Wednesday, 2 November 2022

Are You The Investing Broken Clock?


A broken clock is right 2 times a day.

Investing can be most painful if we are like the broken clock...

During early 2003 in the depths of the Nasdaq meltdown, I remember my colleague couldn't stomach the pain anymore.

He sold out with steep losses, fearing low can get lower, and transferred what remained of his funds into those Capital Protected funds that were peddled by our friendly nation building local banks.

Yup, that's capitulation.

That move is the "equivalent" of voluntary contribution to CPF today.

When the market recovered until it broke in 2008, he missed the "one day I'll breakeven rally"...

The consolation is that "lucky" him! He missed the 2008 GFC! Heng ah!

Well, own self lie to own self is the best way to deal with the pain of missing out...

Then there's the other side of the story.

Parochial "local born and bred" retail investors who jumped onto the passive STI ETF for the past several years were not exactly thrilled when compared to their peers who piled into Nasdaq, S&P 500, or Hang Seng ETFs...

I mean STI didn't go anywhere except collect some dividends here and there. As wealth preservation and income, not so bad... But to build wealth or as vehicle to achieve FIRE? Eh...

Now the tables have turned.

STI pandas and koala bears are now probably patting themselves on the back! I mean losing 10-15% is better than losing 40-50% right?

That's the pain of investing, isn't it?

No matter how much we suck at it, we can always look back at those "twice a day" times when we were right.

But for the rest of the time, we were just dead wrong...

You'll be surprised.

Majority of retail investors just want to be "right", rather than to make money.


  1. Smol,

    Now people are taking money out of cpf to put into tbills! Retails always chasing the tail that wags the hardest lol.

    Hmm was it Soros who said "Doesn't matter right or wrong. What matters is how much you make when right & how much you lose when wrong!" :P

    1. Spur,

      That's when we realized they were "prostitutes" all along...

      Whoever comes along with 1% extra yield, you'll call them, "Daddy!"

      Take REITs versus Singapore rental properties.

      Sure, the yields for REITs beat Singapore rental properties hands down.

      But when interest rates rise, REIT prices go south, but Singapore rental properties? Rentals and property prices zoom north!? In rising interest rate environment???

      Who is the broken clock?

      Who is "right" but lose money?

      Who is "wrong" but make money?

  2. "Lynch provides insight on how to achieve exceptional results

    In an interview he gave to PBS, Peter Lynch discussed what is needed to achieve a track record similar to his. Even though the answer seems simple on the surface, it has many insights that are worth commenting on.

    Q: Was that your secret?

    A: Well, I think the secret is, if you have a lot of stocks, some will do mediocre, some will do OK, and if one or two of 'em go up big time, you produce a fabulous result. And I think that's the promise to some people. Some stocks go up 20% to 30%, and they get rid of it, and they hold on to the dogs. And it's sort of like watering the weeds and cutting out the flowers. You want to let the winners run. When the fun ones get better, add to 'em, and that one winner, you basically see a few stocks in your lifetime, that's all you need. I mean stocks are out there. When I ran Magellan, I wrote a book. I think I listed over 100 stocks that went up over tenfold when I ran Magellan, and I owned thousands of stocks. I owned none of these stocks. I missed every one of these stocks that went up over tenfold. I didn't own a share of them. And I still managed to do well with Magellan. So there's lots of stocks out there and all you need is a few of 'em. So that's been my philosophy. You have to let the big ones make up for your mistakes."

    Over a few decades as retail investors; there will be a few broken clocks opportunities for us to huat!

    1. CW,

      If one bets on "broken clock" opportunities, the last thing on one's mind is Buy and Hold ;)

      A broken clock is only "right" 2 times a day - that's when one needs to have the mindset of a farmer; harvest when it's time to harvest!


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