Saturday 31 May 2014

Why push me into the sun?

I remember a very interesting incident when I was in primary 3. It's still vivid like it happened yesterday.

One of my classmate asked our teacher why his mother pushed him into the sun when he tried to seek shelter under the shade of the umbrella his mother was carrying?

Quick! Don't think.

What's the spontaneous answer that pops in your brain right now?

Now scroll down for what the answer our teacher gave him.

Our teacher was caught a bit off guard. She thought for a while and replied it was because my classmate's mother wanted her son to get vitamin D from the sun.


As I grew up, I found out that what my teacher replied was scientifically correct. But I still feel that's not the answer. Hence this incident left a strong impression even until today.

What's your answer? 

Was it spontaneous or like our teacher, you thought about it first.

There's no right or wrong answer as none of us is the mother. 

What's my spontaneous answer way back in primary 3?

The mother wants her son to grow up be a man.


Thursday 29 May 2014

Zip up your mouth!

Have you experienced big quarrels at a funeral?

It's usually started by a "well-intentioned" close relative or sibling who question how you - the caregiver - should handle the funeral. 

Where were they when the deceased were alive? Sure, now they would like to make the funeral a big grand bombastic affair for the whole word to see how close or "filial" they are now to the deceased. Spare no expense! They can chip in!

Notice they never say they will foot the bill 100%? Just their "fair" share. And they get all the publicity.

Have you been in a hospital waiting anxiously outside the operating room and guess what? Yes, a "well-intentioned" relative or friend will surely say:"How can put ah boy at this public hospital? Class B2 some more!? I know this private hospital have the best specialist for this kind of illness. I give you the number to contact."

People already worried enough and you have to put them through this "guilt" treatment? So are you going to pay for all the medical expenses at the private hospital you recommended? Just as I thought.

During CNY gathering, the relative you only see once a year say this to your face in front of everyone: "Ah girl! You 35 already; still not married? Faster! Don't be choosy. Wait too old to have children you know?"

Feel like slapping this kaypoh right? But cannot. This person your "senior".

If you strike Toto, believe me you, there will be lots of "experts" coming out of the woodwork that will "advise" you how to spend, how to invest, etc. As if they are the ones who have struck Toto?

If a love one has just died, and you are now in possession of a big sum of money through insurance policies you love one has bought. This is not the time for you to make too many financial decisions.

You may want to chase away all those kaypohs (busy-bodies) and put that money in savings account. Wait till you have done grieving - it may take weeks, months, or years. Draw from this account for living expenses, where needed.

Let the money "rot" earning almost no interest. Better this than to lose everything through a dumb move.

Only when you have the presence of mind and a calm heart do you start making financial plans for yourself, and your children, if any. 

Seek counsel through you own volition. 

In a confused state of mind, it's much harder to tell the vultures apart from the angels.

If we are known to be wise, people will come to us for advice.

Meanwhile, zip up our mouths!

Tuesday 27 May 2014

Value Investing is not about buying Cheap

First let's get it straight, I'm not a "value investor" - I not cerebral enough.

But if I would like to jump into a "buy the bounce off the bottom" trade, it would be very comforting to know my entry price is also where the value investors are lurking to buy. It's always good to have the wind behind my back.

Hence, it helps to know "how" value investors think. Come to think of it, I don't trade equities; I trade people (to be precise, it's sentiments).

Below is a link to a very good blog post and summary of Warren Buffet's sharing of his biggest early mistakes.

I would recommend 2 groups of people to read it.

1) Swing Traders who like to trade the bounce off key supports (sharpening the saw).

2) "Value investors" who think they know Warren Buffet (it's what you think you know that ain't so that hurts you the most).

Warren Buffett: These were my biggest early mistakes

Sunday 25 May 2014

Dumbest Insurance - Life Insurance for Child

Life insurance for a child ranks to me as the dumbest Life insurance policy out there.

These policies are never bought; only sold to.

From one salesperson to another, must give a round of applause for these super salespersons - these are the ones who can sell ice to Eskimos!

Take a step back and press reset for a moment:

1. Are you a dependent of the child?

2. What is the coverage for? 

a) To benefit from your child's passing? 

b) To pay for an elaborate and grand burial for all to see?

If your motivation is fear that your child may catch an illness or accident, wouldn't a Critical Illness and/or Hospital and Surgical plan be better? 

Or perhaps you want to give your child a better future, wouldn't a Savings or Education Fund be better?

Of course you will never be sold Life insurance for a child by itself.

If you are a student of the recent sub-prime meltdown, you would understand the wonders of packaging and repackaging of financial products until everyone looses sight of the unsavoury bits.

What you really wanted were the medical benefits and savings plans for your child - your motivation is love. 

What you never bargained for was as part of a set menu, you got something you never needed in the first place - greed and ego were never part of your motivations...

If you knew what you knew now, you would have gone a la carte.

Thursday 22 May 2014

Why Buy Insurance?

My throat is dry.

For a change, I'll stop singing.

Those of you who have bought insurance (not sold to), what were your motivations?

It will be interesting to listen to beer buddies' viewpoints.

Monday 19 May 2014

Fishmonger and Beer Buddies (Why bloggers do what we do)

Frequent readers of blogs may want to pickup some books on blogging (Blogging for Dummies is a good start) if you are curious why some bloggers do what they do in their blogs.

For those who prefer reading stuffs online, you may want to google "Problogger" and you will find the granddaddy site of how to  make money by blogging.

The keyword here is if you are curious. Without curiosity, there will be no "automatic self-learning reflex".  It's back to the default setting of waiting for others to tell us what we "should be" learning...

Why should I? I'm not going to start a blog, or have any illusions to make money on-line. 

Hold this thought.

If anyone has bought insurance in your early twenties, and knowing what you know now versus then, and you are honest to yourself, the reality is you have not bought any insurance at all.... Have you? Yes, you were sold to.

Would it have helped if you had read some books or attended a course on Selling? You would have known the "hooks" and "techniques" we salesmen use to reel in our catch. How we size up our potential customers and grade them instinctively into "easy" or "it's a challenge" targets?

OK, the last comment is maybe more in the realm of consumer behaviour... How different groups react to stimuli.

How about advertising? Are you not curious how advertisers aim to attract your attention, arouse your interest and desire, and give you a nudge to displace your state of inertia into action?

Have you noticed property ads always portray a drop dead gorgeous lady model (never a housewife?) in a swimsuit, bikini, or plunging neckline/low-backed evening gown? The male models, if any, are merely props? Try recalling what the male model wore in the property ad!

Now, are these property ads targeting Men or Women buyers?

If you are a male reader, what buttons the advertisers are trying to press in you?

But I have no desire to work in advertising. Why should I care about what goes on behind the scenes?
OK... Evidently you have never caught yourself asking why am I doing this (buyer's remorse)? And curious enough to look up to see what strings others are twiddling above you.

I can go on to other examples in politics, spirituality, sex. But you get the picture.

Now back to blogging. 

Have you noticed why some websites are eager to give away "free" stuffs? (Go back to the first paragraph if you curious).

With the proliferation of "financial" bloggers and websites (which by itself can be an interesting market indicator), just thought its good to swing my little hammer onto the tiniest of bells - ding, ding, ding!

Talking to fishmongers and beer buddies about fish is not the same.

Thursday 15 May 2014

Trinity of Fundamental Analysis Investing

In investing, the trinity are:

1) Cash Flow

2) Asset Values

3) Profits

Just like the trinity of trading, these 3 components are best viewed as a holistic whole.

Most newbies are so fixated on a particular financial ratio or metric that they become like the 4 blind men touching each singular part of an elephant - and missing the overall big picture. 

Example? Fixation on P/E only. If it's only that simple....

These 3 components are the basic building blocks for these popular fundamental analysis strategies:

1.  Value play (Buy low; sell high).

2.  Growth play (Buy high; sell higher).

3.  Asset play.

4.  Turnaround play.

5.  Dividend play.   

Notice I used the word "play"?

Let's use the example of a "newbie" value investor to illustrate what I mean.

Newbies and "born-again" (failed traders) value investors tend to have lots to say about what they intend to do. High conviction here; strong beliefs there.

They intend to or have bought when prices are below the intrinsic value of stocks they are tracking.

Now ask them what they will do when the prices have recovered and are at fair value - price is the same as intrinsic value? 

Or better still, what will they do when prices exceed their intrinsic values?


That's how I would test for real conviction and check for deeper understanding beyond regurgitating popular buzz words.

Not convinced? Try asking yourself why the long time majority and controlling shareholders of F&N decide to sell to ThaiBev? 

Some plays take decades to complete. 

Reminisces of a sofa salesman

A sale is not completed until the customer pays in full.

This was not evident to me when I was working in Metro and Robinsons. Since the customer pays up immediately, a sale automatically results in instant profit and cash in pocket.

When I moved to selling sofas at IMM, I found out quickly that we only take a 30% deposit when the sale is made. Balance 70% is collected only when we deliver the made-to-order sofa one month later. And if the delivery gets delayed...

A sale here may result in instant "accounting profit", but the cash flow is not the same.

Apply it to investing and you will understand the meaning of "play".

And yes, this is a poke to those who says unrealised losses are not real; using the same logic, unrealised profits are not real too. Wink, wink.

Monday 12 May 2014

Trinity of Technical Analysis Trading

In trading, the trinity are:

1) Price

2) Volume

3) Time

With the combination of these 3 basic components, we get all the myriad technical indicators out there.

Show me any technical indicators out there that do not use 3 of the above components.

You may ask, "What about Point and Figure charting? Where's the time component?"

And I would counter,  "Yes, there's not time axis per se;  but look at the P&F chart again. If there's no time, how do you spot the trend change?"

Science quiz: If there's no movement, how do we tell time?

I read this "goldfish" story many years ago. Can't remember from where so can't give accreditation. And by the way, I will "embellish" this story in my SMOL style as usual. I don't do copy paste well; I often add pepper and salt according to taste.

A professor asked his students to write a paper to describe how goldfish swims. 

Most students would engage in academic research in the libraries and start to write "copy with pride" thesis on how goldfish swims (using other people's reflections and conclusions).

Some students will research by watching documentaries on how goldfish swims (using other people's observation).

Guess what? The professor brought in a fishbowl with a goldfish in it on the day of paper submission and asked his students:

"How many of you actually looked at a goldfish to see how it swims?"

Now this is coaching! 

Make a wild guess what this goldfish story is all about?

Something to reflect upon if you are befuddled by the charts and indicators you are currently using.  

Thursday 8 May 2014

Never Trust a Skinny Chef

Never ask  a fishmonger whether his fish is fresh.

But why then do you ask the insurance agent whether that policy is suitable for you?

Never trust a skinny chef.

And yet you ask directions on how to reach the mountain peak from someone who has never reached there themselves?   

Monday 5 May 2014

10,000 hours versus 10,000 trades

I've just completed 9 months at my part-time retail sales job during the weekends (Sat & Sun)!

9 months may seem like a long time. But if we convert it to the hours my full-time colleagues are working 6 days a week, my 9 months is "only" 3 months from full-time perspective.

Would there be a change in expectations of my competence if you are a customer or my boss now?

When I conduct recruitment interviews, I always try to find out if the candidate with 10 years working experience in a company is really 1st year experience times 10 (holding the same job for 10 years!!!???) or has the candidate been rotated across a few departments with varied job responsibilities or roles during that 10 years in the same company.

Does it make a difference? You tell me.

The secret to making money in the markets is to buy low and sell high (when shorting it's the reverse) - that everyone knows. It doesn't matter whether you call it investing or trading.

(Of course there are other variations like buy high sell higher. That's for advanced demi-gods)

I sincerely hope you didn't have to pay for a course or seminar to find this out. If yes, you may want to take a step back and ask yourself should feeble-brained people be allowed in the markets... (Yes! The more the merrier if you are the carnivore taking the opposite side of their positions)
Those who subscribed to Malcolm Gladwell's 10,000 hours rule in his book the Outliers may nod your heads in agreement that your current corporate or academic success is due to practice, practice, practice.  

If you have 10 years or more experience in your investing or trading journey, now ask yourself: Did you put in the same amount of hours like in your day job or studies?

Let's do the math:

10,000 hours divide by 10 years = 1,000 hours per year

1,000 hours divide by 52 weeks = 19.2 hours per week

19.2 hours divide by 7 days = 2.7 hours per day

Did you put in average 19 hours per week or 3 hours per day to your "passion" in investing or trading? I thought so too.

Hence most prefer to "outsource" their decision making (paid subscription services) or rely on tips from brokers or anonymous strangers in forums. 

(Alert readers will know I am being nice by using 10 years. If your current investing/trading journey is less than 5 years... Unless of course if you are genius or President Scholar material. Your 1 year is equivalent to other people's 10 years)

Would you agree that buy low sell high is all about entries and exits?

If a long term investor makes a buy decision once a year and a sell decision once in a decade, how would this same investor stand against a trader who has made 10,000 trades (round trip entry and exit) ?

Just make a wild guess who is more likely to buy low, sell high?

Not convinced? 

Girls, if you put on make-up only on special occasions, can you out-doll those gals who put on make-up everyday?

Men, if you are a occasional drinker, can you out-drink those drunkards who drink every freaking night?



Friday 2 May 2014

Why Women make Better Investors and Traders

In my previous tongue-in-cheek post about women, I shared in the comments my observation on the differences between men and women when it comes to investing and trading.

No scientific studies or concrete case studies. Just pure personal observation and conjecture.

Hey! What do you know? 

For those who prefers to reference academic studies as their authoritative "expert" source of proof (to score points?), here's some interesting articles for your weekend reading:

UCDavis Graduate School of Management

I have no shame in stealing good ideas; but I don't steal credit.

The link to the above articles were "stolen with pride" from this interesting blog:

Thoughts of a Cynical Investor

P.S.  At the end of the day, it's not about listening to what everyone says - remember the story of the man, his son, and the mule? What's more important is listening to what your inner gut says.

Have an opinion? Express it! 

Proven wrong? While, now you know!

Better than can quote what everyone says (to impress), but have a shallow understanding in what you know... (knowledge and wisdom are not the same)

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