Wednesday, 12 June 2019

A moment of reflection on 'history'

I saw this article Five Lessons from History from one of Uncle8888's post link. I find this article very insightful and here are a few paragraphs that are particularly resounding -


"Downturns don’t happen in isolation. The reason stocks might fall 30% is because big groups of people, companies, and politicians screwed something up, and their screw ups might sap my confidence in our ability to recover. So my investment priorities might shift from growth to preservation. It’s difficult to contextualize this mental shift when the economy is booming. That’s why more people say they’ll be greedy when others are fearful than actually do it.

The same idea holds true for companies, careers, and relationships. Hard times make people do and think things they’d never imagine when things are calm."

How many of us have ever experienced a market crash bad enough to make us capitulate or want to capitulate? I think if you have experienced that, you might find the above as resonating as it did with me.


You might have read some of my old old posts lamenting about my investing mistakes and portfolio downfall. This was actually what happened to my equity portfolio (which I have painstakingly built) during the oil crisis period back in year 2015/16. (Some of you qian bei may probably tell me this is nothing compared to the previous crises.)


It was a screenshot that I took at that time so that it would come back to me every now and then to haunt me serve as a reminder what my portfolio could become if I don't take care.


It was really no fun to watch my red portfolio gets redder by the day. Total massacre. At that point, I have totally lost confidence and failed to be 'greedy when others are fearful'.

What would you do if you were in my shoes then?

So did I capitulate?

No.

If I did, I would have washed my hands in golden bowl from investing and ceased writing this blog. So what happened to my portfolio after that? You can read my archives to find out.

What I can say is, my portfolio has undergone a haul-over since then. Now I have managed to break-even on all my realized losses with realized gains (without counting all dividends collected) and learnt some good lessons there.



The other resounding paragraph I found is this -

"Growth is driven by compounding, which always takes time. Destruction is driven by single points of failure, which can happen in seconds, and loss of confidence, which can happen in an instant.

The irony is that growth – if you can stick around – is a more powerful force, because it compounds. But setbacks capture greater attention because they happen suddenly."


I think there are ample examples around to show how powerful the effect of compounding is even without my further illustration.

In order to see the power of compounding, whatever that's compounding needs to undergo a SLOW and LONG process that we usually won't even notice. There are tons of things in our life that we can compound to GROW and we need to be discerning not to choose the bad ones.

In terms of investing, we can see that despite all the setbacks, market rewards those who are the most patient and who managed to stay alive the longest, without losing confidence in whatever that they are endeavoring. (Related post: Still in the secular bull market).

How to 'stay alive' and not lose confidence when there is a market decline of 30% or more?


Make sure we don't lose too much. 留得青山在,不怕没柴烧.

Then slowly win back.

Then learn to keep the wins.


"Long-term success in any endeavor requires two tasks: Getting something, and keeping it. Getting rich and staying rich. Getting market share and keeping market share."


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Wednesday, 5 June 2019

What inverted yield curve means

We have been hearing about the inverted yield curve and how it signifies that recession is on the horizon. So what exactly is an 'inverted yield curve'?

Source: Investipedia
Let's take a look at the above chart. Short term yield is represented by the blue line (US 3-Yr Treasury Note) and long term yield is represented by the orange line (US 5-Yr Treasury Note). We can also substitute the 5-Yr note with say a 10-Yr note. As we can see, the orange line (short term yield) logically should stay above the blue line, since the note / bond holders are expecting higher compensation for the longer time frame of holding it and with a longer time frame comes more uncertainty. The right hand side indicated a point of inversion - when the orange line falls below the blue line. Why would this happen?

As you know I am not good at explaining the technical stuff, so I shall leave the explaining to Investopedia here.


Some points to highlight are as follow:

"As the economic cycle begins to slow, perhaps due to interest rate hikes by the Federal Reserve Bank, the upward slope of the yield curve tends to flatten as short-term rates increase and longer yields stay stable or decline slightly. In this environment, investors see long-term yields as an acceptable substitute for the potential of lower returns in equities and other asset classes, which tend to increase bond prices and reduce yields."

So when more people choose to invest in longer term yield, naturally the price gets pushed up. It's the logic of supply and demand. So when price goes up, yield comes down. (Same as any dividend stocks.)


"As concerns of an impending recession increase, investors tend to buy long Treasury bonds based on the premise that they offer a safe harbor from falling equities markets, provide preservation of capital and have potential for appreciation in value as interest rates decline. As a result of the rotation to long maturities, yields can fall below short-term rates, forming an inverted yield curve."

This is telling us how market sentiment can affect the yield curve. Vice versa, yield curve could also affect market sentiment, albeit to a lesser extend than some big header news. Will it become a viscous cycle come a recession?


"Despite their consequences for some parties, yield-curve inversions tend to have less impact on consumer staples and healthcare companies, which are not interest-rate dependent. This relationship becomes clear when an inverted yield curve precedes a recession. When this occurs, investors tend to turn to defensive stocks, such as those in the food, oil and tobacco industries, which are often less affected by downturns in the economy."

So observe the shift in big money.


Despite the yield curve inversion, I feel that we need not be overly worried about it. Firstly, we do not know how long will the curve stays inverted (it could flip back anytime). Secondly, I think president Trump will not allow the US economy to sink, not even if there is a full-blown trade war (now it is still a tug-o-war that has no clear winner and election is coming 2020). We all also know now that there are so many different "patterns" that they can play with for their monetary policies...

See link below if you are interested to read more.






What I think we could do now is not to be overly worried, to periodically balance our investment portfolios and buy in to opportunities, yet have a plan on what to do in the event if recession really strikes.


We are living the "one word go up, one word go down" market. Trading counters that have as little correlation as possible to trade war issues seems the way to go.

(Keeping my fingers crossed that my trading months can remain in green till year end.)



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Monday, 3 June 2019

Get more positiveness in life +++

We often put too much stress on ourselves trying to over-achieve at work, trying to reach a faraway goal like trudging in mud, trying to FIRE and worrying whether we will ever get that cushy, retirement life or dream home that we have wished for. In my search on how to age gracefully (I am going to be one year older soon), here are some sharing on how to get a breather and be more positive.
Money ain't gonna make you stress less, trust me. But these would!


1) Practise MINDFULNESS


Mindfulness teaches us how to notice our natural emotions and responses, then in turn accept them and respond to them such that it enhances our well-being. Meditation is often used to bring about that mindfulness and, at higher level, the calmness of mind. (Calm being the opposite of stress.)

This being that stress often makes us develop negative emotions such as sadness, anger, frustration, fear etc. All of which we must recognise that it's our body's natural response. To overcome these challenging emotions, we must learn to NAV (name, accept and validate) them, and not to suppress, deny or fight them. Cases like taking sleeping pills hoping to sleep away stress and anxiety, or getting dead drunk to escape from reality would only create more problems as one becomes dependent on these ways to 'escape'. It is not easy, however, to tackle them head on - which leads us to why we should be practising mindfulness.

A simple read to get started with the practice of mindfulness is this little book 'The Calm Coach' by Dr Sarah Jane Arnold. She showed us the ways in which we can respond to our body, emotions, thoughts and behaviour so that we can attain a calmness of mind.


jacket, The Calm Coach


A particularly interesting tip in the book I found is about noticing our automatic-thinking styles such as the following.

"Black-and-white thinking: Seeing only one extreme or another, and not seeing the nuances in between. E.g. believing that something is all good or all bad.

Catastrophizing: Fearing and believing that a situation is far worse than it actually is in reality.

Comparison: Negatively comparing ourselves to others.

Emotional reasoning: Viewing ourselves or the situation based upon how we are feeling. E.g. 'I feel scared; something bad is going to happen.'

Empty positive thinking: Attempting to reassure ourselves with phrases like 'It'll be fine', which we don't really believe. This can unintentionally invalidate our emotions and interfere with our ability to manage the situations effectively because it encourages us to ignore what's bothering us.

Filtering: Focusing on the difficult and unwanted aspects of a given situation - forgetting to consider the pleasant parts and the bigger picture.

Jumping to conclusions: Making assumptions, judgements and predictions about someone or a situation, without knowing all of the relevant facts first.

Mood-dependent retrieval: Having thoughts that match with our current mood and emotions.

Over-generalizing: Making statements such as 'this always happens'. In reality, it may not be so.

Personalizing: Regularly relating things back to ourselves and blame ourselves for things that go wrong or could go wrong.

Ruminating: Worrying over and over again about a particular concern or fear. Often the mind is trying to solve a perceived problem, but it's got stuck in a loop without finding a workable solution.

Self-critical voice: Putting ourselves down, criticizing and bullying ourselves.

Shoulds: Regular thinking or saying 'I should', 'they should have', 'you should', etc, can put unreasonable demands and pressure on ourselves and others."

Learning to tune in to our thinking as soon as we notice them, and respond by naming the automatic-thinking style in our thoughts can prevent them from unconsciously influencing us in an unhelpful way. 

I realized I have many of the above thinking styles and I really haven't given much thought to them till now! 

Go and pick up the book to learn about the rest which would be really useful.




2) Stay away from Energy Vampires


As the name Energy Vampire suggestions, they are people who suck away your finite energy which could have been spent meaningfully. Below is a video on how to spot an Energy Vampire.





3) Find our IKIGAI


We have FINITE amount of time, energy and resources, but we have INFINITE willpower and imagination to do what we believe could be done. That's how mankind gets aeroplane, computer, internet, smart phones and all the things that revolutionized modern living.

We don't have to be the next Albert Einstein, Steve Job or Warren Buffett. However, if we can contribute even a little to making the world a better place, find value in what we are doing and perhaps learn to enjoy it more. I think that is brilliant enough. 



I am still finding my ikigai, what about you?

(Since I started my renewed career last year, I find that I am sprouting less white hair haha.)  :)

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Tuesday, 28 May 2019

Should frugal millennial guys be scared of Singapore women?

I happened to chance upon the blog post by Christopher on Why Singapore Women scare Frugal Millennial Guys and thought that I would share a few cents worth as a Singapore woman on this. Generally, I find it too stereotyping.
Here I classify "Millennial" based on Cambridge's definition of those born in the 1980s, 1990s, or early 2000s.


Define "frugality"

One issue that he raised was that millennial Singapore ladies seem to create the impression that they are spendthrift. They love to travel and instead of viewing travelling as a luxury, it's like a necessity. Lo and behold I may be just one of them! However, as the keyword said - it is just an impression. It does not mean my goal and hobby depend on travelling. In fact, I do view travelling as a 'luxury' in life and don't do luxury travel. Notice the difference? I don't think many Singapore women are suckers for luxury travel or view it as a necessity. Influencers only out to target 'naive Singapore women'? Nah! We can think for ourselves.

I supposed the group of millennial guys he has spoken to happened to be those who don't enjoy travelling. If you happened to be a guy who doesn't like travelling or who thinks travelling is not what you can afford to do, you can also simply find a homey girl who doesn't like travelling. Singaporean or not. You can save the money for something else... but what?

Being an 'indoor' person doesn't always mean one is really so-called frugal. Those who like to spend money on gaming and other small-ticket thrills could still snowball a large sum of money a year when multiplied by 365. I think the art in frugality is being prudent with how one spends his money.

With Singapore's (high) standard of living, one's idea of frugality may be quite different from another. You have your frugal ways, I have my frugal means. Define yours.

No buying branded goods is frugal? No travelling is frugal? No eating out is frugal? Cooking can be an expensive affair too - it depends on what you choose to cook.



Managing expectations

One good point that a commentor raised is the management of expectations. His expectation for his girlfriend was not to ask him to buy her branded handbags. Likewise, I believe there should be some expectation that he was asked from his girlfriend, since relationship is a two-way channel. Some reasonable expectations are healthy but nevertheless, keep it to a minimal in order not to sour the relationship.

If you are saving up for xxx reasons and therefore you cannot spend more than xxx budget this month, let her know. I am sure if she cares, she will understand. Don't need for lame excuses like 'my money is locked up somewhere'.

Please don't ever be generous on yourself and miserly on your girlfriend ok? 这种人我最看不起。

If you really die-die want to save money (and spend on only yourself) then don't date lor. Go sing BBFA rules! (I didn't know about this acronym until I googled it haha.)

Don't go dating with the mentality that Singapore women are all out to "ken" your money. If you don't care much on saving or boosting your ego, going dutch is fine for most Singapore millennial women too.


Remember to always manage your expectations first before you moderate others' expectations.



Be Ambitious

Be ambitious and passionate about something worthwhile in life.

One problem with the frugal millennials is that they only know how to save and aim for FIRE, then they have no idea what they want to do after FIRE.

Pause.


If you share your passion in life, you will naturally attract those who share your passion. 

Don't tell me your passion and life goal is about saving money ok?

Go listen to Steve's Job speech then tell me about it.

人往高处走,水往低处流。
So don't complain when you allow yourself to be stuck at the lower tree branch. When you are at the higher tree branches, you have no reason to be scared of anyone then.

---
A just-for-fun video below on Hypergamy I found from youtube.




Conclusion from the video: 
It's time to snap out of the wishful thinking that women of other nationalities won't follow the rule of hypergamy. 



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Friday, 24 May 2019

Words of essence from Jesse Livermore

I am finally passed the half-way mark of slowly clawing back my realized 4-digit loss from trading the US market late last year. Slowly... cos I chewed like a rabbit with no gut to swoop like an eagle. 

Considering that it is only May now, I am hopeful that by end of this year I can at least break even. As the saying goes - "You don't have to win back the same way as you have lost.", I take it that it means winning back via a different trading strategy... Not get out of the game entirely.

Trading is a totally different ball game from investing. In investing, we want the stock (which pays good yield) to be as stable as possible (low beta). Whereas in trading, we want volatility (like now) so we could reap profits via long or short. It's like riding a sight-seeing train versus riding a roller-coaster.

Only with skin in the game, I came to fully appreciate the beauty of JL's principles as below.


1.  Big money is made by holding a trend, not scalping or day trading
When there is no clear trend, stay clear.

2.  Cut losses quickly when wrong, let the big winners run
Protect the open positions with stop cos when we take care of the downside, the upside will take care of itself.

3.  Trade price action not fundamental valuations
Just look at Alibaba. Nuff said.

4.  Wait for confirmation before making an entry
Look for the right signals - whether it's from candlesticks or indicators. Don't trade on impulse or in 'no man's land'.

5.  Focus on a small watchlist to be an expert on their price movements
Personal preference.

6.  Do not enter a second trade if your first trade shows a loss
Aka don't anyhow average down.

7.  Best trades are winners right from the start
Back to point 2.

8.  Don't trade unless the market presented an appropriate risk/reward ratio
Same as investing, we need MARGIN OF SAFETY.

PS: Take note too that the harder a stock runs up, the harder it comes crushing down when things turn sour.

Besides shorting the the China large-cap ETF, my latest profit came from shorting Qualcomm (when bad news hit it did a big gap down). I have let go of my position in Kraft Heinz at no loss/gain. Still watching BABA.



"The successful speculator must always have cash in reserve.. .for exactly the right moment. There is a never-ending stream of opportunities in the stock market and, if you miss a good opportunity, wait a little while, be patient, and another one will come along. J.P. reach for a trade, all the conditions for a good trade must be on your side. 
Remember, you do not have to be in the market all the time."

Image result for jesse livermore
Source: https://www.pinterest.com/pin/298996862746535698/



For Bei Kambing beginners, we don't know when we will meet the carnivores. So always remember to exercise stop loss, which is the first aid for "stopping bleeding". 


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