Wednesday 30 October 2013

Risk Management - A little knowledge is more dangerous than no knowledge

A few years back, there was a posting in the papers by a person who was complaining that his mom was diagnosed with terminal stage cancer when she had gone for regular health screenings at a polyclinic for the past 20 years...

There is a common misconception that if I passed a basic health screening test, I am "healthy and fit".

Most of the "free" or "cheap" health screenings only check the cholesterol level, blood pressure, blood sugar, obesity, etc. These are mostly coronary tests as heart attacks and strokes are the top 5 killers in Singapore.

But if there's no chest X-rays or CT scans, there's no way anyone can know whether you have early stage lung cancer.

Same goes for the no.1 type of cancer for males in Singapore - Colorectal cancer. If there's no test for blood in your stool, the doctor would not have the early warning to recommend a more invasive colonoscopy test.

Yes, we have to do our part by asking questions and getting ourselves acquainted with what the health screening tests are for; and their limitations.

Plus we need to tell our doctor our family history of illnesses if you not sure which are hereditary or not. The doctor then can recommend what additional tests we should do as a precaution if we belong to the high risk group.

If you are a smoker and heavy drinker, and you lie to the doctor, well... it's your life; your problem!

And yes, more tests; more money. That's why it's better to have a conversation with your family doctor so you don't pay for tests you don't need.

I see the same misconceptions when it comes to the field of "investing".

Just listen to the blaming and finger pointing when "investors" lose money in MAS approved financial products and CPF approved stocks.   

I know SGX has a better reputation than some other regional bourses, but to assume all SGX listed stocks are "healthy and fit"?

Some even got the cheek to question whether Temasek or GIC got do due diligence on their stock investments? When these investors were freeloaders who piggybacked on the coattails of Temasek and GIC...

There's nothing wrong in following others like lemmings. Just as long you understand and accept the risks involved.

A little knowledge is more dangerous than no knowledge


Monday 28 October 2013

Don't say "we" when you meant "I"

Have you caught yourself saying "we" when you meant "I"?

Why do we do so?

I guess it's a natural survival instinct to want to be part of a school of fish or a herd of wildebeest. 

Maybe it's part Asian cultural makeup where we put the group first before the individual, or perhaps at the back of our minds, we knew the nail that sticks out gets hammered down...

Another way of hiding behind "we" is to quote others extensively. Who and who said this, he said this, she said that. Sounds familiar?

If you are in a leadership position, try asking your co-workers for their feedback and you know what I mean.

I often have to repeat myself:

"Thanks for telling me what others think. Now what's your opinion on this matter?"

"Ah, ah, ee, ee, or, or..."

Of course defintely say "we", "us", "our team", etc; when its to share credit and compliments!

Guess what? Now everyone starts saying "I" - how "I" contributed with the idea generation, the hard work, blah, blah, blah. 

Sure! Now modesty and humility goes out the window. Right...

Notice the below 2 statements when it's said with "I":

1)  I liked what the management stands for, and have faith their interests are aligned with our  shareholders' value. I therefore increased my stake in this core position.

2)  The analyst's summary and target price of this company is in-line with my own analysis and homework. I initiate a new position in this company's stock.

By putting "I" into our investments or trading positions, if things don't work out, we can go back and review our judgement of people and analytical skills.

Steel gets stronger through the pounding between hammer and anvil.

What's worse than hiding behind "we"?

It's blaming "them".  

Friday 25 October 2013

Every Sperm is Sacred

How on earth Monty Python gets away with such irreverence?


Tuesday 22 October 2013

Timing is everything!

As little children, we learn instinctively when to ask daddy and mommy to buy as toys. We don't ask for a Sony Playstation when daddy came home bing bing bang bang cursing and swearing the sorry excuse of a boss he has... Nor do we ask mommy money for sweets when she had just lost at mahjong...

A bit older and dating for the first time as teenagers, getting the timing wrong at holding hands and stealing that first kiss is AWKWARD... Get it right and it remains such sweet memories till today. Aw...

During working life, we quickly learn when it's a good time (or not) to ask for a raise from the boss.

If you are into healthy eating or swear by the benefits of a vegetarian or vegan diet, you don't go shooting your mouth to strangers sitting next to your dining table that eating meat is bad for them right?

You will only share the benefits of healthy eating to your close friends when they are ready to listen right?

Then there are those who have a bad sense of timing and no sense of empathy. I'm sure you have encountered such people around - if that's not already you!

Just because you believe in something and thinks that something is good for you, it does not automatically mean everyone should see what you see immediately.

At home someone nags. At work more people nags. Media nags. Big Daddy also nags.

This is good for you; that is even better for you! Nag, nag, nag.

Sometime it pays to be patient and sensitive to timing.

If your husband smokes 2 packs of cigarettes a day, what makes you think he will listen when he did not listened the first time round? Nagging repetitively will make it better?

Insanity is doing the same thing over and over again and expecting a different result. 

Who says so!? (Wah, so fierce!) 

Albert Einstein says so. (This is to pander to those who prefers to listen to big names than do the thinking themselves)

If you husband informed you that he has just gotten news that his classmate got lung cancer from smoking, NOW is the time.

"Dear, I need you. Don't leave me early."

Grab his arm or hug him.

"I love you. Our child loves you too."

If he doesn't get it now, he never will!


Not what you were expecting from reading the title?

You are probably early in your investing/trading journey...


In due time, you may realise it's everything to do with waiting for the trade to come to you - when the risk/reward ratio is in our favour.

And patiently waiting for the price/value gap to widen to the extent it provides us a good margin of safety to start nibbling.

Friday 18 October 2013

Steve Jobs, CD shops, Nokia, BlackBerry, Kodak, and connecting back the dots

Imagine you are a business owner or CEO of a successful PC company.

I'm am sure you will have goals, aims, and a dream (vision) for your business.

Most CEOs and business owners will have the similar straight line extrapolation of their past goals - just add 20% and we are good to go! 

And how can you go wrong with a vision of putting your computer on the desks of everyone?

Now imagine an idiot in your company submitting a proposal to develop a MP3 player?  

The audacious plan is not about selling hardware per se. It's to take on the 4 major music labels like Universal, Sony, EMI, and Warner on a radically different way to distribute music?

And didn't this idiot know everyone is downloading music illegally from the net? Why pay when you can get a song for "free"?

Next, an even bigger clown now tries to sell you on this great business opportunity of attacking  the handphone market. We can take on BlackBerry on the corporate side, and Nokia, Motorola, Samsung on the consumer side. How? With one phone model!!!??? 

You almost choked on your coffee when your R&D buffoons developed this ridiculous tablet thingy - a new form factor, if successful, may take market share away from your existing desktop and notebook PC sales...

Don't these buffoons know we have KPIs to hit on our desktop and notebook sales? 

You now feel like doing a company purge to get rid of conspirators who are trying their best to undermine your goals, aims, and dream!

Seriously, we need to put blinkers on our co-workers and train them to march in step and sing in the same bloody tune! You pick up your phone to call your Chief Propaganda Officer...

We now know why Steve Jobs is so exceptional. 

Many of us only pay lip service to innovation and thinking outside the box. How many would engage in activities that do not contribute immediately to the goals, aims, and vision that have been decided during the company's annual kick-off?

I am pretty sure former market share leaders like Nokia, BlackBerry, and Kodak have goals, KPIs, vision and what not.  

So were their fall from grace due to lack of goal setting?  

The above is just an allegory to life in general.

The iPod can be the guy or girl that could have made you complete. You didn't treasure as you were wearing blinkers with single-minded focus. You have this and that to achieve before 30, and that and that to achieve by 40... 

The iPhone may be the child might have been. What? Take a year off for maternity? With those young bitches snapping at my heels and eyeing my position? No, child can wait...

The iPad could be that vacation that changes you. The food, the open spaces, the air! The slower pace of life and the beautiful people there - all smiling with contentment. Sure, the pay is 1/4 of what you are getting in Singapore, but with it, you can buy a landed property and car with change to spare. And the best part you don't have to wait till you are 40 or financially free!


It's what we decide and do in the here and now that influence the future.
The future us may connect the dots back and find meaning in what we do today.

Hubris is thinking we know the future.  

Monday 14 October 2013

No Goal, No Aim, No Dream

How I wish I can fulfill all 3 conditions above!

Unfortunately, I still have dreams... Much work remains to be done...

I must qualify the context I am talking about is life in general. 

No goal, no aim, no dream - sounds a lot like the Taoist's 无为 (non-control) and Buddhism's 随缘 (act according to conditions).

It even gels with the Abrahamic faiths in surrendering yourself to your maker and accepting God's will.

Big picture say I do; but on the side, do a bit of hedging by having goals, aims, dreams in the tradition of "If I think I can; I can!" or "I am the master of my own fate!"

Don't you see the contradictions?

We often complain about Big Daddy with their goals and KPIs.

Why must we strive to be No.1 in everything? Stress you know?

Why must we rank everything from schools to Olympic sports? You good boy! You bad boy?

Measure this, measure that. You love cold hard facts over how I feel... OK, now you started to listen. I give you the benefit of the doubt this time.

Guess what?

What do we do in our own private lives?

Repeating it to our children is one thing (talk about repeating the sins of the father), but doing it to ourselves!!!???




Now, how the hell do I stop dreaming? Valium?

Wednesday 9 October 2013

Penny stocks and bad boys

If you ask young teenage girls what kind of boys they prefer, most will say bad boys. Of course that's provided you ask in confidence and not in public

And if you ask most newbie "investors" and traders what category of stocks they first got involved with, most will reply penny stocks.

What's in common between penny stocks and bad boys?


It's usually a phase we outgrow from.

When young girls grow up, who do they marry?

1.  Marry blue-chips - mature men with established careers or businesses.

2.  Marry mid-caps - Ambitious and career minded men with dreams.

3.  Marry penny stocks? All we need is love! And a lottery ticket.

Nothing wrong with penny stocks. Venture, Osim, NOL were once upon a time penny stocks too. Imagine if you had bought these stocks when they were below one dollar?
NOL? Yes, NOL was at 50 cents during 2003 when they lost their CEO and were swimming in a sea of red ink... Fast forward to 2007 and NOL hit $6! 

I completely missed this 10 bagger and the embarrassing thing is I were working in Supply Chain then!!! 


It's like those working in IT buying the theme-of-the year Oil and Gas sector plays; while those working in Oil and Gas sector chase after the latest hot IT stocks. LOL!

Life is not a straight line extrapolation

Sadly, it isn't so.

Some blue-chips will have affairs and break your heart...

Ambitious mid-caps are good until you discover they are so ambitious they never have time for you... Or so fragile that one single failure can destroy them...

Yeah, everyone warns you against marrying that ah beng with ang-kongs (tattoos) all over. But what a surprise! Who knew this lottery ticket will one day IPO his company to the public?

Plan less; live more

Enough said.   

Monday 7 October 2013

Why we lose money in unit trusts

If you ask most retail "investors" on their experience with unit trusts, its quite interesting to find out that most are nursing losses. (We can also add in investment-linked-policies while we are at it)

Isn't it interesting that this is so when most major bourses are near their 5 year highs?

What gives?

Some emotional "investors" are even calling unit trusts "ponzi schemes"!?

How about CPF approved unti trusts? Blame CPF?

Are they still "ponzi schemes" when we don't make money after 10 years?

Hey! What ever happened to Buy and Hold? Perhaps 10 years is too short a time frame for "long term" investing?

Or maybe if we don't make money in any investments, it must be a "ponzi scheme"?

Man in the mirror

Kick me if I am wrong, but I am willing to bet you bought these unit trusts before you ever bought your first stock.

If you didn't, I switch to plan B. LOL!

You didn't bought these unit trusts; you were sold to by the friendly bank representative, insurance agent, financial adviser, classmate, relative, or person you call "friend".


Test questions at the time you "bought" your unit trusts:

1.  Do you know the name of the lead portfolio manager?

2.  Do you know the top 10 fund holdings?

3.  Do you recognise these companies?

4.  Got take a glance at the last 5 or 10 years chart of the fund's performance?

The above are basic elementary facts only. I've not even gone on to Sharpe ratio, Beta, Maximum monthly/annual drawdowns, Annual volatility, etc.

You may go huh? Buy unit trusts must know all these?

OK, you are right.

Buy stocks don't have to know P/E, Price-to-book, Yield, look at charts too. Just press the buy button or call our broker will do. (You may want to stop reading now)

If we know what we know now then

I am quite impressed that quite a lot of retail investors are outperforming their unit trust managers!?

Especially if we only look back to the last 5 years (everything looks good if we use 2009 as index 100). 

If you like to do data mining, you may want to use the mean prices of your unit trusts for 2009. Had we bought these unit trusts then, would we be making money like for our DIY stock picks? 

Are unit trusts still "ponzi schemes"?  
Did we outperform the unit trust managers?

Perhaps its more a case of our financial knowledge has increased since the early days when we were sold to?

If we are banned from investing in equities and ETFs directly now, I am quite confident retail investors with good financial knowledge can still make money from investing in unit trusts.

A vehicle is just a tool. It's the person doing the driving that matters!

Wednesday 2 October 2013

Teaching versus Learning


It's quite cool to be surrounded by tutors and lecturers in this small community of financial bloggers.

Today, I will attempt to do an eggs-on-my-face post on something way out of my league -  talk a about pedagogy.

I know. What the fish is this big word?

I've never heard or seen this word until I started my ex-company's course on how to be a facilitator some years back.

In Scandinavia, this "pedagogy" word is used very often in trainings and courses. I've told my facilitators and fellow students that we seldom use this word in the English language - it's a bit surreal as English is my first language while it's 2nd language to the Scandinavians!?

So there you go! In Europe, with the exception of UK, we Singaporeans can out England the other Europeans; just as long we tone down the Singlish. LOL!

Stand tall. Be confident!

Teach or Learn?

We all have been in roles as teacher, facilitator, coach, mentor, senior, parent, etc.

Whenever someone ask us a question, the way we answer or choose not to answer will reflect our level of understanding on Pedagogy - either consciously or unconsciously.

Sooner or later you will encounter this dilemma - should I focus on teaching; or should I focus on helping the one asking learn themselves?


What's the difference?

Can you recall or notice you mastering a skill all by yourself?
Some of us can play the piano or guitar completely by self-taught.

Others can pick-up a new language without attending any courses.

How about learning to swim, roller-blade or bicycle yourself?

I've even heard of lawyers passing the LLB and Bar exams without attending formal lessons!

No? Try harder. There must be something you pick up without someone "formally" teaching you.

As for teaching, it's a lot easier. Most Singaporeans are used to attending school or courses. We are a very "upgrading" focused society. There's now even courses for hawkers!? 

It's all very Confucius top down for your own good standard package thing. This is the recommended syllabus and everyone should practice marching the same way.

To get a diploma, we need to be taught how to "score" in the exams. 

To trade equities ourselves, we need to take and pass this stupid on-line test. Self-learning or standard teaching module? Forced teaching to cover back-side or encouraging investors to protect themselves on "buyer beware"?

If we can't keep up to the "standard" teaching pace, we will be streamed into various nice cookie-cutter sub-groups - elite fast learners, minority slow learners, majority average learners, special needs, etc.

It's practiced even in adult working life. 

The last company sponsored course you attended, was it something you volunteered or were you "arrowed" by your boss to attend? 

Those courses you had an interest and those that you were "forced" to attend, it's the same teaching method employed, but did you notice the difference in "learning"?  


Practical show me the money!

Scrutinise Investment Seminars 

If the purpose is to get a diploma after attending Investment Seminars, I think the majority will do well.

But if that's not the goal, the level of satisfaction may depend on whether you believe entrepreneurship or creativity can be taught. 

Note: Not to be confused with trainings where you were given tools to solve your own problems - that's self-learning kind of pedagogy not very common in Singapore.

I don't know

This is more for us when we are in the position of "teaching" or giving advice to others. 

When we see ourselves as a hammer, all other people will look like nails.

Frustration creeps in when we find screws (some standard; some Phillip heads some more!) , nuts and bolts, rivets, thumb tacks,  etc. Of course we can try hammering harder...

Sometimes it's not that the student or recipient that is stupid.

Our education system

Parents feel their child need tuition. Minister feels students don't need tuition. Big hoo-hah!

But no one asked the child and student whether he/she wants to have tuition...

As a child, we don't have much "choice". So I shall pass on this one. It depends a lot on how enlightened our parents are.

But as adults, when we know we are fishes, why do we continue to put ourselves in a place where the plans and goals are how fast and how high we can climb trees...

Let's not blame the system or others.

Take ownership. Or do you consider yourself an adult?

Perhaps move to another environment that values the ability to stay underwater and swim fast?

If the mountain don't move; we move.

It's not like we are vegetables - stuck in the ground.



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