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Sunday, 23 August 2015

Cycles and Trends



If you believe the current correction is no different from the 2011Fiscal Cliff and 2013 Taper Tantrum corrections, and this 2009 bull market has legs for another push up to STI 3800 next year and beyond, you would respond and act accordingly during the next weeks.

Buy the freaking dip?



If you believe that trends don't go on forever and this 2009 bull market cycle is coming to a close, then you would be preparing for the start of the next bull market cycle like in 1998, 2003, 2009.

Load up when there's maximum doom and gloom?



Wait a minute!

Don't they look similar?

Not on your life!

What's the difference then?

The bleeding heart calls it war chest. 

The fisherman calls it pillow stock strategy.

I call it cash as ballast. (I like the imagery of me in my little sailing boat braving the rough seas)


If you just started out your investing journey during the last 1 to 2 years, don't worry if you don't understand. 

You'll figure this out for yourself when you discover what it feels like to see the STI double only for your portfolio to break-even.... (next cycle, you swear to yourself never to make the same mistake twice!)





21 comments:

  1. Hi SMOL

    Cash as ballast ;) what a name....

    Down 40% up 50% to break even. Like this easier to understand right? :)

    Cut loss now market recovers also wrong. Hold now wait for market to go next bull cycle. Will my hair turned color over time? Oh wait, i am still breaking even after all these years.

    Can let me know the holy grail of investing strategy? ^^

    ReplyDelete
    Replies
    1. B,

      I'm an Arts student. I see imagery in words ;)

      Numbers suck big time though...


      If we have a 50% lost, it takes a 2 bagger to breakeven - isn't this clearer and sharper?


      100% vested and 100% cash are both the same - high convictions!!!

      I'm neither. I'm grey ;)


      Is there a holy grail in investing?

      Delete

  2. There is Hole-ly grail in investing/trading. Ask those who have chopped their fingers!

    ReplyDelete
    Replies
    1. CW,

      How come sounds a bit like 葵花宝典?

      Wait, sounds a bit like my:

      "Success is what we have to sacrifice to achieve it" too!

      LOL!

      Delete
  3. So what say you SMOL? Buy the dip or watch from the sideline?

    ReplyDelete
    Replies
    1. Yaruzi,

      I like your "small bear/bull, big bear/bull coming, as an eagle I will just fly".

      As a grasshopper, I've never live beyond winter.

      I have no wife, no children; I got more pressing issues to cry about....

      When hungry I eat; when tired rest.

      When money runs out, I go back to work.

      Delete
  4. Hi SMOL

    Apply asset allocation if one don't have the crystal ball to see future.

    If it is so easy, unemployment rate will be 50% as most ppl will be drinking high tea somewhere

    ReplyDelete
    Replies
    1. Who is drinking tea somewhere on weekdays?

      Delete
    2. Frugal Daddy,

      Yup, that's what we do - especially when our assets have reached a certain size.

      Those who are 100% into equities are usually those just starting out on their journeys or who are extreme specialists like pandas and koala bears - eat one kind of food only.

      I'm an omnivore ;)


      P.S. And we don't consider having 100 stocks in a equities only portfolio as being "diversified".

      Delete
  5. Hi SMOL,

    I know that feeling of "market double" just to see your counter break even.

    Then follow by releasing the happiness of no loss or small gain, only to see the market cheong after u sell...

    I think that's why for divdends income hunters, even if they break even after x years, at least they have x x dividends as consolation...

    ReplyDelete
    Replies
    1. Sillyinvestor,

      Ever wonder whether investing is ever worth the emotional roller coaster we experienced?

      Like you, I feel quite Zen now. I think I've improved! (Must pat myself once in a while as investing is damn lonely...)

      I'm a John Neff's Growth and Income school kind of guy.

      Never been a fan of the Yield Hog school - they get slaughtered during 2009/10 with all the shares placements and rights issues just to repair the balance sheet. What they give; they take back.

      No growth as in capital gains? I stay away.

      I'm a bit like institutional bond investors - I'm in it for the capital gains; the yield is just the icing on the cake ;)

      Delete
    2. Think SMOL need to buy ticket to learn What Do You Know About Income Investing? :-)

      Delete
    3. SMOL,

      Lol, u put me to shame. I know no John Neff or Yield Hog. But I do think I know what they are referring to by their name.

      Growth is important. It offset the risk of dwindling moat. Even Stawart grow very slowly.

      Problem is those with growth have lower yield, and growth PE that unravels very quickly if the growth doesn't materialize, so there is bo "safety" as to say, your future growth will ensure you have a good yield and good MOS in future, but if u get it wrong before the "future", your capital loss is going to be painful

      Delete
    4. CW,

      Maybe I am just too dense to understand why others just want income only?

      It's like a career person only interested in the regular annual pay increments and not interested in the promotional pay jumps!?

      I am most willing to forgo my annual increment in return for that next pay scale!!!

      Or?

      LOL!

      Delete
    5. Sillyinvestors,

      Then you have to ask CW. He's 100 steps ahead of me.

      High yielding stocks and Dividend growing stocks are not the same ;)


      When CW bought blue-chips like Keppel 20 years ago, the yield is like today - not sexy compared to REITs and Business Trusts.

      But the dividends keep growing, and today, based on yield on cost, its high double-digits!!!

      Can any high yielding REITs and Business Trusts match?

      How's that for a stock giving you 15 to 20% yield on cost for retirement?

      Wait! There's better!

      How about Keppel now is a multi-bagger as margin of safety against 20% bear markets?


      High yielding stocks are great if we are now currently retired (like me), widowed, or orphaned...

      If I want to retire well in 30 years' time, then I'll choose Dividend Growers. Thank you very much!

      I think I've earned that free drink you treating me ;)

      Delete
    6. Hmm... Growth concept to provide MOs and dividends can also be found in Warren lei...

      Anyway, check your email, I made an appt to redeem my promise of a "treat"

      Practice Zen through markets?

      I think my real work experince and family life has more painful and fulfilling zen moments than markets ...

      Delete
    7. Sillyinvestor,

      We choose our own place and form of cultivation ;)

      Some do it through calligraphy, some from archery, I from trading.

      Some cultivate high up in the mountains, I roll myself in "red dust".

      Delete
  6. Hi SMOL,

    I am a new investor in stock only 5 years now, although only to get serious in the last 2 years. Honestly, I learn my cycles and trends not in stock markets but in life. I think it helps me a bit in my investment.

    That is why I focus the true meaning about finding life rather than going to the bottom in every details of an annual report, which frankly, I do not think is very relevant since the AR can be doctored, and the management can lie, market can react strangely, your emotions can be affected….

    For me and only applies to me, my poor childhood n neighbourhood, mix with ah beng, smoke n fight, failed relationships, almost wanted to end life, hospitalised n almost died when at height of my career, rise again in career and finally fell even harder, losing all my work authority, panic when cannot find job, seeing people get retrenched n struggling with lives, traveling ard world seeing 3rd world country, pple suffering….

    This is my CYCLES and TRENDS in life!

    Not the Stock Market. Market is my passion of learning how business works, then I hope to earn money from there….I am human being, I got frightened and distracted, but my experiences in life helps me to control my emotions a bit better and think a little wiser, each time I commit mistakes.


    ReplyDelete
    Replies
    1. Rolf,

      I can't tell you how humbled and appreciative I am receiving your comment!

      Your understanding and interpretation of my superficial post on Cycles and Trends are so much insightful and deeper in outlook!!!

      Funny how I was sharing at Jes' blog the other day how I almost drowned, got electrocuted, and had 2 near miss traffic accidents...

      Hence my cavalier grasshopper's attitude to living in the moment.

      Plan too much I'll forget to live today!

      You and I have our ups and downs in life. And thank you for your honesty and transparency!

      We both came close to knowing death...

      If we have survived yesterday, we can survive today.

      Compared to our experiences, most things become quite trivial and transitory...

      Money lost can be made back.

      Time lost can never be recovered.

      And if we are dead, well, does it still matter?

      Delete

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