My example above is simplistic and probably makes sense when our position is tiny - 1000 share nia!
But if it's core position, then we do what Hedge Funds do - Trade around a Core Position.
Keep 50%/60%/70% of that position as don't touch core buy-and-hold position for the long-term gains (but will drop like a bad habit if the thesis has changed).
The balance we trade and aim to profit from the volatility as stock don't go up in a straight line. (It's your core position, so you should know better than bei kambings how it will react, no?)
Sell the rip; buy the dip.
This way, we can increase the number of shares in the core position without tapping fresh funds ;)
(The other simpler method is to reinvest the dividends into the same position or opt for scrip dividends)
Fresh funds can be left rotting until an opportunity comes along.
Big money is made in the "waiting".
Most read it as always being vested in Buy-and-Hold.
Obviously, Warren Buffett do not subscribe to that view ;)
Remember the song, "Yes it's sad to belong to someone else when the right one comes along...."
As ex-retail buyer, we have a saying, "A merchandise well BOUGHT is well SOLD!"
If the buyer just focuses on buying, he will soon be out of a job...
The buyer's job is to make sure the merchandise is well SOLD! Duh!
It's the selling ;)
We know of many examples around us:
1. Got Ivy league or multiple degrees but stuck at middle management... Can't "sell" his skills and competences to people that matter...
2. Super character, great attitude, very likeable person; yet always lost out to "mouth flower, flower" low lives who can serenade the panties off girls...
3. Creative's portable music player is technologically "superior" to Apple's iPod... Would Apple be where it is today if they only focused on "buying"?
4. You present your idea to the board... Everyone ignores... Your competitor plagiarised your idea, repackage it in snake oil language, got approved!? Hey!
Buying is like book knowledge - it's "latent" power.
Selling is applied knowledge - its PRACTICAL application of your power!
Selling is so much more difficult than buying. Ask those that buy tech, china stocks and crypto last two years. Seeing paper profits evaporated and going into the red. Horrifying for some. Seasoned players should already be conditioned for these. Experience counts.
Took me two bull/bear cycle to realize my mistakes. Better late than never. No 10 years record no count. That’s why we have 10 years series for assessment books. A-but-ten 😉
Learning to live life with less regrets. I'm glad I was able to spend 1000hrs of facetime with my son to prepare for his PSLE and it went well. Earn more is always nice but to spend time meaningfully is more important as I aged. In this rat race society, sometimes we forgot what are really important in our life.
Ah! You know where your True North is pointing to ;)
Money is our enabler, not our master.
There is a risk we "over plan" for the "perfect" retirement that we forget about living in the here and now...
Before we know it, our parents are gone, children all grownup, wife a stranger through neglect, career going nowhere because we were distracted with chasing financial success on the side...
I have always admired stock traders. I am not a stock trader and as I have shared before, I have never sold any shares on own doing.
I have seen the stocks in my holding do all sorts of things imaginable; becoming multibagger, going to zero, merged, splits, what have you. But this year, collectively they behaved sufficiently well enough to give us $88,180 in dividends.
Our "new toy" for this year is the T-bills. They were never in our radar scope before, but suddenly in Sep, we saw the yield crossed 3% and that piqued our interest!
Within a span of a mere four months (Sep to Dec), we have already moved over $1.5M into these 6 T-bills earning an average of close to 4%. If the yield stays elevated, we intend to pump in more of our savings and recycle the older ones when they become due.
Talked about being conservative. High interest rate environment are a boon for conservative people like us whose priority is to preserve wealth while climbing down the mountain.
Maybe I've not been too damaged by 14 years of zero bound interest rates yet...
I myself am not too keen on negative yielding vehicles in real terms... But losing 1-2% in purchasing power is a lot better than sitting on -20% to -30% unrealised losses!
You are cute lah. You answered your own questions.
We all would like to see our assets grow faster than inflation but reality is not like that. Property as an asset seems to be doing fine against inflation these years but when one only has his home, the rise in his home value does not help him much.
The other asset that could outpace inflation is ourselves, our human capital. When still working, we may get wage adjustment to keep pace with inflation. Those not employed or retired would lose this avenue. Now you know why I would like to continue working. Wink! If you ask me, when I look at all my assets, I am still the best income generator!
Then there is the age factor. When climbing down the mountain, we want to make sure our assets (nest eggs) that we carry down the mountain dont spill out and crack. So we put some of them in very secure baskets (like CPF, wink!), we put some in secure baskets that allow the eggs to grow (like property, wink!) and the rest we put them in our pockets, in our hands so that we can reach for them faster (like equities and other investments).
Many people climbing down the mountain would do this. And thus not all their assets can beat inflation but they can still count on those eggs in secure baskets for food, should they slip on the way down.
Now, for me, the next important thing is cash flow. When fully retired, passive cash flow becomes more important than net worth. When working, the salary income provides the active cash flow but we need to wean ourselves from that when we climb down the mountain. In this respect, I see that the asset allocation that we have is able to provide us a healthy passive cash flow of over $200K yearly even now as I am working. And the passive cash flow would grow to $250K a year when we reach 70. So no need all assets to be beating inflation.
And one more point. Every individual has his strengths, aptitude and preferences. There are those who preferred to stay in the technical ladder and there are those who thrived on management. It is the wise one who knows what his are. Being in the workforce long enough, I have witnessed many management wannabes timidly asked or were asked to step down.
I thought you were the one who talked about Ikigai?
I find your story very interesting, but since you don't have a blog, I play the Jack D. Schwager (Market Wizards) role to flesh more out from you for the benefit of silent readers here. Wink.
You're my inspiration for that go east, go west we still end up in New York post.
Most in our community are seeking FIRE or investing to "escape"...
You're the FEW who are doing very well in your day job. SELLING our skills and competences is definitely one of the best ways to earn more money!
Totally agree! That's what this blog post is all about ;)
You think why financial snake oils are willing to burn their weekends and evenings for!? SELL! SELL! SELL!
You also definitely not investing to "achieve" - that's not your ikigai ;)
I on the other hand find trading and investing very intellectually stimulating! Hence, I'm doing it to "achieve".
It's only natural I stay away from CPF (or other savings vehicles) as how to count voluntary contributions to CPF as "self-actualisation"!!!???
LOL!
And that's also why I willing to stomach losses to my trading account (it's even more negative yielding than yours!) as "toll" for my journey.
It's like folding the blind bets in poker time and time again (death by thousand cuts), while waiting for the right hand to go all-in!
In the stock market, we can earn more dividend income by not selling! :-)
ReplyDeleteCW,
DeleteLong time no gloves off debates liao...
You got 1000 shares of Keppel, I got 1000 shares of Keppel.
You buy-and-hold collect dividends forever. 10 years later, still 1000 shares.
I sell when Keppel is up 20% and buy back when prices have reverted back to my original entry price.
By tapping the 20% REALISED capital gains, I now own 1200 Keppel shares.
Next year, my dividends from Keppel would be 20% more than yours. Wink.
10 years later, if I'm competent in SELLING, my original 1000 shares could be double or triple yours ;)
Who says trader can't enjoy MORE dividends?
You know what's the ironic part?
Not everyone and anyone can do either strategy!
1. How many can sit tight and do nothing?
2. Sell high, buy low. Let's get real, how many can do that!?
That's even harder than buy low, sell high! (I leave it to readers to figure out the difference!)
Yours require discipline; mine requires competence.
No free lunch!
We leave those who believe in free lunches to the passive (or faith-based) people ;)
Do both 😉
ReplyDeleteAT_AT,
DeleteExactly!
My example above is simplistic and probably makes sense when our position is tiny - 1000 share nia!
But if it's core position, then we do what Hedge Funds do - Trade around a Core Position.
Keep 50%/60%/70% of that position as don't touch core buy-and-hold position for the long-term gains (but will drop like a bad habit if the thesis has changed).
The balance we trade and aim to profit from the volatility as stock don't go up in a straight line. (It's your core position, so you should know better than bei kambings how it will react, no?)
Sell the rip; buy the dip.
This way, we can increase the number of shares in the core position without tapping fresh funds ;)
(The other simpler method is to reinvest the dividends into the same position or opt for scrip dividends)
Fresh funds can be left rotting until an opportunity comes along.
Big money is made in the "waiting".
Most read it as always being vested in Buy-and-Hold.
Obviously, Warren Buffett do not subscribe to that view ;)
Remember the song, "Yes it's sad to belong to someone else when the right one comes along...."
Smol,
ReplyDeleteIt's in the buying :P
Whether the "thing" bought is the right asset, product, skills, degrees, ideas, attitudes, character.
Just need to spend money, time, effort or hard knocks to buy those kekeke.
Spur,
DeleteAs ex-retail buyer, we have a saying, "A merchandise well BOUGHT is well SOLD!"
If the buyer just focuses on buying, he will soon be out of a job...
The buyer's job is to make sure the merchandise is well SOLD! Duh!
It's the selling ;)
We know of many examples around us:
1. Got Ivy league or multiple degrees but stuck at middle management... Can't "sell" his skills and competences to people that matter...
2. Super character, great attitude, very likeable person; yet always lost out to "mouth flower, flower" low lives who can serenade the panties off girls...
3. Creative's portable music player is technologically "superior" to Apple's iPod... Would Apple be where it is today if they only focused on "buying"?
4. You present your idea to the board... Everyone ignores... Your competitor plagiarised your idea, repackage it in snake oil language, got approved!? Hey!
Buying is like book knowledge - it's "latent" power.
Selling is applied knowledge - its PRACTICAL application of your power!
Selling is so much more difficult than buying. Ask those that buy tech, china stocks and crypto last two years. Seeing paper profits evaporated and going into the red. Horrifying for some. Seasoned players should already be conditioned for these. Experience counts.
DeleteAT_AT,
DeleteI've been there, done it.
I'm dumb; I always learn things the hard and bitterest way.
Why can't I learn from the mistakes of others like scholars do?
Veterans who survived at least one bull/bear cycle all promise themselves never to make the same mistakes ever again!
We can't have it both ways. Say unrealised losses are not "real", yet is quick to count unrealised gains into our yearly "returns".
Unrealised gains are like the reflection of the moon on the lake, or passing clouds above.
How many will admit they are just Momo (momentum or others buy I buy) investors all this while?
And they are not Warren Buffett even if Buy-and-Hold works splendidly?
Took me two bull/bear cycle to realize my mistakes. Better late than never. No 10 years record no count. That’s why we have 10 years series for assessment books. A-but-ten 😉
DeleteAT_AT,
DeleteIt paid off!
Cashed out $160K from casino this year.
7 digits portfolio doubled.
The best of all? You're only in your 40s!!!
Got 2 more bull/bear cycles to reach your 60s ;)
Money lost can be earned back.
Time lost is forever gone.
The biggest cost to letting unrealised profits turn into losses is TIME.
There are only so many bull/bear cycles in our lifetimes....
Learning to live life with less regrets. I'm glad I was able to spend 1000hrs of facetime with my son to prepare for his PSLE and it went well. Earn more is always nice but to spend time meaningfully is more important as I aged. In this rat race society, sometimes we forgot what are really important in our life.
DeleteAT_AT,
DeleteAh! You know where your True North is pointing to ;)
Money is our enabler, not our master.
There is a risk we "over plan" for the "perfect" retirement that we forget about living in the here and now...
Before we know it, our parents are gone, children all grownup, wife a stranger through neglect, career going nowhere because we were distracted with chasing financial success on the side...
And we have become old fogeys oredi :(
Smol,
ReplyDeleteSo sad, for me, I earn more by working. 20 years of portfolio building and I get less than 2 months pay in a year in dividends.
If I need to urgently increase my earnings, the easier and safer way is to spend some time working "extras" than trying to invest more or trade more
Happy winter solstice 冬至
Sillyinvestor,
Delete祝,
家人团圆,
圆满.
Your own path, your own karma.
What poison suits you, which vehicle to ride, listen to your heart and soul.
Time is on your side.
Just don't wait until you're in your 60s to start finding out.
Hi SMOL,
ReplyDeleteI have always admired stock traders. I am not a stock trader and as I have shared before, I have never sold any shares on own doing.
I have seen the stocks in my holding do all sorts of things imaginable; becoming multibagger, going to zero, merged, splits, what have you. But this year, collectively they behaved sufficiently well enough to give us $88,180 in dividends.
Our "new toy" for this year is the T-bills. They were never in our radar scope before, but suddenly in Sep, we saw the yield crossed 3% and that piqued our interest!
Within a span of a mere four months (Sep to Dec), we have already moved over $1.5M into these 6 T-bills earning an average of close to 4%. If the yield stays elevated, we intend to pump in more of our savings and recycle the older ones when they become due.
Talked about being conservative. High interest rate environment are a boon for conservative people like us whose priority is to preserve wealth while climbing down the mountain.
mysecretinvestment,
DeleteWelcome to the zero bagger club!
Yet you have no problem divesting properties?
Wait a minute...
4% is "high" interest rate environment???
Maybe I've not been too damaged by 14 years of zero bound interest rates yet...
I myself am not too keen on negative yielding vehicles in real terms...
But losing 1-2% in purchasing power is a lot better than sitting on -20% to -30% unrealised losses!
We cross the Eastern Sea in our own way ;)
Hi SMOL,
ReplyDeleteYou are cute lah. You answered your own questions.
We all would like to see our assets grow faster than inflation but reality is not like that. Property as an asset seems to be doing fine against inflation these years but when one only has his home, the rise in his home value does not help him much.
The other asset that could outpace inflation is ourselves, our human capital. When still working, we may get wage adjustment to keep pace with inflation. Those not employed or retired would lose this avenue. Now you know why I would like to continue working. Wink! If you ask me, when I look at all my assets, I am still the best income generator!
Then there is the age factor. When climbing down the mountain, we want to make sure our assets (nest eggs) that we carry down the mountain dont spill out and crack. So we put some of them in very secure baskets (like CPF, wink!), we put some in secure baskets that allow the eggs to grow (like property, wink!) and the rest we put them in our pockets, in our hands so that we can reach for them faster (like equities and other investments).
Many people climbing down the mountain would do this. And thus not all their assets can beat inflation but they can still count on those eggs in secure baskets for food, should they slip on the way down.
Now, for me, the next important thing is cash flow. When fully retired, passive cash flow becomes more important than net worth. When working, the salary income provides the active cash flow but we need to wean ourselves from that when we climb down the mountain. In this respect, I see that the asset allocation that we have is able to provide us a healthy passive cash flow of over $200K yearly even now as I am working. And the passive cash flow would grow to $250K a year when we reach 70. So no need all assets to be beating inflation.
And one more point. Every individual has his strengths, aptitude and preferences. There are those who preferred to stay in the technical ladder and there are those who thrived on management. It is the wise one who knows what his are. Being in the workforce long enough, I have witnessed many management wannabes timidly asked or were asked to step down.
I thought you were the one who talked about Ikigai?
mysecretinvestment,
DeleteJust "throwing brick to attract jade" ;)
I find your story very interesting, but since you don't have a blog, I play the Jack D. Schwager (Market Wizards) role to flesh more out from you for the benefit of silent readers here. Wink.
You're my inspiration for that go east, go west we still end up in New York post.
Most in our community are seeking FIRE or investing to "escape"...
You're the FEW who are doing very well in your day job. SELLING our skills and competences is definitely one of the best ways to earn more money!
Totally agree! That's what this blog post is all about ;)
You think why financial snake oils are willing to burn their weekends and evenings for!? SELL! SELL! SELL!
You also definitely not investing to "achieve" - that's not your ikigai ;)
I on the other hand find trading and investing very intellectually stimulating! Hence, I'm doing it to "achieve".
It's only natural I stay away from CPF (or other savings vehicles) as how to count voluntary contributions to CPF as "self-actualisation"!!!???
LOL!
And that's also why I willing to stomach losses to my trading account (it's even more negative yielding than yours!) as "toll" for my journey.
It's like folding the blind bets in poker time and time again (death by thousand cuts), while waiting for the right hand to go all-in!
Cheerleader of my life; my path.