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Tuesday, 21 April 2020

I surely didn't expect this - negative oil prices!?


I was in the last geographic batch when it came to the Open Electricity Market. 

Finally made the switch March 2019 to enjoy the discount in my monthly electricity bills.



Occupational hazard meant I chose the variable plan. I've a bearish bias on energy prices going forward.

But I never expected negative oil prices!!!



When Brent was threatening USD100 per barrel several years back, I was involved in a project to test shipping one container from Guangzhou and another container from Shanghai to Dortmund, Germany via the Trans-Siberian Railway!?

I mean if shipping rates were going through the roof, we had to find an alternative cheaper land solution - short of moving production back to Europe...



If I were still with my old employer, I wonder what projects I'll be working on to take advantage of the unprecedented crash in energy prices! 








Tuesday, 7 April 2020

Correct Belief vs Correct Practice


I'll steal with pride from CW and do a blast from the past.

When I first wrote it in 2013, you could hear a pin drop... LOL!



Now, maybe some can appreciate it better, having gone through both bull and bear phases in their financial journeys.



Here's the post:


Orthodoxy versus Orthopraxy








When we started out, without any track record to our name, we have to rely on some theories as our foundation. And more frequently than not, these theories or "correct beliefts" were implanted into us from outside in.

It could be a book we read , a class we paid for, an advice from someone we trusted, or even an anonymois source we swallowed hook, line, and sinker nevetherless!? Hey! Its "free" what!?

  

How did all those "correct beliefs" done recently?

Some are not shaken. Their "faith" strong as ever. Unrealised losses are not "real"...

Some are having their cognitive dissonance moment. 

Some are not letting this crisis go to waste. They are thinking for themselves and making adjustments to their "correct beliefs". 

No need to consult others as they have their own track records to do their own "trust but verify" due diligence. 

Some "beliefs" they had held dear for so many years may have to be thrown out...



Its the transition to grey. 

Where "labels" matter less. Just like you don't care whether the cat is black or white, can catch mice that's what important!

"Correct practice" can also be more apealing to those who thrive on feedback from reality. 

When we do something, there will always be "crash got sound" feedback. 

When all one does is "believe" but never do anything abougt it, how to verify whether its true or not? Wink.








  



  

Saturday, 4 April 2020

Indexing versus Individual Stocks


I think I shall give him a new nickname. I'll call him the Ant Man!

Why reinvent the wheel when I can steal with pride?

Look at the chart below:

Covid-19 Bear Market 2020 - Round 2 Coming??? 




CW's chart is great to gauge our risk/reward profile.


STI index fund or ETF

The advantage of buying a Singapore STI index fund or ETF is it can't go to zero - unless the whole Singapore island disappear under the sea?

But to get a 2 bagger, we'll have to buy around STI 1,500 and wait for mean reversion back to 3,000.

To triple our money, its a scary buy at STI 1,000 - yes, not that far from 1997 Asian Financial Crisis level!!!

I hope you didn't have any illusions of scoring a 10 bagger using an index fund or ETF!

OK, its possible. Buy in your 20s at STI 1,000, and hope STI will hit 10,000 in your 60s?

But in your 20s, how much can you invest? 

Its those in their late 40s or early 50s that have real money to bet, but you'll have to pray for long life like Dr Mahatir...

Then again, you can always gift your STI index fund or ETF to your children, if you believe in buy only - never sell. Ever!



Individual stocks

If you are great at stock pickings, you don't need to wait for STI 1,500 or 1,000. At any level also can! Penny stocks anyone?

You can ask around, there are some astute ones who bought individual stocks in 2009 are sitting on 5 or 10 baggers during 2018. That's provided they sold. Wink.

That's a lot better than buying the STI index at around 1,500 and "merely" getting a 2 bagger ++...

But then again, if you are not so good, individual stocks can go to zero. Trust me, I know...

There's no free lunch. 

You win big; you lose big.



Choose your poison

So there you go. 

Like in a casino, walk to your preferred gaming table, Place your bets!

Just don't be like that young 20 something fresh from school with FIRE dream to retire at age 35, have made wonderful SMART goals, and detailed planning for each and every milestones, only to have chosen the poison of STI indexing... Eh?

I've said this too many time in the steering group when reviewing the goals and action plans of our young shepherds,

"Are you aware your ladder is leaning against the wrong wall?"



 










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