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Tuesday, 10 January 2012

Float like a butterfly; sting like a bee

This famous fighting style by Muhammed Ali came to mind while exchanging ideas in my previous post with qian bei (senior) Coconut.

Float like a butterfly

Before fantasizing about yields or returns on investment, qian bei CW8888 said it best with his: Return of Capital

Yup, if we don't get our money back, everything else is just words written on water. The classic White men's promise to the native American Red Indians... Even if all the treaties were written in black and white. Something for Singaporeans who have a fetish for more regulations to ponder over ;)

Nowadays, investors/traders have to watch over their shoulders to keep an eye on counter-party risks. Have you heard of counter-party risks 5 years ago?

What if my broker goes kaput? What if there's a run on my bank? Even countries and governments can default? If you own sovereign bonds that default, try bringing the textbook to the publisher and ask for a refund! What bonds are "safer" than stocks @#@%$&!!*

Or try suing the ratings agency. Their defence will be: "I say say only you really believed?"

Or since you have not paid us directly for the ratings, there - here's your money back. Pay nothing; refund nothing back. Fair what!

Tip: You may want to keep an eye on those synthetic ETFs with French and German banking counter-parties. Some of these banks are ripe for a credit downgrade in 2012.

Sting like a bee

Going through 2011 unscathed in a way is "winning". But I not so sure about relative benchmarking used by others. Fund managers use it to "protect" their rice bowls I understand. But as private investors/traders? You mean STI down 20% and your portfolio "only" down 5% you very happy?

Being the practical me, I rather use absolute benchmarking. That means my portfolio must beat inflation - period. Call a spade a spade. No such thing as "ponding".

For Chinese and Cantonese readers, you may want to listen to my speculation song.

愿望系做个预算 梦幻系自我去编


Always treading water is fine if we are happy with the current spot or just focusing on burning calories. But isn't it a bit tiring expending all this energy and going nowhere?

I would much prefer to be swimming towards somewhere. Even if I don't have any clear goal or destination. Who knows I may meet a mermaid?

Opps! I think I am going off tangent again...

Back to boxing. Even if we can float like a butterfly and avoid getting hit by our opponent, that won't win us the match!

We still need to hit consistent winners (go for win on points) or make a big knock-out punch (go for KO)!

Again using investor qian bei CW8888's example. If he cannot find multi-bagger and high yielding winners like Keppel Corp, can he "retire" at 55? This is going for KO.

For traders, its more about finding the right "vehicle". 5% here, 10% there - just like the Malay saying: Sedikit demi sedikit, lama-lama menjadi bukit! (a little a little, wait become a hill!) This is going for points win. 

Knowing you knowing me

Yee...So violent!

Eh... Investing/trading is not a gentleman's sport. Can't stand the gore and violence? Perhaps its better to stay outside the ring.

And if you don't fancy getting your nails broken or hands bloodied - outsource. Get a hired hand. But remember to act like a land owner. If the hired hand don't perform, next! 

I think those that were very quick to ask for the resignation of the SMRT CEO should have no problem here. (you decide whether it's a "like" or "poke")


  1. say first har, i'm not a good investor but i do know what are risk.

    if you are the only one that can see a very high yield stock. then i say nothing, but if everyone can see and the yield stay there a long time. shoudn't you have to investigate first?

    if everything stay so "cheap" for everyone to view, i would rather stay away from it.

    the key to trading is for capital gain and investing is to compound your returns, correct?

  2. Coconut,

    You asking me?

    I just a pretty face ;)

    If easy everyone rich already!

    Notice the long queues at some hawker centres? Some people queue because others queue they queue also!?

    Ah! The dividend trap... Some have learnt the hard way: 10% plus yield when you buy. Then see capital loss of 20 to 30%. That means money stuck for 2-3 years just to break-even. Haven't count inflation yet. Ouch!

  3. Q at some hawker centres?

    Two reasons: good or cheap.

    Choose wisely.

  4. Yes CW8888,

    Cheap and good the best!

    Not from looking that pictures of celebrities; but trying it ourselves.

    Sometimes hghly recommended stalls are neither good or cheap. It's just that the stall owners understand the power of testimonial marketing ;)

  5. Ha ha CW8888!

    I would prefer sting like a mosquito (can live to tell the tale, but mosquito that stings is qiao bu).

    I guessed Ali did not realise that honey bee sting once and they die.

    I realised the loophole while writing this post; hoped no one spotted it. And you did!



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