Cultural Revolution and Benchmarking

Anyone remember the story of that taxi-driver who shared he earned $7,000 a month? Then it was discovered the $7,000 were his best months; not the average per month... Hold this thought. It never fails to tickle me pink when I read about self-professed long term "investors" are so enthused into comparing annual performance returns, benchmarking this, benchmarking that. It can become … [Read more...]

Covered Short

Have you tried shorting stocks? If you interested, do be aware that only amateurs will use SGX's securities borrowing and lendiing programme (SBL). How I know? I was that "sotong" (dumb) amateur. If your portfolio is big as in landed class, and you want to borrow shares to short, ask your prime broker. The rates are way much better than SGX's! If your portfolio is more HDB like, do … [Read more...]

How many more years do they have?

I came to know of a group of mainly retired teachers and ex-principals that gathers regularly at one of the food centres in Queenstown for coffee and chit-chat in the mornings. Every alternate month or so, there will be organised "excursions" up north to Hap Chai, or down south to Batam. Wink, wink. Yes, they are all males. Some on reading this may get their blood boil... How could these … [Read more...]

Gurkhas, Riots, and Emergency Funds

Mt Vernon crematorium is the resting place for my maternal grandma. I visit her a few times a year; whenever I feel like saying hello. (I don't wait for Ching Ming; I listen to my heart. Visiting her is not an obligation) This bond started way way back. I remember when grandma went back to China for visiting before I enrolled in primary school, the many days I've stood looking out the … [Read more...]

Mea Culpa (Yes, it’s the freaking Mind part again!)

Mea culpa is a Latin phrase that translates into English as "through my fault". It is repeated three times in the prayer of confession at the Catholic Mass: mea culpa, mea culpa, mea maxima culpa — "through my fault, through my fault, through my most grievous fault". No, it's not me proselytising. It's a nice phrase. The modern equivalent I guess would be - "my bad". By the way, when was … [Read more...]

Sunk Cost Fallacy (The Mind part of 3 Ms)

Of all the psychological mental blocks, this one is one of the hardest to undo even if we are fully aware of it. Sunk cost fallacy Have you ever been in a movie where after the first half-hour you realised the movie is crap. What do we do? We stay till the boring ending when it would make better sense to just walk-out of the cinema. No? We have already paid for the tickets right? How … [Read more...]

Risk Management – A little knowledge is more dangerous than no knowledge

A few years back, there was a posting in the papers by a person who was complaining that his mom was diagnosed with terminal stage cancer when she had gone for regular health screenings at a polyclinic for the past 20 years... There is a common misconception that if I passed a basic health screening test, I am "healthy and fit". Most of the "free" or "cheap" health screenings only check the … [Read more...]

Don’t say “we” when you meant “I”

Have you caught yourself saying "we" when you meant "I"? Why do we do so? I guess it's a natural survival instinct to want to be part a school of fish or a herd of wildebeest. Maybe it's part Asian cultural makeup where we put the group first before the individual, or perhaps at the back of our minds, we knew the nail that sticks out gets hammered down... Another way of hiding behind … [Read more...]

Timing is everything!

As little children, we learn instinctively when to ask daddy and mommy to buy as toys. We don't ask for a Sony Playstation when daddy came home bing bing bang bang cursing and swearing the sorry excuse of a boss he has... Nor do we ask mommy money for sweets when she had just lost at mahjong... A bit older and dating for the first time as teenagers, getting the timing wrong at holding hands and … [Read more...]

Why we lose money in unit trusts

If you ask most retail "investors" on their experience with unit trusts, its quite interesting to find out that most are nursing losses. (We can also add in investment-linked-policies while we are at it) Isn't it interesting that this is so when most major bourses are near their 5 year highs? What gives? Some emotional "investors" are even calling unit trusts "ponzi schemes"!? How … [Read more...]

We need more short sellers to help build up our muscles?

You know what? After watching the short selling saga of both Olam and China Minzhong, I have a thought (I know, I shocked myself too!). Imagine if these 2 short-sellers had stress-tested our SGX stocks a few years earlier? Before the blow-up of the long string of questionable and fraudulent S-chips AND Singapore born and listed companies (ACCS, Citiraya, Informatics...)? Perhaps less … [Read more...]

Value Trap and Margin of Safety

This "Margin of Safety" concept popularised by Benjamin Graham has hurt many "so called newbie value investors". Not that the theory or concept is bad; it's great! What could be wrong in buying something with an "intrinsic value" of $1 for 60 cents? And If I ask where did you get that "intrinsic value"? 99% of these newbie value investors will answer: From sell side … [Read more...]

Context and Perspective

Views and opinions are a dime a dozen these days. Especially when markets are euphoric or downright gloomy... Listening to the advice of others can be misleading and confusing if we don't know the context and perspective of the speaker. Buy and hold; don't sell at the high and buy back at lower prices. Makes sense if you have bought at near 52 weeks (even better at 104 or 208 weeks!) … [Read more...]

Low probability of success; high demand

As a followup on my previous post: The Art of Goal Setting, the practical manifestation can be observed as follows: The more limited the places and the harder it is to get in, the more we desire to apply to that primary school, faculty, or university. If we can help it, we do our best to avoid the anyone and everyone can get in learning institutions... Hundreds and thousands apply to join … [Read more...]

Common Ways to Earn More

For someone who earns below $1,000 per month, it can be patronizing to tell this person to save more...  To get out of the poverty trap, the long term solution is to earn more. That's why micro-financing is so much better in helping others help themselves. Compare this to the destructive effects of subsidy and aid - good intentions; unintended consequences... Let's say if you earn a good … [Read more...]

Earn more or Save more?

We all know the secret to having more money is either to earn more or save more. And doing both together is even better! As a saver myself, it's not my intention to slap my own face or to belittle the savers. But we need to see things in context and have a proper perspective on which comes first. The Chinese have a idiom for it: 开源节流  -  to broaden the sources of income and economize on … [Read more...]

The Haze – Did you notice your emotional reactions?

I find some of the reactions of our fellow Singaporeans to the recent haze quite interesting.  It's a parallel I can infer and apply to trading in the markets - after all, the market is made up of people; with it's tug if war between emotions and rationality. If you never had any respiratory problems all your life, work and live in air-con environment, don't have high risk dependents like … [Read more...]

10,000 hours, 10 years, 10,000 trades

10,000 hours A common theme that appears in Malcolm Gladwell's book - Outliers: The Story of Success - is this "10,000-Hour Rule".  We know it kind of intuitively don't we? Hardcore gaming friends that that play Starcraft and CounterStrike day and night will beat the pants off us casual gamers. The same it goes with billiards (here's looking at you coconut) or mahjong (and all you … [Read more...]

Orthodoxy vs Orthopraxy

It's a holiday! Just thought I'll write something more celebral today (or so I think). Let's introduce 2 big words: Orthodoxy - correct belief Orthopraxy - correct practice No, I'm not giving a religious sermon today. Don't worry. Just using these two spiritual words as moot points to explain how some traders and investors apply them on their financial journeys - sometime without … [Read more...]

Is Gold considered as investment or insurance?

It is quite interesting to listen to intellectual debates on whether Gold can be considered an investment (when it has no cash flow) or is it an insurance. Investment I remember around 2005, I remember reading in the Sunday Times about how a Singaporean investor became a millionaire by investing in Gold.  He had sunk in his life savings of SG$500,000 into Gold when it was US$250 an ounce a … [Read more...]