Friday, 24 October 2014
Goal setting on things you can't control?
The old days
I remember getting poked when I submitted my first business goals and plans to my Steering Group many years back.
During my tour of duty in Shanghai, when I became part of the Steering Group during my final years there, I had fun returning the favour back to the team leaders so eager to please and impress us - them with their bombastic goals together with shock and awe business plans...
It's so interesting to see the progress and adjustments (or none) these team leaders made during our quarterly reviews.
Some "get it" very quickly. Some take more time. Some will never "get it".
And that's how some names get into the "High Potentials" file, some into the "Potentials" files, and if your name is not in any file, it means you are "condemned"....
Losing weight
If you want to lose weight, there's basically 3 ways you can do it:
Eat right - diet to reduce calorie intake way.
Exercise - burn more calories way.
Eat right and exercise - why choose when you can do both?
A goal to lose 5 kg in 12 months with a corresponding plan using any one of the 3 processes is believable.
Why?
It's because it's controllable by us. To diet or to exercise is what we can control.
The discipline to follow through with our plans is not influenced by the weather, geopolitics, or anything external with the exception of illness or accident.
Questionable goal settings
Now pause and think about the X amount in Y years financial goal settings you may have done up. Especially when they involve investing or trading in the markets.
Do you see the fly in the ointment here?
If you get it, don't have to read further. You very the good! One tiny pin poke and you see blood immediately!
Holding your hand
For those that need more time, let me ask you some verification questions like what we used to do in the Steering Group:
Can you control the markets?
Is your position so large that when you sell or buy, you can influence the market prices?
If both your answers are "No" - you can neither control nor influence the markets - pray tell how you will achieve your goals then?
Depending on pure dumb luck?
Or is your goal setting purely an exercise in randomness?
People smarter than you
If you want to be more successful in your investing and trading journey, isn't it better to focus on what we can control?
Like in our weight loss example?
Improve your buying process - a merchandise well bought is a merchandise well sold.
Improve your selling process - no selling means you are a "stamp collector".
Improve both your buying and selling processes - duh?
LP the butterfly guy is the only one I've read that talk about the buying and selling processes in his blog posts. I guess his engineering background helps!
If in your day job you are constantly talking about systems and processes, and you never apply it to your own investing/trading journey....
See that wall over there?
Yes, you can go bang your head against it.
LOL!
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You want to reach the goal of $60K passive income per year.
ReplyDeleteCan achieve?
100% can!
How?
Keep increasing your capital every year.
One day sure hit $60K.
No meh?
CW,
DeleteThat's similar to how I did it ;)
If not for my increased in ACTIVE earned income, I would not have been able to save 3 times more while working overseas than in Singapore.
7 years tour of duty turned out to be equivalent of 21 years thread milling in Singapore.
Then came 2008/09 and the rest is history...
No goals, no planning.
Just the awareness to scale into the markets late 2009 onwards.
One day I realised I had "enough", and here I am!
(Try to quantify "enough". It's more a state of mind than numbers. Hence most people just move the goal posts as they never ever will reach "enough")
What we will be in the future may depend more on the decisions and actions we do (or did not do) today - than the plans and goals we wrote on a piece of paper ;)
Think less; do more.
For Taoists, its "think less; do less". But that's on another whole philosophical plane...
Hi SMOL
ReplyDeleteAre you talking on buying and selling strategy? Im sure investor have their preferred own way of buying and selling but chose to focus on the macroeconomic factor they cant control.
B,
DeleteExcellent question!
It's not about buying and selling strategy - Method.
It encompasses Money Management and the Mind - the 3 Ms as in the whole investing or trading process of buy and sell.
For eg: If you had invested 100% in the markets with zero war chest funds, would you have written your recent post to profit from a bear market?
Would you be reviewing your buying process so that you can take advantage of a future bear market?
How about improving the selling process to "protect" those unrealised profits?
Hope I can reduce the sugar coating since we have a relationship already ;)
Of course every investor/trader can do whatever they want. It's their money ;)
You are a consultant.
If your client comes to you with a business plan with goals they have neither influence or control, what will you do?
How to do periodic reviews when straight out the gate we knew it's just a tilting at windmills exercise?
Of course, just as long as the client continues to pay, we keep cheering him on!
P.S. You may want to review how "long only" mutual fund managers do their goal settings.
X amounts in Y years is believable only for Hedge fund managers who back it up with long/short strategies that go for absolute returns ;)
temperament,
ReplyDeleteYou have just given me an inspiration of another blog post!
And yes, part of focusing on what we can "control" is also an acknowledgement of what we can't influence and control.
Hence imbedded in the improvement in buying and selling processes would be risk or money management techniques too ;)
ReplyDeleteSo before clicking the BUY button, you have control over the stock, but once bought, you have surrendered your control of the stock to the Market and leave it to the market forces to work it out for you. However, if you are feeling so painful in seeing your falling stocks, and keep losing your sleep at night, then it is better for you cut it off; otherwise, take a break and go fishing.
Read? Wise Words Series - Part 2
CW,
DeleteTo be precise, we have no control over the stock or markets - before or after clicking the Buy button.
What we have control:
1) Whether to click the Buy button or not.
2) How big share this buy will form in our portfolio.
3) To go all in with one single transaction or spread this purchase over several transactions.
4) To take some money off the table.
5) To re-balance our portfolio.
6) To sell to our peaceful sleeping point.
7) Etc.
You're an encyclopedia!!!
Although it sounds a cliché, I like what I read in a book about setting goals: SMART: specific, measurable, attainable, realistic and time-targets.
ReplyDeleteTom,
DeleteThat's a good starting point for goal setting.
Like all things we do, there's elementary, mid, and tertiary levels.
If we ask 100 investors or traders to each write down their SMART goals for the next 5 years, and like what you wrote in your recent blog post, only a minority will make money.
What gives?
What's the secret sauce?
If it were only as simple as goal setting.... Then investors would not be reading Warren Buffet but Peter Drucker instead!?
LOL!
SMOL,
ReplyDeleteI like your hard rocking posts, even if I Kena knock also never mind..
In my workplace, there is plenty of goal setting during the planning phase, so much so that I think they are obsessed with it.
I did not think so much of control and non-control, personally, non controlled also can have targets.
Why? Because targets allow u to ensure you are heading the right direction, and if u keep getting lost, time to reorientate the map/ plan.
Problem is, some people thought targets are part of the plan, and if they dun do well, it means the plan is substandard. Also, some believe targets should not just provide direction but also act like a GPS and tell us where the actual spot is.
Most importantly, accept both targets and plan are not sacred cows. My target keep changing, from finacial freedom like what u are enjoying now, to a golden Retirement to a withdrawal rate of 6% from an port of capital size not smaller than 200k.
The targets actually get more specific, but I do not think it is useless.
It allow me to reflect on my plan, and plan contingency of what happen if:
Some years do not hit 6%
One or 2 counter go layout, possible to recover?
It is planned with the fact that all of us need to go through bear market.
Lastly, can I immplement the plan based on my circumstances and temperaments.
I agree with the do more, talk less thou. Do more, and review and plan. The. Do again. Get comfortable, keep doing it. Get uncomfortable, relook the plan, and even targets, get going again.
It is sad enough if your dream get smaller and smaller, but it is a tragic if dreams disappear.
Luckily I different industry with you, it's ok to be in your condemned name list. :)
Sillyinvestor,
DeleteI am never against setting goals or planning. It's just that like everything else, there are bad goal settings and bad planning too.
It's never the noun; it's the adjective.
If someone gives a KPI for fish to climb trees, and the fish accepts the "challenge", then both are deluded...
Of course having dreams keep us alive and looking forward. But if a fish has "dream" of climbing trees...
I've worked with inspirational leaders and very mediocre managers. Thank goodness I can tell the difference!
I never said it was easy. As you can see from "My Stories", I job-hopped many times until I found the "right fit". And once found, I "thrived".
Others focus on what they can't influence or control. I focus on what I can control - I am not a vegetable.
I am mobile.
Btw,
ReplyDeleteI bet this:
You enjoy what u doing now, so siong that u hitch/ slay/ monetized the 2009 bear and achieve it without plan and target.
Assume you achieve this with target and plan, patience ....
2 things could happen:
1) u set another target and go over the cycle again, feeling empty that the peak is scaled.
2) you instead of siong, feel super siong, feel justified that all your pain are worth it, feel super power, super high self- esteem. Feel your dream is fulfilled and empowered!!
?? Could be?? Right? The possibility 2 is more gratifying. Stumble upon gold and go treasure hunting and found gold?
Sillyinvestor,
DeleteYour 2 scenarios fit what I've poked in the past:
1) Are we investing to escape, or
2) are we investing to achieve?
BTW, where is the self-esteem in point 2 if its achieved by just a coin-flip?
Where is the sense of accomplishment in achieving something we have neither influence or control over? How's that different from stumbling upon gold?
Well, you have to ask those that were around in 2009 who stumbled upon gold but didn't bother to bend down and pick it up ;)
During this recent volatility (can't call it a correction), did you notice the oat meal guy and fisherman both nibbling during the sell down?
Now with the recent reversal, I guess they made some kopi money ;)
Like what Mike Tyson said: "Everyone has a plan until they get punched in the mouth."
I may disagree with both the oat meal guy and fisherman at times, but I respect them. They don't just talk.
Readers may do better to benchmark their own buying and selling processes with these 2 titans; than to compare silly things like 10 baggers or 6 digits dividends per annum.
Do what you like and be good at what you like anyone?
Hi SMOL,
ReplyDeleteHmm... Guess we have different investment school of thoughts...
Just thought we do not have to make use of volatility to make money. Not that we can't.
This volality, agree not correction, does not throw out any bargains, portfolio hardly affected at the peak of volality.
No actions doesn't mean no plan.
Hey, btw, surprise at your timely reply, thought u have weekend work? Fisherman is LP?
Sillyinvestor,
DeleteI work afternoon shifts.
"No actions doesn't mean no plan."
Well, its better than: Got plan no action :(
LOL!
LP is butterfly.
CW is fisherman. (Good, I can tease CW about it!)
Hi SMOL,
ReplyDeleteOn reading your post, it reminded me of my company's end of year evaluation which had just passed.
One of the questions asked was what is your goals for next year?
I wanted to write (1) Earn more money and (2) Get off work on time, but sadly both are out of my control. Sigh.
Apologies for going off tangent. But it is true that the bulk of my capital is via earned income (a.k.a salary) that I have saved up. I do not think it is possible for my investment returns to take over my main income source. More like to supplement it.
I will never ever be able to swap my rice bowl for what comes from the market.
S-Reit System Investor,
DeleteI see some Jedi magic in you. There's a "system" in your nick ;)
Don't you dare write like that in your year end evaluations!
I would have written:
1) Make more money (or "save" if I am working in cost centre) for the company.
2) Be more productive in the next year.
I'm so full of it! LOL!
Hello! I wore a mask (like everyone else) during my snake-oil selling days. Don't be fooled by my "koyok". I can talk like this now because I am a Man of Leisure ;)
This post of mine is not meant to pour cold water over others; it's more a wake up call to cheer others on!
It's like if I am a tennis player, it's perfectly alright to DREAM about playing in Wimbleton.
But I would do better to set concrete goals like:
Improving my serve
Improving my forehand
Improving my backhand
Etc.
Look at where I've started. Never let money or capital distract us from what's important.
Jut like the Hokkien song: One step; one foot print.
How to replace our earned income?
ReplyDelete1) By passive income
How?
Not that difficult. SMOL has already show you how.
2) Living for a trade.
Look for that MIA man called Coconut.
CW,
DeleteNot so fast!!!
Don't try to put your mainstream ideas on me....
I am the one who questions is there such a thing call Passive Income?
http://singaporemanofleisure.blogspot.sg/2014/07/what-passive-income.html
Anyone who believes he/she does not have to WORK for something of value deserve their own fantasies.
i'm still here!!
Deletestill feel dizzy after shorting the market, now only slowly trying to get back on my feet, doing my daily job.
Delete@%#&*
i thought "it" was coming, i add on to my already late shorts and close most of my long/short positions!
Deletelost some money, not a lot but it feels like i lost my entire capital or a big battle!
Chill coconut,
DeleteNice to see u back.
Guess you are battle- hardened enought not to be affected by it
Welcome back coconut!
DeleteWe missed you :)
Oh! Don't let us distract you from your trading. Only come here when the dealing is done.
I was lucky to have covered my Simsci short last Monday near the recent lows. But I have a mental weakness.
I am not mentally flexible enough to turnaround and go long on Tuesday to take advantage of the retracement back above STI 3200...
Something I must work on.
if i say i'm not affacted than i'm lying. it affact a lot on mental stress, not on moneitorily.
Deleteit just reveal to me that i thought i knew a lot and the market ought to reward me, but he has other plans.
back to the drawing board.
yes i fully agree, flexibility is the key to trading but its hard for everyone, me included, to do it. practice practice practice.
Deletecoconut,
DeleteOh how I missed you!
In this day and age of instant gratification, appreciation for good craftsmanship is harder to come by...
Yes, working my way towards my first 10,000 trades; one good trade at a time.
i think the underlying idea is to understand what you can control and perhaps not enough is delve into the conservative or optimistic nature of targets. there are 2 sides of argument for that.
ReplyDeletei generally don't talk much about selling in that i subscribe to the part of buying without a need to sell. but usually when i buy there is usually an evaluation of the 'triggers' to sell.
managing volatility and behavioural aspect is also need to be systemized and that is where perhaps portfolio construction comes in.
congrats of you absolute market timing.
Kyith,
DeleteYou are into football; let's use football analogy.
Too many "investors" have goals the equivalent of scoring X goals in Y matches.
But is that how we define the competence of a good football player?
Maybe it works well for a striker; but how about defenders and goalkeepers? How about the whole football team?
And I thought the goal is to win games....
Sometimes we can play well but lose the game. (scored a lot but let even more goals in at our end...Ouch!)
And have you ever felt sheepish when you played badly but still won the game? (The other team played even worse!)
This post is not about market timing, it's more about skill-sets ;)
Maybe I should not have used the words Buy or Sell - it seems these words can be emotive.
Let's use more neutral words like Entries and Exits instead ;)
If I improved on my entries and exits, would I not be a more competent investor and/or trader?
Setting goals on things we have control over is a lot harder since we can't blame others if we fall short :(
It seems Brazil only focused on the Attack process during the recent FIFA World Cup ;)
Deletetemperament,
ReplyDeleteTrust a lao jiang hu to know the difference!
In boxing, they teach you how to take a punch before you throw your first punch. In Judo, you learn how to fall without hurting yourself ;)
I like to study people; I people watcher.
When it comes to earning more versus saving more, most gravitate towards saving more as it's more under their "control".
But when it comes to investing... these same people do a 180 degrees turn!? All of sudden, what we can't control and influence becomes "low hanging fruits" ???
Quote: All of sudden, what we can't control and influence becomes "low hanging fruits" ???
ReplyDeleteWhy no have "low hanging fruits"?
Got leh? SGX REIT Data
REITs : Average Yield = 6.470%
You want some?
CW,
ReplyDeleteYou don't quote me lah!
I now got phobia of you.
Stop smiling and turn around. Must check for hidden dagger...
REITs?
Sorry, pass.
2009, 2010, and 2nd half of 2011 were great fruit picking seasons.
There is a season for everything. I'll wait for the next upswing in the property cycle, thank you very much!
My questionable goal is to have more comments on my blog than SMOL. Or more "Leisure" in life than SMOL...! Can I control??? Hmmmm... Hahaha
ReplyDeleteI does not bother about X goals in Y matches. Only Liverpool Balotelli should! I pay more attention to X laughters in Y hours!
One reason of Setting Goals, is to motivate oneself to improve oneself in life and not necessary to "win" over your peers.
By the way, I sell and buy very often. Sell in my full time job and net buy in my part time job (investment)...
Rolf
You are Oil Trader?
DeleteRolf,
DeleteYou pay me 20 cents per comment; I'll comment at every single one
of your posts ;)
Pay 50 cents I spice it up with ooooh and ahhhhh.
This is what you can "influence". LOL!
Eh, there got people do such things one!?
A few years back, a very sharp and IT savvy Malaysian blogger caught a "fake guru" writing glowing comments and testimonies under different nicks in a blog he created himself!!!
A very low way to give the illusion he is very sharp with his market calls. All this just to sell a few courses and subscription service?
But he not very IT savvy. All his different nicks were tracked and screen captured to show coming from the same Blogger IP address. LOL!
Ah! You are fellow salesman ;)
Snake oil man got do buying?
DeleteCW,
DeleteThe oil bottles?
And the fake snake oil?
Salesman also got buy and sell processes.
There are always processes.
In corporate life, there is take bullshit from overlords and give crap to underlings.
Rolf,
DeleteYou are sharp.
I give you one poke but you can't hit my face back hor!
You could have just said you would like to have more comments in your blog....
Why must you add "more than SMOL"?
Draw? Handshake?
Stand back. No hugging!
Why must you add "more than SMOL"?
ReplyDeleteThat is called S.M.A.R.T goal
ReplyDeleteUncle CW,
I am no pretty lady. Most successful oil traders are pretty!
SMOL,
The blogger ”ownself direct, ownself act!" Must be very busy and still need to conduct courses! I pity him. He is no true salesman.
I was/am never a salesman. I am an Engineer. Engineering a sales is different from selling Engineering product or Snake oil. Hahaha
I added "more than SMOL" because I only set Goal on the best mah. Furthermore, anything with word "Singapore" and famous, must be the best and leader of the pack. For example SingTel, Singpost, Singapore Airlines, Singapore pool, and yes ... Singapore Man of Leisure. LOL
If you want to set a Goal, make sure it is a big one. Right?
Cheers, Rolf
Rolf,
DeleteI somehow got a feeling I've just been put in my place :(
Thanks for telling me you wear white hard hat; I wear yellow hard hat.
Simi "Engineering a sales is different from selling Engineering product or Snake oil"?
Kenna sai.
You win liao lor!
Don't try to butter me up. I sibei buay song liao.
LOL!
All in good fun ha! Cannot hit the face!
P.S. I seeking verification whether you lean towards ang moh pai or local local ;)
Opps!
DeleteRolf,
I just read your life story at 15HWW's blog.
Got it. I don't have to sugar-coat or hold back my replies to your comments.
You are a man ;)
Mai buay song lar.. I hokkien pai.. I apologized soli soli
ReplyDeleteHahahahaha...
Look forward to seeing you in the seminar..
Have good fun..
;)
DeleteAlways!
By the way, very good reply to help that young man see perspective.
It's not selfish to take care of ourselves and our immediate family FIRST before we go "I want to teach the world to sing, in perfect harmony. Coca cola..."
I never help anybody, I am just there to entertain myself! Haha..Sounds familiar.
ReplyDeleteNice song from Coca Cola, a vintage one for "Lau Lang"