When Our Trades Seem A Little Off...

This how I felt recently...

Until I discovered like the gentleman above, I've been wearing my briefs wrong!

LOL!

Yeah, now I can laugh. Got stop-loss orders mah!

Imagine if I had held on to my losing trades... I would be totally naked by now... 

How? Yesterday STI down; today up?

I not playing; got more pressing matters to attend to.

Got to buy new underwear!

Deja vu like in 2000?

Anyone investing/trading around year 2000?

Wait. 

Its more than 17 years...

Now that's a generation ago!

How?

Do the events of today remind you of 2000?

Especially the activities and behaviours of your colleagues, neighbours, classmates, etc?

Leslie Kee - From Rental Flat To $40K Daily As Top Photographer

Finally an article from our "nation building press" that resonates in my heart:


It Changed My Life: How Leslie Kee went from living in rental flat to earning $40k daily as top photographer 

The "ugly" side of our "financial freedom" (formerly aka I want to be a millionaire) community is the frequent obsession with money. 

Crass. Banal. Bourgeois.

Especially when I read those "financial advice" to youths who have asked the "wrong" question about life. 

Of course there is bias in highlighting this article. 

We tend to identify with others with similar backgrounds and experiences.

Compared to Leslie's childhood, mine would be liken to be born with a silver spoon!

Talk about playing the cards you were dealt well...

If you were in his shoes, would you have just rolled-over and gave up?

Many did.

Drugs, gangs, crime. 

There's some take-aways that I would like to share with youths who have gotten the "wrong answers".

Remember, if the answers did not came from within you, they are usually platitudes parrot by drones and mules. Full of sound and fury, signifying nothing...

1.  We got to pay our dues

Michael Leong - founder of ShareInvestor.com also washed dishes while taking his medical classes in Northern Ireland.

No, I don't mean literally you have to wash dishes... I didn't either!

But I too had to put in my fair share of blood, sweat, and toil just to be able to to afford the learning of my craft.

This is before the 10,000 hours needed to master our craft. 

Huh?

Yes. Don't huh me!

Unless of course you were born with a golden spoon. Grades lousy but parents can afford to send you overseas to get a degree with little academic respect... But you're a "graduate" still mah!

2.  Success is what we have to sacrifice to achieve it

If you can't spot it, don't worry.

In time you will. Especially when it comes to relationships.

3.  Life is a series of decision points

If you ask anyone who have lived life a little long than you, you'll often find them regretting more on the decisions they did not make over the ones they have made.

Would you make that move to New York, if given the chance?

Would you suffer for your craft even if it costs you your freedom?

Of course "New York" and "personal freedom" are metaphors again.

Tip: If no one asks or headhunts you in your industry, I think you know the reasons why... Its either you are very mediocre, or super brilliant but clueless on "personal marketing"!

4.  A scholar in every profession

Trust in our 5,000 years of collective Chinese wisdom: 行行出状元!

There's another Chinese wisdom that says women afraid to marry the wrong man; man afraid to enter the wrong profession.

If you decide to choose Money, I can understand. 

Its easier to aspire to be a "prostitue". Who wants to toil for our craft?

I understand. I'm a man-whore myself.

Overthinking

Why I Use Stop-Loss

One reason we keep a record of our trades is so we can make logical decisions based on real data - not our biases or what other people say.

You know what?

7 out of 10 trades I've made, if I stomach the unrealised losses and "cheat" as in wait-and-hope for weeks, months, and years (let a trade turned into an investment), these losing trades will eventually be money making ones.

So why do I still use stop-loss to realise the actual loss?



Its because I remember vividly those 3 out of 10 trades that almost killed me! 

I've let a small paper cut turned gangrenous...

Eventually having to chop off my fingers...

Better this than to lose a whole arm or leg right?

Some traders never do and let the poison reach their hearts. And they are heard no more...



So whether to use stop-loss or not for you is not through listening to others or reading books.

You have to experiment for yourself and let your track record tell you - based on hard data. 

Crash got sound.



If you are so good at stock-picking (just lousy at entries) and all your trades will eventually make money, why use stop-loss to protect yourself?

Or if you are skilled at finding 10 baggers to dilute out those occasional small losses like Peter Lynch, why use stop-loss indeed!



That's why whenever I'm in a new job, I prefer to ask for forgiveness than permission. This way, I can flush out the unwritten law of the land - when I still have my honeymoon period!

Crash got sound!

LOL!

The "Free" Trade/Hedge

Shorted the Simsci at 368 Thursday night.

Friday afternoon it closed in the money at 363.7 during the day session.

Weekend no armaggedon.

Monday morning got profit-stopped out at 367.7 during the first 30 minutes.

Well, that trade ended quickly... LOL!

When we returned from our overseas vacation safely, the travel insurance premium we paid is money flushed down the toilet.

Wouldn't it be nice if we can get our money back?

Review your investing diary or trading journal.

Have you noticed if your entry is good, better, best - your chances of getting out unharmed were greater?

It never was about market timing; its about risk management.

OK, not everyone trades with 10:1 leverage to appreciate the nuance I've just said.

Let's illustrate with an example:

If you have entered Keppel at $2, at the current price of $6 plus, it feels like a "free" investment. (If you let this position turn into a loss you have no one to blame but yourself)

Contrast it if you have bought Keppel at $10. 

Making less and losing money not even close to "same same".

Using dividends or entry price as panadols - your choice.

Which one hurts more?

Sillyinvestor, CW, and I were bantering which one hurts more?

1.  Sell too early and missed out on outsized profits? 

2.  Sell too late and left too much money on the table?

Just to clarify. 

Letting a winning position turn into a loss is just plain dumb.

Scenario 1

We bought stock A at $1.00.

Sell at $1.40 for a 40% gain; only to see it go all the way to $2.00 and missing a 2 bagger.

Scenario 2

We bought stock A at $1.00.

See it go all the way to $2.00 didn't sell; only to see it drop back down to $1.40.

How?

Don't talk theory. From your experience, which one hurts more?

You don't bluff!

SMOL's Pledge

I, the Singapore Man Of Leisure, pledge myself to strike on Monday, Wednesday, Thursday, Saturday, and Sunday.

Regardless of ToTo, 4D, or Big Sweep. To buy hope and win extra. 

Based on quickpick, system 7 to 12, Big Sweep tickets, and 4D big/small.

So as to achieve car, cash, and condo.

Happy National Day!

The Buddha And The Beggar

This Is Why Eating Healthy Is So Hard (So Is Investing!)

Investing is hard right?

Especially for those of you who have been investing for the past 10-20 years.

Remember those "advice" you thought were "gospel" when you started your journey but no longer "true" today?

For those just started recently, if you want to have a bit of fun, write down what you think will get you to the end of the rainbow - be it trading, investing, saving, buying Toto, marry into wealth, kick-ass career; etc.

Then put this paper into an envelop and toss it away in your drawer.

10 years later, open it up to see if the world then is a straight-line extrapolation of today. Wink.

Yield Hogs and Bird Brains

Dividend investing has several derogatory labels attached to it.

Like being called yield hog (its a pig if you don't speak american), or being sneered as an investment style more suitable for widows and orphans...

What?

Why you all looking at me?

Ar ber then?



How much money we need to live off dividends is quite simple to calculate.

If one just need $4,000 per month for retirement, then at 5% yield, we need minimum $2 million to sleep soundly at night.

What's with that "extra" $1 million?

Those who drive a car or ride a motorcycle would know why. Wink.


Now compare the "not greedy" dividend investor above to yield hogs who for the same $4,000 per month dividend income:

1.  Employ a 100% vested strategy of $1 million capital at 5% yield.

2.  Employ a 100% vested strategy of $500K capital at 10% yield.

3.  Employ margin so they can raise enough capital for point 1 or 2...



I've been through Nasdaq 2000 and Lehman 2007 as a retail investor.

I've also experienced the Asian Financial Crisis of 1997 - though not as an investor - but I believe this one caused a lot more damage to the real economy and actual jobs lost.

What more to say if we're already retired and living off dividends that were cut or reduced? And seeing our networth got decimated in parallel?

Without a buffer, you confident you won't lose your head like a headless chicken and sell in panic?

No, I don't believe a word of Janet Yellen when she said we won't see another crisis. Well, that's what Ben Bernake said in 2007 on sub-prime not affecting the US economy too...



Climbing down the mountain

If you already have the required capital (with buffer), you don't need to shoot for the moon when it comes to yield. Boring 4-5% is good enough. 

You understand high yield bonds that pay north of 8% are also known as "junk bonds". So high yielding equities that pay north of 8% meant there's no free lunch!

And if your dividend gets halved or cancelled completely, you won't starve. You still have some cash rotting around somewhere.

I remember my motocycle instructor sharing with us he not so fond of Honda cubs as they lack the "spare engine power" to get us out of trouble in an emergency...



Climbing up the mountain

If your personal expenses at retirement is $8,000 per month, or you want to provide for your significant other ($4K plus $4K), then how much capital you need may depend whether you like cruising with your tachometer straining at the red zone...

The focus is to grow and earn more capital.

The math is simple:

$1 million at 2% yield is more than $100,000 at 10% yield.


Of course taking on bigger risks is par for course when we are climbing up the mountain.

And that's the normal path.

When young, can take more risks. Our bones and skins recover faster. Time is on our side.

But when we use a strategy that's more suitable for climbing down the mountain to climb to the summit...

Perfectly OK if you love what you do and never have a need to use financial freedom to "escape" from work!




P.S.  Context and perspective is important.

$1 million at 2% yield is more than $100,000 at 10% yield.

The story changes if the person with $1 million is 100% vested at 2% yield in equities, while the person with $100K at 10% yield in equities is only 10% vested - he has the balance $900K in short term AAA rated bonds yielding practically nothing.

Additionally, the risk/reward changes depending whether one is climbing up or down the mountain.


That's the biggest blindspot "bei kambings" miss when they think all they need to do is blindly follow their favourite shepherd...