Author: Create Wealth Through Long-Term Investing and Short-Term Trading

TA – Always Two Sides To Every Technical Decision

You may look at a chart with your own favourite indicators and system and see one thing, while another person who likes to look for e.g. reversals may look at the chart and see something else or totally different. Every buyer and seller have their own reasons to buy or sell and every transaction is matched between buyer and seller. So who is right? Read...

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Who Moves My Market? – Part 4

I like the simplicity of support and resistance. It can work because it is based on simple crowd psychology; but, sophisticated traders don’t like to admit it that it can work. Many Gurus have developed so many technical indicators, and every Guru claims their indicators work best. Who should we believe? If you could predict where the market is heading, you would be a millionaire many times. Unfortunately, no one has developed an indicator that will predict the future. Many indicators have been created that will give you a probable direction of the market. But, the concept of support...

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Why Do We Still Need To Read Charts?

Some real hardcore retail Value investors will argue charts are not helpful and they don’t care about charts as holding the stock for long term makes charts irrelevant. But to the rest of us charts are the best way to judge the emotions and psychology in the market as stock prices are primarily driven by investors’ sentiment. Stock prices move because of what the Big Boys (Market Sharks) are currently feeling and thinking, and not just because of the fundamental numbers that have been released to the market. The stock market is never a level playing field and will...

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Portfolio Management – Growing Money Tree

This is the Symbolic Picture of Growing Money Tree in My Profile – It helps me to visualize why am I actively Invest or Trade. “What the mind can conceive and believe it can achieve” – Napoleon Hill Common saying: Money Is Not Yours Until You Spend It. (or someone else will spend it for you) And I said: Profit Is Not Yours Until You Realize It. (or Mr. Market may take it back unexpectedly) Take a good look at the components of a Portfolio: Mathematically, LHS (Left Hand Side) = RHS (Right Hand Side) LHS = Current Value...

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Portfolio Management – Stop Losses?

http://createwealth8888.blogspot.com/2009/10/portfolio-management-price-volatilty.html What is Stop Loss? Setting a stop-loss for x% below the price you paid for the stock will limit your loss to x%. This strategy allows investors to determine their loss limit in advance, preventing emotional decision-making. What are the Guru’s recommendation of Stop Loss? Alexander Elder strongly believes in (the 2% and 6% rules). William O’Neil: Whenever a stock is bought, a tight stop loss of 7-8% is set below the purchase price. No matter what the reason for the decline, each stock should be sold without hesitation if it drops down to or below this limit....

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Insurance – Human Asset and Liability

For the sake of this discussion, let us put aside all the human emotions and love that impress upon on the insurance matters, and take a look at Insurance as a hedging tool against Human Asset and Liability in the Human Life Cycle – Balance Sheet from a financial perspective. So what is hedging? Hedging means reducing or controlling risk. Insurance as a hedge against Human Asset and Liability? The moment when we were conceived in our mother’s womb; a human liability was created in our parent’s Human Financial Balance Sheet; but, it was still a very, very small...

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Portfolio Management – Price Volatilty

http://createwealth8888.blogspot.com/2009/10/portfolio-management-market-forecast.html Knowledge born from actual experience is the answer to why one profits; lack of it is the reason one loses – Gerald M. Loeb George Soros earned his reputation and a lot of financial rewards by understanding risk and return has his views on volatility, risks, and returns. He said that asset classes and stocks that have the lowest short-term volatility also generate lowest long-term returns. Short-term Price Volatility May Not Be Risk To Some. If you are investing with high leverages, then short-term price volatility that goes against you will pose significant risks. If you are trading...

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Understanding Stock Market Risks

You often hear this – Investing in Stock Market is risky. In fact, investment of any kind including setting up your own business by nature is risky, and can potentially cause you lose some or all your investing or initial capital. Actually as a paid employee you also face similar risks of losing your job when you approach 40s or 50s. It is a well known fact that HR department update this list of employees in these age groups during annual budget exercise. So what are the possible Stock Market Risks and how can we as retail investors mitigate...

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Know Your Interest?

Do you always up size your Burger? Do you always max up your whatever loan you take? Car loan or especially Home loan can be up to 30 years. If you opt for a 30-year home loan, your banker loves you most. Why not you try to borrow this book from NLB? Know your interest : a guide to loans and investment / Tse Yiu Kuen. or quick visit to http://createwealth8888.blogspot.com/2009/02/my-no-leverage-principle-why-part-1.html Repayment of a home loan is usually made in monthly installments. Each installment consists of two parts: principal repayment and interest payment. Do ask your bank to provide...

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Multibaggers and Compounding – Their differences

Some investors or intelligent speculators use Buy and Hold strategy to get multi-bagger stocks if they are right. Where can we probably find multi-bagger stocks? 1) Penny stocks – high risk, high return 2) Speculative stocks – high risk, high return 3) Severely Undervalued stocks – low risk, high return It is difficult for the Magic of Compounding to work its magic in a Buy and Hold strategy even with dividends re-invested as dividend income is too small to have any impact. Do you have that type of risk appetite for high risk, high return? If you don’t, then...

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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. http://createwealth8888.blogspot.com/2009/08/investing-in-property-is-far-safer-than_22.html and I posted many articles under Label: Education – Property –> http://createwealth8888.blogspot.com/search/label/Education%20-%20Property 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...

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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...

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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,...

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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...

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Investing in Property or Stocks – Revisit

Given that you only have enough capital for just one type of investment, will you invest in Property or Stocks? I have been asking this question again and again as I want to seek a better option to invest my limited capital to create wealth for my retirement fund. I am sure you too asking this question. Size of Investing Capital Even if you only have smaller investing capital, you can easily without using any leverage to start investing in stock market; but, unlike investing in property market, you will need a fairly larger capital, and use certain degree...

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