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Thursday, 8 January 2015

Philately and Currencies Trading

No need to check the dictionary, philately is just the fancy word for stamp collecting.

So why didn't I use stamp collecting in the first place? 

Bite me. My vocabulary big cannot?

Ever heard of the phrase - "Use it or lose it"?

I was active in stamp collecting during my primary and secondary school days. Even as a working adult, I would be extra nice to the receptionists so that they will give me those used envelopes with stamps for me. But that stopped when companies nowadays use the stupid franking machine...

One of the side benefits of stamp collecting is that if we take an interest and research the subjects depicted on the stamps, we can learn a lot about foreign countries and other general knowledge stuffs not taught in school.

My interest in currencies started when I first moved to China. I quickly realised after my first year that no hedging is needed and it's better to opt for a greater share of my salary to be in RMB. It's nice to have a tailwind as in RMB appreciation against SGD to go with the annual pay raises.

However, my move to Greece was another story. From the get go, it was a painful pay reduction every month with the depreciation of the EUR against SGD.

Drip, drip, drip. It was death by a thousand cuts; hence the greater urgency for me to learn the art of hedging my EUR exposure.

Nothing motivates more than a fire burning at your ass!

What started out as a simple hedging exercise has now been blurred with extra layers of leveraged speculative positions added for extra kick and spice!

I stumbled (I did not planned it) to the this awareness that currency trading is a great vehicle to express my macro economic/political views of the word.

And just like stamp collecting, by taking into an interest to the fundamental drivers of the currency pairs, my knowledge of Geography, History, Economics, and other "Hey, this is interesting!" insights have grown as well.

Did you know there are more sheep than men in New Zealand? 

How about the latest Fonterra's diary milk auction price anyone? 

No prizes if I ask you what's the main export of New Zealand? 

And what's the nickname for NZD?

Trading the EUR, USD, and JPY, following Central Bankers' speeches and statements have never been so hair-pulling frustrating... Lucky I'm bald!

Oh great! The FOMC has removed the "considerable time" phrase in their Dec 14 prepared statement. What does it mean? What does it mean!?

And what the hell are macroprudential policies?

Some readers have feedbacked I can be vague and cryptic in my posts and comments... Compared to Central Bankers, I am crystal :)

Trading the AUD is best if you are into mind-mapping techniques. 

All of sudden, you never knew you have such an interest in China's GDP, the Politburo plans, China's under the radar QE programmes (you think why the China local index is outperforming the world? The last one announced was in Nov 14), property cooling measures, etc.

The impact of Gold, Iron Ore, Coal prices, and even the freaking Baltic Dry Index all have their impact and influences too.

Before I knew what I was doing, I have once again blur blur anyhow stumbled into what the professionals call Inter-Market Analysis!? Like that also "boleh"?

So there!

Can you now tell apart those who are in it just for the money versus those who take enjoyment in what they do?


  1. Like soccer players who claim they join a club for the challenge and not the six-digit salary, it is hard to believe traders who say they are in for the thrill and not the money.

    Enjoyment only comes when you do not have to worry about bread and butter issues, no?

    1. S-Reit System Investor,

      No one "joins" a professional football club; you have to be "recruited" or "talent scouted" ;)

      And how do we become so good that teams will recruit us?

      When these professional football players were young, what made them play and practice football after school? Some even skip school to pursue what they love best despite the damage to their grades...

      When you ask these young footballers wannebes what are their dreams - what do you think they would say?

      Somehow I don't think they will say its to make a six digit salary as their dream...

      There are "easier" pathways like going to law school or investment banking ;)

    2. Well spoken. I get your point of view. :)

  2. Trading can be good hobby for retirees who have locked in most of their money out of the market.


    1. CW,

      During the winters of our lives, its best not to risk money we cannot afford to lose.

      Just like buying Toto with small change, trading using a small speculative account can be useful to keep the brain alert and the heart pumping ;)

      A bit like playing Mahjong? Can keep dementia away?



  3. Hi SMOL

    First, you got me….. I was almost checking dictionary before reading the contents….

    Some people just enjoyed living life dangerously.

    Watch Austin Powers who like to live his life dangerously below.


    Just for laughs.

    1. Rolf,

      A little excitement in our lives can't be bad ;)

  4. "During the winters of our lives, its best not to risk money we cannot afford to lose."
    Wisdom from you indeed!

    Investors, naturally, want the highest return possible on their investments — but for a retiree, this could be a recipe for disaster.
    In my view, you should never take more risk than is necessary to accomplish your financial goals.
    If you do decide to take on extra risk, you're being greedy. Despite what Michael Douglas said in the movie Wall Street a few years ago, greed isn't good.
    It isn't about becoming rich quick ...
    At Money Matters, our goal isn't to make our clients rich quick. It’s to keep them from becoming poor. Taking on too much unnecessary risk is one way they can become poor. To determine how much risk is appropriate for each client, we calculate what we call a "hurdle rate" for each of them. By considering taxes, inflation, and their spending habits, we figure out the rate of return they need to earn on their money; the end goal being that they will have enough money for the rest of their lives. We can then construct a portfolio that gives us the highest probability of achieving that hurdle rate with the least amount of risk.
    Don't get greedy
    If you don't know your hurdle rate (or choose to ignore it), you put yourself at risk of losing your retirement. Consider this real life example:
    In 2002 , a 70-something-year-old couple came in to see me, and told me their story. In 1998, they had a million dollars. Their cost of living was $50,000, and they had $15,000 coming to them from Social Security. This couple's investments needed to generate $35,000 a year to make up the difference. $35,000 is 3.5% of a million dollars, so leaving some room for inflation, their hurdle rate was about 4%. If they made 4%, they would probably cover their cost of living for the rest of their lives.
    They had their money in Treasurys, CDs and cash. Interest rates at the time were 6.5%, so they were making $65,000 a year. They were well above their hurdle rate with relatively no risk. They spent $35,000 of their returns a year and banked the other $30,000. If you look at their situation mathematically, you can see they would never run out of money.
    But what did they do? They saw that the technology stocks were making 20%-25 %. All of their friends were telling them about all the wonderful returns they were making.They started thinking about all the money they were leaving on the table by only making 6.5%. The market kept going up, and after two years, the couple finally succumbed to the mermaids' song. They put all their money into technology stocks at the beginning of 2000. We all know what happened next. In a little over a year, the dot-com bubble burst. The couple lost 90 % of their money. Their million dollars became $100,000.
    Moral of the story
    Don't take more risk than you need to accomplish your goals. It makes zero sense to take one iota more risk than you need to. If you can win the game with 4%, be happy. You're fortunate if that's all you need to make. You can invest very conservatively. You don't have to take a lot of risk. That's a good thing. Don't get mad at yourself because you're only making 6% when you could make 20%. Instead, be happy that making 6% exceeds your hurdle rate.
    You’re on defense now. Take only as much risk as is necessary to accomplish your financial goals, and you should win the game.

  5. We must never forget the Moral of the story. And i believe not necessary only for people during the winter years. What about people who at 30 to 50 already have more than enough to live (financially free).

    1. temperament,

      That's why we have the CPF minimum sum thingy ;)

      I invest not to lose; I trade to achieve.

      I've ring-fenced the speculative part so even if I blowup, my lifestyle would not suffer.

      The trouble starts when people who "have enough" starts getting annoyed that others are earning or making more than them - the old couple in your story - and they start doing silly things just to prove they can be just as "reckless" as the neighbours next door.

  6. what the hell do you do in this early hour temperament?!

    actually i woke up at 4am also but went for a drive after seeing the dow up 300 points haha.....

    1. by the way, nice story and i believe even now many are risking what they cannot afford to lose if you take retirement into consideration.

    2. a few days ago a friend of mine told me he invested most of his extra CPF money in one stupid australian mining company, needless to say it is well under water....

    3. and in the pass 2 weeks, relatives has call me to ask about, you guess it right, keppel corp and sem marine shares cos everybody is advising them to buy buy buy....

      but i told them i know nuts about the companies....buy at your own risk!

    4. oh and genting s'pore too haha...

    5. when you invest, you can only make money if the company you invested make money and a lot of these company is not making money or enough money to justify your risk.

      most people do not understand the risk that they are undertaking against the potential returns.

    6. coconut,

      Everyone has a plan until they get punched in the face - Mike Tyson.

  7. coconut,
    Good morning.
    It's just one of those nights i don't feel like sleeping.
    By the way even if you know about Keppel Corp or any company now, it doesn't mean the market will agree with you. So how? Even if the market agrees with you now , what happens "suay,suay" a Black Swan appears?
    Oldman too long winded. Only just need to say,
    "Must remember giving advice which stock to buy or sell is a thankless task."
    If you must advice, always add "caveat emptor" lol.

    1. a true investor will welcome any black swan as they taste very nice!

      but most so call investor risk so much just to get a tiny bit of the share of profit and usually in a short term duration, but they will hold when they under water orworst until the company go bust! thats stupidity.

  8. Hmm...

    How true. I never understand a nut about shipping. Only when I research on YZJ then I realised so much to understand. Containers, bulk, tankers, trade, commodity, etc. All forces playing into market prices...

    But unlike u, LDMR set in, I no longer chase market supply demand of iron ore, CPO etc...

    1. Silllyinvestor,


      So you are one of those men who will do backflips and tricks just to get into her skirt.

      Once you "had" her, you cite Law of Diminishing Returns and no longer that much interested...

      I guess you were not really into her in the first place ;)

      To those who have found their soul mate, they will lyrically how they discover new things about her they never knew when they first met...

      That's the difference between 3 minutes passion and doing what we like ;)

  9. Sounds to me like, if one wants to trade currencies on a "fundamental" basis (as opposed to using technicals), a lot of knowledge is required. People who trade on technicals can get away without that lol - suitable for the lazier folks.

    1. RetailTrader,

      I hear you.

      As a Trend Follower, I don't need to know what I am trading - it's just a ticker symbol. Come to think of it, I treat most technical analysis as voodoo too.

      I just need a simple line chart with volume to get a quick overview, and use mainly Price Action ;)

      The fundamental analysis part? It's more an intellectual curiosity so I can fake my way through dinner conversations.


  10. Actually hoh nature hates a vacuum. So fundamental and technical always push & pull at each other. Then who is affecting who?

    1. temperament,

      Technical analysis is about reading people.

      Fundamental analysis is about how much you know that others don't.

  11. Yes but each take actions in the stock market that may affect each others. So who is affecting who in the end is not so straight forward in the markets

    1. temperament,

      Now you're into coconut's realm as in Quantum Mechanics :)

  12. Fundamental analysis is to help you to decide what to do when market is volatile like now and technical analysis can't help you to decide what to do since either your skill not gd enough or indicators not clear enough.

    1. Googirl Investor,

      Interesting viewpoint!

      To me, Fundamental and Technical analysis are mere tools that fall under Method of the 3 Ms of Method, Money, and Mind.

      This full trading week of the New Year is indeed VOLATILE!

      The decision whether to wade in or stay on the sidelines would come under Mind - call it Investor's Acumen or Trader's Psychology.

      That's perhaps why 2 investors invested in the same stock or 2 traders trading the same instrument can have vastly different results!?

      HOW we wield our tools may matters more ;)

    2. Oh Googirl,

      Just a heads-up for you.

      I find it hard to comment at your blog as it wants me to first register for a G+ profile?

      Unless it's deliberate (you work for Google?), I don't think many will do it when an Open-Id nick can let us comment at Wordpress and Blogger :)

  13. That's true. The mind unfortunately plays tricks on us and with no conclusion and only guesses to the world events, the markets have been crazy! Haha how can I ever work for Google siah unless I've a tech degree which only ACCICB have and hardly use. Oh shit, I'm so bad at this, let me go and find out how to turn that off!


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