Sunday 30 June 2013

What is that?

Least we forget...

I had

On many occasions

Irritations and frustrations

Leave me alone!

Now I am home

I remembered

Thanks to the little bird 

Thursday 27 June 2013

The Haze - Did you notice your emotional reactions?

I find some of the reactions of our fellow Singaporeans to the recent haze quite interesting. 

It's a parallel I can infer and apply to trading in the markets - after all, the market is made up of people; with it's tug if war between emotions and rationality.

If you never had any respiratory problems all your life, work and live in air-con environment, don't have high risk dependents like small children and older parents, did you join the queue for the N95 masks? And did you buy any air purifiers?

What motivated you from your inertia into action? Was it your own volition? Or was it the actions of your colleagues at your work place? Or was the trigger from the media that reported long queues for N95 masks and it's shortages at some retail locations?

Was the emotional reaction similar with record COE prices? Or rising property prices and long queues during the property launches? How about when STI made new 52 week high? Or when colleagues were all talking about and punting that hot IPO of the month? 

After the joy and elation of finally securing the N95 masks by Friday last week, what was your emotional state when the skies started to clear up the next day during Saturday? Were you glad that the haze has not gotten worse till today? Or were a little bit teeny weeny upset that you never got to use these highly prized N95 masks after going through all the trouble and hassle to secure them?

During the worst days of the haze, I saw some young children and senior citizens (high risk group) going around in the public with surgical masks on. Perhaps they couldn't secure the N95 masks; but these surgical masks are practically useless against the harmful PM 2.5 particles. Does having this "false sense of security" help? Or does it do more damage (since I got a mask on, I can stay outdoors longer)?

Those that haven't got their N95 masks, would you still get them despite the recent good fortune in wind direction? Wind directions do change, no? 

How about next year? Will you make your OWN preparations in advance for the next Indonesian dry season? Or will you rely on complaining to Big Daddy to make you feel good instead? How Big Daddy never made preparations and all.... Of course we skip the part on our own preparations and how you have personally experienced the haze for the last 15 years. We blame it all on short memory span!

I am merely sharing my observations and reflections. There is no mockery intended.

I think there are interesting parallels when it comes to:

Insurance needs

Making big ticket purchases

Market timing

Risk management

Emotional trades versus informed decisions after homework

Attention span of market participants

Influence of media and people around you

And of course our famous kiasuism (fear of losing out)!

How about you? Did you have your own parallels to share?


Monday 24 June 2013

10,000 hours, 10 years, 10,000 trades

10,000 hours

A common theme that appears in Malcolm Gladwell's book - Outliers: The Story of Success - is this "10,000-Hour Rule".
We know it kind of intuitively don't we?

Hardcore gaming friends that that play Starcraft and CounterStrike day and night will beat the pants off us casual gamers.

The same it goes with billiards (here's looking at you coconut) or mahjong (and all you tai-tais out there).

Curiously, when it comes to investing or trading, retail investors and traders seem to suffer from the Lake Wobegon effect - we overestimate our abilities and underestimate the time and effort needed to learn our craft.

10 years

For a part-time retail investor, 10 years would be about right. 

Within this time frame, if we are lucky, we would have experienced 1 or 2 bull/bear cycles.

A lot of ideas, plans, strategies, tactics - learned from books, seminars, courses, etc - did we implement them?

Did we jump in with glee during the lows of 2003 and 2009? What happened to buy when there's blood on the street? Not so easy when some of the blood is ours! No?

Some say they are waiting to scoop bargains if STI goes to 2700 during this current phase of correction. 

Eh... If 2700 is "good value", did the same "investors" take some money off the table when STI was above 3400 last month during May 2013? How about anytime during year 2007?

The mistakes and lessons I've learned from the crash of year 2000 to 2003 and the subsequent bull market from 2003 to 2007 were very enlightening.

Most of it was an understanding of myself - my own temperament, my TRUE pain threshold, and my own emotions.

Whether I am more comfortable with "go with the trend" or am I suitable for contrarian plays.

Whether I am more a value (buy low; sell high), or whether I am more a growth (buy high; sell higher) investor. 

Some buy at 52 week lows; some buy at 52 week highs. Where I prefer to buy that's more important!!!

I've experienced euphoria and I've experienced capitulation. Now these emotions come in handy when I monitor market sentiments!

I guess I am now more discerning what I read and learn. I focus on what fits me. Must filter! Less on which guru said this or that. I make a real effort to listen to my own inner voice.  

But I guess that's normal. Like a singer, most of us start by emulating others; with the passage of time, we realise we need to develop our own voice if we want to be successful. 

10,000 trades

For retail traders, I think we are luckier in a morbid sense.

We get to learn about ourselves a lot quicker!

Most will get washed-out within 6 months. We quickly realise we don't have the temperament or mental strength to handle making multiple trades in succession.

Some have problem squeezing the trigger. Some cannot take the emotional upheavals, some just have unrealistic expectations on themselves or on the markets.

It's not that trading is "harder" than investing. It's just a simple phenomenon that in 6 months, we probably make more trades than an investor in 2 to 3 years!?

But once we survived our first 2 years, I guess we're on your way towards our first 10,000 trades and the resulting epiphany - on who we are as a trader, and our position in the market.

I've not reached my first 10,000 trades yet; but I am so looking forward towards it. I just hope my futures account will be a significant stake then to profit from my then epiphany!

Meanwhile, I just plod along on my tiny futures account (what I can afford to lose) and focus on discovering more about myself and the markets along the way.

And another "advantage" for trading is that we can try out different strategies and setups with quicker market feedback. For an investor, the feedback could be 5 or 10 years later when they belatedly discover a flavour of the decade investing style may not work... Ouch!


Wednesday 19 June 2013

Lake Wobegon effect

"Welcome to Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average."

Garrison Keillor 

The Lake Wobegon effect has been used to describe a real and pervasive human tendency to overestimate one’s achievements and capabilities in relation to others.

Being a Singaporean, I can identify with it. 

That is until I started travelling and working overseas...

Yet some Singaporeans are clueless why our neighbours find us "arrogant"...

Car drivers know it well too. It's the other drivers that can't bloody drive! 

As traders and investors, we can see this effect quite prevalent amongst newbies - they are so sure of their trading setups and positions and can quote writer guru says this, speaker guru says that... Especially if they have just read a "famous" book or attended a weekend seminar. 

Old timers, remember we were once like that until Mr Market taught us humility via the realization that what we think we know is painfully different from what we know we know...

I guess that's why when we accept we could be wrong, we start to use techniques like: scaling in, scaling out; and/or cut our losses.

Why would we cut our losses if we think it's the other market participants who have got it wrong?

Tuesday 11 June 2013

What's your ikigai?

I quote from Wikipedia:

Ikigai (生き甲斐, pronounced [ikiɡai]) is a Japanese concept meaning "a reason for being". 

Everyone, according to the Japanese, has an ikigai. Finding it requires a deep and often lengthy search of self. 

Such a search is regarded as being very important, since it is believed that discovery of one's ikigai brings satisfaction and meaning to life.
In the culture of Okinawa, ikigai is thought of as "a reason to get up in the morning"; that is, a reason to enjoy life.

What's your ikigai?

I was discussing in a recent post on why we see 80 plus year old seniors queuing up to buy Toto?

I believe its the same reason why Li Ka Shing and Warren Buffet are still doing what they do even in their 80s and with all their wealth.

Same same why Lao Lee refuses to step down I guess.

Next time when you visit the hawker centres, do take a look at the retired seniors there. See if you can spot those with ikigai, and those you suspect have no ikigai.

It takes time to know our ikigai. 

Once we know it, everything else will fall in place.

If we are clueless to our ikigai, all the goal settings and planning in life may lead us to a situation where we have climbed the ladder of "success" and find the ladder is leaning on the "wrong" wall...

Saturday 8 June 2013

The Rose - Bette Midler

This is a song dedication to Ah Lian girl - a fellow romantic.

In matters of the heart, there is no such thing as being rational or emotional.

There are only the brave and the timid.

If I were a girl, this song would be my national anthem; and The Rose by Bette Midler would be my close no. 2 on what's really important in my life.

Guys out there, I know this is a "chick" song, but do listen to the 2nd verse.

It pretty much sums up all of our inner most fears, doesn't it?
We all have a Rose that's buried deep in our hearts. 

Tuesday 4 June 2013

Photography, Trading, and Investing

HK trip May 2013

If you look at the photo above, do you feel uncomfortable? Like something is unbalanced?

As are a trader, do you see an opportunity to fade the market? If everyone is on the same side of the trade, taking the opposite side of the trade can be extremely uncomfortable, and profitable. Others talk contrarian; you act.

As an investor, you believe in putting all your eggs in one basket. Focus and concentration. You swing for the fence when the opportunity arises!   

HK trip May 2013

Visually, this 2nd photo looks more pleasing. But I would rather submit the 1st photo if I'm entering a photo competition. No one takes a 2nd look at "pleasing" photos...

As a trader, can you see a good risk/reward trading setup? I'll pass. It takes discipline not to trade. (OK, if you force me, maybe there's a momentum trade possibility...)

As an investor, you believe in the Modern Portfolio Theory. You spread your asset across different asset classes, and you rebalance them from time to time to ensure no one asset upsets the balance of the whole portfolio. 

Lucky I am not US investor - stocks near all time high, US treasuries' interest rates moving up... How to rebalance between the classic stocks and bonds mix? Emerging markets high yield debt? But you need to hedge against adverse currency movements against the USD. Shit, have to understand currencies!?    

What? You invest in equities only? Then you are no different from the investor in the 1st photo - yes, even if you own 100 individual stock counters. Just look how your "diversified" equities portfolio performed during the 2008 melt down. 

It's one basket no?

Sunday 2 June 2013

Am I living in a bird cage too?

Tung Choi Street Gold Fish Market, HK

Yuen Po Street Bird Garden, HK

Public Housing Project at Fangling, New Territories, HK

Condominium at Lantau Island, HK

Public Housing at Shekou, China

It does not matter whether we live in humble public housing board flats or upmarket condominiums, aren't we living like the fishes in plastic bags and birds in tiny cages too?

I guess that's the "price" to pay for being "average" city folks. 

The last pic at Shekou breaks my heart. It's a unique housing phenomenon found only in the Guangzhou area. It speaks volumes on the security situation there...

Talk about self-imposed "prisons"!

Hey! I remember Singapore HDB flats in the 70s and 80s were "caged" up too... Thank goodness for upgrading, now less and less HDB flats have iron grills to wall ourselves in. Or maybe Singaporeans feel more secure now? I not so sure...

When I returned backed to Singapore, I begin to appreciate my small HDB flat even more. Although it's tiny like a bird cage, it's not a prison - I can come and go as I please. 

Freedom is not about physical restraints; it's a state of mind.

Related Posts Plugin for WordPress, Blogger...