What do you think?

When asked a question, what do you do?

Do you straight away provide the answer, or do you encourage the person asking the question to find the answers themselves?

The former is giving fish; the latter is teaching how to fish.

Those who have gone through coaching or counselling trainings will know what I mean. I myself have gone through many hair-pulling sessions, and shall avoid talking about coaching! It’s so bloody difficult!

I am still fighting my demons…  Every time I feel like “Limpeh kali gong” or “You should”; I’ve to bite my tongue. Now my ability to do French kiss is severely affected…  

It’s perhaps the reason why there’s a hoo-hah not so long ago since most Singaporeans are brought up expecting to be spoon-fed solutions; but at the same time we complain nobody listens to our opinions? Hello?

Today, I shall take the easy way out and focus on the former – giving fish. 

You level what?

Before giving the answers to the person asking the question, you may want to ask “what do you think?” 

By the way, this “what do you think?” question is also a great coaching technique. 

Ok, ok. I’ll stop talking about coaching. I promise!

From the answer the person replying this “what do you think?” question, you can “guess” the “level” of this person.

1)    Newbie – A more diplomatic term for sucker, patsy, idiot, sotong, spider, etc.

2)    Thinks he/she knows – Just read one book on investing for dummies and assume they know everything about investing, for eg…

3)    Expert level or specialist – Don’t play play! This person knows the answer to the question he/she is asking you. Why they so like that? Either to embarrass you or draw attention to how smart they are lah!

See? If you don’t tailor your “limpeh kali gong” answer to the level of your enquirer, you may risk flying over his/her head, or offend the enquirer by talking down to him/her. Or worse, fall into the trap of the “expert” pretending to be “newbie”!

Remember: See ghost speak ghost; see people talk people!

How to avoid getting “what do you think?” questions

Be the first to ask that question!

But it also means you must do your homework and cannot be at “newbie” level. Must at least be “think I know” level.

“The advantage of bonds over dividend stocks is… However, dividend stock is….. What do you think?”

Don’t be too cocky hor! We snake-oil salesperson know many other techniques and tricks to deflect and parry. But I think you get the idea.

Newbie not human?

No lah!

You can ask dumb questions just as long it does not involve you reaching for your wallet in payment.

For questions involving money, it’s best to do your own homework first.

It’s like you going to Sim Lim and asking the salesperson this handphone or PC can buy or not?

You might as well be flashing on your forehead a big “newbie” word. And that can’t be good. When sharks smell blood…

Don’t believe?

If you’ve bought insurance from a relative or close friend when you were a financial newbie, and looking back now you are financially literate, what do you see?

Exactly! If a relative and close friend can do that to you, what more about stranger salespersons? 

What do you think?

The Rain

 

It was a busy
Morning, about 8:30, when an elderly   gentleman in his 80's

Arrived to have
Stitches removed from his thumb. He said he was in a hurry

As he had an
Appointment at 9:00 am. I took his vital
Signs and had him take a seat, knowing it would be over

An hour before someone
Would to able to see him. I saw him looking at his

Watch and decided, since I
Was not busy with another patient, I would evaluate

His wound. On exam, it was
Well healed, so I talked to one of the doctors, got the

Needed supplies to
Remove his sutures and redress his wound.

While taking care of
His wound, I asked him if he had another doctor's

 appointment this morning, as
He was in such a hurry.

The gentleman told me no, that he needed to go to
The nursing home to eat breakfast with his wife.

I inquired as to her health.

He told me that she had been there
For a while and that she was a victim

Of Alzheimer's Disease.

As we
Talked, I asked if she would be upset if

He was a bit late.

He
Replied that she no longer knew who he was,

That she had not recognized him in five years now.

 

I was surprised, and asked him, 'And you

Still go every morning, even though she doesn't

Know who you are?'

He smiled as he
Patted my hand and said,
'She doesn't know me, but

I still know who she is.'

I had to hold back
Tears as he left, I had goose bumps on my arm,

And thought,
'That is
The kind of love I want in my life.'
True love is
Neither physical, nor romantic.

True love is an
Acceptance of all that is, Has been, will be, and will not be.

The
Happiest people don't necessarily have the

Best of everything; they just make
The best of everything they have.

'Life isn't about
How to survive the storm,
But how to dance in the rain.'

We are all getting Older

Tomorrow may be our turn.


 

  

Average up or down?

I have an ex-colleague who is now the tai-tai of one of the big luxury watch retailers in Orchard Road.

While entertaining overseas clients, she may bring them to one of our casinos.

She never loses money there. OMG! How?

Her system is simple.

She will place a $100 bet on the roulette table on either black or red. If she wins, she got back her $100 entry fee. End of story.

If she loses, she will increase her bet to $200 on the same colour.

Lose again she increase the bet to $300 and so on.

So far, she always got back her $100 entry fee. Of course there was this one time she got a scary 12 rounds of reds against her…

I’ve written a tongue-in-cheek post on this topic of whip cream or leather whip.

But that’s for the “Mind” part.

Today I will be exploring the “Money Management” and “Method” parts (at least I’ll try). 

Money Management

To recover from a 20% loss (paper or realised it’s the same) we need to either hope our existing position goes up by  25%, or sell this loser and switch to a winner that gives us a 25% return.

To recover from a 50% loss, we need a 2 bagger.

To recover from a 90% loss, we need a 10 bagger.

Mind you, it’s just to break-even – there’s no profit to speak of yet! 

Method

How many 10 baggers or 2 baggers have you got in your track record?

And please don’t tell me you never got any 25% realised winners before! (If you don’t, you may want to review whether DIY suits you at all. Outsourcing?)

Here it’s not what you intend or hope to do or accomplish using what not techniques or strategies. It’s what you have achieved. Period. 

Average down

Looking around me and at my own speculation journey, I found to do average down successfully, you need the below ingredients.

1. Lots of new money coming in

Like my tai-tai example, if you have lots of new money coming into your investible funds every year.

You invest $10,000 into a stock from crashes from $1.00 to $0.10.

You average down another $10,000 at $0.10 and you just need the stock to “double” at $0.20 and you will make a small profit from your $20,000 bet.

2. Good at picking multi-baggers

The above example is about the futility of making plans based on “what-if” scenarios. Mathematically it looks simple and plausible.

But again, look at your track record. It matters more than comparing others’ track records – be it from gurus or your peers. 

If you’ve never got a 2 bagger, what makes you think by putting extra $10,000 on a dead stock will make it miraculously double to $0.20? 

And if you have no new money to invest, you’ll need a 10 bagger just to break-even!

People celebrate when they’ve got a 10 bagger - $10,000 becomes $100,000!

We? $10,000 becomes $1,000 and then back to $10,000. How many years did it take for this wonderful recovery to happen?

We wouldn’t want to tell anyone since anyone who placed the same $10,000 in a savings bank would have beaten us. Shhh….

3. Luck is on your side (Or you really are smarter than the market!)

I got my answer to whether to average up or down with my Greek tragedy holding in Jurong Technologies.

I could have cut at 20% loss. Huh! I could have cut at 50% loss. Humph! I could have cut at 90% loss. Hahaaaaa!

Noooo… I so very the stubborn and “smart”! Then it got to a big zero when it bankrupted and got delisted from SGX.

That’s a very expensive lesson on buy and hope!

Well, the silver lining is that I did not average down. Phew!

You do the math. Imagine you start averaging down at minus 20%; minus 50%; minus 90%?

Even if you can print money like Bernanke, worthless is still worthless.

Average up

Eh… I think you can fill in the blanks here with your own reflections using examples from your own track record.

Keep losses small

Those that did not have a long enough track record don’t worry. In time, you will understand why Warren Buffet says don’t lose money. And why not having a down year works wonder with compounded returns for Peter Lynch.

Traders learnt very quickly you can’t play when you have no chips.

Investors may take longer as we can hide under the “it’s for the long term" denial…

It does not matter what you call yourself – value, growth, dividend, long term, etc. It’s our track record that determines whether we are successful or poor investor.

How to minimise losses? It’s the Mind part of the equation. There are lots of system tools and hedging techniques. But if the Mind refuses to act, it’s all very academic.