NEARLY all the Bull Markets had a number of well-defined characteristics in common, such as
(1) a Historically High Price Level
(2) High Price/Earning Ratios
(3) Low Dividend Yields as against Bond Yield
(4) Much Speculation on Margin
(5) Many Offerings of New Common-Stock Issues of POOR Quality
There were sufficient variations in the successive market cycles to complicate & sometimes frustrate the desirable process of Buying Low & Selling High.
The most notable of these departure, of course, was the Great Bull Market of late 1920s, which threw all calculations badly out of gear.
1897 to 1949 with 10 Complete market cycles running from bear-market low to bull-market high and back to bear-market low.
~~ 6 cycles lasted 4 Years;
~~~ 4 cycles lasted 6 to 7 years)
1921 to 1932 ===> LASTED 11 YEARS
(Source: The Intelligent Investor, Revised Edition by Benjamin Graham)
Short Term Trading vs Investing, What's the Difference?
Moderators: alvin, learner, Dennis Ng
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candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
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candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
Below is the investment wisdom shared at valuebuddies forum on 22 December 2012:
Buying value stocks is easy.
The hard part is the value realising process since management of most value companies are seasoned businessmen.
These astute businessmen do not focus on share price movements to boost their egos. Rather, they are focus on factors beyond short term wealth factors like how to ensure another 3 more generations of their family members can be taken care of.
When it comes to shareholder activism - these management are bullet proof. How many times have you seen Wee Cho Yaw being cornered by shareholders' questions - its the opposite as they will turn around and ask you if you can do it better with your questions or suggestions.
Anyway, as long as you BUY value stock at the RIGHT PRICE,
===> your holding costs are likely to be covered by DIVIDENDS.
====> CAPITAL GAINS resulting from low price purchased will help calm nerves during holding period.
=====> Any value being unlocked over time will be bonus.
Buying value stocks is easy.
The hard part is the value realising process since management of most value companies are seasoned businessmen.
These astute businessmen do not focus on share price movements to boost their egos. Rather, they are focus on factors beyond short term wealth factors like how to ensure another 3 more generations of their family members can be taken care of.
When it comes to shareholder activism - these management are bullet proof. How many times have you seen Wee Cho Yaw being cornered by shareholders' questions - its the opposite as they will turn around and ask you if you can do it better with your questions or suggestions.
Anyway, as long as you BUY value stock at the RIGHT PRICE,
===> your holding costs are likely to be covered by DIVIDENDS.
====> CAPITAL GAINS resulting from low price purchased will help calm nerves during holding period.
=====> Any value being unlocked over time will be bonus.
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
Stocks—It Is When You Sell That Matters
July 19, 2012
By Dennis Ng (guest contributor)
In Singapore, there is no lack of investors who place their money in stocks. However, I observe that the majority of stock investors know very little about stock investing. To help clear the air on stock investing, let me share with you some common mistakes made by retail investors.
Many investors make the mistake of buying stocks without knowing when to sell them. As important as it is to buy stocks that matter, knowing when to sell stocks is paramount in stock investing, as it can dictate whether one would reap profits or incur losses.
When it comes to stock investing, some investors hold onto their stocks steadfastly. It is as though they have developed deep emotions with their stocks and are in ‘love’ with them. It sometimes appears to me that these investors hope to tide through the thick and thin with their stocks. In doing so, they fail to realize that they have just committed a cardinal sin in investing, which is getting emotional about investing.
When we invest, it is imperative that
~~ we keep a clear mind and stay rational.
~~~ we have to avoid letting our emotions affect our decisions. That much said, it is a tall order to be completely void of emotions as we are emotional beings by nature.
But as what billionaire investor Gorge Soros said, “It’s impossible for human beings to be emotionally detached when we invest, but the key is to learn HOW to CONTROL Our EMOTIONS, to be as emotionally stable as possible, when making investment decisions.”
Misconception 1—The decision to buy blue-chip stocks is a safe one
Some investors erroneously believe that as long as they buy blue-chip stocks, they can be rest assured that their investments will be in good hands. But this belief is not entirely without flaws.
So what are blue-chip stocks? Blue-chip stocks typically include the 30 component stocks that make up the Straits Times Industrial Index (STI), as well as some very large and established companies listed on the stock exchange. If you are to buy stocks when the stock market is near its peak—when stock prices are high—buying blue-chip stocks might end up giving you the ‘blues’ instead.
For instance, imagine you had bought DBS shares in 2007, when they were trading at above S$20. If you had waited four years before selling your stock in September 2011, when the stock was priced at below S$12, or had fallen by 40%, you would still have suffered a painful loss of 40%. In your defense, you could justify your buy by saying that such blue-chip stocks pay you dividends. But even if the dividends handed out is at 5%, a 40% decline in share price means you technically need to collect eight years worth of dividends to recoup the loss incurred when you mistakenly bought stocks that were over-priced.
Misconception 2—Stock prices always go up in the long run
Investors who have made the mistake of buying overpriced stocks argue that even if stock prices fall in a bear market, its share price will eventually make a comeback as long as they have holding power. While this, in theory, is aligned to the teachings of investment textbooks that claim stock prices always go up in the long run, I beg to strongly differ.
As much as I do not wish to dash your hopes, but investing based on hope is not quite a strategy. The reason is that the price you paid for your stock has no relevance to anyone except yourself. The stock market does not owe you an obligation to ensure you break even in your investments. If you have over-paid for the stock, the value of this said stock could still be much lower than your purchased price in the long run.
For instance, back in 2000 when technology stocks were the rage, Creative Technology, which was trading at a high of S$55 at one point, was one of the STI component stocks and deemed one of the ‘market darlings’. But fast forward 11 years later, in September 2011, the same stock is valued below S$4, representing a staggering decline of 90%.
Misconception 3—Paper losses are not real losses
There are investors who simply refuse to face up to reality. They do not wish to admit that they might have made a wrong investment decision, or have made an incorrect analysis or wrongly judged a stock. Such is their extent of denial that they might claim to only have suffered some paper losses if you ask them how much loss have they incurred. So long as they do not sell their losing stocks, their losses are not deemed to be real, at least in their opinion.
Now imagine a scenario where a Japanese investor bought some Japanese stocks in 1989, when the Nikkei stock index was as high as 38,915 points then. Today, even after a long 22 years, the Nikkei stock index is well below 9,000 points or about 76% lower. If the Japanese investor still insists that the loss is just paper loss and not real loss, it becomes very obvious that he or she is just in self denial.
By now, you might be wondering why I am familiar with the common mistakes and misconceptions held by retail investors. Well, to be honest, I used to be guilty of committing such investment mistakes due to the misconceptions that I had.
During the Asian Financial Crisis in 1998, when the STI index fell by 68% from a high of 2,500 points to 800 points, I told myself that everything would be alright. I told myself that so long as I have holding power, I would not lose my money. But that was of course, not the case. Through losing over 50% of my wealth in the stock market crash, I learned the truth about investing the hard way. It was then that I had a rude awakening as to how little I really knew about stock investing and that I had needed to learn how to make wise investments to have any hope of making money from stock investing again.
That marked the turning point in my investing journey. There is a saying that “when the student is ready, the teacher will appear.”
After suffering a hard fall, I met and learned a lot about investing from several multi-millionaires in Singapore. I also read many investments books, attended many such seminars and eventually picked up some practical and useful tips on stock investing. I then learned that the crux of investing is in knowing when to sell your stocks.
So are you ready to learn when to sell your stocks?
1. Sell when the overall stock market trend changes
No matter what stocks you buy—be it blue-chips, red chips (China companies listed in Singapore) or ‘potato chips’ (i.e. stocks without fundamentals)—when the overall stock market changes from an uptrend to a downtrend (bear market), or when the overall market direction reverses, it is time to sell all your stocks to avoid losing more money in a potential market crash.
If you are to look back at past trading trends, you would realize that in a bear market, stock markets typically fall by over 50%. In Singapore, the STI fell from 2,500 points in 1996 to just 800 points in 1998, representing a 68% fall. In 2000, STI fell from 2,500 points to 1,200 points in March 2003, representing a 52% drop. And in 2007, STI fell 62% from 3,900 points to its lowest of 1,456 points in March 2009.
That much said, how do we know that the direction of the overall stock market has changed? To do so, you might want to keep a close watch on the 200-day moving average. By doing so, you would be better informed whether the trend remains up or has tipped over to a downtrend.
2. Sell when stocks are over-priced
How do we know whether a stock is over-priced or not? In answer to this, price earning (PE) ratio serves as an indicator to whether the price of a stock is reasonable or not. In which case, price earnings ratio is basically derived by dividing the stock price by its earnings per share. If the PE ratio is 20 times, it means that the company will take 20 years to obtain enough earnings to pay off your capital. Put simply, the return on investment is 1 divided by 20, or 5%. Thus, any stock trading at a PE ratio of 20 times or higher may suggest that the stock is over-priced, unless the company can grow at a much higher rate.
Having said that, we need to understand that every industry is different. Instead of making our investment decisions based on PE ratio alone, we need to compare a company with its peers when coming to a conclusion as to whether a stock is over-priced or not.
3. Sell when we made an investment mistake
Sometimes, it might take us awhile for us to discover that our initial analysis of a stock is incorrect. In which case,
~~ we might have over-estimated the company’s prospects and profits, or
~~~ the company did not quite manage to execute their expansion plans as successfully as we had thought.
Regardless of the investment mistake made on our part, we must not hesitate to admit our mistakes and sell those stocks immediately. In doing so, we are cutting our loss so as to refrain losing even more money if the stock price falls further.
4. Sell when a better investment opportunity arises
If you have already fully invested your money but discovered at some point that another stock has better prospects or value, you might want to sell some of your existing stocks in order to raise capital to invest in the latter stock.
In summary, successful investing has more to do with WHEN you SELL your stocks than when you bought them. The four approaches to selling stocks have served me very well over the years and helped me avert the ill fate of incurring losses during the stock market crash in 2008. It is my hope that these approaches would similarly serve your investment decisions well.
http://moneymatters.sg/stocks-it-is-whe ... t-matters/
July 19, 2012
By Dennis Ng (guest contributor)
In Singapore, there is no lack of investors who place their money in stocks. However, I observe that the majority of stock investors know very little about stock investing. To help clear the air on stock investing, let me share with you some common mistakes made by retail investors.
Many investors make the mistake of buying stocks without knowing when to sell them. As important as it is to buy stocks that matter, knowing when to sell stocks is paramount in stock investing, as it can dictate whether one would reap profits or incur losses.
When it comes to stock investing, some investors hold onto their stocks steadfastly. It is as though they have developed deep emotions with their stocks and are in ‘love’ with them. It sometimes appears to me that these investors hope to tide through the thick and thin with their stocks. In doing so, they fail to realize that they have just committed a cardinal sin in investing, which is getting emotional about investing.
When we invest, it is imperative that
~~ we keep a clear mind and stay rational.
~~~ we have to avoid letting our emotions affect our decisions. That much said, it is a tall order to be completely void of emotions as we are emotional beings by nature.
But as what billionaire investor Gorge Soros said, “It’s impossible for human beings to be emotionally detached when we invest, but the key is to learn HOW to CONTROL Our EMOTIONS, to be as emotionally stable as possible, when making investment decisions.”
Misconception 1—The decision to buy blue-chip stocks is a safe one
Some investors erroneously believe that as long as they buy blue-chip stocks, they can be rest assured that their investments will be in good hands. But this belief is not entirely without flaws.
So what are blue-chip stocks? Blue-chip stocks typically include the 30 component stocks that make up the Straits Times Industrial Index (STI), as well as some very large and established companies listed on the stock exchange. If you are to buy stocks when the stock market is near its peak—when stock prices are high—buying blue-chip stocks might end up giving you the ‘blues’ instead.
For instance, imagine you had bought DBS shares in 2007, when they were trading at above S$20. If you had waited four years before selling your stock in September 2011, when the stock was priced at below S$12, or had fallen by 40%, you would still have suffered a painful loss of 40%. In your defense, you could justify your buy by saying that such blue-chip stocks pay you dividends. But even if the dividends handed out is at 5%, a 40% decline in share price means you technically need to collect eight years worth of dividends to recoup the loss incurred when you mistakenly bought stocks that were over-priced.
Misconception 2—Stock prices always go up in the long run
Investors who have made the mistake of buying overpriced stocks argue that even if stock prices fall in a bear market, its share price will eventually make a comeback as long as they have holding power. While this, in theory, is aligned to the teachings of investment textbooks that claim stock prices always go up in the long run, I beg to strongly differ.
As much as I do not wish to dash your hopes, but investing based on hope is not quite a strategy. The reason is that the price you paid for your stock has no relevance to anyone except yourself. The stock market does not owe you an obligation to ensure you break even in your investments. If you have over-paid for the stock, the value of this said stock could still be much lower than your purchased price in the long run.
For instance, back in 2000 when technology stocks were the rage, Creative Technology, which was trading at a high of S$55 at one point, was one of the STI component stocks and deemed one of the ‘market darlings’. But fast forward 11 years later, in September 2011, the same stock is valued below S$4, representing a staggering decline of 90%.
Misconception 3—Paper losses are not real losses
There are investors who simply refuse to face up to reality. They do not wish to admit that they might have made a wrong investment decision, or have made an incorrect analysis or wrongly judged a stock. Such is their extent of denial that they might claim to only have suffered some paper losses if you ask them how much loss have they incurred. So long as they do not sell their losing stocks, their losses are not deemed to be real, at least in their opinion.
Now imagine a scenario where a Japanese investor bought some Japanese stocks in 1989, when the Nikkei stock index was as high as 38,915 points then. Today, even after a long 22 years, the Nikkei stock index is well below 9,000 points or about 76% lower. If the Japanese investor still insists that the loss is just paper loss and not real loss, it becomes very obvious that he or she is just in self denial.
By now, you might be wondering why I am familiar with the common mistakes and misconceptions held by retail investors. Well, to be honest, I used to be guilty of committing such investment mistakes due to the misconceptions that I had.
During the Asian Financial Crisis in 1998, when the STI index fell by 68% from a high of 2,500 points to 800 points, I told myself that everything would be alright. I told myself that so long as I have holding power, I would not lose my money. But that was of course, not the case. Through losing over 50% of my wealth in the stock market crash, I learned the truth about investing the hard way. It was then that I had a rude awakening as to how little I really knew about stock investing and that I had needed to learn how to make wise investments to have any hope of making money from stock investing again.
That marked the turning point in my investing journey. There is a saying that “when the student is ready, the teacher will appear.”
After suffering a hard fall, I met and learned a lot about investing from several multi-millionaires in Singapore. I also read many investments books, attended many such seminars and eventually picked up some practical and useful tips on stock investing. I then learned that the crux of investing is in knowing when to sell your stocks.
So are you ready to learn when to sell your stocks?
1. Sell when the overall stock market trend changes
No matter what stocks you buy—be it blue-chips, red chips (China companies listed in Singapore) or ‘potato chips’ (i.e. stocks without fundamentals)—when the overall stock market changes from an uptrend to a downtrend (bear market), or when the overall market direction reverses, it is time to sell all your stocks to avoid losing more money in a potential market crash.
If you are to look back at past trading trends, you would realize that in a bear market, stock markets typically fall by over 50%. In Singapore, the STI fell from 2,500 points in 1996 to just 800 points in 1998, representing a 68% fall. In 2000, STI fell from 2,500 points to 1,200 points in March 2003, representing a 52% drop. And in 2007, STI fell 62% from 3,900 points to its lowest of 1,456 points in March 2009.
That much said, how do we know that the direction of the overall stock market has changed? To do so, you might want to keep a close watch on the 200-day moving average. By doing so, you would be better informed whether the trend remains up or has tipped over to a downtrend.
2. Sell when stocks are over-priced
How do we know whether a stock is over-priced or not? In answer to this, price earning (PE) ratio serves as an indicator to whether the price of a stock is reasonable or not. In which case, price earnings ratio is basically derived by dividing the stock price by its earnings per share. If the PE ratio is 20 times, it means that the company will take 20 years to obtain enough earnings to pay off your capital. Put simply, the return on investment is 1 divided by 20, or 5%. Thus, any stock trading at a PE ratio of 20 times or higher may suggest that the stock is over-priced, unless the company can grow at a much higher rate.
Having said that, we need to understand that every industry is different. Instead of making our investment decisions based on PE ratio alone, we need to compare a company with its peers when coming to a conclusion as to whether a stock is over-priced or not.
3. Sell when we made an investment mistake
Sometimes, it might take us awhile for us to discover that our initial analysis of a stock is incorrect. In which case,
~~ we might have over-estimated the company’s prospects and profits, or
~~~ the company did not quite manage to execute their expansion plans as successfully as we had thought.
Regardless of the investment mistake made on our part, we must not hesitate to admit our mistakes and sell those stocks immediately. In doing so, we are cutting our loss so as to refrain losing even more money if the stock price falls further.
4. Sell when a better investment opportunity arises
If you have already fully invested your money but discovered at some point that another stock has better prospects or value, you might want to sell some of your existing stocks in order to raise capital to invest in the latter stock.
In summary, successful investing has more to do with WHEN you SELL your stocks than when you bought them. The four approaches to selling stocks have served me very well over the years and helped me avert the ill fate of incurring losses during the stock market crash in 2008. It is my hope that these approaches would similarly serve your investment decisions well.
http://moneymatters.sg/stocks-it-is-whe ... t-matters/
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
Personality-led stocks gain popularity with retail investors
By Sylvia Paik | Posted: 08 January 2013, CNA
SINGAPORE: Some stocks like Rowsley and Geo Energy have been in the spotlight with retail investors recently after being linked to high-profile investors like Peter Lim and Jim Rogers.
But experts said retail investors should avoid following a herd mentality when picking stocks.
Instead, they should look for businesses with strong management teams and solid fundamentals.
Rowsley, which is a Singapore-listed firm controlled by "Remisier King" Peter Lim, saw its share price double in just a week after it announced plans to acquire a site in Malaysia's Iskander region.
Rowsley's share price on Tuesday closed at S$0.315, up from December 20, 2012 price of S$0.14.
Meanwhile, Indonesian coal miner Geo Energy's share price has nearly doubled since Jim Rogers joined its board a month ago.
Jim Roger's appointment as non-executive director was announced on December 3, 2012. Geo Energy shares closed at S$0.635 on Tuesday, up from S$0.35 on November 29, 2012.
Geo Energy granted Jim Rogers a call option over two million shares, at S$0.35 per share, with an exercise period of 10 years, commencing on January 1, 2015.
His involvement is in line with his views on the potential in the energy sector.
Mr Rogers said:
====> "You should never INVESTin anything Unless you KNOW what you are talking about yourself.
====> People should NOT Listen to people they see in the press because you don't know what I'll do. I might sell it next week.
======> If you bought it because of me, and then I sell it, I'm not going to call you up, and say Bill, Mary, I sold my stock. You should sell yours too. I don't even know you bought it."
Analysts said this trend of investing on the coat-tails of well-known investment personalities has its benefits and risks.
Roger Tan, Chief Executive Officer of SIAS Research, said: "For retail investors, the most important thing and the most difficult thing is acquiring information. Information is difficult to acquire and expensive to acquire. Most of the time, what they do, is they try to look for good investors, well-known investors, as a way to find signals to go into companies. And it reduces the effort of trying to acquire information.
"The upside of course, is that by following them, and IF you Follow them EARLY Enough, and these gurus get it right, then the payoff is a lot higher."
Terence Wong, who is the co-head of research at DMG & Partners, said: "
~~ Investors need to be very much more cautious when investing with the herd, or just on the backs of these so called market gurus.
Many of these guys have a long term perspective and very very deep pockets.
"They can afford to lose millions, or tens of millions.
~~~~ But many people, they park a good part of their wealth into such stocks. And when it doesn't happen, it's going to HURT them A Lot Harder than these market gurus."
Analysts said there is simply NO SHORT CUT to making fast cash.
They say retail investors should look at the fundamentals and valuations of the stock before investing.
http://www.channelnewsasia.com/stories/ ... 54/1/.html
By Sylvia Paik | Posted: 08 January 2013, CNA
SINGAPORE: Some stocks like Rowsley and Geo Energy have been in the spotlight with retail investors recently after being linked to high-profile investors like Peter Lim and Jim Rogers.
But experts said retail investors should avoid following a herd mentality when picking stocks.
Instead, they should look for businesses with strong management teams and solid fundamentals.
Rowsley, which is a Singapore-listed firm controlled by "Remisier King" Peter Lim, saw its share price double in just a week after it announced plans to acquire a site in Malaysia's Iskander region.
Rowsley's share price on Tuesday closed at S$0.315, up from December 20, 2012 price of S$0.14.
Meanwhile, Indonesian coal miner Geo Energy's share price has nearly doubled since Jim Rogers joined its board a month ago.
Jim Roger's appointment as non-executive director was announced on December 3, 2012. Geo Energy shares closed at S$0.635 on Tuesday, up from S$0.35 on November 29, 2012.
Geo Energy granted Jim Rogers a call option over two million shares, at S$0.35 per share, with an exercise period of 10 years, commencing on January 1, 2015.
His involvement is in line with his views on the potential in the energy sector.
Mr Rogers said:
====> "You should never INVESTin anything Unless you KNOW what you are talking about yourself.
====> People should NOT Listen to people they see in the press because you don't know what I'll do. I might sell it next week.
======> If you bought it because of me, and then I sell it, I'm not going to call you up, and say Bill, Mary, I sold my stock. You should sell yours too. I don't even know you bought it."
Analysts said this trend of investing on the coat-tails of well-known investment personalities has its benefits and risks.
Roger Tan, Chief Executive Officer of SIAS Research, said: "For retail investors, the most important thing and the most difficult thing is acquiring information. Information is difficult to acquire and expensive to acquire. Most of the time, what they do, is they try to look for good investors, well-known investors, as a way to find signals to go into companies. And it reduces the effort of trying to acquire information.
"The upside of course, is that by following them, and IF you Follow them EARLY Enough, and these gurus get it right, then the payoff is a lot higher."
Terence Wong, who is the co-head of research at DMG & Partners, said: "
~~ Investors need to be very much more cautious when investing with the herd, or just on the backs of these so called market gurus.
Many of these guys have a long term perspective and very very deep pockets.
"They can afford to lose millions, or tens of millions.
~~~~ But many people, they park a good part of their wealth into such stocks. And when it doesn't happen, it's going to HURT them A Lot Harder than these market gurus."
Analysts said there is simply NO SHORT CUT to making fast cash.
They say retail investors should look at the fundamentals and valuations of the stock before investing.
http://www.channelnewsasia.com/stories/ ... 54/1/.html
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
Wise advice dispensed by Jim Rogers on signals to detect a market bottom as shared by Daniel:
http://www.masteryourfinance.com/forum/ ... gers#p4497
Below phrase taken from another website explained Jim Rogers' advices appropriately:
When bad news is no longer a “big deal”.
When things go bad for an extended period of time, a lovely thing happens and we stop being trigger-happy — people eventually get bored with the bad. They start to get jaded, and before long, even moderately bad news begins to sound “good”.
It is at this point that markets decide they’re going to take a breather and stop falling, and may even rise on account of the next neutral economic story that hits the media channels.
http://www.thedigeratilife.com/blog/ind ... et-bottom/
http://www.masteryourfinance.com/forum/ ... gers#p4497
danielcheng wrote:Was listening to an interview with Jim Rogers and took note of one of his comments on how he sense the market is going to hit bottom.
Thought of just sharing this just incase anyone interested. For the forum experts, do pardon me.
He says and i quote:
(1) "When People SAY its Over, and
(2) When you HEAR More Bad News, and
(3) Stocks STOPS Going Down, and
(4) When they Go UP on Bad News,
===> that is when it will hit bottom".
Sort of grasped his wisdom in a broad sense as i am still learning but believe those who are experienced and knowledgable in investing will infact benefit from all these "market signals"
Below phrase taken from another website explained Jim Rogers' advices appropriately:
When bad news is no longer a “big deal”.
When things go bad for an extended period of time, a lovely thing happens and we stop being trigger-happy — people eventually get bored with the bad. They start to get jaded, and before long, even moderately bad news begins to sound “good”.
It is at this point that markets decide they’re going to take a breather and stop falling, and may even rise on account of the next neutral economic story that hits the media channels.
http://www.thedigeratilife.com/blog/ind ... et-bottom/
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
Though we are in a different phase of stock market, this article may become in handy in time to come.
How To Tell When The Stock Market Has Hit Bottom
by Silicon Valley Blogger on 2008-11-07
Now how about a quick review of what the bottom feels like? Not that we can accurately call it out, as short-term market timing doesn’t work on a consistent basis (in my humble opinion), but knowing the general vicinity of a bottom should serve us contrarians well.
Following are some typical symptoms and signs of a stock market bottom. When you get that far down, the only way to go (as they say) should be “up”!
1. People are worriedly asking what they should be doing next. Friends and family have been calling me asking me whether they should sell and abandon ship. And we’re not talking about lightening up their portfolios here and there. We’re talking about investors wondering if they should toss in the towel and move everything — all their funds, retirement and otherwise — over to safer vehicles.
The irony is that many of them are young, in stable jobs, and have no dependents. The greater irony is that many of them work in the financial sector. I can see why: if you work in the financial industry, you’re closer to the action and may feel more unnerved about what you’re seeing in “ground zero”, or you may feel much more vulnerable than the rest of us.
2. Stocks sell at vastly discounted prices but where are the buyers?
Sure nobody wants to catch a falling knife, but when prices have stabilized and plateaued, it may be a sign that you can start dipping your toes in the stock market brew. The brave (or those who take risks) are eventually rewarded.
3. People are using any excuse to sell.
When it comes to our money, we’ve become trigger-happy.
One false move and everyone wants to rush out the exits. The financial bailout failed….Sell! The bailout passed….Sell! Obama won….Sell!
4. You can’t bear to look at your portfolio.
Because it hurts too much.
You may say that it’s foolish NOT to know how your investments are doing, but at the same time, I trust that my asset allocation is right for me and I’d rather protect my investments from myself. This is my way of preventing myself from doing anything rash or emotional; plus it’s all for the long term — so do I really need to get to the bottom of the ugly truth? Okay…. I’ll do so soon enough!
5. The media dishes out fresh painful anecdotes on the economy and/or the investment markets on a frightfully regular basis.
The newspapers have been having a field day, giving us daily doses of doom and disaster from all fronts. Being somewhat of a rubbernecking curiosity seeker who loves to root out drama and has a natural interest in things morbid, I continue to read the daily news and absorb the media hype. Just keep me away from my own portfolio numbers.
6. When bad news is no longer a “big deal”.
When things go bad for an extended period of time, a lovely thing happens and we stop being trigger-happy — people eventually get bored with the bad. They start to get jaded, and before long, even moderately bad news begins to sound “good”. It is at this point that markets decide they’re going to take a breather and stop falling, and may even rise on account of the next neutral economic story that hits the media channels.
7. It feels harder and harder to dollar cost average downwards.
As time goes on, you may start to think that your contrarian strategies are beginning to fail you. Your stash of savings is depleting as you continuously shift more of it into long-term, riskier assets such as equities and REITs. But if you’ve got cash flow, you’ll hopefully continue to keep the faith. Based on my past experience with DCA and VCA (value cost averaging), I’ve seen these strategies become justified time and time again, once the markets recover.
8. When bullish market gurus admit that they were wrong.
I follow an investment newsletter or two, and I’ve noticed a change. Some of the long term bullish “experts” are now crying “uncle”. Now, they’re not necessarily changing their stance on things… just admitting that they may have been wrong, to some degree, about their recent market calls (or lack thereof). It looks like this crazy October was unprecedented and caught them by surprise!
9. When you hear people griping that they’re now going to have to work through retirement.
Thanks to the previous amazing bull runs of the previous decades, we’ve been all trained to take and accept the extra risks afforded to us by the stock market.
But if there’s one thing I’ve really learned this time around, it’s to make sure that I cut the risks in my portfolio by readjusting my asset allocation over time.
The closer you are to retirement, the smaller your exposure should be to the stock market.
10. Annuities and boring savings accounts are in.
Not long ago, noone wanted the turtle-paced, slow-mo returns of fixed annuities, ordinary bank accounts and plodding CDs yielding 5% a year. These days, those returns are quite appealing and look awfully sweet. But with everyone thinking the same thing, it could be time to reroute those long term safe funds over into more exciting investments… if you dare.
http://www.thedigeratilife.com/blog/ind ... et-bottom/
How To Tell When The Stock Market Has Hit Bottom
by Silicon Valley Blogger on 2008-11-07
Now how about a quick review of what the bottom feels like? Not that we can accurately call it out, as short-term market timing doesn’t work on a consistent basis (in my humble opinion), but knowing the general vicinity of a bottom should serve us contrarians well.
Following are some typical symptoms and signs of a stock market bottom. When you get that far down, the only way to go (as they say) should be “up”!
1. People are worriedly asking what they should be doing next. Friends and family have been calling me asking me whether they should sell and abandon ship. And we’re not talking about lightening up their portfolios here and there. We’re talking about investors wondering if they should toss in the towel and move everything — all their funds, retirement and otherwise — over to safer vehicles.
The irony is that many of them are young, in stable jobs, and have no dependents. The greater irony is that many of them work in the financial sector. I can see why: if you work in the financial industry, you’re closer to the action and may feel more unnerved about what you’re seeing in “ground zero”, or you may feel much more vulnerable than the rest of us.
2. Stocks sell at vastly discounted prices but where are the buyers?
Sure nobody wants to catch a falling knife, but when prices have stabilized and plateaued, it may be a sign that you can start dipping your toes in the stock market brew. The brave (or those who take risks) are eventually rewarded.
3. People are using any excuse to sell.
When it comes to our money, we’ve become trigger-happy.
One false move and everyone wants to rush out the exits. The financial bailout failed….Sell! The bailout passed….Sell! Obama won….Sell!
4. You can’t bear to look at your portfolio.
Because it hurts too much.
You may say that it’s foolish NOT to know how your investments are doing, but at the same time, I trust that my asset allocation is right for me and I’d rather protect my investments from myself. This is my way of preventing myself from doing anything rash or emotional; plus it’s all for the long term — so do I really need to get to the bottom of the ugly truth? Okay…. I’ll do so soon enough!
5. The media dishes out fresh painful anecdotes on the economy and/or the investment markets on a frightfully regular basis.
The newspapers have been having a field day, giving us daily doses of doom and disaster from all fronts. Being somewhat of a rubbernecking curiosity seeker who loves to root out drama and has a natural interest in things morbid, I continue to read the daily news and absorb the media hype. Just keep me away from my own portfolio numbers.
6. When bad news is no longer a “big deal”.
When things go bad for an extended period of time, a lovely thing happens and we stop being trigger-happy — people eventually get bored with the bad. They start to get jaded, and before long, even moderately bad news begins to sound “good”. It is at this point that markets decide they’re going to take a breather and stop falling, and may even rise on account of the next neutral economic story that hits the media channels.
7. It feels harder and harder to dollar cost average downwards.
As time goes on, you may start to think that your contrarian strategies are beginning to fail you. Your stash of savings is depleting as you continuously shift more of it into long-term, riskier assets such as equities and REITs. But if you’ve got cash flow, you’ll hopefully continue to keep the faith. Based on my past experience with DCA and VCA (value cost averaging), I’ve seen these strategies become justified time and time again, once the markets recover.
8. When bullish market gurus admit that they were wrong.
I follow an investment newsletter or two, and I’ve noticed a change. Some of the long term bullish “experts” are now crying “uncle”. Now, they’re not necessarily changing their stance on things… just admitting that they may have been wrong, to some degree, about their recent market calls (or lack thereof). It looks like this crazy October was unprecedented and caught them by surprise!
9. When you hear people griping that they’re now going to have to work through retirement.
Thanks to the previous amazing bull runs of the previous decades, we’ve been all trained to take and accept the extra risks afforded to us by the stock market.
But if there’s one thing I’ve really learned this time around, it’s to make sure that I cut the risks in my portfolio by readjusting my asset allocation over time.
The closer you are to retirement, the smaller your exposure should be to the stock market.
10. Annuities and boring savings accounts are in.
Not long ago, noone wanted the turtle-paced, slow-mo returns of fixed annuities, ordinary bank accounts and plodding CDs yielding 5% a year. These days, those returns are quite appealing and look awfully sweet. But with everyone thinking the same thing, it could be time to reroute those long term safe funds over into more exciting investments… if you dare.
http://www.thedigeratilife.com/blog/ind ... et-bottom/
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
Evolving a setup to detect stock market crash
Md Toufique Hossain
Investing in the stock market is risky. The purchase and sale of shares are a gamble. There are people who made bagful of money; but there are MORE people who Lost a lot of money.
Research shows that the common people are the loser. And the main reason is that over 90 per cent investors invest without knowing and without study.
The funny thing is that
~~ nobody dives in a deep pool without knowing how to swim,
~~~ no one drives a car without knowing how to drive, and
~~~~ no one dares to open a business without having any knowledge of it;
===> but, many people invest in the stock market without knowing the market trend.
Stock market crash warning: Would not it be nice if there were in place some sort of early warning system to let the investors know that a serious crash was approaching? It has been hard not to notice that financial bubbles play an important role in our economy.
The key characteristic in determining a bubble is the volatility of an asset's price, which, in the case of bubbles, is very high. For instance, the ability to tell when an asset is or is not in a bubble could have important ramifications in the regulation of the capital reserves of banks as well as for individual investors and retirement funds holding assets for the long term.
For banks, if their capital reserve holdings include large investments with unrealistic values due to bubbles, a shock to them could occur when the bubbles burst, potentially causing a run on the bank, as infamously happened with Lehman Brothers, and is currently happening with Dexia, a major European bank.
Many investors expect to get advice from someone more experienced than them to tell them how far a stock will rise or drop when they buy. But the real difficulty is to put the issue in perspective.
http://www.thefinancialexpress-bd.com/m ... _id=123455
Md Toufique Hossain
Investing in the stock market is risky. The purchase and sale of shares are a gamble. There are people who made bagful of money; but there are MORE people who Lost a lot of money.
Research shows that the common people are the loser. And the main reason is that over 90 per cent investors invest without knowing and without study.
The funny thing is that
~~ nobody dives in a deep pool without knowing how to swim,
~~~ no one drives a car without knowing how to drive, and
~~~~ no one dares to open a business without having any knowledge of it;
===> but, many people invest in the stock market without knowing the market trend.
Stock market crash warning: Would not it be nice if there were in place some sort of early warning system to let the investors know that a serious crash was approaching? It has been hard not to notice that financial bubbles play an important role in our economy.
The key characteristic in determining a bubble is the volatility of an asset's price, which, in the case of bubbles, is very high. For instance, the ability to tell when an asset is or is not in a bubble could have important ramifications in the regulation of the capital reserves of banks as well as for individual investors and retirement funds holding assets for the long term.
For banks, if their capital reserve holdings include large investments with unrealistic values due to bubbles, a shock to them could occur when the bubbles burst, potentially causing a run on the bank, as infamously happened with Lehman Brothers, and is currently happening with Dexia, a major European bank.
Many investors expect to get advice from someone more experienced than them to tell them how far a stock will rise or drop when they buy. But the real difficulty is to put the issue in perspective.
http://www.thefinancialexpress-bd.com/m ... _id=123455
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
It is crucial to protect our investment fund when the dreadful event occurs, excerpt from below article offers some useful tips.
How To Avoid A Stock Market Crash
Losing your hard-earned money in a stock market crash is no joke.
Let's take a serious look at how to avoid a stock market crash that might severely affect your portfolio.
I've tried to summarise in plain English, 14+ years of investing, trading, and observing the stock market. I've made and lost money - not millions - but just enough to feel the gain as well as pain. I hope you can gain from my pain. Here are some ways to Not Lose Too Much Money in the market, in no particular order:
(1) Always set a stop-loss
If I could write that a thousand times, I would. It's that important.
So, you research this stock for many days and find that the company is among the top performers in their industry and holds a promising future. You invest a good amount of money in it. One week later, the company announces some bad news and the stock falls steadily over the next few days. By the time you checked the stock, it was already down 40% from your purchase price. Sounds familiar? At least, it did to me.
The lesson here is - no matter how thorough your research is, always set a STOP-LOSS order right after you purchase a stock. This will greatly Limit your Losses, just in case of any Bad News. And, believe me, there are many aspects that are not under your control, that can negatively affect the prices of stocks that you own.
(2) Run Forrest... Run!
Most of you will know that I borrowed that line from the Oscar-winning movie Forrest Gump.
Apart from the fruit company that Forrest invested in and made a fortune, he doesn't relate much to the stock market, but the way he runs does -
you should RUN away from the market when the time is right, and be prepared to keep running for many years like he did. Forrest grew his beard, and you will grow your money during those years, if you start running based on clear signs from, where else, the market itself.
If you have been a keen observer of the markets, you will find that in most instances of stock market crash, you would've had a smaller loss if you had Followed the crowd and SOLD ALL of your long stock positions on DAY 1 of Crash.
Take a look at this example:
Stock price of Cisco (CSCO) on Sep 29, 2008, a high volume down day: 21.79, at market close.
Stock price of Cisco on Mar 9, 2009, when it started to turnaround: 13.62.
As you can see, you would've been better off selling CSCO in Sep-Oct 2008 at a 5-10% loss rather than suffering another 40% loss through Mar 2009.
The onset of a market crash is usually indicated by a huge down day where the major indices fall 5-10% or more.
You can identify such days by the first few hours after the market opens: Extremely high volume - the first few hours would've traded way more than the average daily trading volume; steady and controlled drop of stocks across the board.
Such down days are characteristic of the Big Boys Exiting from their stock holdings and they are very likely NOT going to come back anytime soon into the stock market.
(3) Diversify
Never invest all your money in one industry, even if that's the best performing one at that time. This is because times can change - once hot industries can turn ice-cold in the future and you would lose all your money in such a stock crash.
Even within an industry, always try to buy a basket of stocks, rather than just one. Why ? This is because individual companies can collapse due to mis-management even when other companies in the same industry are doing well. ETF's, or Exchange Trade Funds, are a good way to diversify your investments.
(4) Your Brokerage Account Balance $0.00
Why would you be looking to avoid a market crash? Mainly because you are afraid to lose a lot of money, right?
So, if you don't want to be affected much by a market crash, you should invest or trade only with the amount of money that you are willing to lose completely, and still be able to sleep well at night.
The exact amount is up to the individual, but a general rule of thumb is 10-20% of your net worth. Investing or Trading with only those funds you are willing to lose altogether is a cardinal rule of playing in the stock market, and is very much applicable in this context too.
(5) Don't be a Cheapskate
Don't buy a stock just because it's cheap. It maybe cheap for a good reason. It would become even cheaper after you buy and you would lose money.
So, stay away from cheap stocks to avoid a stock crash.
http://www.the-stock-market-crash.com/m ... crash.html
How To Avoid A Stock Market Crash
Losing your hard-earned money in a stock market crash is no joke.
Let's take a serious look at how to avoid a stock market crash that might severely affect your portfolio.
I've tried to summarise in plain English, 14+ years of investing, trading, and observing the stock market. I've made and lost money - not millions - but just enough to feel the gain as well as pain. I hope you can gain from my pain. Here are some ways to Not Lose Too Much Money in the market, in no particular order:
(1) Always set a stop-loss
If I could write that a thousand times, I would. It's that important.
So, you research this stock for many days and find that the company is among the top performers in their industry and holds a promising future. You invest a good amount of money in it. One week later, the company announces some bad news and the stock falls steadily over the next few days. By the time you checked the stock, it was already down 40% from your purchase price. Sounds familiar? At least, it did to me.
The lesson here is - no matter how thorough your research is, always set a STOP-LOSS order right after you purchase a stock. This will greatly Limit your Losses, just in case of any Bad News. And, believe me, there are many aspects that are not under your control, that can negatively affect the prices of stocks that you own.
(2) Run Forrest... Run!
Most of you will know that I borrowed that line from the Oscar-winning movie Forrest Gump.
Apart from the fruit company that Forrest invested in and made a fortune, he doesn't relate much to the stock market, but the way he runs does -
you should RUN away from the market when the time is right, and be prepared to keep running for many years like he did. Forrest grew his beard, and you will grow your money during those years, if you start running based on clear signs from, where else, the market itself.
If you have been a keen observer of the markets, you will find that in most instances of stock market crash, you would've had a smaller loss if you had Followed the crowd and SOLD ALL of your long stock positions on DAY 1 of Crash.
Take a look at this example:
Stock price of Cisco (CSCO) on Sep 29, 2008, a high volume down day: 21.79, at market close.
Stock price of Cisco on Mar 9, 2009, when it started to turnaround: 13.62.
As you can see, you would've been better off selling CSCO in Sep-Oct 2008 at a 5-10% loss rather than suffering another 40% loss through Mar 2009.
The onset of a market crash is usually indicated by a huge down day where the major indices fall 5-10% or more.
You can identify such days by the first few hours after the market opens: Extremely high volume - the first few hours would've traded way more than the average daily trading volume; steady and controlled drop of stocks across the board.
Such down days are characteristic of the Big Boys Exiting from their stock holdings and they are very likely NOT going to come back anytime soon into the stock market.
(3) Diversify
Never invest all your money in one industry, even if that's the best performing one at that time. This is because times can change - once hot industries can turn ice-cold in the future and you would lose all your money in such a stock crash.
Even within an industry, always try to buy a basket of stocks, rather than just one. Why ? This is because individual companies can collapse due to mis-management even when other companies in the same industry are doing well. ETF's, or Exchange Trade Funds, are a good way to diversify your investments.
(4) Your Brokerage Account Balance $0.00
Why would you be looking to avoid a market crash? Mainly because you are afraid to lose a lot of money, right?
So, if you don't want to be affected much by a market crash, you should invest or trade only with the amount of money that you are willing to lose completely, and still be able to sleep well at night.
The exact amount is up to the individual, but a general rule of thumb is 10-20% of your net worth. Investing or Trading with only those funds you are willing to lose altogether is a cardinal rule of playing in the stock market, and is very much applicable in this context too.
(5) Don't be a Cheapskate
Don't buy a stock just because it's cheap. It maybe cheap for a good reason. It would become even cheaper after you buy and you would lose money.
So, stay away from cheap stocks to avoid a stock crash.
http://www.the-stock-market-crash.com/m ... crash.html
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
5 Reasons Why Investing in Unit Trusts Are a Bad Idea
Wed, Jan 2, 2013 5:34 PM SGT
By Alvin Chow (guest contributor)
Be careful when agents try to sell you mutual funds (equivalent to unit trusts in Singapore). Since you do not have the expertise and time, you may feel it is better to leave your money with the professional fund managers.
It seems like the easy way out, but there are important issues that you need to understand before you decide.
1. Most actively managed funds cannot beat the benchmark or the index over the long run
John Bogle, the founder of Vanguard funds and a strong supporter of index funds, analysed the performance of US mutual funds in the 36-year period from 1970-2006.
~~ At the start of 1970 there were 355 equity funds.
~~~ By 2006, only 3 out of the original 355 funds beat the index consistently over the 36-year period.
Hence, your chances of picking the three winners are a slim 0.8 percent. You can improve your chances by investing in the index fund instead.
2. High fund management fees eats into your earnings
One of the reasons why it is so difficult for funds to beat the index is because the annual management fees (typically 2 to 3 percent) reduce your returns.
Moreover, the fees are fixed no matter how the fund performs – even if the fund had a negative return, the manager still gets paid. Over time, compound interest can aid you. But your annual fund management fees can compound against you as well.
3. Randomness of the market
Burton Malkiel (author of A Random Walk Down Wall Street) and many other efficient market believers feel that you cannot predict the market and profit from it. Fund managers cannot disprove the luck factor in their success or failure.
Nassim Taleb further addressed the randomness in his book, Fooled by Randomness. He mentioned that randomness very much determines the success or failure of managers. To answer how some managers managed to be spot on in stocks, he drew the analogy of coin-throwing where everyone has a 50-50 chance of the correct answer. For example, we begin with 100 managers, after one throw, 50 managers were right. After second throw, 25…third, 12… fourth, 6, after the fifth throw, 3.
This is a simplified explanation of how the top three funds can be spot on for five years in a row. But how long can they sustain their luck?
4. Restrictions for fund managers
Fund managers are restricted by the description of their respective funds.
Even if a golden opportunity comes knocking, they may not be able to seize it. If a particular sector or country is undergoing a downturn, they may have to stay invested as stated in their fund objectives.
An additional problem also arises when the fund gets too big. They may be pressured to keep the money invested, even when there are no good options. In the end, they may end up with second-rate investments. The restrictions and pressures piled on top of the randomness effect make it even more difficult for managers to beat the market.
5. Sales charges
Like management fees, sales charges (when you buy and sell) eat your earnings. It is true that there are a few funds that can beat the market each year.
But it is also often the case that this year’s top five funds will not be the next year’s top five. The chances of finding the top performing ones are slim. Buying and selling frequently will also incur a lot of sales charges, which greatly reduces your returns even if you managed to pick one or two correct ones.
If someone tries to sell you mutual funds, pose these arguments to them. If they can defend their products convincingly, they deserve to be considered.
http://sg.finance.yahoo.com/news/5-reas ... ector.html
Wed, Jan 2, 2013 5:34 PM SGT
By Alvin Chow (guest contributor)
Be careful when agents try to sell you mutual funds (equivalent to unit trusts in Singapore). Since you do not have the expertise and time, you may feel it is better to leave your money with the professional fund managers.
It seems like the easy way out, but there are important issues that you need to understand before you decide.
1. Most actively managed funds cannot beat the benchmark or the index over the long run
John Bogle, the founder of Vanguard funds and a strong supporter of index funds, analysed the performance of US mutual funds in the 36-year period from 1970-2006.
~~ At the start of 1970 there were 355 equity funds.
~~~ By 2006, only 3 out of the original 355 funds beat the index consistently over the 36-year period.
Hence, your chances of picking the three winners are a slim 0.8 percent. You can improve your chances by investing in the index fund instead.
2. High fund management fees eats into your earnings
One of the reasons why it is so difficult for funds to beat the index is because the annual management fees (typically 2 to 3 percent) reduce your returns.
Moreover, the fees are fixed no matter how the fund performs – even if the fund had a negative return, the manager still gets paid. Over time, compound interest can aid you. But your annual fund management fees can compound against you as well.
3. Randomness of the market
Burton Malkiel (author of A Random Walk Down Wall Street) and many other efficient market believers feel that you cannot predict the market and profit from it. Fund managers cannot disprove the luck factor in their success or failure.
Nassim Taleb further addressed the randomness in his book, Fooled by Randomness. He mentioned that randomness very much determines the success or failure of managers. To answer how some managers managed to be spot on in stocks, he drew the analogy of coin-throwing where everyone has a 50-50 chance of the correct answer. For example, we begin with 100 managers, after one throw, 50 managers were right. After second throw, 25…third, 12… fourth, 6, after the fifth throw, 3.
This is a simplified explanation of how the top three funds can be spot on for five years in a row. But how long can they sustain their luck?
4. Restrictions for fund managers
Fund managers are restricted by the description of their respective funds.
Even if a golden opportunity comes knocking, they may not be able to seize it. If a particular sector or country is undergoing a downturn, they may have to stay invested as stated in their fund objectives.
An additional problem also arises when the fund gets too big. They may be pressured to keep the money invested, even when there are no good options. In the end, they may end up with second-rate investments. The restrictions and pressures piled on top of the randomness effect make it even more difficult for managers to beat the market.
5. Sales charges
Like management fees, sales charges (when you buy and sell) eat your earnings. It is true that there are a few funds that can beat the market each year.
But it is also often the case that this year’s top five funds will not be the next year’s top five. The chances of finding the top performing ones are slim. Buying and selling frequently will also incur a lot of sales charges, which greatly reduces your returns even if you managed to pick one or two correct ones.
If someone tries to sell you mutual funds, pose these arguments to them. If they can defend their products convincingly, they deserve to be considered.
http://sg.finance.yahoo.com/news/5-reas ... ector.html
Re: Short Term Trading vs Investing, What's the Difference?
The Stock Market is very much manipulated by banks, proprietary traders and hired professionals to speculate f
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
"Wall Street Never changes,
~~ the Pockets Change,
~~~ the Suckers Change,
~~~~ the Stocks Change,
but Wall Street never changes, because Human Nature NEVER changes." ~ Jesse Livermore
Now, I realized that my overly cautious approach (insecurity in holding higher potential profit) in my investment style could be attributed to my dad's investment history.
He had lost a enormous chunk of his fortune around $200k (no opportunity to recoup his loss) through speculative trading in 1997, this partially resulted in downgrading from 4-room flat (business failure worsened the financial strain) to 3-room flat (7 family members squeezing into the pigeon hole) & cut back on luxury.
All these crisis may have contributed to my "hit and go" trading style all these years (instead of buy & hold for sizeable capital gain)
Livingston (Jesse Livermore) recounted a story of a big time player and how he maneuver his way to short the market:
http://www.masteryourfinance.com/forum/ ... ore#p24846
~~ the Pockets Change,
~~~ the Suckers Change,
~~~~ the Stocks Change,
but Wall Street never changes, because Human Nature NEVER changes." ~ Jesse Livermore
Now, I realized that my overly cautious approach (insecurity in holding higher potential profit) in my investment style could be attributed to my dad's investment history.
He had lost a enormous chunk of his fortune around $200k (no opportunity to recoup his loss) through speculative trading in 1997, this partially resulted in downgrading from 4-room flat (business failure worsened the financial strain) to 3-room flat (7 family members squeezing into the pigeon hole) & cut back on luxury.
All these crisis may have contributed to my "hit and go" trading style all these years (instead of buy & hold for sizeable capital gain)
http://www.masteryourfinance.com/forum/ ... ore#p24991candy_chia wrote: By Mossie on Friday, June 30, 2000 - 12:08 am:
Folks,
I have another story to tell. This time, it's a sad story.
Two days ago, I received word that my former remisier whom I dealt with during my days of folly (1995 to 1997), had just been served with a bankruptcy order. He's in his mid forties and he has 4 kids, the youngest just five years old. His wife has been forced to work again.
His problem was that his EGO "told" him that he could beat Mr Market. He always felt that he was bigger than Mr Market. So he kept on initiating new positions, trading the little squiggles, the up's and down's.
He was hoping that his trading profits provided his monthly salary. Before he knew it, he went beyond the point of no return. The losses amounted to millions.
I told him I had spotted reversal patterns and used volume studies to prove that Invisible Hands (insiders) were accumulating stock. I shared what I thought were basement prices using charts, volume studies and fundamentals.
You would have thought he would be interested in what I had to say. But, NO!
His reply stumped me till today?? He said my strategy was the right strategy PROVIDED that I had the capital to HOLD for the long term. As for him, he doesn't have the capital and so, he had to trade/contra to MAKE the capital. In my mind, I remember clearly my thoughts then; he wasn't Jesse Livermore.
Folks, let's stop & think about this for a while.
1) Are we OUR worse enemy?
2) What are some trading habits we have that are SELF DESTRUCTIVE?
3) Are we the lazy sort that expects "manna" & rumours to fall from heaven?
4) Do you expect tips to make you money OR are you the sort that believe in hard work, to find out facts for yourselves.
5) Do you lay BLAME on Yourself, the Market & Circumstances?
6) Or do you think YOU are (attributes of Fear & Greed) your Worse Enemy?
As an active investor, I ask myself these questions every week.I also remind myself, "BE DISCIPLINED or THE MARKET WILL DISCIPLINE ME". The Market is forever a disciplinarian, especially against those that are lazy & uninformed.
Folks, please set your own rules or the market will set its rules for you.
Livingston (Jesse Livermore) recounted a story of a big time player and how he maneuver his way to short the market:
http://www.masteryourfinance.com/forum/ ... ore#p24846
http://www.masteryourfinance.com/forum/ ... 3&start=30candy_chia wrote: Sharpen your Investment & Trading Decisions and Ride the Market Volatility
by ALVIN on OCTOBER 21, 2012
Most of us are interested in investing strategies and we would RARELY DO PERSONAL REFLECTION.
We will tend to Claim it is the Strategies that Did Not Work and there is nothing wrong with us. Therefore, we think it is the strategy that we need to change and Not the PERSON applying the strategy that Needs to be Changed.
Here is the irony, if we attribute poor fighting skills to the person, Why Do We Attribute POOR TRADING RESULTS to the Method?
You would agree with me if I say there is no one superior Kung Fu style.
It is the Training and the Honing of the Skills in one particular style that makes a master.
** 「知己知彼，百战不殆。」(zhījǐzhībǐ, bǎizhànbùdài)
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candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
"Experience taught me a few things.
One is to listen to your gut, no matter how good something sounds on paper.
The second is that you're generally better off sticking with What You KNOW.
And the third is that sometimes your best investments are the ones you don't make."
- Donald Trump
Wise advice by George Soros, It's NOT whether you're right or wrong that's important,
~~ but how much money you MAKE when you're Right and
~~~ how much you LOSE when you're Wrong.
The rise and fall of Andy Zaky
By Philip Elmer-DeWitt March 4, 2013: 1:07 PM ET
How an Internet-trained Apple analyst lost tens of millions of other peoples' money
First, some background.
He says he learned everything he knows about trading stocks on the Internet, where he developed a knack for Anticipating when a stock was Over- or Undersold
based on a variety of technical indicators, including the Chaikin Oscillator and the RSI (relative strength index).
It was the first of what was to be a series of spot-on predictions -- of Apple's quarterly earnings, of its iPhone unit sales, of the high and low points in Apple's wildly variable stock chart. On May 17, 2012, for example, two days before the stock jumped $30 and began its four-month run to over $700, he issued a public call to buy Apple at $533.52 a share -- advice that was rebroadcast by Daring Fireball's John Gruber to tens of thousands of readers. "This is only the fifth time Zaky has issued a buy on Apple," Gruber wrote. "He's four-for-four."
By then, Zaky had become something of a celebrity.
Zaky was mobbed by admirers from the moment he identified himself at the back of the room.
As Apple's share price climbed and Zaky's fame spread, investors clamored to get in.
"It iis amazing how poorly positioned the fund was," this investor writes.
~~"He based his trades too much on how Apple traded in the past and
~~~ completely discounted any black swan scenarios.
~~~~ He didn't follow any of his own previous advice about how to properly position yourself -- not Over-Allocating on Single Trades and having proper Upside and Downside Hedging."
Zaky had taken under management more than $10.6 million of Other People's Money and Lost it All.r of the people who lost money following Zaky's trades were people who were NOT sophisticated enough to unde had made recommendations about not putting more than a certain percentage of one's capital into following his Apple positions, but most people ignored that."
Most tellingly, when subscribers started asking whether they shouldn't be buying some downside protection, hedging their bets in case Apple kept falling,
~~ he grew increasing angry and defensive. "
~~~ By the time I got there he wasn't talking about risk management," says Smith.
~~~~ "He was talking about going all in."
When Zaky finally advised his readers to bail out of their call spreads, it was too late.
Although there is plenty of anger in the Google group -- talk of a lawsuit and what might happen if they ran into Zaky in a dark alley -- many members recognize that they share some of the blame for Putting More money than they Could AFFORD to LOSE into High-Risk Investment Vehicles.
Besides, no one forced them to follow the advice, as one member put it, of some punk on the Internet they'd never met.
Others, however, seem to be mostly interested in finding another investment guru who will promise, as Zaky did, easy gains with low risk.
On Bullish Cross Pro, Zaky has moved away from covering Apple and concentrated on trading the SPY, which tracks the S&P 500 and requires less faith in fundamentals.
Zaky declined to be interviewed for this article beyond a brief e-mailed comment:
"The bottom line is we didn't Expect Apple to crash 40% of its value inside of a few months and trade at a 10 P/E ratio given its cash flows. We were on the bull side of the Apple case and it didn't work. I wish I could give you more, but then it would just look like a complicated set of excuses. And what's the point."
http://tech.fortune.cnn.com/2013/03/04/ ... ish-cross/
One is to listen to your gut, no matter how good something sounds on paper.
The second is that you're generally better off sticking with What You KNOW.
And the third is that sometimes your best investments are the ones you don't make."
- Donald Trump
Wise advice by George Soros, It's NOT whether you're right or wrong that's important,
~~ but how much money you MAKE when you're Right and
~~~ how much you LOSE when you're Wrong.
The rise and fall of Andy Zaky
By Philip Elmer-DeWitt March 4, 2013: 1:07 PM ET
How an Internet-trained Apple analyst lost tens of millions of other peoples' money
First, some background.
He says he learned everything he knows about trading stocks on the Internet, where he developed a knack for Anticipating when a stock was Over- or Undersold
based on a variety of technical indicators, including the Chaikin Oscillator and the RSI (relative strength index).It was the first of what was to be a series of spot-on predictions -- of Apple's quarterly earnings, of its iPhone unit sales, of the high and low points in Apple's wildly variable stock chart. On May 17, 2012, for example, two days before the stock jumped $30 and began its four-month run to over $700, he issued a public call to buy Apple at $533.52 a share -- advice that was rebroadcast by Daring Fireball's John Gruber to tens of thousands of readers. "This is only the fifth time Zaky has issued a buy on Apple," Gruber wrote. "He's four-for-four."
By then, Zaky had become something of a celebrity.
Zaky was mobbed by admirers from the moment he identified himself at the back of the room.
As Apple's share price climbed and Zaky's fame spread, investors clamored to get in.
"It iis amazing how poorly positioned the fund was," this investor writes.
~~"He based his trades too much on how Apple traded in the past and
~~~ completely discounted any black swan scenarios.
~~~~ He didn't follow any of his own previous advice about how to properly position yourself -- not Over-Allocating on Single Trades and having proper Upside and Downside Hedging."
Zaky had taken under management more than $10.6 million of Other People's Money and Lost it All.r of the people who lost money following Zaky's trades were people who were NOT sophisticated enough to unde had made recommendations about not putting more than a certain percentage of one's capital into following his Apple positions, but most people ignored that."
Most tellingly, when subscribers started asking whether they shouldn't be buying some downside protection, hedging their bets in case Apple kept falling,
~~ he grew increasing angry and defensive. "
~~~ By the time I got there he wasn't talking about risk management," says Smith.
~~~~ "He was talking about going all in."
When Zaky finally advised his readers to bail out of their call spreads, it was too late.
Although there is plenty of anger in the Google group -- talk of a lawsuit and what might happen if they ran into Zaky in a dark alley -- many members recognize that they share some of the blame for Putting More money than they Could AFFORD to LOSE into High-Risk Investment Vehicles.
Besides, no one forced them to follow the advice, as one member put it, of some punk on the Internet they'd never met.
Others, however, seem to be mostly interested in finding another investment guru who will promise, as Zaky did, easy gains with low risk.
On Bullish Cross Pro, Zaky has moved away from covering Apple and concentrated on trading the SPY, which tracks the S&P 500 and requires less faith in fundamentals.
Zaky declined to be interviewed for this article beyond a brief e-mailed comment:
"The bottom line is we didn't Expect Apple to crash 40% of its value inside of a few months and trade at a 10 P/E ratio given its cash flows. We were on the bull side of the Apple case and it didn't work. I wish I could give you more, but then it would just look like a complicated set of excuses. And what's the point."
http://tech.fortune.cnn.com/2013/03/04/ ... ish-cross/
Re: Short Term Trading vs Investing, What's the Difference?
The Straits Times Published on Mar 12, 2013
By Anita Gabriel Senior Correspondent
Penny stocks plummet after record highs
Myanmar plays worst hit amid weak market and fresh trading curbs
THE rally in penny stocks that has taken many to record highs this year came to a crashing halt yesterday with a trader referring to the selldown as a "burst bubble".
Many shares that have shot up despite the firms not having impressive fundamentals were dumped amid a relatively weak market and fresh trading curbs that were imposed by some brokerages.
One stock, WE Holdings, lost 47 per cent. Others were down by as much as 20 per cent while the FTSE ST Catalist Index, which tracks 109 counters, mostly penny stocks, lost 5 per cent.
The FTSE Fledgling Index, which reflects the value of the bottom 2 per cent of stocks by market capitalisation, fell nearly 2 per cent. Both these indices have risen about 14 per cent this year, far outpacing the benchmark Straits Times Index's 4 per cent rise.
Retail investors who chased these stocks on the herd mentality are probably the biggest losers.
"Retail investors lost quite a bit of money today. The lesson is that it is never in their interest to chase a stock that is trading way above its book value," said remisier Alvin Yong.
Yesterday's decline only underscored a trend that has been in motion over recent weeks.
"It's not really unusual as most of the recently active penny stocks have started to slow down after a considerable run," said another remisier.
Realisation may have also set in that some of these shares were at levels well above their true value.
"The bubble has burst. Some of these counters were trading way ahead of their fundamentals with lofty expectations. There is a sense of reality that has hit investors that the shares have run ahead of the developments," said Mr Yong.
Myanmar plays topped the hit list yesterday. The steepest decline was felt by Catalist-listed WE Holdings, which was chased up recently on news of a potential tie-up and business venture in the new land of opportunities.
The counter reached a high of 18.4 cents on Feb 26. But it plunged six cents or 47 per cent to 6.8 cents yesterday, on trade of 410 million shares worth $39 million, the day's most active stock.
Another Myanmar play, Aussino Group, lost 2.2 cents or 12 per cent to 16.7 cents. Last year, the lifestyle product supplier was a subject of a reverse takeover led by a prominent Myanmar businessman to mark its shift into the country's budding energy sector. That helped the counter hit a high of 29 cents on Jan 31.
The corporate development is still in limbo and faces regulatory risk. The maker of bedlinen and towels has been suffering losses since 2008 and was placed on the Singapore Exchange watch-list in 2011. "There have been no updates on the deal and the company has yet to turn around. But it's already trading like a profitable firm," a dealer pointed out.
Ntegrator International shed two cents or 19 per cent to 8.4 cents. The communications network firm said in January that it secured $12 million in new contracts.
Investor favourite Yoma Strategic also came under selling pressure, falling 7.5 cents or 9 per cent to 75.5 cents.
"When these micro stocks fall, they fall very fast. Retail investors are not that nimble to get out and fear grips them. So, some of these counters will have few buyers which precipitates the fall," said remisier Ernest Lim.
The sharp fall in some of these counters could have also been a result of trading curbs from stockbroking houses that require more cash upfront so they can limit their exposure to a single counter. Broker UOB Kay Hian has imposed restricted online trading on 15 stocks, including WE Holdings, according to its website.
By Anita Gabriel Senior Correspondent
Penny stocks plummet after record highs
Myanmar plays worst hit amid weak market and fresh trading curbs
THE rally in penny stocks that has taken many to record highs this year came to a crashing halt yesterday with a trader referring to the selldown as a "burst bubble".
Many shares that have shot up despite the firms not having impressive fundamentals were dumped amid a relatively weak market and fresh trading curbs that were imposed by some brokerages.
One stock, WE Holdings, lost 47 per cent. Others were down by as much as 20 per cent while the FTSE ST Catalist Index, which tracks 109 counters, mostly penny stocks, lost 5 per cent.
The FTSE Fledgling Index, which reflects the value of the bottom 2 per cent of stocks by market capitalisation, fell nearly 2 per cent. Both these indices have risen about 14 per cent this year, far outpacing the benchmark Straits Times Index's 4 per cent rise.
Retail investors who chased these stocks on the herd mentality are probably the biggest losers.
"Retail investors lost quite a bit of money today. The lesson is that it is never in their interest to chase a stock that is trading way above its book value," said remisier Alvin Yong.
Yesterday's decline only underscored a trend that has been in motion over recent weeks.
"It's not really unusual as most of the recently active penny stocks have started to slow down after a considerable run," said another remisier.
Realisation may have also set in that some of these shares were at levels well above their true value.
"The bubble has burst. Some of these counters were trading way ahead of their fundamentals with lofty expectations. There is a sense of reality that has hit investors that the shares have run ahead of the developments," said Mr Yong.
Myanmar plays topped the hit list yesterday. The steepest decline was felt by Catalist-listed WE Holdings, which was chased up recently on news of a potential tie-up and business venture in the new land of opportunities.
The counter reached a high of 18.4 cents on Feb 26. But it plunged six cents or 47 per cent to 6.8 cents yesterday, on trade of 410 million shares worth $39 million, the day's most active stock.
Another Myanmar play, Aussino Group, lost 2.2 cents or 12 per cent to 16.7 cents. Last year, the lifestyle product supplier was a subject of a reverse takeover led by a prominent Myanmar businessman to mark its shift into the country's budding energy sector. That helped the counter hit a high of 29 cents on Jan 31.
The corporate development is still in limbo and faces regulatory risk. The maker of bedlinen and towels has been suffering losses since 2008 and was placed on the Singapore Exchange watch-list in 2011. "There have been no updates on the deal and the company has yet to turn around. But it's already trading like a profitable firm," a dealer pointed out.
Ntegrator International shed two cents or 19 per cent to 8.4 cents. The communications network firm said in January that it secured $12 million in new contracts.
Investor favourite Yoma Strategic also came under selling pressure, falling 7.5 cents or 9 per cent to 75.5 cents.
"When these micro stocks fall, they fall very fast. Retail investors are not that nimble to get out and fear grips them. So, some of these counters will have few buyers which precipitates the fall," said remisier Ernest Lim.
The sharp fall in some of these counters could have also been a result of trading curbs from stockbroking houses that require more cash upfront so they can limit their exposure to a single counter. Broker UOB Kay Hian has imposed restricted online trading on 15 stocks, including WE Holdings, according to its website.
Price is what you pay; Value is what you get
RayNg
RayNg
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
WHY investors LOSE money?
By Alvin March 16, 2013
I found that many people misunderstood risks or underestimated their tolerance for risks. Hence, I always want to share the ultimate reason why people lose money in the financial markets during my talks. It can be stocks, properties or any asset class. The reason is the same – they buy high and sell low.
Buy high and sell low
While we all KNOW that to make money is to buy low and sell high, most investors DO the opposite without realising.
For example, very few people were interested in the property market in 2004 or 2005. As prices went up in 2007 and even more so in 2012, investors started to pour their savings into properties. Is this buying low and selling high?
To them, this is entirely rational as they share their reasons for buying a property now (although research have shown that we decide first and reason later):
1. Property prices go up forever
2. Singapore is a tiny country with very little supply of land
3. Government has indicated to grow our population with immigrants
4. Rich Chinese and massive liquidity from U.S. are going to push up the prices
5. I am buying for my children because they won’t be able to afford a house in the future.
They believe you are a fool if you are not buying properties.
It is amazing to see many Singaporeans sharing a common insight into the future. It is as if they had gazed through the same crystal ball which I didn’t get to peer.
I am not sure how the future would unfold. Property prices can go either direction.
~~ But what I do know is that I sense “Irrational Exuberance” in property market now. The risks have definitely increased.
~~~ Looking at the newspapers I see countless property launches, courses, advertisements, etc.
~~~~ I think this is too much and good times do not last forever.
~~~~~ I remember vividly the property prices crashed after peaking in 1996 and it took 12 years to recover to the same price in 2008.
====> People will say “this time is different” and Sir John Templeton advised these are the four most expensive words in the English Language.
I believe Markets have Cycles and History will Repeat.
I saw the same exuberance in 2007 stock market.
The financial crisis unfolded in 2008 and the stock market crashed 50% from its peak.
How many people had lost money?
Those who LOST the MOST MONEY were those who bought Near the Market Top. They were enticed when everyone was making fast money. Subsequently, they dumped the stocks at low prices because they could not take the pain anymore. They follow the “buy high and sell low” mantra and they still think their investment decisions were rational.
Greed (Kiasu) and Fear (Kiasee)
The culprits for buying high and selling low are the feeling of greed and fear in us.
Everyday, like it or not, we make a lot of decisions based on emotions.
~~ We choose certain food for lunch because we ‘feel’ like eating that.
~~~ We buy certain design and colour of clothes because we ‘feel’ it is nice.
~~~~ We ‘like’ to do certain things because we ‘feel’ happy doing them.
We are not as rational as we think we are.
Emotions make us very poor investors because
==> GREED forces us to Buy when prices are High and
===> FEAR forces us to Sell at the Low.
Hence, the profitable way of buying low and selling high is very difficult to do.
~~ We all know to control our weight is to eat less and exercise more. It is easy to understand but very difficult to do.
~~~ Very few people are interested in the stock market or property market when prices are low. Most people would rather go shopping, watch movies or enjoy their hobbies than to look at the markets. However, they soon generate interest when they hear stock prices have risen and people are making money. The cycle of buying high and selling low repeats.
Investing is a path dependent – do not just look at returns
During my talks, I usually recommend to the audience the Permanent Portfolio (PP) as a solution to counter their inclination to buy high and sell low.
However, some still missed the point and focused on the wrong aspects of PP.
===> PP is decent to return about 8% per annum. Some are not satisfied with such returns.
====> They compare with an all-stock portfolio that can probably return 10% per year.
======> The fatal mistake is looking at one side of the coin – the potential profit. They did not look at the potential loss.
An all-stock portfolio can suffer up to 50% loss from the peak.
How many people can stomach such big drop without selling out in fear?
The beauty of PP is that the volatility is very low
~~ and based on Teh Hooi Ling’s 10-year backtest on PP, there is ONLY 1 DOWN Year in 2008.
~~~ The STI tanked more than 50% while PP only dropped a mere 7%.
~~~~ Most investors would not be scared out of position with PP.
For someone who chose to go for higher returns, and yet does not have the risk appetite to stomach the drawdown, would have sold the all-stock portfolio at the low. Hence, he will never achieve the 10% average annual returns.
Important points to remember
If you are not having successes in your investments, you have to REFLECT if you have been buying high and selling low. You will need to learn to reverse this process so that you can reverse your fortunes. Remember the following pointers when you invest:
1) Volatility can make you very rich or very poor. Make sure you can stomach the roller coaster ride.
2. The higher price you pay, the lesser holding power you will have when prices tank, the higher chance you will buy high and sell low.
3. Look at the Maximum Risk or drawdown over and above the returns. You will have no problem when your investment portfolio is performing. Think about how you will react if your portfolio value is halfed. Will you sell? If you will, you need a portfolio with lower volatility and drawdown.
4. Long term investors need more than patience. They need to Sit Tight when prices tank. Otherwise, they will never achieve the average returns in the long run.
http://www.bigfatpurse.com/2013/03/why- ... ose-money/
By Alvin March 16, 2013
I found that many people misunderstood risks or underestimated their tolerance for risks. Hence, I always want to share the ultimate reason why people lose money in the financial markets during my talks. It can be stocks, properties or any asset class. The reason is the same – they buy high and sell low.
Buy high and sell low
While we all KNOW that to make money is to buy low and sell high, most investors DO the opposite without realising.
For example, very few people were interested in the property market in 2004 or 2005. As prices went up in 2007 and even more so in 2012, investors started to pour their savings into properties. Is this buying low and selling high?
To them, this is entirely rational as they share their reasons for buying a property now (although research have shown that we decide first and reason later):
1. Property prices go up forever
2. Singapore is a tiny country with very little supply of land
3. Government has indicated to grow our population with immigrants
4. Rich Chinese and massive liquidity from U.S. are going to push up the prices
5. I am buying for my children because they won’t be able to afford a house in the future.
They believe you are a fool if you are not buying properties.
It is amazing to see many Singaporeans sharing a common insight into the future. It is as if they had gazed through the same crystal ball which I didn’t get to peer.
I am not sure how the future would unfold. Property prices can go either direction.
~~ But what I do know is that I sense “Irrational Exuberance” in property market now. The risks have definitely increased.
~~~ Looking at the newspapers I see countless property launches, courses, advertisements, etc.
~~~~ I think this is too much and good times do not last forever.
~~~~~ I remember vividly the property prices crashed after peaking in 1996 and it took 12 years to recover to the same price in 2008.
====> People will say “this time is different” and Sir John Templeton advised these are the four most expensive words in the English Language.
I believe Markets have Cycles and History will Repeat.
I saw the same exuberance in 2007 stock market.
The financial crisis unfolded in 2008 and the stock market crashed 50% from its peak.
How many people had lost money?
Those who LOST the MOST MONEY were those who bought Near the Market Top. They were enticed when everyone was making fast money. Subsequently, they dumped the stocks at low prices because they could not take the pain anymore. They follow the “buy high and sell low” mantra and they still think their investment decisions were rational.
Greed (Kiasu) and Fear (Kiasee)
The culprits for buying high and selling low are the feeling of greed and fear in us.
Everyday, like it or not, we make a lot of decisions based on emotions.
~~ We choose certain food for lunch because we ‘feel’ like eating that.
~~~ We buy certain design and colour of clothes because we ‘feel’ it is nice.
~~~~ We ‘like’ to do certain things because we ‘feel’ happy doing them.
We are not as rational as we think we are.
Emotions make us very poor investors because
==> GREED forces us to Buy when prices are High and
===> FEAR forces us to Sell at the Low.
Hence, the profitable way of buying low and selling high is very difficult to do.
~~ We all know to control our weight is to eat less and exercise more. It is easy to understand but very difficult to do.
~~~ Very few people are interested in the stock market or property market when prices are low. Most people would rather go shopping, watch movies or enjoy their hobbies than to look at the markets. However, they soon generate interest when they hear stock prices have risen and people are making money. The cycle of buying high and selling low repeats.
Investing is a path dependent – do not just look at returns
During my talks, I usually recommend to the audience the Permanent Portfolio (PP) as a solution to counter their inclination to buy high and sell low.
However, some still missed the point and focused on the wrong aspects of PP.
===> PP is decent to return about 8% per annum. Some are not satisfied with such returns.
====> They compare with an all-stock portfolio that can probably return 10% per year.
======> The fatal mistake is looking at one side of the coin – the potential profit. They did not look at the potential loss.
An all-stock portfolio can suffer up to 50% loss from the peak.
How many people can stomach such big drop without selling out in fear?
The beauty of PP is that the volatility is very low
~~ and based on Teh Hooi Ling’s 10-year backtest on PP, there is ONLY 1 DOWN Year in 2008.
~~~ The STI tanked more than 50% while PP only dropped a mere 7%.
~~~~ Most investors would not be scared out of position with PP.
For someone who chose to go for higher returns, and yet does not have the risk appetite to stomach the drawdown, would have sold the all-stock portfolio at the low. Hence, he will never achieve the 10% average annual returns.
Important points to remember
If you are not having successes in your investments, you have to REFLECT if you have been buying high and selling low. You will need to learn to reverse this process so that you can reverse your fortunes. Remember the following pointers when you invest:
1) Volatility can make you very rich or very poor. Make sure you can stomach the roller coaster ride.
2. The higher price you pay, the lesser holding power you will have when prices tank, the higher chance you will buy high and sell low.
3. Look at the Maximum Risk or drawdown over and above the returns. You will have no problem when your investment portfolio is performing. Think about how you will react if your portfolio value is halfed. Will you sell? If you will, you need a portfolio with lower volatility and drawdown.
4. Long term investors need more than patience. They need to Sit Tight when prices tank. Otherwise, they will never achieve the average returns in the long run.
http://www.bigfatpurse.com/2013/03/why- ... ose-money/
-
candy_chia
- Investing Mentor
- Posts: 1731
- Joined: Sun Jul 17, 2011 11:36 am
Re: Short Term Trading vs Investing, What's the Difference?
This is an original article written by Philip Loh; the edited version appeared in the Business Times 16th November 2005.
Seven Keys to Money Happiness
The government says that structural unemployment is here to stay. Some experts predicted that even in good years, we would still face a minimum unemployment rate of 3-4%; in bad years, probably even 6-7%. Your year end bonuses are cut. Your company told you that despite the economy recovering, you are still going to get a pay-freeze this year. For those who do get some increments, it is probably barely enough to cover the rate of inflation.
So you wonder when you would ever achieve financial bliss, the day when you can stop worrying about your finances or when you have enough money to survive on if you were to stop work now.
Surveys have shown that finances are the #1 worry among Singaporeans.
Sure, some say money cannot buy happiness. But as the Chinese saying goes, “Without money, all things are impossible.” After digging through some literature and studies done by academics, I can safely conclude that there is “in fact” a connection between income and happiness. Of course, you don’t have to be a multi-millionaire to be happy. In fact, based on some studies, having greater than $100,000 of annual household income does not contribute very much to financial happiness.
How Much you Earn isn’t everything; many other factors count in the equation of financial happiness.
One key factor is that you are in CONTROL of your personal finances. Control over your finances plays a critical role in determining your life’s happiness, more than control of your weight (though many women may disagree), your health, your occupation or your relationships.
After counselling hundreds of people on improving their personal finances, I have come to a conclusion that there some Critical HABITS that you Can CHANGE to Improve your Feeling of Control. Compiled below are six.
1. Budgeting
If you are earning an average income of $40,000 per annum, based on 45 working years, you will earn a total of around $1.8 million in today’s dollars. If inflation averages 3%, this becomes $4 million. But how much are you likely to save?
Some Singaporeans say, “If I earn significantly more than what I get now, I will be OK.” But honestly, you probably wouldn’t be.
I have clients that earn as little as $2,000 per month and as much as $50,000 per month.
They ALL have a problem with saving money. The more we earn, the more we spend.
People who have worked for at least a few years can easily testify to that. Some of the fresh graduates when I first meet them earn about $2,000 per month.
Three years down their working career, some of them draw as much as $5,000 to $6,000 per month. Guess what? They feel poorer than they first started out. This is naturally so when you have all your credit card bills to pay, your car mortgage to service, a family to support, country club membership to pay and many other miscellaneous expenses.
Therefore, it is wise to do a monthly cash flow budget, so that you know where your money goes.
It is perhaps the first step to Finding the Extra Dollars for Saving and Investment.
You don’t have to invest in fancy PDA or anything like that to do the job, a pen and a piece of paper would do it just as well.
2. Pay your bills as they come and minimise credit card debt
People who pay their bills as they come rather than stockpiling them are a happier lot.
Clearing your bill immediately would instantly free your mind from “worrisome debts”. I understand that in the local context, being able to afford a house, a car or home renovation means taking on debts, but as long as we are not spending too much, they don’t stress us out.
Credit-card debt is a totally different issue. If you rid your life of never-ending credit-card debts (i.e. carrying a balance on your card that you don’t pay off every month), you will definitely be much happier.
There is no benefit to prolong your debts.
Take the next 10% of what you are earning and use it to pay off your debts or repay the debt that has the minimum payment as compared to others. That way, you would be able to pay off bills fast and not incur further interest charges
3. Avoid punting and silly risks
Buying the occasional Toto and 4-D are some Singaporeans’ indulgences, which is all right, as long as we don’t have unreasonable expectations like: “I plan to retire by winning Toto”.
One thing that bothers me, however, is the number of “get rich quick” schemes advertised in The Straits Times nowadays.
Examples include headlines like ‘Secret and Proprietary Option Trading Methods’, ‘Empowerment Seminar to Create the Millionaire in you’, ‘Sure-Win Tips on Stock Picking’ and ‘Making Money in both Bull and Bear Markets’.
Clearly, the operators of these schemes understand human psychology as they entice people in getting rich fast. Who wouldn’t want to become a millionaire overnight? The question is: does it work?
Think about it, if these ‘get-rich quick’ schemes are effective, why don’t these operators use them to get rich themselves? It’s obvious, isn’t it? These schemes don’t work. I bet the scheme operator uses your money to do what you should be doing, paying their own mortgage loan and investing in shares.
The message is simple. High returns usually mean high risk as well. Don’t let anyone fool you into thinking you can get high returns with low risk. Some level of risk is needed to generate a reasonable return. So, investor should understand the risk of the investment they are going into so as to make an informed investment decision.
4. Protect your family and yourself
Doing all you can to shelter your family and yourself from financial hardship is very important.
Once you have set aside an emergency fund of 3 to 6 months of living expenses, you should be seriously thinking of taking care of three protection needs: Death, Medical and Disability – three cornerstones of insuring “You”, which is your greatest asset. I believe that you should be buying as little insurance as you need.
But for most people, these protection needs are quite a lot. Let me elaborate a little on the three cornerstones I have just mentioned.
~~ Death cover provides a pool of funds to your dependents in the event of your untimely death, to make sure that the family that you so painstaking work for does not tumble when you are gone, and that they can continue to live life as normally as they previously did. Nothing can compensate the death of a loved one, but if the financial aspect is well taken care of, it makes things a little more bearable.
~~~ Medical cover ensures that a significant part of your medical bills are taken care of in the event of an accident or a severe illness.
Some would suggest that they don’t need any medical insurance because they are rich enough to pay for their medical bills. In fact, many may be rich enough to pay but not liquid enough. One of the most stressful things when you are sick is deciding which assets you have to liquidate to pay the medical bills. Medical cost is one thing that inflates more rapidly than inflation itself. And given that the Singapore government aims to reduce health subsidy in the upcoming years, medical cover becomes even more crucial.
~~~~ Disability cover is an often ignored protection that most people should be seriously considering.
The whole idea is to insure your earning ability, which is one’s greatest asset.
What we are telling you is NOT that you should insure the “golden goose” that lay the golden eggs; neither should we attempt to insure the “golden eggs”.
But what we should be insuring is the “golden goose’s ABILITY to lay golden eggs”.
===> Most insurance plans Only Pay Out when the golden goose drops Dead or is Critically ill, but this is not enough. What is the golden goose is partially disabled?
For example, almost no insurance plan would pay a teacher if she loses her voice and have to quit because she can no longer teach.
Similarly, no insurance plan would pay a pilot if he is grounded because his diabetic condition affects his eye sight.
However, a properly designed disability income program would ensure a monthly income payout if you cannot perform your primary occupation because of an injury, accident or any illness (this need NOT be one of the 30 major illness).
5. Live well below your means
Being FRUGAL is the cornerstone of wealth building.
Yet, too often, the big spenders are so sensationalised by the local media that we receive the false impression that all millionaires lead an extravagant lifestyle. Nothing can be further from the truth.
People whom I talk to who are financially carefree are usually living well below their income. They still pamper themselves with the occasional splurges and frequent holidays. But trust me, these folks do their sums.
You should always discuss with your spouse on both your spending habits and hopefully arrive at an amicable consensus.
Note that most people will never become wealthy in one generation if they are married to people who are big spenders. A couple cannot accumulate wealth if one of them is a hyperconsumer. Few can sustain profligate habits and simultaneously build wealth. Singaporeans generally build wealth by keeping a tight budget and controlling their expenses, and they maintain their affluent status the same way.
==> One suggestion is to live in a less affluent neighbourhood than what you can afford.
This may sound counter-intuitive, as a typical Singaporean’s dream is to live in the biggest and most expensive house that he can afford.
Imagine the amount of money you have to spend to “put up a front” if you are rubbing shoulder with the ultra-rich. When you upgrade to a luxurious condo, you are not only required to service a bigger mortgage, your whole lifestyle would have to be upgraded just to keep pace with your neighbours and not be the “odd ball” in the neighbourhood.
I could literally see the financial disaster many of my clients are courting when they bite a bigger piece of cake than they can swallow by buying an expensive luxurious condo.
Remember, “The lower your lifestyle, the greater your true wealth”. How so?
- Say A earns $50,000 a year, spends $20,000 in a year and has $200,000 in saving.
- B earns $300,000 a year and spends $250,000 in a year and has $1.5m in saving.
- According to my definition of wealth, A is wealthier than B because if both of them lose their income, A can survive for 10 years based on his saving of $200,000 whereas B can only live for 6 years.
Wealth, to me, is the duration your savings can last based on the lifestyle you are used to if you stop work now.
This is the same definition that Dr. Thomas Stanley used in his bestseller “Millionaires next door”. The jargon ‘Financial Independence’ is then defined as the point where if you stop work immediately, you have enough to live comfortably for the rest of your life.
6. Don’t plan to save cash
Look at your monthly budget. You should have $600 left over every month and save $7,200 a year but where is the money? From my experience, Singaporean can’t save cash, or they simply save only to spend it all later. These folks faithfully put aside $600 every month, only to wipe it all off with a long December holiday. Some prefer to spurge on furniture and electronic gadgets, others on cars and house renovations. The money vaporises nevertheless.
A typical Singaporean worker’s mindset is “I work so hard so I need to spend money to pamper myself”.
Notice the logic, work hard and spend hard, work harder and spend harder.
The only solution to this vicious cycle is to ensure that you have some structural saving program to help you set aside a certain percentage of your income every month.
There is this interesting argument on whether you should buy a permanent insurance plan or a term policy and invest the difference. In my opinion, IT DOESN’T MATTER! We can argue till the cows come home, but the
ONLY important thing to do is simply to get STARTED.
Most Singaporeans simply can’t get themselves off the starting block. How are you going to finish the race if you don’t get started in the first place?
Some practical tips are listed below.
• Top up as much as possible into your CPF account if you are a self-employed.
• If you are above the 40 years old, make sure you use your entire SRS cap
every year.
• Get yourself started in a profit participating insurance policy or variable life
policy or ‘Buy Term and Invest the Difference’. Just get started in ‘something’
and see it through.
• Be persistent in setting aside at least 10-15% of your income every month;
never waiver in this.
• Immediately invest or allocate any unexpected windfall you receive, like a bigger than usual bonus. Chuck it away before you spend it away.
7. Learn from the financial mistakes you commit
No matter how well you plan, things may go wrong sometimes.
Thus, it is important to keep your composure and work yourself out of the difficult situation.
~~ The road to financial success is paved with mines and bobby traps.
If you are caught in one or two, don’t give up. Just pick up the pieces and move on.
~~~ Remember that ‘what does not kill you only makes you Stronger and Wiser’. Martin Luther King once said in his famous speech, “The measure of a man is not what he stands in moment of comfort and convenience but what he stands in challenge and controversy.”
~~~~ Additionally, one successful financial planner stated, “Your growth into a financial adult is usually accelerated during the most challenging times.”
~~~~~ We all strive for the mountain top experience – the time when we are recognised for our hard work – but real growth is found in the valley.
Everyone strives to attain the mountain top experience, but in fact, no one can live on the peak of Everest for long. As one acclaimed mountaineer put it, “You can spend a maximum of 20 minutes on the peak of Everest. But you spend any longer there, you would die. You either run out of oxygen or sunlight and there are corpses there to prove it.”
~~~~~~ Hence, when you are the staring at the worst financial storm of your life, remember the rainbow could be just minutes away.
Set your heart on making the above seven habits a part of your life. If you find it too hard to make drastic changes to your financial habits all at once, focus and work on them one at a time.
The most important thing is to Get STARTED and NEVER Give Up. And see you in the financial heavens soon!
http://www.opl.sg/pdfs/BT%20road%20to%2 ... heaven.pdf
Seven Keys to Money Happiness
The government says that structural unemployment is here to stay. Some experts predicted that even in good years, we would still face a minimum unemployment rate of 3-4%; in bad years, probably even 6-7%. Your year end bonuses are cut. Your company told you that despite the economy recovering, you are still going to get a pay-freeze this year. For those who do get some increments, it is probably barely enough to cover the rate of inflation.
So you wonder when you would ever achieve financial bliss, the day when you can stop worrying about your finances or when you have enough money to survive on if you were to stop work now.
Surveys have shown that finances are the #1 worry among Singaporeans.
Sure, some say money cannot buy happiness. But as the Chinese saying goes, “Without money, all things are impossible.” After digging through some literature and studies done by academics, I can safely conclude that there is “in fact” a connection between income and happiness. Of course, you don’t have to be a multi-millionaire to be happy. In fact, based on some studies, having greater than $100,000 of annual household income does not contribute very much to financial happiness.
How Much you Earn isn’t everything; many other factors count in the equation of financial happiness.
One key factor is that you are in CONTROL of your personal finances. Control over your finances plays a critical role in determining your life’s happiness, more than control of your weight (though many women may disagree), your health, your occupation or your relationships.
After counselling hundreds of people on improving their personal finances, I have come to a conclusion that there some Critical HABITS that you Can CHANGE to Improve your Feeling of Control. Compiled below are six.
1. Budgeting
If you are earning an average income of $40,000 per annum, based on 45 working years, you will earn a total of around $1.8 million in today’s dollars. If inflation averages 3%, this becomes $4 million. But how much are you likely to save?
Some Singaporeans say, “If I earn significantly more than what I get now, I will be OK.” But honestly, you probably wouldn’t be.
I have clients that earn as little as $2,000 per month and as much as $50,000 per month.
They ALL have a problem with saving money. The more we earn, the more we spend.
People who have worked for at least a few years can easily testify to that. Some of the fresh graduates when I first meet them earn about $2,000 per month.
Three years down their working career, some of them draw as much as $5,000 to $6,000 per month. Guess what? They feel poorer than they first started out. This is naturally so when you have all your credit card bills to pay, your car mortgage to service, a family to support, country club membership to pay and many other miscellaneous expenses.
Therefore, it is wise to do a monthly cash flow budget, so that you know where your money goes.
It is perhaps the first step to Finding the Extra Dollars for Saving and Investment.
You don’t have to invest in fancy PDA or anything like that to do the job, a pen and a piece of paper would do it just as well.
2. Pay your bills as they come and minimise credit card debt
People who pay their bills as they come rather than stockpiling them are a happier lot.
Clearing your bill immediately would instantly free your mind from “worrisome debts”. I understand that in the local context, being able to afford a house, a car or home renovation means taking on debts, but as long as we are not spending too much, they don’t stress us out.
Credit-card debt is a totally different issue. If you rid your life of never-ending credit-card debts (i.e. carrying a balance on your card that you don’t pay off every month), you will definitely be much happier.
There is no benefit to prolong your debts.
Take the next 10% of what you are earning and use it to pay off your debts or repay the debt that has the minimum payment as compared to others. That way, you would be able to pay off bills fast and not incur further interest charges
3. Avoid punting and silly risks
Buying the occasional Toto and 4-D are some Singaporeans’ indulgences, which is all right, as long as we don’t have unreasonable expectations like: “I plan to retire by winning Toto”.
One thing that bothers me, however, is the number of “get rich quick” schemes advertised in The Straits Times nowadays.
Examples include headlines like ‘Secret and Proprietary Option Trading Methods’, ‘Empowerment Seminar to Create the Millionaire in you’, ‘Sure-Win Tips on Stock Picking’ and ‘Making Money in both Bull and Bear Markets’.
Clearly, the operators of these schemes understand human psychology as they entice people in getting rich fast. Who wouldn’t want to become a millionaire overnight? The question is: does it work?
Think about it, if these ‘get-rich quick’ schemes are effective, why don’t these operators use them to get rich themselves? It’s obvious, isn’t it? These schemes don’t work. I bet the scheme operator uses your money to do what you should be doing, paying their own mortgage loan and investing in shares.
The message is simple. High returns usually mean high risk as well. Don’t let anyone fool you into thinking you can get high returns with low risk. Some level of risk is needed to generate a reasonable return. So, investor should understand the risk of the investment they are going into so as to make an informed investment decision.
4. Protect your family and yourself
Doing all you can to shelter your family and yourself from financial hardship is very important.
Once you have set aside an emergency fund of 3 to 6 months of living expenses, you should be seriously thinking of taking care of three protection needs: Death, Medical and Disability – three cornerstones of insuring “You”, which is your greatest asset. I believe that you should be buying as little insurance as you need.
But for most people, these protection needs are quite a lot. Let me elaborate a little on the three cornerstones I have just mentioned.
~~ Death cover provides a pool of funds to your dependents in the event of your untimely death, to make sure that the family that you so painstaking work for does not tumble when you are gone, and that they can continue to live life as normally as they previously did. Nothing can compensate the death of a loved one, but if the financial aspect is well taken care of, it makes things a little more bearable.
~~~ Medical cover ensures that a significant part of your medical bills are taken care of in the event of an accident or a severe illness.
Some would suggest that they don’t need any medical insurance because they are rich enough to pay for their medical bills. In fact, many may be rich enough to pay but not liquid enough. One of the most stressful things when you are sick is deciding which assets you have to liquidate to pay the medical bills. Medical cost is one thing that inflates more rapidly than inflation itself. And given that the Singapore government aims to reduce health subsidy in the upcoming years, medical cover becomes even more crucial.
~~~~ Disability cover is an often ignored protection that most people should be seriously considering.
The whole idea is to insure your earning ability, which is one’s greatest asset.
What we are telling you is NOT that you should insure the “golden goose” that lay the golden eggs; neither should we attempt to insure the “golden eggs”.
But what we should be insuring is the “golden goose’s ABILITY to lay golden eggs”.
===> Most insurance plans Only Pay Out when the golden goose drops Dead or is Critically ill, but this is not enough. What is the golden goose is partially disabled?
For example, almost no insurance plan would pay a teacher if she loses her voice and have to quit because she can no longer teach.
Similarly, no insurance plan would pay a pilot if he is grounded because his diabetic condition affects his eye sight.
However, a properly designed disability income program would ensure a monthly income payout if you cannot perform your primary occupation because of an injury, accident or any illness (this need NOT be one of the 30 major illness).
5. Live well below your means
Being FRUGAL is the cornerstone of wealth building.
Yet, too often, the big spenders are so sensationalised by the local media that we receive the false impression that all millionaires lead an extravagant lifestyle. Nothing can be further from the truth.
People whom I talk to who are financially carefree are usually living well below their income. They still pamper themselves with the occasional splurges and frequent holidays. But trust me, these folks do their sums.
You should always discuss with your spouse on both your spending habits and hopefully arrive at an amicable consensus.
Note that most people will never become wealthy in one generation if they are married to people who are big spenders. A couple cannot accumulate wealth if one of them is a hyperconsumer. Few can sustain profligate habits and simultaneously build wealth. Singaporeans generally build wealth by keeping a tight budget and controlling their expenses, and they maintain their affluent status the same way.
==> One suggestion is to live in a less affluent neighbourhood than what you can afford.
This may sound counter-intuitive, as a typical Singaporean’s dream is to live in the biggest and most expensive house that he can afford.
Imagine the amount of money you have to spend to “put up a front” if you are rubbing shoulder with the ultra-rich. When you upgrade to a luxurious condo, you are not only required to service a bigger mortgage, your whole lifestyle would have to be upgraded just to keep pace with your neighbours and not be the “odd ball” in the neighbourhood.
I could literally see the financial disaster many of my clients are courting when they bite a bigger piece of cake than they can swallow by buying an expensive luxurious condo.
Remember, “The lower your lifestyle, the greater your true wealth”. How so?
- Say A earns $50,000 a year, spends $20,000 in a year and has $200,000 in saving.
- B earns $300,000 a year and spends $250,000 in a year and has $1.5m in saving.
- According to my definition of wealth, A is wealthier than B because if both of them lose their income, A can survive for 10 years based on his saving of $200,000 whereas B can only live for 6 years.
Wealth, to me, is the duration your savings can last based on the lifestyle you are used to if you stop work now.
This is the same definition that Dr. Thomas Stanley used in his bestseller “Millionaires next door”. The jargon ‘Financial Independence’ is then defined as the point where if you stop work immediately, you have enough to live comfortably for the rest of your life.
6. Don’t plan to save cash
Look at your monthly budget. You should have $600 left over every month and save $7,200 a year but where is the money? From my experience, Singaporean can’t save cash, or they simply save only to spend it all later. These folks faithfully put aside $600 every month, only to wipe it all off with a long December holiday. Some prefer to spurge on furniture and electronic gadgets, others on cars and house renovations. The money vaporises nevertheless.
A typical Singaporean worker’s mindset is “I work so hard so I need to spend money to pamper myself”.
Notice the logic, work hard and spend hard, work harder and spend harder.
The only solution to this vicious cycle is to ensure that you have some structural saving program to help you set aside a certain percentage of your income every month.
There is this interesting argument on whether you should buy a permanent insurance plan or a term policy and invest the difference. In my opinion, IT DOESN’T MATTER! We can argue till the cows come home, but the
ONLY important thing to do is simply to get STARTED.
Most Singaporeans simply can’t get themselves off the starting block. How are you going to finish the race if you don’t get started in the first place?
Some practical tips are listed below.
• Top up as much as possible into your CPF account if you are a self-employed.
• If you are above the 40 years old, make sure you use your entire SRS cap
every year.
• Get yourself started in a profit participating insurance policy or variable life
policy or ‘Buy Term and Invest the Difference’. Just get started in ‘something’
and see it through.
• Be persistent in setting aside at least 10-15% of your income every month;
never waiver in this.
• Immediately invest or allocate any unexpected windfall you receive, like a bigger than usual bonus. Chuck it away before you spend it away.
7. Learn from the financial mistakes you commit
No matter how well you plan, things may go wrong sometimes.
Thus, it is important to keep your composure and work yourself out of the difficult situation.
~~ The road to financial success is paved with mines and bobby traps.
If you are caught in one or two, don’t give up. Just pick up the pieces and move on.
~~~ Remember that ‘what does not kill you only makes you Stronger and Wiser’. Martin Luther King once said in his famous speech, “The measure of a man is not what he stands in moment of comfort and convenience but what he stands in challenge and controversy.”
~~~~ Additionally, one successful financial planner stated, “Your growth into a financial adult is usually accelerated during the most challenging times.”
~~~~~ We all strive for the mountain top experience – the time when we are recognised for our hard work – but real growth is found in the valley.
Everyone strives to attain the mountain top experience, but in fact, no one can live on the peak of Everest for long. As one acclaimed mountaineer put it, “You can spend a maximum of 20 minutes on the peak of Everest. But you spend any longer there, you would die. You either run out of oxygen or sunlight and there are corpses there to prove it.”
~~~~~~ Hence, when you are the staring at the worst financial storm of your life, remember the rainbow could be just minutes away.
Set your heart on making the above seven habits a part of your life. If you find it too hard to make drastic changes to your financial habits all at once, focus and work on them one at a time.
The most important thing is to Get STARTED and NEVER Give Up. And see you in the financial heavens soon!
http://www.opl.sg/pdfs/BT%20road%20to%2 ... heaven.pdf