I am poor in math during school.
Come to think of it, this "handicap" extends to life after school as well.
How bad is my math?
When doing additions and subtractions, I have to use all the digits of my toes and fingers. Looking down at them, the max I can count is up till 21. Oh behave!
(Clueless female readers may want to remember I am a guy)
I've never learned my multiplication tables. So if people ask what's 7x4, I'll mentally go: 7, 14, 21, 28... Talk about slow processing!
So when mobile handphones come with the calculator function, I was the happiest people on earth! After sms, the calc function is my next most frequently used app!
I hated math so much that when I got streamed into the pure science stream after secondary 2, I switched into the sub-science stream so I can skip additional math for history.
I am better with words and pictures (or imagery).
Of course with that decision, I realised after O' levels quite a few courses were closed to me without additional math - thank goodness for that! That made quitting school all the more easier.
It was years later that I learned about left and right-brained persons. I am more right-brained.
It's true, when it comes to investing, all I ever needed was: + - X /
OK, understanding ratio is also great for making bets on soccer or gambling. I guess the same applies for making risk/reward analysis for speculative trades or investments.
Percentage is another way of representing ratio; but given a choice, I prefer to count in money when it comes to gains or losses in my speculations - thank you very much!
"Only" 10% loss is something else if it equals to $100,000 hair-cut. 500% gain crashes down to earth if it means $5,000 profit in money terms. Statistics and numbers do lie.
Of course being poor in math has many handicaps during my investing and trading journey. For eg, options is beyond me :(
Concept I understand; but once I've looked at the Black-Scholes model, I cried.
So I am limited to simpler "products" and trading/investment strategies. Boo hoo hoo.
But looking back, it wasn't a handicap for me. Simple as simple does suits me just fine :)
Saturday, 10 March 2012
Wednesday, 7 March 2012
The Cock And The Fox
One bright morning as the sun was rising from the horizon, the Cock flew on top of the barn house. He flapped his wings three times and crowed loudly.
“Wake up, wake up! First to use the toilet no need to queue!”
But just as he was about to let out another one of his morning wise cracks, his Cock eyes (yes, pun intended) caught a flash of red and a glimpse of a long pointed nose, and there just below him stood the Fox smiling.
"Have you heard the wonderful news?" cried the Fox in a very joyful and excited manner.
"What news?" the Cock asked suspiciously.
"All animals of the forest have agreed to forget their differences and live in peace and friendship from now on forever. Just think of it! I simply cannot wait to hug you! Do come down, dear friend, and let us celebrate this joyful event."
"How wonderful!" said the Cock. "This is indeed good news." But he spoke in an absent-minded way, and stretching up on tiptoes, seemed to be looking at something afar off.
"What is it you see?" asked the Fox a little anxiously.
"It looks to me two Dogs are coming this way. They must have heard the good news and wanted to celebrate with you and me too!”
But the Fox did not wait to hear more. Off he started to run.
"Wait," cried the Cock. "Why do you run? The Dogs are friends of yours now!"
"Yes," answered the Fox. "But they might not have heard the news. Besides, I have a very important errand that I had almost forgotten about."
The Cock smiled and said to himself, “You smart; I not stupid.”
Sunday, 4 March 2012
Traders and Investors – Ebony and Ivory
Traders
When I think of traders, I am reminded of this mental image of the Arabian traders from the 101 Arabian Nights.
Their final destination may be Cathay (China), to source for silk, porcelain, tea, etc.; but the journey is at least a year or more away. To sustain their livelihood along this arduous trek, traders have to set aside a portion of their merchandise for trading with the next village, town, and fortress.
To know what to buy and to secure a good price for their merchandise, traders have to anticipate what the people of the next destination would buy and pay for.
Everything is for sale! There is no emotional attachment to their merchandise.
If a mistake is made, traders know the first mark-down is the least painful. The longer they hesitate, the bigger the mark-downs they will have to endure. It’s pointless to drag along merchandise that nobody wants through the whole journey. Talk about dead weights!
The focus is not what the traders themselves liked; but what others would like.
Investors
When I think of investors, the image of parents raising their child comes to mind.
Like all proud parents, they would direct their hopes and aspirations (or failed dreams) to their child.
Some parents dream of their child growing up into a bright, successful, and respected adult. Whatever the child needs: ballet, violin, or overseas education, these parents will “invest” in the child’s call for more funds. No expense is too much.
Some parents can’t wait. They prefer to adopt grown-up “children” who from the get go can return their “love” with immediate monthly parental allowance.
If the relationship sours – the child not living up to the parent’s expectation – one group of parents would disown the child and move forward, while the other group would cling on to the failed relationship and play “victim”.
And if the child exceeds or performs to expectation, now why would any parents “let go” of this child?
The focus in what the investor want out of this investment.
How to tell which is which?
A good example is when you bought your place of abode. Do you visualize how you can renovate and decorate this place into your personal sanctuary, or do you spend more time checking out the features and selling points that might appeal to the next buyer?
Younger readers may want to infer from your purchase habits – like buying the latest smart phone, branded handbag, or car - which comes to mind more? Is it your personal enjoyment or the 2nd hand resale value?
OK now look at how you “trade” or “invest”.
Ebony and Ivory
Does it matter what we call ourselves?
Not really; but to some individuals – everything!
A trader who constantly gets married to his positions and projects his hopes and dreams to his trades…
An investor who can’t seem to sit tight through the volatility and refuses to recognize the reasons for investing in the first place are no longer there…
And then there are musicians who can make great music from Ebony and Ivory:
The right question is perhaps not whether it’s better to be a trader or investor? A better question could be:
a) Are you a good or bad trader?
b) Or are you a good or bad investor?
Subscribe to:
Posts (Atom)
