goodness for my training on awareness!

      So easy to be with people and not being present...

      Delete
  3. Yes! Passion or addiction? Insanity or genius? It's only a very thin line to draw the differences. If something good comes out of any "extreme activity" it is passion or genius.
    And of course with age comes wisdom and maturity for most people.
    I always tell people we are all adults, so please don't blame anyone for your own actions even if someone initiated you into the activity.(Aka gambling or drug or anything). Because you already know what it can do to you by knowing what it has done to some people who have become addicted.

    But not all of us have the same mental strength (disposition) or awareness.
    That's why some take drugs to escape the reality of life.
    And it can be anyone rich or poor, very intelligent or stupid.

    ReplyDelete
  4. Hi SMOL,

    I guess it all boils down to how much risk one is prepared to take? Especially since market mistakes are only evident from hindsight? If it's not a mistake, then it's a missed opportunity, right?

    If one is >100% invested now, he will be lauded as a market genius if STI approaches 4,000 in a few months time. However, if STI sinks to 2,000, he would really become a pauper.

    And I know my profile can't take that. I probably wouldn't have as much fun winning those $20/$30 from my nieces and nephews for the past few days if I were 100% invested. =p

    ReplyDelete
    Replies
    1. Hello 15HWW,

      I think you hit the nail on the head when you say you know your "profile can't take that".

      Superficial "knowledge" is using and knowing about hypothetical examples - what if STI 4000 and STI 2000.

      Those who KNEW themselves through the pain of past personal experience will position themselves accordingly when STI was at 3150 -

      1) Those who feel lots of pain in missing the rally to 4000 will stay 100% vested. (They knew what's it like personally to miss the 2009 rally to today)

      2) Those who knew what's it like to be 50% underwater with no bullets will take some money off the table. (Those caught napping in 2008)


      There's no right or wrong - we are who we are ;)

      It's perhaps better than to quote and hide behind superficial knowledge that Warren Buffet and Peter Lynch never used stop-losses.

      Yeah, that's provided you ARE Warren and Peter - when was the last time they suffered more than 50% losses at portfolio level? Now look into the mirror.

      Book knowledge is book knowledge. Needle into skin is alertness and awareness!

      Ouch!

      Delete
    2. Can quote CW8888 on no stop-losses?

      LOL!

      Delete
    3. CW,

      I only saw "investors" quoting Warren and Peter ;)

      Jia you!

      Delete

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