Wednesday, 11 December 2013

Gurkhas, Riots, and Emergency Funds

Mt Vernon crematorium is the resting place for my maternal grandma.

I visit her a few times a year; whenever I feel like saying hello. (I don't wait for Ching Ming; I listen to my heart. Visiting her is not an obligation)

This bond started way way back. 

I remember when grandma went back to China for visiting before I enrolled in primary school, the many days I've stood looking out the window crying for grandma to come back - especially after getting a beating from mom...

When I read stories of how children cry their hearts out when their maids have to return home, I understand that feeling.

Next to Mt Vernon is the camp for our Singapore Gurkha Contingent.

I often see these young warriors when I visit grandma.

After Sunday night's event, I am very glad and thankful we have the services of these professional warriors living amongst our midst.

Sometimes we forget the original purpose of an emergency fund, and through the passage of time, we may get too cute with it, without thinking through the consequences.

Imagine some smart aleck, doing a straight line extrapolation, may suggest this:

"Since there's no riots in Singapore for the past 40 years, why spend all these money in maintaining this Gurkha Contingent for an event that may or may not happen?"

An alternative example:

You own a car. 

You got bitten by the "passive income" flavour of the year bug.

So smart of you! 

Rent out your car to a car leasing company, while you switch to public transport. You earn the carry difference.

Now you go telling everyone how you turned a liability to an asset with positive free cash flow every month! 

Yes, enjoy that euphoric feeling while it lasts. Contrast it with the feeling of panic and frustrations when you need your car urgently back to ferry your sick child, injured wife, or aged parents during a medical emergency.

What is the purpose of an Emergency Fund?

We all have to answer that ourselves - depending on our personal situation and what we value more in life.  (Goals to reach financial success quicker versus people first?)

There will be whispers to our ears and well meaning advice on how much we can save by not having an emergency fund; or how much more we can earn by converting this emergency fund into an opportunity fund.  

You decide.



  1. Good post. Good reminder that we cannot foresee the future, so the best is to prepare for whatever that comes. It often takes a disaster to remind ourselves that we are overconfident.

    1. LP,


      Middle path: Don't over plan to death; and don't over be complacent.

  2. Without the ability to accumulate an "Emergency Fund" first, it is very dangerous to be in the market. It shows your fund in the Market is needed by you at any moment. Please don't go into the Market yet.

    1. temperament,

      We only discover the usefulness of having a first aid kit in the office or home when we got a cut or burn...

      Still, it's a lot more fun when I don't know what cannot be done.

      Now before I jump, I ask too many questions and look around too much :(


    2. smol, do yourself a favor, whatever question you want to ask, ask now.

      don't wait until you want to jump then come and ask, too late!

    3. don't talk about sticking to your plan when the times come, even there is a program trading of some sort, or my manual system trading, you still can't keep up with the market movement, where got time to think?

    4. coconut,

      Ah! You have nicely summed up why I envy the young (especially those who don't plan too much).

      I was watching the Chinese programme the other night about 2 young adults setting up their Mexican Burrito outlet.

      They were primary school mates. One came back from the States and was the one who came up with the idea. He loved Burritos. He is the money man.

      The other was a graduate from Shatec. He is the chef.

      These 2 young adults knew its best to make mistakes when they are young. What's the worst that can happen?

      Get a regular job if business venture fails?

      LOL! That's plan A for the majority of us :(


    5. haha but i don't think they know its best to make mistake when young, i also started my first business doing what i love most, where got think of failure? absolutely no fear whatsoever.

      running a business has similarity with trading, but there is also a whole lots of different. love to trade and love to manage money are 2 things a trader must have, most trader don't even have any, they only love to win where it should be a given.

    6. so if one is only going after money, without the 2 things i mentioned, please don't step into trading, you are going to lose your pants for sure.

    7. coconut,

      Yes. Once upon a time many years ago, I got attend free SGX seminars and course previews.

      I like to look around the room at the participants.

      It's like you say, only a minority have "fire" in their eyes.

      The majority looked like life has not worked out according to the "study hard; work hard" plan they were sold to...

      One group wishes to "achieve"; the other wishes to "escape".

    8. glade you understand, fat recent post just keep me thinking of the many who disappear, these guys are not stupid, they got guts to trade big. still one by one they disappear.

      and i just wanted to highlight (to you) the difficulty of making money trading if money is what you seek.

      remember jack nicklaus, he says "i never miss a putt in my mind" something like that (an average putt for the pro is 2 putt per hole) you have to have that kind of confident to trade professionally.

      is like saying i already win before i put in the trade, that kind of confident. its tough!

  3. Hi SMOL,

    What doesn't break us makes us stronger.

    If the system is not tested, we won't know its weaknesses.

    If we don't falter, we won't know what bouncing back means.

    Resilience is developed from stress testing in all areas.

    PDCA cycle? Who say we can't start with D?

    1. Endrene,

      And starting with D first works!

      We forget that's how we learn to cycle and swim ;)

  4. i'm totally totally disgisted when this fellow keep posting everyday how much he make trading the CFDs, the dow, the stocks, how trading funds his expensive life style. knn!

    he only post the winning, seldom got losses one, never seems to mention the very most important how to cut losses short, knn.

    i cannot take it anymore, he is misleading and holding lesson to the public, if you happen to get notice, please for christ sack, don't listen to him, such an dishornest person.


    1. usually i don't really care about what other people do, i keep a very low profile, so low that nobody know who am i, just another uncle down the street.

      but this guy misleading trading to a higher level, so high that my spin are "tabole tahan" already!

      can someone do something about it!

    2. even if someone produce a statement of prof, one should not just take as it written.

      in trading, i can create illusion by openning 2 or more accounts, using hedging technic, applying 2 complete opposite strategy on each account, through times, you will see one account has big and impressive results while the other needless to say a hugh loss.

      once combine you will still probably see positive results but not what you see in just one hugh profitable account.

      so please use common sense when people say they are so good and so good.

    3. coconut,

      LOL! Calm down. Calm down....

      Oh you mean that young guy.

      In my 10 years, I've seen his like come and go. Anyone can "look good" (even newbies) trading from 2009 till today - it's a bull market!

      He very de good. Magically avoided the penny stocks down draft ;)

      That "Doctorate" of options was even more popular than this young guy. Then what happened?

      Time will tell who is made of gold; who is tungsten plated with gold.

      It's funny. We have SGX and reputable brokerages giving trading courses - with trainers that are veterans from the prop desks of banks and brokerages - yet some people prefer to go to the snake oil salesman...

      It's like buying Aladin magic oil from the back lanes of Desker road when we can just as easily get Viagra from our family doctor.



      Truth be told, I would rather his "students" take the opposite side of my trades than you and temperament ;)

    4. haha, i'm not angry, no need to calm down, just very the uncomfortable haha. got medicine or not?

    5. oh by the way, i'm not critizising his trading, that part i don't know, may be he is good, he does have guts which is good, 50 lots DOW you know! i trade only 2 Emini haha, like peanuts.

      i don't agree at all the way he tell peopke about his winning, where are the losses?? no? LC!

    6. coconut,

      I always forget you "special". See? I treat you normal - I friend or what?

      I am being skeptical or ironic when I say he "good". Like you, I don't believe there's a professional trader out there who has not made losses.

      And yes, "professional" is another sugar coated "poke".

      I can talk salesman :(

  5. Hi SMOL,
    Aiyo, Yo!
    Don't mention my name in "Short Term Trading" lah.
    Net, net lose money leh.
    Stiil trying to get over the HK's Bucket Shop experience in commodities trading.
    i want to learn how to short in a Bear market. How many ways are there doing the "Pendek"? Can i learn from your experience. i don't want to learn from books or internet. It's just too easy learning from there. To me not realistics enough.
    And what are you shorting most of the times? How do you protect your backsides 1st. i am more interested in protecting one's backside.

    Hi coconut,
    Any contribution from you too, about protecting one's backside?

    1. smol please enlighting temperament ok, i'm busy already, got to go.

      will add something on monday or weekend.

    2. oh get ready your pen and pencil, don't wait til the time comes, you will have a lot of question to answer first, thats the way it is, without knowing about you, how to tell you what to do.

    3. temperament,

      OK, OK. You're an investor lah! So sensitive... LOL!

      One of the many ways:

      1) My first choice is Trading around a core position.

      I like to rotate back into cash bit by bit since I now don't have active income. I cannot use the savings from salary reinforcement technique anymore :(

      No cash; no play.

      2) My most common shorting vehicle is the Simsci futures whenever I am bearish on the STI. I used to short individual stocks using CFD; but now I use the covered short technique - I'll write a post on it soon.

      3) I am now long the USD going into next week's FOMC meeting. It's my hedge against Dec taper.

      We can use other asset class to hedge our stock holdings; but one thing at a tiime ;)

      Qian bei,

      May I be frank?

      You KNOW how to short. Its never about the vehicle (Method).

      It's your MIND part. You have already shared about your "scarring" from your old commodity days.

      Only you and you alone (unless you have a good trading coach) can untie the bell you have tied around your neck.

      I can only share my money management techniques....

      P.S. You know why I still call you "investor"? A true long term investor will not ask about shorting the market or market timing.

      It would be staying fully vested via sector rotation into defensive or solid big cap companies that will decline less in a market correction, and rotating into bombed-out cyclicals and small caps during the next upswing ;)

      Tioi bo?

  6. Ha! Ha!
    i only can say,
    After 25 to 26 years i am already Rojaked by the Market. Fortunately escape being Goreng though have survived some burnts here and there.

    I had said i like to short the S & P 500 or maybe the STI index (if possible) during a Bear Market. Instead of just eyeballs "watch in horror".
    Why can't i profit too in a Bear market? Not so much into trading at other times.

    1. temperament,

      There you go! Nothing is stopping you from profiting in a bear market ;)

      You more "garang" than me.

      I merely want to protect my unrealised profits.

  7. SMOL,
    Do you mean short in a Bear market to protect your unrealised profits of your portfolio?
    In a Bear Market my portfolio definitely koyak one. Can go down 40% or more. Can survive the Bear's savage ravages to be profitable again sometimes in the future, i am very happy liu.
    That's why i always think why most people (long-term investor/trader) making money only in Bull Market and not Bear Market. i am one of them.

    Actually i did trade in a Bear Market before but i found either i was no good at it because if i bought and held for longer term (3-5 years), the returns were usually so much better.
    In other words i still have to find a way to trade in a Bear Market. Maybe trading in Stock Index is better than individual stock during Bear Market?

    1. temperament,

      LOL! Touchy on being called a trader, but itchy to trade. Cannot!

      Repeat after me: I am not an investor; I am a man-whore.

      Once you can accept being called a man-whore, you'll be free from "labels"!

      Now we can focus on doing the right thing ;)

      I only survived 2000 Nasdaq crash and profited from 2008 GFC. You have survived the Asian 97 ;) That was more hallowing than 2008 - STI below 1000!!!! And we didn't have QE for the manipulated recovery like today ;)

      To be precise, I would rather hedge (short) near the potential top of a bull market. If early, I lose money in the hedge and limit the upside on my core holdings :(

      Shorting in a bear (already known) market is not that much different from buying near the 5 year highs of a aging bull market. Unless you now want to be a momentum or trend following trader?

      You got your own epiphany; but you don't trust yourself... The tools and vehicles we use should suit our temperament. Think haute couture; not off-the-rack.

      Your epiphany is along the lines of: Raise cash, re-enter when others sell in capitulation, sit tight for 3-5 years and repeat cycle. Who needs shorting the S&P or STI?

      I think you might want to buy CW coffee on how he is making sure he don't fall asleep on the wheel like in 2008 ;)

      Now that's real life experience; not theory!

  8. smol, what temperament wants to know is what are the options to trade in a bear market, what vehicle available. be it hedging his stuff (haha) or profit from it.

    not so much on technic, thats very individual.

    1. assuming you are an investor (not a trader), you want to hedge with the closest to your underlying portfolio, examples if your invest in s'pore stock, you want to hedge with the simsci futures or with a CFD simsci futures equal. there are others like the index option (warrant) traded in the stock exchange, you can use that as well, (if you bearish, buy put option), don't trade the US market if you are not farmilar, they are not so corelated.

    2. but honestly, i don't advise you to do it, as an investor, try to be a good investor, don't try to be fancy, it may be very costly as well trying to short the market. but as a trader, if you want to be one good one, learning to short (and long) is a MUST!

    3. Times up! I got to prepare for my weekend work.


      Qian bei temperament knows ;)

      For someone who have survived the 97 crash, and still in the market, and don't have to wok at Mcdonalds, and have a investment shoe box apartment, boleh one lah!

      Like you said, it's more about mixing mindsets between investing and trading. I guess its a bit of homecoming to his old bucket shop roots?

  9. Ha! Ha!
    Both of you have very good practical points to ponder.

    SMOL's shorting the Bear's Market maybe not better than shorting the Bull's Market.

    smol, what temperament wants to know is what are the options to trade in a bear market, what vehicle available. be it hedging his stuff (haha) or profit from it.

    not so much on technic, thats very individual.

    And don't be fancy.

    Many articles i read say it's very difficult to be good at as an investor and trader at the same time in the Market. The psychology of a trader and investor is so much different that it's like Black and White. The principles are also like Black & White.
    So it seems whenever i go into trading mode i usually lost money.

    After talking to both of you till down, i realise my real pet peevee
    is just imagine we have no portfolio to protect or hedge, how to trade to make money in a Bear market is my real question?
    i think coconut has given me the answer and also the warning. "Don't be fancy"
    Ha! Ha!
    I am not trying to be fancy. i just thinking for a long time already why can't i also make some money in the Bear Market? Why only in the Bull market.? Which most people seems to be able to do.
    Not satisfy lol!

  10. How much or what's the % of your net worth u reckoned should be saved as emergency fund? I used to keep 3mths worth of salary and now married with a bb coming next year, I had increased to 1 yr worth of salary. Mostly vested in FD or money market.

    1. sgftfund,

      Some use salary, some use living expenses. Same same but different ;)

      I myself have set aside 2 years of living expenses as my emergency fund when I took "sabbatical from work" 2 years ago.

      Normally I would have stopped at here as sharing what I do is the best way to avoid telling others what they should do ;)

      Looking at your blog, you stand out from the "me first" perspective from most financial bloggers. You inspire me to share more as I think we have something in common when it comes to relationships.

      I'm always "me first" when younger (that's why I went away..). Now my perspective includes my parents and siblings as I want to be there for them in health and in sickness, for better and for worse. Let's just say I've threw out my nice cookie-cutter left-brained approach above to emergency fund.

      As you would too:

      1) If you have a 2nd or 3rd child later on. (Congrats on your new BB!)

      2) Your parents? That may also depend whether you are the only child or if you have other siblings to share the love.

      3) And whether you include your wife's parents as mom and dad.

      4) Siblings. My younger sibling (the same one who didn't talk to me for several weeks after a big quarrel 1.5 years back) is taking half-day off next week to treat me to watch the Hobbit together :)

      Emergency fund is not always funded with $.


    2. SMOL,
      Good reminder $ is actually one aspect, more important is people around us - human relationship.

  11. Hi SMOL & coconuts,
    Let me shares my thoughts first about "Emergency Fund"
    Can you all share yours later?

    Definition of 'Emergency Fund' (Investopedia)

    "An account that is used to set aside funds to be used in an emergency, such as the loss of a job, an illness or a major expense. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt, such as credit cards, as a last resort."
    If you have Human Capital, 6 months to 12 months i think is O. K. If not maybe up to 2 years expenses like me (chiat kaki already) because i still investing in the stock market. Don't want to be forced to sell. And of course the worst case is forced to borrow from "AH LOONG" whether approved one or not.
    So there this is my "Emergency Fund"-2 years if possible.

  12. temperament, yes indeed, very different between trading and investing, i dare say most people got mix up big time.

    the reason i don't encourage you to trade is not becos you are not inteligent or not capable, we are guys and we want to be seen as "very the can", its normal. but i can tell you that trading takes a long long time to master, much longer than many thinks, its just not easy at all, becos of your age, time is not on your side, you know what i mean.

    1. Emergency Fund, becos i'm a trader full time, money is my tool to make money, they are all emergency funds so to speak.

      in another words , life and trading emergency are of the same nature to me, they are all kept and ready to be use at any time.

    2. i got a brother like you who is retired and invest in the stock market recently. i'm very concern about him cos he put most of his saving in the market in exchange for passive income through dividend.

      i talk to him a lot, every so often i told him time and time again don't trade stocks, just lock them up and forget about them. so far he seems to be "listening" and didn't buy or sell any of his shares, good for him!

    3. by the way, he bot them all in 2010 (through my encouragement ofcos haha), which still was a good timing, he was lucky.

      if he continue not to trade, he will be the few who can truly say he make money investing, he is a rooky!

    4. coconut,

      Ai yeah! I wanted to write a post on "covered short", but after reading your comments to temperament, plan B!

      Technical stuffs bore me to death. I am more into feelings and the mind stuffs ;)

    5. oh come on, just write la!

      i also wanted to know what is "covered short" le. may be i can learn from it too.

    6. by the way, i like your idea of trading around a position, if you can master it, its going to be very helpful.

      i'm a position traders, means like an investor who keep a portfolio, i keep positions and trade around them. its part of my strategy.

  13. Hi coconut and SMOL,

    "but i can tell you that trading takes a long long time to master, much longer than many thinks, its just not easy at all, becos of your age, time is not on your side, you know what i mean."

    Thank you for your concern. What you say i am completely in accordance with. You make me think of somebody now - The most storied and important trader who ever lived, Jesse Livermore,.
    Who are we compare to him?

    Honestly, i know and feel i can not be a Trader ( aka speculate and hedge and speculate and hedge) since HK"S Bucket Shop experinece. Not because i am afraid of failure but because i don't have the temperament for it. To tell you the truth much as i want to but i just don't have the feel or believe in technical chart readings, etc.....
    i don't and can't believe in the chart patterns can be the same consistently.
    i think because i believe in just like anything can happen in life so is the market. Isn't the Market actually part of our live? Whether we are a Trader or Invester.
    i am actually a long-term Investor/trader.
    Rojak lah, That's me.


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