If we go with the flow like water, is planning a hindrance? LOL!
Bruce Lee and the Samurai warriors have both discovered the key to the mastery of their crafts:
“Be like water making its way through cracks. Do not be assertive, but adjust to the object, and you shall find a way around or through it. If nothing within you stays rigid, outward things will disclose themselves.
Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend.”
But I see this as a continuum. To learn music, first we learn how to obey the rules. We go accordingly to the beats, according to the score. Once we know the rules, we question the rules, break them and don't think about the rules. We just play ;)
boundary simply means limit, we have to be very sure where our boundary is especially when it comes to trading where you can never be too sure where it is cos its changes.
you can be right at this moment but seconds later you found yourself at the wrong end!
the only way i know of is to first be aware of the changes and second keep reviewing your boundary all the time cos in trading thats changes too if you are a position trader.
take water for example, earth is the boundary for the water we see, who design it don't ask me, and don't ask temperament, but thats the boundary and we survive on it.
in trading and i guess in other espect as well, we draw or create the boundary according to what we want base on our strategies, so that our equity can survive upon.
if you don't know where your boundary is, it is a matter of time you will blow up your account.
For the sake of newbie readers, let me use an example:
Savvy investor A buys a stock with $50,000.
Fan boy B follows like a good lap dog with same $50,000 entry.
Unknown to fan boy B, savvy investor A has allocated $500,000 for this stock. This nibble at $50,000 is just a scouting party; a mere 10% of his allocated funds for this stock. He is employing a scaling-in strategy to slowly build up a core position in this counter.
He has earned the right to say, "If the stock goes lower, I'll buy more!"
But to clueless fan boy B, his $50,000 is 100% of his trading capital... It's a all-in bet!?
What happens when the stock suffers a plain vanilla correction of -20%? Sell in panic?
And that's how 2 investors in the same stock bought at the same price - one can make money, the other can't.
amam, i didn't think of that example, is not so much of boundary but more of a strategy where B does not have one, even though he has a plan to buy just that 50k.
can't really say B has no boundary and in fact he is standing on it! but he has less degree of freedom as compare to A.
boundary is our own define limitation and strategies determent our degree of freedom. we need to know where we stand in relation to both to trade sucessfully.
so take for example, bruce lee, his boundary probably would be: don't fight with more than 5 at one time and opponent with guns, don't fight in the morning (cos half asleep) and at night (cos want to sleep), other than that, bring it on!
than there is these strategy, apply all kongfu type when applicable even to the extend of biting! thats the strategies.
he know his boundary and his strategies, sure win one!
It's not about how much % share a counter should be in a portfolio - although that would help us live to tell the tale a 2nd day ;)
Your CAO does not count. Must go to zero remember?
What's unavoidable are market losses - that's par for the course.
But before a stock can go to zero, it has to start from a tiny 5% loss, and goes through milestones like a 10% loss, 20% loss, 50% loss, 80% loss, 90% loss, etc.
At 90% loss, a stock has to become a 10 bagger before we recover our capital!!! How many 10 baggers have we got? Exactly!
What's avoidable and within our control? That's our cut-loss point ;)
Having a cut-loss point at zero is plain silly - that's what I've discovered.
In my book, cut loss and stop loss are the "same" if we don't split hairs.
Technically speaking, cut loss is part of Money Management, while stop loss is just a mechanical tool under Order Management to execute this cut loss point we have predetermined in advance under Money Management ;)
Why would anyone want to sell partial shares when the stock is dropping like a rock?
What you are suggesting is better employed under Trading around a core position.
That's why we sell some partial shares into STRENGTH.
If we are right, we can buy back these shares at a later price during a pullback.
If we were wrong, hey! That's why we still hold back some of the remaining shares to sell at an even higher price mah!
It's can also be called as a scaling out strategy ;)
Need Plan B?
ReplyDeleteCW,
DeleteWhat plan B?
When you are down on the canvas, blood in your eyes, missing a tooth or two, I don't think we can think straight anymore....
Just responding to what I read last night by someone who has started investing recently, and has never been punched before.
His plans were quite "cute"...
You and I have been down on the canvas before.
Plan B comes after we have woken up at the hospital bed the next morning and discovering with relief we are still breathing!?
That's when mind-flips and reflections start to occur ;)
LOL!
Agreed.
DeleteHarder to learn by reading or listening. Got hit very hard on their face or KO even better.
They will learn very fast. LOL!
Hi SMOL,
ReplyDeleteSo next time, plan b is to block the face.
Ting ting ting, round 2 fight! He's all ready to block his face, but his opponent just kick his stomach. Na beh..
Round 3, he block his face and his stomach. Then his opponent kick his knees..
Be like water next time! Have a shape but be prepared to occupy the shape of the next container!
LP,
DeleteIf we go with the flow like water, is planning a hindrance? LOL!
Bruce Lee and the Samurai warriors have both discovered the key to the mastery of their crafts:
“Be like water making its way through cracks. Do not be assertive, but adjust to the object, and you shall find a way around or through it. If nothing within you stays rigid, outward things will disclose themselves.
Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend.”
― Bruce Lee
Hi SMOL,
ReplyDeleteBut I see this as a continuum. To learn music, first we learn how to obey the rules. We go accordingly to the beats, according to the score. Once we know the rules, we question the rules, break them and don't think about the rules. We just play ;)
Brilliant!
DeleteHow do you know the fire is hot if we don't get burnt? :P
ReplyDeleteDerek,
DeleteHaving our fingers burnt is one thing; getting 3rd degrees burns all over is another.
Everyone (including me) thinks the rules don't apply to them - until they do!
Ouch!
Thanks for the painful reminder!
ReplyDeleteckw-I99,
Delete;)
Nobody likes the guy who points out the Emperor has no clothes.
It's nice to know some appreciate it!
temperament,
ReplyDeleteAnd that's why I am quite happy with the new proposals for CPF Life.
In my 60s, I don't want to still have to play hide-and-seek with Mr Bear.
Knowing when to walk away from the table - now that's something for us young at hearts to think about ;)
a plan is not the same as strategy.
ReplyDeletea plan is like a structure, the harder it is, the harder it can moves. your strategy is to make it moves as free as you can be.
but if it is too soft like water for example, then we better draw our boundary right for the universe (market) has no boundary.
coconut.
coconut,
DeleteLOL!
Last night, one person said my blog posts can be a bit "cheem" - not for the common reader.
Reading your comment above, I am so glad I'm in great company!!!
I'm OK with the water stage - remember surface tension?
When it gets to the mist or cloud stage then I'll have to stay mindful.
But then... They say every cloud has a silver lining? (Who is they anyway?)
Is that boundary for you?
boundary simply means limit, we have to be very sure where our boundary is especially when it comes to trading where you can never be too sure where it is cos its changes.
Deleteyou can be right at this moment but seconds later you found yourself at the wrong end!
the only way i know of is to first be aware of the changes and second keep reviewing your boundary all the time cos in trading thats changes too if you are a position trader.
take water for example, earth is the boundary for the water we see, who design it don't ask me, and don't ask temperament, but thats the boundary and we survive on it.
Deletein trading and i guess in other espect as well, we draw or create the boundary according to what we want base on our strategies, so that our equity can survive upon.
if you don't know where your boundary is, it is a matter of time you will blow up your account.
for a good trader, know your boundary and constant push to the boundary will certainly helps in the long term performance.
Deletebut if he is not aware of the boundary, he will not be able to make a living out of it.
coconut,
DeleteWell said!
In simple England, it's to know our limitations.
For the sake of newbie readers, let me use an example:
Savvy investor A buys a stock with $50,000.
Fan boy B follows like a good lap dog with same $50,000 entry.
Unknown to fan boy B, savvy investor A has allocated $500,000 for this stock. This nibble at $50,000 is just a scouting party; a mere 10% of his allocated funds for this stock. He is employing a scaling-in strategy to slowly build up a core position in this counter.
He has earned the right to say, "If the stock goes lower, I'll buy more!"
But to clueless fan boy B, his $50,000 is 100% of his trading capital... It's a all-in bet!?
What happens when the stock suffers a plain vanilla correction of -20%? Sell in panic?
And that's how 2 investors in the same stock bought at the same price - one can make money, the other can't.
When we read someone nibble on a stock; now small boys can follow to nibbe with 100 shares.
Delete:-)
amam, i didn't think of that example, is not so much of boundary but more of a strategy where B does not have one, even though he has a plan to buy just that 50k.
Deletecan't really say B has no boundary and in fact he is standing on it! but he has less degree of freedom as compare to A.
boundary is our own define limitation and strategies determent our degree of freedom. we need to know where we stand in relation to both to trade sucessfully.
so take for example, bruce lee, his boundary probably would be: don't fight with more than 5 at one time and opponent with guns, don't fight in the morning (cos half asleep) and at night (cos want to sleep), other than that, bring it on!
Deletethan there is these strategy, apply all kongfu type when applicable even to the extend of biting! thats the strategies.
he know his boundary and his strategies, sure win one!
1) coconut,
DeleteNever start a fight with a battle hardened-street gangster - even if we are black belt or gold medal winners in wushu.
Our boundaries and the gangster's are different!
And that's why I am very respectful to hands-on traders like you, Fat, WolfT, ladykiller, etc.
No prize on guessing who are "black-belt and gold medal winners" in trading ;)
2) CW,
Buy $1 Toto quickpick and win $10 "horseshit" prize is also 10 baggers!
But no bragging rights as if others found out the dollar amount, face don't know where to hide.... LOL!
temperament,
ReplyDeleteYes, theory is easy; it's the execution that's a bitch!
I should know.
I let Jurong Tech go all the way to zero....
After waking up from the hospital bed the next morning, I discarded "hope" as a strategy.
LOL!
Hi SMOL,
ReplyDeleteWah, u also a passenger on that sampan which u mistook as submarine, thinking one day it would come to surface?
One part of my CPF and my hubby's found its burial ground on the same seabed too.
Ju-wrong Tech! LOL~
Ju-WRONG Tech was recommended by 3 out of 5 top analysts in one of New Year stocks pick by ST. The future Blue chip! LOL!
DeleteEven top analysts got it WRONG!
1) Endrene,
DeleteLOL! We have one more thing in common! Ouch!
2) CW,
I made good money with Omni Industries and JIT when they both were bought out and delisted.
Thought I was clever until Jurong Tech made me crash down to earth with humility...
Never mistake luck for intelligence!
temperament,
ReplyDeleteOthers share their glorious victories.
Here? We young at hearts share our scars, claw-marks, and bite-wounds from surviving lion, crocodile, wolf, and hyena attacks...
LOL!
But look at us today. At least we have lived to tell our tales ;)
Longcheer anyone? LOL
ReplyDeleteThat one dragged me all the way down!
LP.
DeleteNope. Not vested in this counter.
It's experiences like these that we realise what "investment risks" are ;)
I wouldn't dare tell anyone money in bank is rotting and better invest!
But what if they lost everything? Would I make it whole to them?
I don't think so...
Hi SMOL,
ReplyDeleteIt's been awhile.
Mohd Ali floored invincible George Foreman in 1974 match of the century, when big George is least expected.
Nassim Taleb describe "blow up" as bankruptcy when you least expected.
It's ok to get punch at times. Just have to make sure that it is not the KO punch when you least expected!
Rolf
Rolf,
DeleteComplacency.
It's good to have some small setbacks once in a while to remind us not to be complacent.
But if a big one hits us unexpectedly, it's a good opportunity to discover whether we are made of aluminum or titanium.
Some are just more fragile than others.
amam, its perfactly ok to get blow up a counter or big trade once in a while, its unavoidable.
ReplyDeletebut it will becomes a big problem when we are not able to get it back when it is our turn to blow up other people.
coconut,
DeleteI now praying hard you are not standing on the opposite side of my trades!
Wait a minute. What does it mean when an agnostic "prays"? Hmm...
By the way, what is "amam"?
Do you mean the Christian "amen"?
Or is it your Bob Marley raggae "hey man"?
no la, my throat got stuck!
DeleteLOL!
DeleteHmm... Interesting.
ReplyDeleteHow is that so many old ginger can Kena jurong tech...
Maybe you guys in hindsight, can enlighten me a little, or it is totally unavoidable?
LOL,
ReplyDeleteA reminder to never have a bigger than 10% counter in portfolio..
Ya, I have been a Robert vege head before. CAO?
As for greenhorn, vegetable bird, think before we call it quit, we never know if we beat Mr Market
Sillyinvestor,
ReplyDeleteIt's not about how much % share a counter should be in a portfolio - although that would help us live to tell the tale a 2nd day ;)
Your CAO does not count. Must go to zero remember?
What's unavoidable are market losses - that's par for the course.
But before a stock can go to zero, it has to start from a tiny 5% loss, and goes through milestones like a 10% loss, 20% loss, 50% loss, 80% loss, 90% loss, etc.
At 90% loss, a stock has to become a 10 bagger before we recover our capital!!! How many 10 baggers have we got? Exactly!
What's avoidable and within our control? That's our cut-loss point ;)
Having a cut-loss point at zero is plain silly - that's what I've discovered.
Warren admits to rare investing blunder
Let's be honest, if your CAO is at 90% paper loss, I don't think you will cut loss like Warren Buffet ;)
Having a cut-loss point at zero is plain silly. Poking me again! I got one more than you. So lagi silly!
ReplyDeleteCW,
ReplyDeleteI poking myself so lucky got a free poke at you!?
LOL!
Tomorrow I go buy Toto!
Heng heng ah!
Cut loss....sell partial shares and still keep?
ReplyDeleteStop loss....sell all the losing shares without keeping?
Rolf,
DeleteIn my book, cut loss and stop loss are the "same" if we don't split hairs.
Technically speaking, cut loss is part of Money Management, while stop loss is just a mechanical tool under Order Management to execute this cut loss point we have predetermined in advance under Money Management ;)
Why would anyone want to sell partial shares when the stock is dropping like a rock?
What you are suggesting is better employed under Trading around a core position.
That's why we sell some partial shares into STRENGTH.
If we are right, we can buy back these shares at a later price during a pullback.
If we were wrong, hey! That's why we still hold back some of the remaining shares to sell at an even higher price mah!
It's can also be called as a scaling out strategy ;)