Friday, 24 September 2021

STI ETF can be good for those who can't Cut-Loss

 

I'm not a fan of passive investing.


It just intellectually "weird" to me, to savour the pleasure of  getting rich, by not doing anything at all???


The analogue is like winning an Olympic gold medal by sipping pina colada while chilling in the shade on the beach...



But I must say there's one good thing about passive investing using the STI ETF - its great for those who can't bring themselves to cut-loss on losers.


STI will do it for you!


FTSE Russel and SPH do quarterly reviews on the STI component stocks. Any lemons/dead anchors that are dragging the STI down will be kicked out!


They will in turn add "hot" stocks of the season into the index. 


That's the secret sauce why stock indexes always go up!


How not to go up if we only include stocks that go up, and weed out stocks that go down?


Its never passive.


Can you imagine how bad it must be for SPH to ownself kick ownself out of STI?



The current STI ETF is still 3 banks and 1 telco (plus REITS & property if you pedantic). 


ZERO exposure to tech unicorns...


What about SEA Ltd? 


Oh! That's included into the MSCI Singapore Index.


Those who trade the SIMSCI futures will know. Wink.



I know what you thinking.


Is there an ETF for MSCI Singapore?


Yes, you can goggle iShares MSCI Singapore ETF. 


Its listed in the US.



But, but I already torn deciding which is better - SPDR or Nikko STI ETF?


Now I sharing another extra choice is not helping!



Don't worry. 


Just go back to the person who sold you on "passive" investing. He/she will tell you what to do.


Problem solved!


Snake oils love customers like you!








Tuesday, 21 September 2021

The "Free" Trade

 

What's the next best thing to taking your capital safely back and only risking your profits when it comes to trading?


I guess it would be the "Free" trade.


When I put on a trading position, the first thing my order gets filled is to enter a stop-loss order.

Its a bit like options (but not the same) where from the get go, I know the MAX I'm willing to lose on the trade.

Its a risk/money management thing.



Three scenarios will happen next:


1)  I got stopped out of the trade at the predetermined loss. (Well, that was quick!)


2) The price just oscillates around my entry price, going nowhere... (Some advanced traders will get out of a trade if it does not perform within their expected time frame. That's next level stuff...)  


3) My position becomes profitable. (This one I like best! Who doesn't?)



When I can move my stop-loss order point to my entry price, hey! I got a free trade!


Which means if and when the market reverses, I just scratch the trade. 


No harm; no foul.


But if the trading continues to work in my favour... 


Kaching!






Friday, 17 September 2021

Manipulation With Words

 

Those not in politics or sales have too little appreciation on the power of words.


The pen is mightier than the sword is just not some empty words uttered by some scholars who can't fight.


Let's take a snake oil word I hate the most:

"Pre-owned".

What the fish is that!?

2nd hand say 2nd hand. But no... Previously owned. 

No, can't spell it out like that! 

Write "pre-owned", somehow the 2nd hand; other people used before; no more virgin negative "stigmas" are no longer obvious.

Pre-owned has become "neutral".

And that helps in fetching a better price!


Stocks in general can be categorised as big-cap, mid-cap, small-cap.

These are neutral words.

But if I want to sell you buy-and-hold big-cap stocks (so I can milk the AUM fees forever and ever), I would call these stocks "blue-chips" instead!

Some how, when the brain hears "blue-chips", we automatically think sure win, "bao-jiak", and make silly extrapolations like if the stock goes to zero, Singapore will go down too...

See? Told you SPH is blue-chip! It never went to zero right!? Just buy-and-hold. Stocks only go up one!


Similarly, if I want to encourage you to trade penny stocks (I want to fleece the trading commissions from you), I not so silly to call them penny stocks. I would call them small cap stocks. 

The name penny stocks somehow got negative connotations... Like rubbish, risky, 2nd class; and all that... 

Most youths are not aware Venture was a penny stock before. So not all penny stocks are risky speculative bets OK!?


Corporate bonds are getting more and more common in SGX in recent years. 

Most are unrated and are called by a very nice and sexy name - High Yield Bonds.

Old fogeys would remember their former name - Junk Bonds.

What!?

You read correctly. 

But just like penny stocks, junk bonds can be very lucrative, provided you know what you are getting into. 

They say the bond market is smarter than the equities market.

If you wan to play high yield bonds, just make sure you are smarter than the average equities investor/trader. Wink.


What's the moral of the story?

Having a wider vocabulary helps!

Just don't over do it.

Remember the "ponding" incident? 

LOL!







 


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