Monday 4 December 2017

The Ability To Read Patterns

Have you read in the papers several years back where some new cases of Dengue Fevers were not diagnosed by some younger doctors?

Experienced doctors are usually the ones who will report to Ministry of Health if they spot patterns of unusually high cases of Dengue Fevers that require a co-ordinated response to root out the breeding grounds...

Similarly, those medical professionals who have experience working with SARs would have the muscle memory burned into them.

Next time if Singapore is once again faced with an "unknown" highly infectious disease, these medical professionals would ensure they protect themselves and their medical staff first. 

If these brave doctors and nurses fall ill themselves, who are left to treat the sick?

For those who've never experienced a car accident or air turbulence before, you would think putting our seat belts on in the car and during our flights is such an hassle... 

"Investors" who started their investing journeys after 2009 would know only one pattern - higher highs, higher lows.

To those of us who have lived through past patterns where markets do decline by -50%, we can't beat youth who don't know what cannot be done. 

We practice Risk Management. 

How do you practice portfolio re-balancing when both equities and bonds are in a bull market?

To youths who have studied business finance, portfolio management, and risk management in polytechnics and universities, have you gone back to ask your lecturers and professors what they've taught you is not reality today? 

Do they still teach when equities go down, bonds in general will go up? 

I'm a student of hedge funds, and yes, I practice the sincerest form of flattery - mimicy.

Its extremely humbling to see quite a few greats in the industry decide to return money back to their investors and retire from the industry. Well not really. They are investing/trading for themselves now.

Better to quit when they are still ahead and avoid the fate of those who have blown-up quite spectacularly! 

All of them have one thing in common - they have made lots of money for themselves and their clients prior to 2008; after 2009, their past strategies don't seem to work anymore...

But then, those of you who started your journeys after 2009 wouldn't care or know. 

And you don't use seat belts anyway.

Those of us who have experienced several bull/bear cycles and thus more "sensitive" to changing patterns, we are the ones who will probably take care of ourselves and our love ones first, before taking care of anonymous people we don't know.


  1. Smol,

    My alarm also went off when my sister-in-law start talking about stocks and what to average down.

    I mean we all have losing counters. But if at current bull run still
    Need to ...

    My MIL ask
    Me can buy some
    More, I say take money off table
    Instead ... lucky she believe me.

    My SIL doubt market will crash in the next 10 years

    Btw: can’t post on your comment using google. Dun know what happen

    1. Sillyinvestor,

      Your MIL got longer memory of the different cycles ;)

      In a bull market, its about adding to winners or averaging up.

      But if we have lossers in a bull market, the question to ask is not to average up or down...

      A better question is whether have we bought a "lemon"?

      I mean if bear market -20% will this "lemon" go lower with the market?

      And if the market goes up another 20%, so the purpose of your SIL investing is to "break-even"...

      That's retail "investing" for you.

      No, I'm not speculating... I'm "investing"!

      And I doubt market will crash in the next 10 years... And that's not speculating?

      P.S. You mean cannot comment using Goggle Chrome? I've no clue about these IT stuffs...

  2. Few more weeks to prove that XXX7 pattern is broken! No more pattern!

    1. CW,

      We have to exceed the 2015 high first ;)

      There always will be patterns.

      The last time equities went on for a 20 year bull run was from 1980 to 2000.

      Some may see today's market as a halfway point in a 20 year bull market run ;)

      Some may see today's market as like 1999 :(

      Or maybe this time is indeed different!?

      With major central bankers looking out for the backs of speculators, the markets will never crash! Just lever up and buy the freaking dips!!!

      Savers globally are screwed... but luckily in Singapore, there's CPF!

      Its a smart strategy.

      The rich cats big daddy can't touch since they are mobile and citizens of the world. But if I can secduce the majority of middle class sheep to put their trust in me, how will they vote me out when I have their money locked up?

      I have them by the xalls!

      Independence is the option to say no thank you.

      Freedom is the ability to move around without a leash

      Nothing is "free". The extra 2-3% comes with terms and conditions...

  3. Aside from thick clothing, it's always good to prepare some cold medicine for winter! My winter "virgin" you know!
    Very precious.

    Cannot be sick and miss out everything!

    1. sleepydevil,

      I remember my first winter in Shanghai :)

      So kiasu that I bought thermal underwear and all.

      Then discovered they are too hot to wear in the office and restaurants. Only can wear at home :(

      In winter, the office and restaurants are like Singapore in reverse - warm like hell! LOL!

      But gloves and winter caps a must!

      Its during my first winter there that I discovered the ladies' clothing art of "layering" ;)

      And in Sweden, I often hear them say, "There's no such thing as bad weather; there's only bad clothing."

      You take care over there OK?

  4. i used forget to check blind spots when driving. Then after 2 near misses... I now remember to check blind spots
    Never see the casket, don't cry.

    1. ERSG,

      No bad.

      You don't have to wait till "crash got sound" to learn what not to do ;)

      I've shared some years back lucky I got wait till the cars stop completely before crossing red lights.

      If I was playing with my mobile or being absent minded, I would have been knocked down by that idiot on her mobile who just zoomed by in her huge SUV without stopping...

      Being right and dead - so what?

  5. Man vs Machine. Pattern recognition algorithms vs the human brain.

    Or is it? Politically correct answer is we need both lah!

    1. Unintelligent Nerd,

      Machines are great tools provided we are the ones who command them what to do.

      But when a person willingly subjugates himself to a machine or algo... I mean Passive is already bad enough... To go full retard!?


    2. Indeed, the buzz these days seems to be on AI/Machine learning which is another way of saying I do not know what to do but I sure can program a machine who will know what to do lol...

    3. Macroanalyst,

      Glad you saw the "humour" in it too ;)

      Global macro has taken a beating again in 2017 :(

      Let's hope the cure for high prices is high prices!

    4. I suspect the main culprit for the poor performance for global macro is due to the lack of good trends in FX. Having said that, there are still funds within the macro space that did extremely well this year.

    5. Macroanalyst,

      Tell me about it!

      I had band aids on all my fingers! LOL!

      Of course, there will always be the 5% outliers; I'm not that good (yet).

      That (yet) is why I'm still in the arena despite my bleeding fingers ;)

      And congrats and respect for those who managed to hop on to the biggest trade in 2017 - bitcoins.

  6. Hi Jared, are you describing the phenomenon of clustering illusion? We flawed humans do see patterns in random events. Everywhere, but especially when money is involved. Like the idea that red is more or less likely to turn up on a roulette table after a string of reds.

    The current patterns look indeed scary. But then you can’t pick a time in history that something scary wasn’t around the corner.

    It's healthy to occasionally recall those past moments and then recognize that even though it was truly scary life moved on and markets recovered and the world didn’t come to an end. So that when next time the fear comes, you think “this is scary and unpleasant and a little awful, and it was last time too!” Then you can remember that the fear this time only feels different. It isn’t truly different.

    The unfair reality is that for every point in history - including today - someone in the future will look back and say, "Wow, what were those idiots thinking?"

    1. Andy,

      That's why I consider Technical analysis as "voodoo"... LOL!

      Then again, they're not any different from the "Fundamental" modellings used by economists either ;)

      You are right as humans like to "see" patterns to make better sense of this world - if nothing more just to pretend we have "control" in this seemingly random world...

      Outside the world of trading and investing, we have palm readings, astrology, fortune telling, feng shui, and geomancy...

      Kings and Emperors knew they are "voodoo". They use them not because they believed in them; they use them because they knew their men belived in them ;)

      Now that's shepherding!


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