As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Monday, 31 August 2009

Gaining insights to investing

BT-Citibank Young Investors’ Forum
Published August 31, 2009

One of the five main speakers, Lumiere Capital fund manager Wong Yu Liang, said that it was important for youths today to be knowledgeable about investment management.

'Compounding is an often overlooked aspect of wealth accumulation. Having a sensible investment approach that delivers a positive return, coupled with the power of compounding, is what will create wealth in the long term,' he told BT. 'This is especially applicable for youths who have a long investment timeframe ahead of them.'

..........

Everyone should have at least a basic knowledge of investment management, said Mr Yee. 'It is a critical part of a person's skill set for life. Too many people focus on the income generation part of knowledge, at the expense of not knowing enough about the cost optimisation and investment management aspect.'

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CreateWealth8888 once said:

http://createwealth8888.blogspot.com/2009/07/best-secret-in-investment-and-trading.html

Sunday, 30 August 2009

Is Home For You to Retire Or to fund your Retirement?


You probably heard those home buyers at new property launches being interviewed saying: "This is for retirement investment." There are just too many home buyers thinking that their residential home can be used to fund their retirement.

But, before you start thinking and counting the value of your residential home and your estimate of its appreciation rate. You may want to start thinking about the implications. There are just too many uncertainties in your future, and counting your residential home may mislead you into saving too little or not investing wisely.

A residential home is a lot more than something you can just trade in for another investment. After living in your residential home for many, many years, and in your old age you are likely to develop emotional ties. It has neighbours that you like or close friends nearby.

Your home may represent years of your effort in tailoring it to meet your tastes. The furniture, decorations, mementos, and even quirks are things that you have learned to enjoy. It may have a emotional or support system that helps you to calm down when you reach home to relax even though you are having troubles in your office or elsewhere.

So, are you too thinking that your residential home is part of your retirement fund. I don't. I treat it as contingency fund of the last resort when everything else fails.


Read? Home for living and not for profit Taking


Your Residential Housing Loan How Long Will It Take To Pay Off?



Well. It depends on your future earning power. But, assuming any increases in your future earning goes into your retirement and your kids' University education fund, and also to support your ever increasing family expenses till one or more kids start working.

Your size of earning income at the time of taking up your housing loan is a good snapshot what can be expected. The above table gives you an idea for how long you will need to "kowtow" to your bosses and slog in your office and the chance of getting out of Rat Race is not an early option.

Saturday, 29 August 2009

Will You Try To Pay Off Your Housing Loan ASAP If You Have One?

One young lady asked me this question at the cbox: "Will You Try To Pay Off Your Housing Loan ASAP If You Have One?"

I believe she was referring to housing loan for residential purpose i.e My Home

For Investing in Property.
Investing in Property is far safer than stocks? - Part 2 and I posted many articles under Label: Education - Property More articles related to discussion on properties

For residential home, let begins the discussion with a quote from Albert Yang.

"A man is not a man; until there is a house that he may call his castle. A woman is not a woman; until she has a place she may call her home. And neither a man nor a woman can say anything about their house, until they are the masters of it, and own it outright and unencumbered."

Many people will tell you that Housing Loan is the cheapest loan in town and you should take advantage of it or else you look like a fool. If that it is really true, why don't you buy the cheapest rice, eat at cheapest hawker stall, and do your shopping at the cheapest supermarket, etc. But life is not like that. Not anything that is the cheapest will offer you a better option. Maybe it is just not for you.

Mortgage Loans

Banks love mortgages as home loans are secured loans. Secured means the bank has the ability to take the home back if you don’t make payments on the loan. Banks often have wars with each other to attract new home buyers with low initial interest rates for home loan.

Often, we hear people said: "I bought a new home at XXX for XXX". Your new home? Have you fully paid up your new home? If it is not fully paid up, then, it is never yours yet, it belongs to your bank, and your bank has kindly allowed you and your family to live there provided you don't ever miss your mortgage payment or else soon you will be homeless.

Next, you may consider how soon do you want to be NET WORTH POSITIVE? In 10, 15, 20, 25 or 30 years time?

Your net worth calculation excludes your residential home as an asset; but includes your outstanding housing loan payment as liabilities.

Net Worth = Sum of All Assets - Sum of All Liabilities.

If you are a very savvy investor who can generate assets at the rate that is faster than your liabilities with those extra cash available and you are already NET WORTH POSITIVE, why should you pay off your housing loan any sooner? You are from a different world from the man who buys a house to call his castle and his wife has a place she may call her home.

You may wish to read more ...

Four Financial Progressive Stages

Debt free and that to me is richness

So my answer to the young lady is to pay off asap the housing loan and quickly moves to Financial Stage 2 and try not to ever go back to Financial Stage 1. Cheers!

Friday, 28 August 2009

Psychology of Losses in Money

Losing money activates fear and pain in the brain, according to Dr Ben Seymour from the Wellcome Trust Centre for Neuroimaging at University College in London. When research participants lost money through gambling, the area in their brains normally associated with fear and pain was triggered. The same region allows the brain to predict imminent danger and activates defensive actions – leading Dr Seymour to conclude that there’s biological truth behind the clich√©d phrase “financial pain.”

The brain’s ancient evolutionary system of motivation, fear, and pain has been hijacked by contemporary financial losses and gains. That is, we want to avoid losing money the same way we want to avoid experiencing pain because fiscal loss and physical pain are connected in our brains. Even just anticipating or thinking about losing money activates that region of our brains (the striatum). This is the psychology of money – or more accurately, the physiology of money.
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CreateWeakth8888:


If you want to participate in the stock market, you will have no choice but to accept the fact that you will at some points in the future encounter real losses or paper losses.

You have to live to overcome this psychology of money or physiology of money so that you will have a less painful investing journey.

Your first trade in a new stock will be the most painful one if you are hit with a paper loss after buying. But, if you have holding power, learn to relax, this paper loss is not going to kill or ruin your financial life.

Market goes up and market crashes down is a normal behavior of the market. If the market allows you to make reasonably good returns on your newest stock, do take it. With the realized profit in your pocket, then wait for opportunity to re-enter this stock again.

Your psychology of paper losses on this second trade will be less painful if the market turns against you. Continue to execute this strategy successfully and you will one day realize that you have overcome psychology of money – or more accurately, the physiology of money.

Fire Your Broker!

Although, your broker earns very little commissions from you when you trade via Internet Online Trading platform, but we still expect him/her to provide some courtesy services like sending you market reports and breaking news, and attends promptly to your emergency calls on trading errors.

If your broker doesn't do that, fire him/her now. Find another broker who is willing to provide you with some courtesy services. Please don't be lazy as it only takes you to fill up a form to get a new broker. You can have as many brokers as you like and then you can choose the best one to give your business.

Thursday, 27 August 2009

Olam - Contra $2.62, ROC 6.3%

Round 5: ROC 6.3%, 3 days, B $2.45 S $2.62

Round 4: ROC 5.9%, 15 days, B $2.26 S $2.41
Round 3: ROC 9.6%, 8 days, B $2.18 S $2.40
Round 2: ROC 7.0%, 8 days, B $2.18 S $2.35
Round 1: ROC 9.8%, 161 days, B $1.37 S $1.52

Making the next pillow in progress. Cheers!

Tuesday, 25 August 2009

Mutlibagger Stocks?

Many investors love to own multibagger stocks in their long term core portfolio.

What is multibagger stocks?

In the Stock market terminology, a multibagger means a stock that goes up in price multiple times the initial cost of investment e.g. 1x, 2x, 3x, 4x, 5x, etc

Where can we find multibagger stocks?

Often we may find potential multibagger stocks from those high risk penny stocks or after a prolong Bear market where the stock price of solid companies are beaten to rock bottom. These beaten down stocks are the better ones for you to pick up and can also be potential multibagger stocks.

But, do you have what it takes to buy and hold it further instead of taking some nice profits. Are you ready to pick up your next multibagger stocks if the market corrects itself deeply in Sep/Oct 09?

The Mistakes We Make and Why We Make Them

by Meir Statman
Monday, August 24, 2009

What was I thinking?

If there's one question that investors have asked themselves over the past year and a half, it's that one. If only I had acted differently, they say. If only, if only, if only.

Yet here's the problem: While we know that we made investment mistakes, and vow not to repeat them, most people have only the vaguest sense of what those mistakes were, or, more important, why they made them. Why did we think and feel and behave as we did? Why did we act in a way that today, in hindsight, seems so obviously stupid? Only by understanding the answer to these questions can we begin to improve our financial future.

This is where behavioral finance comes in. Most investors are intelligent people, neither irrational nor insane. But behavioral finance tells us we are also normal, with brains that are often full and emotions that are often overflowing. And that means we are normal smart at times, and normal stupid at others.

The trick, therefore, is to learn to increase our ratio of smart behavior to stupid. And since we cannot (thank goodness) turn ourselves into computer-like people, we need to find tools to help us act smart even when our thinking and feelings tempt us to be stupid.

Let me give you one example. Investors tend to think about each stock we purchase in a vacuum, distinct from other stocks in our portfolio. We are happy to realize "paper" gains in each stock quickly, but procrastinate when it comes to realizing losses. Why? Because while regret over a paper loss stings, we can console ourselves in the hope that, in time, the stock will roar back into a gain. By contrast, all hope would be extinguished if we sold the stock and realized our loss. We would feel the searing pain of regret. So we do pretty much anything to avoid that pain—including holding on to the stock long after we should have sold it. Indeed, I've recently encountered an investor who procrastinated in realizing his losses on WorldCom stock until a letter from his broker informed him that the stock was worthless.

Successful professional traders are subject to the same emotions as the rest of us. But they counter it in two ways. First, they know their weakness, placing them on guard against it. Second, they establish "sell disciplines" that force them to realize losses even when they know that the pain of regret is sure to follow.

So in what other ways do our misguided thoughts and feelings get in the way of successful investing—not to mention increasing our stress levels? And what are the lessons we should learn, once we recognize those cognitive and emotional errors? Here are eight of them.

No. 1

Goldman Sachs is faster than you.

There is an old story about two hikers who encounter a tiger. One says: There is no point in running because the tiger is faster than either of us. The other says: It is not about whether the tiger is faster than either of us. It is about whether I'm faster than you. And with that he runs away. The speed of the Goldman Sachses of the world has been boosted most recently by computerized high-frequency trading. Can you really outrun them?

It is normal for us, the individual investors, to frame the market race as a race against the market. We hope to win by buying and selling investments at the right time. That doesn't seem so hard. But we are much too slow in our race with the Goldman Sachses.

So what does this mean in practical terms? The most obvious lesson is that individual investors should never enter a race against faster runners by trading frequently on every little bit of news (or rumors).

Instead, simply buy and hold a diversified portfolio. Banal? Yes. Obvious? Yes. Typically followed? Sadly, no. Too often cognitive errors and emotions get in our way.

No. 2

The future is not the past, and hindsight is not foresight.

Wasn't it obvious in 2007 that financial institutions and financial markets were about to collapse? Well, it was not obvious to me, and it was probably not obvious to you, either. Hindsight error leads us to think that we could have seen in foresight what we see only in hindsight. And it makes us overconfident in our certainty about what's going to happen.

Want to check the quality of your foresight? Write down in permanent ink your forecast of tomorrow's stock prices. Do that each day for a year and check the accuracy of your predictions. You are likely to find that your foresight is not nearly as good as your hindsight.

Some prognosticators say that we are now in a new bull market and others say that this is only a bull bounce in a bear market. We will know in hindsight which prognostication was right, but we don't know it in foresight.

When I hear in my mind's ear a voice that says that the stock market is sure to zoom or plunge, I activate my "noise-canceling" device rather than go online and trade. You might wish to install this device in your mind as well.

No. 3

Take the pain of regret today and feel the joy of pride tomorrow.

Emotions are useful, even when they sting. The pain of regret over stupid comments teaches presidents and the rest of us to calibrate our words more carefully. But sometimes emotions mislead us into stupid behavior. We feel the pain of regret when we find, in hindsight, that our portfolios would have been overflowing if only we had sold all the stocks in 2007. The pain of regret is especially searing when we bear responsibility for the decision not to sell our stocks in 2007. We are tempted to alleviate our pain by shifting responsibility to our financial advisers. "I am not stupid," we say. "My financial adviser is stupid." Financial advisers are sorely tempted to reciprocate, as the adviser in the cartoon who says: "If we're being honest, it was your decision to follow my recommendation that cost you money."

No. 4

Investment success stories are as misleading as lottery success stories.

Have you ever seen a lottery commercial showing a man muttering "lost again" as he tears his ticket in disgust? Of course not. What you see instead are smiling winners holding giant checks.

Lottery promoters tilt the scales by making the handful of winners available to our memory while obscuring the many millions of losers. Then, once we have settled on a belief, such as "I'm going to win the lottery," we tend to look for evidence that confirms our belief rather than evidence that might refute it. So we figure our favorite lottery number is due for a win because it has not won in years. Or we try to divine—through dreams, horoscopes, fortune cookies—the next winning numbers. But we neglect to note evidence that hardly anybody ever wins the lottery, and that lottery numbers can go for decades without winning. This is the work of the "confirmation" error.

What is true for lottery tickets is true for investments as well. Investment companies tilt the scales by touting how well they have done over a pre-selected period. Then, confirmation error misleads us into focusing on investments that have done well in 2008.

Lottery players who overcome the confirmation error conclude that winning lottery numbers are random. Investors who overcome the confirmation error conclude that winning investments are almost as random. Don't chase last year's investment winners. Your ability to predict next year's investment winner is no better than your ability to predict next week's lottery winner. A diversified portfolio of many investments might make you a loser during a year or even a decade, but a concentrated portfolio of few investments might ruin you forever.

No. 5

Neither fear nor exuberance are good investment guides.

A Gallup Poll asked: "Do you think that now is a good time to invest in the financial markets?" February 2000 was a time of exuberance, and 78% of investors agreed that "now is a good time to invest." It turned out to be a bad time to invest. March 2003 was a time of fear, and only 41% agreed that "now is a good time to invest." It turned out to be a good time to invest. I would guess that few investors thought that March 2009, another time of great fear, was a good time to invest. So far, so wrong. It is good to learn the lesson of fear and exuberance, and use reason to resist their pull.

No. 6

Wealth makes us happy, but wealth increases make us even happier.

John found out today that his wealth fell from $5 million to $3 million. Jane found out that her wealth increased from $1 million to $2 million. John has more wealth than Jane, but Jane is likely to be happier. This simple insight underlies Prospect Theory, developed by Daniel Kahneman and Amos Tversky. Happiness from wealth comes from gains of wealth more than it comes from levels of wealth. While gains of wealth bring happiness, losses of wealth bring misery. This is misery we feel today, whether our wealth declined from $5 million to $3 million or from $50,000 to $30,000.

We'll have to wait a while before we recoup our recent investment losses, but we can recoup our loss of happiness much faster, simply by framing things differently. John thinks he's a loser now that he has only $3 million of his original $5 million. But John is likely a winner if he compares his $3 million to the mountain of debt he had when he left college. And he is a winner if he compares himself to his poor neighbor, the one with only $2 million.

In other words, it's all relative, and it doesn't hurt to keep that in mind, for the sake of your mental well-being. Standing next to people who have lost more than you and counting your blessings would not add a penny to your portfolio, but it would remind you that you are not a loser.

No. 7

I’ve only lost my children’s inheritance.

Another lesson here in happiness. Mental accounting—the adding and subtracting you do in your head about your gains and losses—is a cognitive operation that regularly misleads us. But you can also use your mental accounting in a way that steers you right.

Say your portfolio is down 30% from its 2007 high, even after the recent stock-market bounce. You feel like a loser. But money is worth nothing when it is not attached to a goal, whether buying a new TV, funding retirement, or leaving an inheritance to your children or favorite charity.

A stock-market crash is akin to an automobile crash. We check ourselves. Is anyone bleeding? Can we drive the car to a garage, or do we need a tow truck? We must check ourselves after a market crash as well. Suppose that you divide your portfolio into mental accounts: one for your retirement income, one for college education of your grandchildren, and one for bequests to your children. Now you can see that the terrible market has wrecked your bequest mental account and dented your education mental account, but left your retirement mental account without a scratch. You still have all the money you need for food and shelter, and you even have the money for a trip around the country in a new RV. You might want to affix to it a new version of the old bumper sticker: "I've only lost my children's inheritance."

So here's my advice: Ask yourself whether the market damaged your retirement prospects or only deflated your ego. If the market has damaged your retirement prospects, then you'll have to save more, spend less or retire later. But don't worry about your ego. In time it will inflate to its former size.

No. 8

Dollar-cost averaging is not rational, but it is pretty smart.

Suppose that you were wise or lucky enough to sell all your stocks at the top of the market in October 2007. Now what? Today it seems so clear that you should not have missed the opportunity to get back into the market in mid-March, but you missed that opportunity. Hindsight messes with your mind and regret adds its sting. Perhaps you should get back in. But what if the market falls below its March lows as soon as you get back in? Won't the sting of regret be even more painful?

Dollar-cost averaging is a good way to reduce regret—and make your head clearer for smart investing. Say you have $100,000 that you want to put back into stocks. Divide it into 10 pieces of $10,000 each and invest each on the first Monday of each of the next 10 months. You'll minimize regret. If the stock market declined as soon as you have invested the first $10,000 you'll take comfort in the $90,000 you have not invested yet. If the market increases you'll take comfort in the $10,000 you have invested. Moreover, the strict "first Monday" rule removes responsibility, mitigating further the pain of regret. You did not make the decision to invest $10,000 in the sixth month, just before the big crash. You only followed a rule. The money is lost, but your mind is almost intact. (CreateWealth8888 called it Money Management skills using more active form of managing cashflow and stock flow)

Things could be a lot worse.

--Mr. Statman is a professor of finance at Santa Clara University in Santa Clara, Calif.

Monday, 24 August 2009

Olam - Bought @ $2.45

Sunday, 23 August 2009

Debts Free Before 50?

If you are spectacle or contact-len free before 40, welcome to the new world if you cross over to 40, you will probably realize sooner or later that you will need a reading glass (spectacle) to read your newspaper.

When you cross over to 50, a brave new world is waiting for you, you are now seen by HR department or your bosses as a costs cutting tool if needed to trim staff costs.
But, before that happens, you already started to be paid less as the new world thinks that you are an old asset that has lower productivity and your earning needs downward adjustment.

http://createwealth8888.blogspot.com/2009/08/when-you-reached-50-years-old.html

But, beware that your forward expenses after 50 probably will be higher and higher as your kids are going to start their University education soon.

So it is best for you to do your financial planning well ahead of time and aim to be absolutely debts free before 50.

Saturday, 22 August 2009

The Role of Investors

MR HSIEH FU HUA, CEO OF SINGAPORE EXCHANGE, AT THE INVEST FAIR 2009 said ... Over the longer term, stock markets offer fair returns to those who have carefully diversified their investment portfolio.

In order to make better investment decisions and to reap the rewards, investors need to understand both the inherent investment and business risks. The famous American inventor, Thomas Edison, once said, "Success is 10% inspiration and 90% perspiration".

However, investors generally believe that success in the stock market requires more inspiration than perspiration, with some going so far as to having a flawed belief that gains are made based on 100% inspiration! Even if you are a speculative investor and liken investment to playing poker, one would be foolish not to study the cards before placing a bet. Therefore, for your investment to succeed, you too would need to do homework.

Investing in Property is far safer than stocks? - Part 2

ST, Saturday, Aug 22, 2009

... bought a property .... intending to sell it about 10 years later, and confident of being able to repay the mortgage and make a handsome profit, he took a 90% loan. Any thought that he would lose his job and house prices would drop like a stone never occurred to him. But the unthinkable became an unpleasant reality. In 2001, after his employer merged with another company, he lost his job. Desperate to make ends meet, he tried to sell the cluster house in which his sister and mother had been living, but for 2 long years was unable to do it. Although he managed to secure a new job in 2003, his salary barely covered the monthly payments. Then the SARS crisis hit and property prices plunges further, recalls Mr Tsai, who is now operational manager in his late 50s. He eventually disposed of the house at a bank foreclosure sale in 2003 for $680,000 almost half of the original value and $300K below valuation. In total, he lost about $700K on the house.

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What may not be obvious to retail property investors who have small investing capital?

1. Risks of using of leveraged investment are never obvious to many investors mind as many are just only thinking like this - intending to sell it about 10 years later, and confident of being able to repay the mortgage and make a handsome profit.

2. If you are dying for rental income to cover your monthly mortgage. You have grossly under-estimate your risks as your grew older in the same company, you actually become more costly to hire and you are more likey to lose your job sooner than expected. I have seen many ex-seniors at all levels losing their jobs sooner than expected and that is the reality of the corporate world. If you are not a HORSE then you are just a COW slogging in your office waiting to be slaughtered when the time comes. Even if you are a HORSE now, for how long can you slog like a HORSE in your office before you finally got burnt out or brown out into a COW.

In reality, your performance in your office are just preceived relatively to the performance of your peers. Every year you are going to face competition from those young HORSES waiting to change the old HORSE into a new COW.

3. Under-estimate the events of Black Swan happening in your life sooner than expected.

4. Take the advice of Mr Tsai, you not only think twice but think 3 or 4 times.

Or alternatively join CreateWealth8888 in stocks investing as I never have to wake up in the middle of night wondering why the rental income has not arrived but the mortgage payment is already over due. (Take Point 2 seriously)



Wednesday, 19 August 2009

Do you have one minute to update your portfolio?

Peter Drucker once said, “What gets measured, gets managed.”

http://createwealth8888.blogspot.com/2009/08/measure-measure-measure-part-2.html <--- Measure CreateWealth8888's No 1 question: What is your ROC?

CreateWealth8888's No 2 question: What is your CAGR?

Some will reply:

Oh, I am very lazy to compute CAGR.
or

Aiyo, I am very busy, no time la.

I am telling you that you only need less than one minute to update your portfolio and instantly know your CAGR. (If you die die must have very accurate CAGR, then you have one worksheet for each set of capital, and then compute average CAGR)

For updating your portfolio, I suggest you visit Sharejunction to create a watchlist of your counters in your portfolio.

http://www.sharejunction.com/sharejunction/index.html


You can then highlight and copy your watchlist and paste it directly into your Excel worksheet. The current price of your counters is then linked to the respective counters in the sharejunction's watchlist. Instantly, your value of portfolio is updated and CAGR too. It takes less than 1 minute to know your CAGR.

Are you that lazy? Are you that busy? Come on.. stop kidding!

Tuesday, 18 August 2009

Investing in Property is far safer than stocks?

Since STI low at 1205 on 11 Mar 2003, we are having jolly good times in the Stock Market all the way up to peak until ...

OMG! Our lunch was quickly stolen by the Bear!

We quickly realize how damaging and fearful the Stock Market can be? Company stock price can crash 80-90% so fast before we could even overcome our emotions to hold or cut losses, and some even went to ZERO before we can do anything!

With such fearful experience in the stock market, retail investors (those with smaller capital) start thinking in the current environment of low loan interest rate of less than 2% fixed for 3 years, it is better to invest in property. Property will never crash 80-90% like stocks. So it must be safer as a long term investment over the future bear markets.

We have to be extremely careful as retail investors (those with smaller capital) as objective comparison between property and stocks is tricky, because property is typically a leveraged investment, in which the retail investor makes a down payment equal to only a fraction of a property’s value and borrows to finance the rest.

The knowledge, and skills required for investing in property is far more complex than you think. The risks hidden in a leveraged investment are often not too obvious to many. Many retail investors will just think it is location, location, and location and that about it.

There are factors that are often overlooked by the retail investors:

1. You are putting probably more than 80% of your investing capital into 1 single investment and there is no room for judgement error. You have to be absolutely right in 1 bang.

2. You may under estimate the impact of future higher interest rate.

3. You may under estimate the risk of not getting enough rental income to offset the mortgage payment.

4. Forgetting that leverage is a double-edged sword.

5. Harder to cut losses

6. You can't do partial draw down from your investment to fund any unexpected expenses.


http://createwealth8888.blogspot.com/2009/07/investing-in-property-or-stocks-revisit.html <--- More reading if you may to continue ...

Monday, 17 August 2009

Your Stages of Life and Your Money

Teen age:

Have Time + Energy … but No Money

Working Age:

Have Money + Energy … but No Time

Old age:

Have Time + Money …but no Energy

Sunday, 16 August 2009

Financial literacy is one of the most important skills an adult should have

By TEH HOOI LING
SENIOR CORRESPONDENT

A FRIEND from my university days called to say that she and her husband had committed to buying a second property and are finding their finances a little tight despite having two incomes. Then she asked a question that I get rather often: 'Got any good stocks to buy or not? Any inside information?'

'No,' I said. 'I never get any inside information! You go do your own analysis!' She said: 'You mean you do your own analysis when you buy stocks? I buy on 'tips'. Anyway, I don't know how to analyse stocks. Where did you learn how to do that? In school ah?'

Yes, I did. My studies in Business Administration and Applied Finance and the CFA programme did equip me with some of the principles of investment analysis.

I told her that financial literacy is one of the most important skills an adult should have and that it should be taught in schools. Increasingly this is being recognised, and such courses are being offered as part of enrichment programmes.

But for those of us who didn't have that privilege, there is no lack of material available out there if one really takes an interest in the matter. I have friends from non-financial industries who through years of reading the 'how to' investment books, have become very savvy investors. A number of them came to know me through this column.

One of them is from Penang. He used to run his own construction business and is now retired. He said he was an ignorant young man in the 80s and had lost money investing in a fund. He then resolved to educate himself on investment. Like most value investors, he idolises Warren Buffett. He bought a few lots of Berkshire Hathaway shares some years back, with the intention of leaving one lot each to his grand kids as their education fund.

But he sold some near the peak in 2007, sensing the frothiness of the market. Earlier this year, he bought into Citigroup when it sank to around US$1. He has sold some to get back his capital. What's left in the stock now is all 'free money'.[Createwealth8888: Pillow stocks ah!]

Having experienced and seen the results of wise investments, this friend is very fervent about convincing others of the importance of learning that skill. [Createwealth8888: Me too, but how many people will believe me?] At 60-plus, he still buys and reads books like Trump Strategies for Real Estate: Billionaire Lessons for the Small Investor and Accounts Demystified by Anthony Rice.

Some months back, he asked me to help him edit a two-pager that he had penned on his investing experience. He wanted to share it with his friends, particularly the younger ones. I think many readers can benefit from his advice as well. Here's what he wrote:

'I have no money to invest in stocks! - This statement is wrong! Why? Because one can always start small. Below are two real life examples. Case 1: With her monthly salary of less than RM200 back in 1958, a 'poor' Chinese primary school teacher (my friend's cousin) managed to put some savings away every month. In the early 1960s, she started to buy stocks as investments.

She did the 'right' thing in investment. She chose the 'good' stocks - companies with good businesses. She held on to the stocks for the long term. Over the years, she bought more of the stocks with her additional savings as well as the dividends received. Her stockholding also grew as the companies distributed bonuses and issued rights.

Thirty years later, she had become a millionaire. She managed to send her kids to England to study. Despite her wealth, she is still very careful with her money. As a retired civil servant, she receives a pension of RM1,000 a month. But dividends from her stocks come to RM3,000 a month. Case 2: In 1985, a young 'ignorant' young man (my friend himself) invested $500,000 of his hard-earned income/savings in a fund managed by a bank. He didn't know much about stock investing. He thought the bank's fund managers would be in a better position to help him invest. But over the next one to two years, his invested fund decreased in value. He lost about $150,000! He lost confidence in the fund managers, and withdrew what was left of his money.

The lessons from the examples are: One, it's not true to say one has no money to invest. Two, even if you have money, without sound knowledge of investment, it is 'useless'. People will try to take away your money. Three, it is better to start learning how to invest when you are young so that your 'good' investment can enjoy the 'magic of compounding' over a longer time frame.

The compounding effect is such that the longer the time, the bigger the money will grow to! For example, a $100,000 invested with a compounded return of 8 per cent a year, will: in 10 years grow to $216,000; in 20 years grow to $466,000; and in 30 years grow to $1,006,000!

It's never too late to start. And from your own experience, you can pass on to your next generation the 'correct' way to invest their hard-earned money.

Also, it is not true that we have no time to manage our own investment. This is the misconception that so-called 'experts' perpetuate to mislead us, so that they can slowly take away our money through the 'clever' knowledge of investment! Remember Bernie Madoff? (How cleverly he cheated his clients!)

It is not a time factor, nor a cost matter. It is a matter of focus and priority. So equip yourself with good knowledge and attitude of investment. There are a few good books to teach/guide us.


The Richest man in Babylon;
Rich Dad and Poor Dad;
Who Moved My Cheese?
The Intelligent Investors;
Beating the Street;
Common Stocks and Uncommon Profits;
Books on Buffett's investment strategy, including The Warren Buffett Way; Buffettology; The New Buffettology.

You can finish reading these books within one year and they will cost you less than $2,000! This is another way to self-study an Investment MBA course.

Yes, it is simple but yet not so easy. It needs determination and belief that this is the right and only way. 'Yes, you can!' as Mr Obama would say.

Good luck and have a happy life. It's achievable if we choose the 'right' track. Laziness and greed are the biggest enemies! And no 'quick money' mentality, please!'

Well put indeed. To readers who have written in to ask which are the good investment books, perhaps the list above is a good place to start.

Along the vein of 'experts' trying to profit from the uninitiated, another friend pointed out to me what he deemed to be the latest instance of that - the just launched POSB's MyHome Fund.

Managed by DBS Asset Management (DBSAM), the fund will invest in two exchange traded funds (ETFs) - namely the DBS STI ETF and ABF Singapore Bond Index fund. Both ETFs are listed on the Singapore Exchange. Depending on risk appetite, investors can choose from two portfolios offered which differ in their allocation to the two ETFs.

Why pay DBSAM a fee of 0.5 per cent when investors can buy both the ETFs directly from the market, he asked. Some observers see the MyHome Fund as a ploy by POSB - a unit of the DBS Group - to raise funds for the DBS STI ETF which hasn't attracted that much monies since its launch earlier this year.

Another friend cheekily said they could launch their own 'Milk the People Fund'. 'That's why learning to invest or at least understanding the gist of it should be rated as an essential life skill in this world of sharks that we live in,' he said.

'Sadly, most laymen will not be able to pass it down to their kids. [Createwealth8888: The purpose of this blog is to record the truth and fact of investing down to our kids] And these kids will grow up wondering how to invest, read the ads in the papers and end up enriching those guys selling trading programmes or courses but still end up nowhere.'

Also commenting on the MyHome Fund, the website The Book of Wise Investors concluded: 'Finance companies, insurance companies and banks are not benevolent donors to your wealth. The most important fact in growing your hard- earned money is really more financial literacy and not paying unnecessary expenses for nothing.'

But to be fair, as pointed out by financial adviser Martin Lee of Den of Lion Investors, MyHome Fund investors don't have to incur costs rebalancing their portfolio. For investors who want to do regular investments of $100 to $1,000, the upfront costs will be lower via the fund.

Also, according to him, if MyHome Fund manages to attract a big pool of money, its manager - DBSAM - may be able to get the manager of the DBS STI ETF, also DBSAM, to create units at net asset value. Hence, investors would save on the bid-ask spread, a cost that someone who buys the ETFs directly from the market will have to pay.

My take on all these is: Do your own research, and weigh the costs and benefits of any investments you intend to make. Then decide for yourself whether they suit your needs. Nobody else but you should be the most diligent in safeguarding your hard-earned money.

The writer is a CFA charterholder

Saturday, 15 August 2009

Are you buying into business or just buying stock?

Some people are thinking that they are buying into a firm's business, when they are just buying a stock.

When you are buying x% or xx% of the firm's share, you are buying into the firm's business as you become a major shareholder of the firm. The firm's management will have to warm up to your presence and you may even have a board seat.

With a board seat, your interest in the firm is represented. You will have access to the Management to understand their immediate and long term prospects, assess the real ability of the management team, cognitive of the goals of the board members, their future products in the pipeline, the expected acquisitions, the competitive landscape and many more ..

If you buying x or xx or even xxx lots of the firm's shares, you are just buying stocks and don't have the falsehood of thinking that you are buying into the firm's business. Is your interest in the firm in anyway represented? Do you have access to the management team?

You are likely at your disposal for detailed analysis of the company's business and its future earning prospects through quarterly and annual reports, and probably attending AGM and asking a few questions; and most of the time the Management is very careful not to mention any undisclosed information; otherwise, they will have to rush out a press release.

Warren Buffet and the likes of Warren are buying into firm's business and even home-grown Warren-like, Dr Michael Leong like to buy 3-5% of the firm's share. These people are buying into business and not buying stocks. They buy a good business at good discount and hold for forever if the business continues to be good.

But, buying a stock is different because the primary reason to buy a stock is to sell it.

Even you are a long term value investor, you should at least look at chart for a 200 days EMA, if the stock price ever falls below the 200 EMA, at least do a partial sale.

Are you investing or speculating?

When people are speculating, but they think are investing? Here is the definition from


West's Encyclopedia of American Law

What is investment?

An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.

Investopedia Says:

The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of investments in the economic sense.

In the financial sense investments include the purchase of bonds, stocks or real estate property.

Be sure not to get 'making an investment' and 'speculating' confused. Investing usually involves the creation of wealth whereas speculating is often a zero-sum game; wealth is not created. Although speculators are often making informed decisions, speculation cannot usually be categorized as traditional investing.


To me, it is just very simple, are you holding any hard or soft asset after the purchase? If the answer is no, then it is not categorized as investing. Can you call koala a bear? The koala is not a bear.

Thursday, 13 August 2009

Payback period

From Wikipedia, the free encyclopedia

Payback period in business and economics refers to the period of time required for the return on an investment to "repay" the sum of the original investment. For example, a $1000 investment which returned $500 per year would have a two year payback period. It intuitively measures how long something takes to "pay for itself." Shorter payback periods are obviously preferable to longer payback periods (all else being equal)

When come to stock investing, do you really seriously think and care about Payback period?

Any businessman will want to recover his capital quickly and then let the biz takes care of itself to generate future cash flow. He will then look for the next biz prospect to deploy his recovered capital.

For stock investing, why are we not thinking like a businessman? Shouldn't we quickly recover the invested capital and let the stocks take care of themselves to generate future cash flow. This is the similar method which I called it "Pillow Stocks Investing" strategy.

Read? Pillow Stocks Strategy

Monday, 10 August 2009

Trading Performance Review

Peter Drucker once said, “What gets measured, gets managed.”

Since Nov 08 that I have given up the fast exciting active contra trading after successive months of contra losses for a slow moving position trading, how am I doing now?

1. ROC from 3.8% to 34.3% (I don't use stop loss so no negative ROC)
2. Holding Days from 1 to 226 days
3. Average ROC: 12.6%
4. Average Holding Days: 47.8 days


Next performance review at end Dec 09.

Insufficient savings? No wonder with poor insurance returns

http://tankinlian.blogspot.com/2009/08/insufficient-savings-no-wonder-with.html <--- TKL's view: Many life insurance policies taken today require more than 15 years to 'break even'. This is the point where the cash value of the policy is more than the premiums that were paid over the years.

Createwealth8888's view on his insurance policies:

My insurance policy was purchased more than 13 years ago, and coming to its 14th year anniversary and its cash value as on Jul 2009 is about 80.3% of premiums paid, and still far from break even.

So I still believe that certain insurance products will continue to give poor insurance returns regardless whether it is today or in the past 15 years ago, or in the future.

Another insurance policy maturing in Oct 09 and I have received the letter from the insurance company and its total return is 8.2% over 5 years, and it is nowhere near its projected returns. Projected returns are USELESS statement and don't ever believe it.

Fortunately, those relatives and friends of mine have been successful in their FA careers or they have move on, and unlikely they will come to me for meeting their quota. Cheers!

Sunday, 9 August 2009

bull run or a bear market rally?

Published August 8, 2009
Albert Lam
Investment director
IPP Financial Advisers

THE global stock market has seen an incredible transformation over the past few months - from an Armageddon scenario to a super bull run that yielded a 40-80 per cent rally on most Asian bourses. Those who are invested have been handsomely rewarded, while those who are not adequately invested are hoping for a retracement that has yet to materialise. One common question among investors is: Have we missed the boat?

Many people expected a rebound from March's low but very few or none predicted the strength and length of this rebound. What caused the massive run-up after March 2009? I can think of four reasons:

1. There was a genuine sigh of relief that the financial system did not collapse, which restored investor confidence. However, just because the financial system did not break down, does not mean there are no problems within the system. I will use an analogy to describe what has happened. Mr Financial System was supposed to die from cancer but last-minute surgery got his heart pumping again. Everyone was happy that Mr Financial System did not die. However, Mr Financial System is only in cancer remission mode - there could be a relapse. His condition needs to be monitored carefully and he needs lots of long-term treatment and regular reviews before he can be pronounced well.

2. The concerted effort by governments worldwide to inject money into the financial system helped restore investor confidence, which resulted in risk aversion abating. Before long, chasing risk was back in form. We must go back to time-tested wisdom like proper asset allocation, diversification and regular portfolio reviews. Do not panic when others do, and do not be overly bullish just because others are jumping in big time.

3. Massive liquidity also played a big part in this rally. There was more than US$4 trillion in money market funds in the US alone at the start of this year. And since March, more than US$500 billion has flowed back into other higher-yielding assets. We see similar stories worldwide. In fact, many commentaries have called this a liquidity-driven rally.

4. The low interest rate environment means money in the bank is not a good alternative because the returns on deposits are not worth much. Therefore, investors have been encouraged to put their money to better use in the stock market. And rightfully so, if I may say.

However, fundamental economic data does not support such a massive rebound. The foundation of any economy is consumption - cycle feeds on demand.

Let's look at the US, which represents roughly 20 per cent of global GDP. The unemployment rate is heading towards the 10 per cent and could go beyond that. To add more pain, banks have reined in the availability of credit, which is a temporary lifeline to some. Property prices are still deteriorating year on year and the option to borrow from this asset class is out of the question. In these circumstances, we conclude that the US economy is still extremely weak. Unfortunately, Europe is in a similar condition. And Eastern Europe is in even worse shape.

Let's look back and recall what sparked the 2008-2009 Great Recession? It started with a financial crisis, which culminated in an economic crisis.

What we experienced last year is a serious crisis that almost broke the entire financial system. Liquidity was quickly soaked up and lending came to standstill. Banks were forced to either sell investments to meet demand or face collapse. This is what we saw recently when lending came to a standstill. No one trusted the banks with their deposits, prompting several governments to guarantee such deposits.

This evolved into an economic crisis, with most countries now in recession. They suffered a sudden downturn brought on by a financial crisis, with falling GDP, negative growth and high unemployment.

Can we have a genuine bull run under such conditions? It is not uncommon for bear market rallies to reach 50-70 per cent. The Dow Jones Index hit a high of 11,750 points at the peak of the technology bubble in January 2000 and collapsed to 8,062 in September 2001. It then staged an incredible bear market rally for the next six months to a high of 10,673 before crashing to a low of 7,197 six months later. The Straits Times Index went through a similar ride in the 1998 currency crisis. It fell from a high of 2,145 in January 1997 to a low of 1,040 in January 1998. It then rallied to a high of 1,553 in March 1998 and subsequently bottomed at 800 in September 1998.

Throughout the economic and financial crises of the past few decades, bear market rallies have come across as fierce and over-optimistic.

I am not saying this is definitely a bear market rally. However, I would rather be cautious than overly bullish. The foundation is still weak, although we have seen much improvement in sentiment, corporate results and some improvement in economic numbers. The International Monetary Fund has forecast a US$4 trillion loss from the credit/financial crisis, and the banks have written off about half of that so far. What will happen to the balance? All types of loans, led by sub-prime, are seeing a surge in delinquency.

Whether this is a bull run or a bear market rally, we must go back to time-tested wisdom like proper asset allocation, diversification and regular portfolio reviews. There are investment products out there that are not correlated with the stock market. There are regions and sectors that are still doing well despite the downturn. Do not panic when others do, and do not be overly bullish just because others are jumping in big time.

Parents can be an Asset or Liability to the children?


Bill Gates said: "If you born poor it's not your mistake. But, if you die poor it's your mistake."

La Papillion once said: "Parent can be an asset or liability".

How true!.

My deceased parents were definitely not an asset and more of liability. My mum died from cancer at age 42, and my dad was unable to carry on working as a painter due to chronic asthma as the smell of paint made his illness worse so I have no choice to give up going to the University after NS and have to start working to support the family.

So as parents, it is definitely important to start as early as possible in our financial planning to ensure that we have adequate retirement fund to take care of our own living expenses so that at least we are not liability to our children.

I foresee our children are going to have real tough life slogging very hard to earn enough money to purchase a home for living.

STI going where?



The market is too risky to short so it is less likely to crash down by taking the elevator down; but, it is more likely to climb the floor like some shopping mall. They make you walk round the shops at that level before you come to climb the staircase to the next level.

Did you notice them in the chart?

When you have money, what would you do with it?

When you have money, what would you do with it?

1. Spend it,
2. Save it,
3. Invest it,
4. Lose it,
5. Give it.

To spend, to save, to lose or to give it away, all these actions require very little effort from you. Only, to invest it is really tough, and it is so tough that to really do it well requires you to spend lots of effort and time to build up your investing knowledge and skills, and yet after putting so much effort and time you may even Lose it. That is the paradox of investing.

There are only 2 primary reasons to invest:

1. To preserve Wealth,
2. To build Wealth.

There is a saying that the RICH invest to preserve wealth, if they don't lose it, it is considered successful investment. However, the not so rich invest to build wealth and you can't afford to lose it..

So are you building wealth or preserving wealth? Each requires totally different strategy.

If you are building wealth, you may have to be a little more aggressive in your outlook and let the Magic of Compounding works harder for you. But, there is no free lunch, other than finding them in some temples or churches; you have to spend lots of time and effort to build up your investing knowledge and skills, and yet after putting so much effort and time you may even LOSE IT. That is the paradox of investing.

Happy National Day and may you build up your wealth as years go by!

Saturday, 8 August 2009

STI - healthy correction?



The 4 consecutive days of pullback to -4.9% from its last peak may be a healthy correction to offload the weak holders and preparing STI for the next leg of rally breaking through 2700 to test the next major resistance at 2800.

Unfortunately, no show on Monday. *sigh*

Measure, Measure, Measure - Part 2

http://createwealth8888.blogspot.com/2009/07/measure-measure-measure.html <--- Part 1


Investopedia explains Compound Annual Growth Rate - CAGR

What Does Compound Annual Growth Rate - CAGR Mean?

The year-over-year growth rate of an investment over a specified period of time.

The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.

CAGR isn't the actual return in reality. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.

Don't worry if this concept is still fuzzy to you - CAGR is one of those terms best defined by example. Suppose you invested $10,000 in a portfolio on Jan 1, 2005. Let's say by Jan 1, 2006, your portfolio had grown to $13,000, then $14,000 by 2007, and finally ended up at $19,500 by 2008.

Your CAGR would be the ratio of your ending value to beginning value ($19,500 / $10,000 = 1.95) raised to the power of 1/3 (since 1/# of years = 1/3), then subtracting 1 from the resulting number:

1.95 raised to 1/3 power = 1.2493. (This could be written as 1.95^0.3333).
1.2493 - 1 = 0.2493
Another way of writing 0.2493 is 24.93%.

Thus, your CAGR for your three-year investment is equal to 24.93%, representing the smoothed annualized gain you earned over your investment time horizon

Here is Excel formula that I am using CAGR=POWER(G13/G10,1/(ROUND(E8/365,1)))-1. (Email me if you wish to have the Excel spreadsheet.)

Now that you have know your CAGR of your investing/trading portfolio and the knowledge of the Secret of Compounding Effect, and you will have to constantly review your investing/trading strategies and refine them if necessary for you to reach your Final Investment Goals or Objectives.

From the above table, your CAGR come from 2 components:

1) Realized P/L
2) UnRealized P/L

To increase your CAGR, you have to increase your Realized P/L or UnRealized P/L or both and you have to deploy your available cash timely in the market. Too much cash at the sideline may not be helpful.

To increase your Realized P/L

Classic textbook's recommendation for Reward/Risk ratio of 2-3 for taking an investment is a good return.

I use CPF Ordinary Rate of 2.5% per annum as benchmark, I aim for at least an average of 5% ROC which is at least 2 x Reward/Risk ratio.

I have set for myself Yearly Target which is then translated to average monthly target as milestones towards the Final Investment Goal. We have to be realistic in the Stock Market as there is going to be some bad months that are below target.

For UnRealized P/L, you are just trying to outguess the Market forces to grow it and you have absolutely no control over it. The Market will determine your Exit Price when you need to cash them out unless you have no intention to sell your shares during your lifetime then it is not a matter of concerns.

My strategy is to keep growing the size of Realized P/L, which is then translated to MORE cash available to buy MORE Quantity of shares, and over time, hopefully to let the Magic Of Compounding work its way for me.

For example:

You bought 10 lots of Stock A @ $1.00 for $10K and then subsequently sold 10 lots @ $1.20 for $12K, and not considering brokerage fees just for a simple illustration.

When the Stock A pulls back to $1.1, you could buy back 10 lots of Stock A @ $1.1 for $11K. Now, you still have the same quantity of stock as before but with extra cash available ($1K) to to buy more shares and let the Magic of Compounding works its way through.

So have you started to measure your CAGR?

Friday, 7 August 2009

Semb Corp: Sold $3.41, ROC 7.9%

Hope to gather more feathers for a bigger pillow soon ...


Round 49: ROC 7.9%, 91 day, B $3.14 S $3.41

Hmm.... The last affair with this old lover - Semb Corp was in 8 Aug 08. That was 1 year ago!!!!

Wednesday, 5 August 2009

When you reached 50 years old ....

When you are reaching 50s you are going to earn less as your CPF Employer's contribution is going to be cut.


Some companies when you reach 60, they will cut your salary by e.g. 10% and that is on top of your CPF Employer's contribution rate cut.

So when you plan for your long term housing loan, have you considered these?

Monday, 3 August 2009

Charging Bull!




The Bulls charging to National Day Rally?

Sunday, 2 August 2009

Are you shaken by this Grizzly Bear?


Are you shaken by this Grizzly Bear and now the Bulls have come to your rescue and probably your stock portfolio may have break even or making some profit and now you are seriously thinking that stocks are too volatile and too risky for wealth building and thinking that investing in property for long term is a lot safer.

You may wish to re-visit ..

http://createwealth8888.blogspot.com/2008/12/investing-in-property-may-be-less.html

Your First $100K realized profit from the stock market?

Let say you have total investing capital of $100K and you use whatever strategies, either TA or FA or both, money management and practise market timing. Of course, you will get stuck in some counters, but let assume you are good enough have about 30% of total investing capital giving you an average of 3 profitable trades at an average 5% ROC per month and starting with $10K each for the first 3 trades . How long will you take by the Magic of Compounding to make Your First $100K realized profit from the stock market?

Let see ... Hmm



Yeah. Doing the maths, you probably need between 17 - 32 months. That sounds pretty good so are you ready to take $100K Challenge? Alamak, but life is not so simple as that; but, it is still worth to seriously ponder over it. Yes, you can. Cheers!

Saturday, 1 August 2009

Major STI market cycles - Horrible Bears and Beautiful Bulls!




MW asked me how many bears I have encountered?

I would say that the last STI's Greatest Bear should be Asian Financial Crisis. Many Singaporeans had lost their fortune especially in the CLOB saga when overnight everything was gone.

I have never invested in any oversea market before, and also unlikely in the future as I don't believe that with my limited investing capital, SG market cannot provide enough opportunity for me to make decent returns.

There is no need to look so far away when the pot of gold is just in our own backyard. So I have escaped the CLOB saga, but my father-in-law and brothers-in-law were all badly burnt.

BTW, SIAS was born out of the CLOB saga.

I don't really remembered that I felt painful or scary during the Asian Financial Crisis. Probably at that time I only have $XX,XXX capital to invest in the stock market.

When you are in 30+ and you only have $XX,XXX capital and losing 70-80% of it in the bear market, you can still earn back by saving harder to raise new capital to continue your investment venture.

But, if you are in 40+ or 50+ and likely to have accumulated more wealth and have bigger capital like $XXX,XXX. Losing 70-80% of it in the bear market; it is going to be sleepless nights.

So I would say this is the most terrible bear market that I have encountered because I am in 50 and have much larger capital at stake. I don't have the luxury of time to earn more money and save harder to raise new capital to fight another bear battle. Scary man!

Read? Who Took My Wealth?

Can I find back the Lost Profit in 2007? Yes. I can as I am Beary wiser now. Cheers!

STI - Any parallel with Asian Financial Crisis?

During Asian Financial Crisis, STI fell from high of 2,504 to low of 800, down -68.0% in 941 days and recovered from the low to the high of 2,583, up 222.8% in 486 days.

This Sub Prime Crisis, STI fell from high of 3,876 to low of 1,457, down -62.4% in 515 days and as on Friday has recovered from the low to 2,659, up 82.5% in 144 days.

This time STI has crashed down at a greater velocity in a shorter time compared to the last Great STI Bear, and will it also recover at a greater speed in a shorter time?

Do you believe in the Law of Averages?

Your Size of Investing Capital Matters

Your investment strategy and the choice of assets and markets for investment should fit into your size of investing capital. You only have small capital to invest and yet trying to follow other big boys with plenty of capital investing across different markets and asset class.

http://createwealth8888.blogspot.com/2008/11/assets-in-your-portfolio.html

Larry Williams once said: Your fortune will come from your focus - focus on one market or one technique.

A jack of all trades will never become a winning trader. Why? Because a trader must zero in on the markets, paying attention to the details of trading without allowing his emotions to intervene.

A moment of distraction is costly in this business. Lack of attention may mean you don't take the trade you should, or neglect a trade that leads to great cost.

Focus, to me, means not only focusing on the task at hand but also narrowing your scope of trading to either one or two markets or to the specific approach of a trading technique.

Have you ever tried juggling? It's pretty hard to learn to keep three balls in the area at one time. Most people can learn to watch those 'details' after about 3 hours or practice. Add one ball, one more detail to the mess, and few, very few, people can make it as a juggler. It's precisely that difficult to keep your eyes on just one more 'chunk' of data.

Looks at the great athletes - they focus on one sport. Artists work on one primary business, musicians don't sing country western and Opera and become stars. The better your focus, in whatever you do, the greater your success will become.
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