Trading Plan : We do need one

What Is a Trading Plan?

A trading plan is a complete set of rules that covers every aspect of your trading life. Many experts refer to the need to have an ‘edge’ which will tip the balance of probabilities of success in your favour. In itself, a plan is not an edge but, over time, the trader with a plan will fair a lot better than the trader without one. Many amateur traders do not have any sort of plan to trade by, and enter the markets with scant regard to their risk and profit objectives. Suffice to say, comprehensive risk and money management strategies lie at the heart of all good trading plans.

Traders with a plan have the ability to monitor their performance. They can evaluate their progress continually, day-by-day, in a way that is objective and comprehensive. This enables them to trade without emotion and with minimal stress. The trader without a plan is not able to do this and their trading tends to rely upon gut feeling, hunches and tips etc. Trading for them is a nail biting, emotional roller coaster ride of stress that, inevitably, results in financial loss.

Obviously, a plan does not guarantee success; that would be too simple. However, a good plan that is adhered to strictly will help to minimise losses and enable you to stay in the game a lot longer than traders who do not have a plan. In his book ‘trading online’, Alpesh B. Patel writes, “While a plan cannot predict the future, it can lay down how you react to the possible outcomes. This is why a plan is essential. It is a list of strategic responses to events beyond your control. You control the only thing you can control – yourself”.

Some confusion exists over the difference between a trading plan (or system) and a trading strategy. As stated above, the former is a complete set of rules that governs every aspect of your trading life. It goes into great detail and may, for example, stipulate the amount of time devoted to reading threads on T2W! The term ‘trading strategy’ tends to be used to describe trade entry and exit criteria. However, these are merely elements of an overall trading plan and possibly not even the most important ones. It is perfectly feasible, desirable even, to include two or more trading strategies (i.e. entry and exit criteria) within
an overall trading plan.

---------------------------------------------------------------------------

TRADING PLAN CONSIDERATIONS

1. Define objective.

a. Plan to trade for a living or just augment income?
b. Which instruments to focus.
c. Time frame; Scalp, Swing, Position, Manage Portfolio, Combination?
d. Initial investment.

2. Education & Training. You should plan the amount of time you plan to spend on continuing and ongoing education. Plan the amount of time you will spend doing your homework and research. This business requires continual education and adaptation.

The trading plan is perhaps the most overlooked tool in a trader’s arsenal. In fact, most traders
don’t even write their first plan. Then most traders also go broke in their first six months. In our opinion, this is no coincidence. A pilot doesn’t leave the ground without a checklist; a builder doesn't begin construction without a blueprint; therefore, a successful trader shouldn’t take a trade until they have a carefully crafted, reviewed, re-written, re-considered, trading plan.

Much like a business plan, a trading plan is used to define one’s goals, identify one’s costs, and
lay out the strategies one needs to reach those goals. Unlike a business plan, it must be adhered to with
absolute discipline in order to be of continuing use. It is this intractability that gives the savvy trader an
edge. The plan provides a measure of consistency in the way traders approach an ever-uncertain market.
Why is consistency important? Think about how difficult it is for a stationary marksman to hit a
moving target (much harder than it looks in the movies). Now, imagine that the marksman is also moving at the same time. This dramatically reduces the chance of hitting the target with any degree of regularity.

On a high level, this analogy illustrates the relationship between a trader and the market being traded. The entity is always in a state of flux (moving either up, down, or sideways), and the trader is continually trying to gauge that movement to ascertain exactly when to pull the trigger. When done from a stationary perspective, one will enjoy greater success than if constantly shifting position.

1. The first step in writing a trading plan lies in understanding exactly what is being written about:
trading. And make no mistake; it is a business – a big business - with some of the shrewdest and
most experienced players on Wall Street competing for the best trade.

2. Learn what others know and learn to trade as well as others. Often, success boils down to the
“trading plan,” not the “player.” Decisions to buy or sell a stock often come down to the last second.
Without a plan, there will be hesitancy when the window of opportunity is rapidly vanishing. On the
other hand, the prepared trader – the one with a trading plan - can react without hesitation in a
consistent fashion because they’ve already written down the various trading strategies they intend
to invoke and have a clearly defined set of rules on how to play the tactics. A polished plan
removes the emotion from the equation engendering more mechanically {automated thinking}
executed actions.

3. Agreeing with the philosophy that trading is a business, the language and the format of the plan
should deliver a business like tone. Furthermore, it must be written well enough to convince a
hypothetical banker that trading is a worthwhile enterprise and that the trader is up to the task of
running it as CEO. So, forget dashing off a few quick paragraphs! Think forward: Write a good
trading plan. Take the necessary time, careful thought, and commitment toward the idea that the
plan will work. Otherwise, the plan will just go through the motions of what in the end will amount to
futile exercise.

4. BE REALISTIC! Don’t set goals based on wild dreams of winning the lottery. Making money
doesn’t occur real fast trading. Do not set yourself up for failure.

5. DETAILS. Cover as many facets of your trading plan as possible. Strategies, indicators, money
management, entries and exits, time of day, and finally, when to simply observe. The more detailed
the plan, the better..

6. INDICATORS: Define and limit the use of indicators. Too many is worse than none.

7. MONEY MANAGEMENT: Be sure to keep the proper perspective about money. This works both
ways, when having a great day, or a losing day. Just be sure to have enough to play the next day.
It’s easy to get “caught up in the money moment,” like getting punched in the face in a boxing
match. The boxer must learn to take punches. The trader must learn to step away from losers.

8. TRADE SIZE: This is the “valve” used to regulate money flow. Define the valve carefully. Do not
exceed predetermined limits without modifying the plan beforehand.

--------------------------------------------------------------------------

The above are taken from some of the sites I have read. Reading and practising are two different stories. First of all, you need to BELIEVE that we need a trading plan BEFORE you could even trade.

Today, I will like to share the above post with my tratles in my trading class. There is no such thing as the 'best' trading plan or which one we should be following. We need to design our own and use others as guide-lines. Seriously, one of the MAIN weakness in most losers in KLSE(or any markets) is lack of plans ... or perhaps, DO NOT have a plan at all.

If you are a newbie ... GOOD. Start to read about these ... and start to design ONE plan. Do not think of trading yet .... dont worry, market is always there. Do yourself a favour ... DO NOT listen to others unless they are the minority people who consistently profitting from their trades. I believe they do have a good trading-plan before they trade. Discipline and hard-work ... now, do you know why trading is so difficult? Well, it is because MAJORITY prefer to cut-short many things(I do that too at times and was punished) ... and so many are pure ignorants!! They really thought market is a place for the to be rich or some sort of casino or just to feel their thrilling-needs?

Unless you want to improve yourself, you will be 'lost', searching in the noisy forums ... or worst still, only listen to some rumours. Take your trades in more serious manner, will you?

I still have a looong day today.

Have a nice day.

TEH

Dissapointing Durable Goods Report Drag down Dow Jones

I have mentioned last week that there are 2 Enterprise Reports to watch out for this week. One of them is this Friday Chicago PMI, the other is today's Durable goods Report.

Today Durable Goods Report is a dissapointing 2.2% compared to forecast of 2.9%. That is one major reason why Dow is down by 80 points by noon.

But the main one this week is still Friday's Chicago PMI. 

Today I am looking at opportunities, but did not enter. Almost all stocks are dragged down by the report. But Google broke through of $650 to reach $658. It has potential to run, but because of the major market, it is down a bit by midday. Potential to run when market turns better.

Amazon takes a turn to test $200 support. See whether it lifts off this support! Great entry also if it does.

Keep calm: The rally is for real

Business Times - 28 Mar 2012
Keep calm: The rally is for real

Investors are starting to believe the current rally in stocks, commodities, and emerging markets could be a long-lasting one

(NEW YORK)

IF YOU'RE waiting for the next meltdown in US stocks or in commodities, you may want to get over it. After several false dawns following the global financial crisis, more investors are starting to believe the current rally in stocks, commodities, and emerging markets could be a long-lasting one. The S&P 500 closed above 1,400 points last week for the first time since the 2008 financial crisis. Investors piled into US equity funds, with the biggest weekly inflows since mid-September.

'Is this risk rally for real? I think the answer to that question is yes, but it's not a straight line up,' said Art Steinmetz, chief investment officer at Oppenheimer Funds here, managing more than US$177 billion in assets. Oppenheimer is currently betting on stocks tied to upswings in the economy and is also overweight in riskier bond classes, he said.

Since its recent bottom in early October, the S&P index has jumped 30 per cent. But for the first time since 2007, investors are not using the gains as an opportunity to take profits and run away. Instead, the rally has been slow and steady and investors see the sustained improvement in the US economy as a sign that demand has returned and that risky assets can support higher valuations. 'The prospects for future returns in equities relative to bonds are as good as they have been in a generation,' Goldman Sachs said in a note last week.

Dean Junkans, chief investment officer at Wells Fargo Advisors and Wells Fargo Private Bank, said individual investors have started wading back into higher-risk, higher-yield assets, including high-yield and emerging market funds. 'For the last five years, few people wanted to talk about a long-term plan,' said Mr Junkans, who oversees US$1.3 trillion in assets.

Instead, investors had preferred the safety of low-yielding Treasury bills and money market funds. 'Now I'd say they are dipping their toes back into the market,' he said, citing demand for high-dividend-yield stocks, high-yield corporate debt, and emerging market fixed income.

Last year was one for the risk-averse: US government bonds were the best-performing asset class. This year has been the reverse. The S&P is already up 11 per cent in 2012. The Thomson Reuters-Jefferies commodity index has gained 2.4 per cent so far in 2012 after losing more than 8 per cent last year. Long-dated US Treasuries prices, meanwhile, are down 7.3 per cent this year, according to Barclays Capital.

The euro, at the epicentre of the financial crisis, is also up nearly 2 per cent against the US dollar in 2012 after losses of 3.2 per cent in 2011. 'There has been very substantial progress in the eurozone the last couple of months,' said Thomas Stolper, chief currency strategist at Goldman Sachs in London. He expects the euro to hit US$1.38 over the next six months and US$1.45 by the end of 2012.

The eurozone's general stability is reflected in currency options as well. Implied volatility has fallen to levels not seen since before the eurozone debt crisis, in large part because heavily indebted Greece finally agreed to a bailout plan and debt restructuring and the European Central Bank offered short-term loans to the region's banks.

The high-yield debt market has risen more than 5 per cent this year, according to Barclays Capital. Investors have flocked to junk-bond exchange-traded funds (ETF), with the two largest junk-bond ETFs attracting nearly half of the US$4.15 billion that flowed into US fixed income in February.

Emerging markets have also become more popular: The Vanguard MSCI Emerging Markets ETF pulled in US$2.5 billion while the iShares MSCI Emerging Markets Index Fund hauled US$1.5 billion, according to IndexUniverse.com, which tracks ETF performance.

The US stock market is a favourite of Scottish Widows Investment Partnership. The fund, which is based in Edinburgh and manages about US$220 billion, has made US stocks the biggest overweight sector in its portfolio. 'The recovery in the US has been more robust than expected, and the rally in the US is probably more durable,' said William Low, head of global equities at Scottish Widows. The firm has exposure to US industrials, information technology, and the consumer discretionary sector.

A key measure of risk suggests more investors are becoming comfortable with equities as the rally has continued. The implied equity risk premium, which compares the market's earnings yield - a ratio of earnings to share price - to the yield on risk-free government debt, is what investors are willing to pay to invest in stocks instead of bonds. When it rises, it suggests investors want to be paid more to take on the risk of owning stocks. When it falls, it suggests more comfort with equities.

Over the last 10 years, risk premiums in both the United States and Europe have been rising. Premiums peaked in August 2011 and have since been declining, an indication that investors are more positive on the outlook for stocks. The implied risk premium currently suggests another 10 to 15 per cent in gains in the US stock index this year and for European equities, a further 6-8 per cent rise.

It is easy to be sceptical about this year's gains. Risky assets have gone through a series of rallies that were undermined by worries, ranging from the eurozone's debt crisis to the Japanese earthquake and sluggish performance from banks.

In Europe, while Greece has negotiated a bailout programme and a debt restructuring agreement, investors question whether it will be the end of the region's troubles. Other indebted nations like Spain and Portugal loom as problems for Europe's banks. Sabre-rattling between Iran and Israel has boosted crude prices. Rising petrol costs could pinch consumer budgets and a greater conflict would add uncertainty to markets.

In addition, recent data has rekindled fears that the eurozone could fall back into recession. And signs of slowing growth in China could carry risks around the world, particularly commodities-rich countries from Latin America to Australia that have found a rich market in China for their goods.

This year's strong rally has led some, like London- based hedge fund GLC, to reduce their exposure to risk after profiting from stock-market gains and successful bets against bonds. Nonetheless, Steven Bell, director and portfolio manager for GLC, which has about US$1 billion in assets under management, does not see a bear market coming. 'We're still on a positive track and in a bullish trend,' he said.

Other funds are taking advantage of low volatility to increase hedges against calamitous events. The CBOE Market Volatility Index, or VIX, Wall Street's favoured anxiety gauge, last week hit its lowest close since mid-2007, suggesting benign market conditions will continue. But later- dated volatility futures contracts show increased concern that the market is starting to become complacent.

Similarly, currency market investors are also hedging against unforeseen outcomes. The concern is that the euphoria will leave investors exposed to sudden, sharp declines.

Still, the market's worries are less intense when compared with 2008, when Lehman Brothers collapsed, or the eurozone crisis that dominated 2011. 'Markets love a grizzly story,' said Simon Smollett, senior currency options strategist at Credit Agricole in London. 'But there is no grizzly story. The bears have left the room.' - Reuters

Source/Extract/Excerpts/来源/转贴/摘录: www.businesstimes.com.sg
Publish date:28/03/12

你有多少时间投资?

● 刘崇瑜 投资理财

对于投资者而言，时间至关重要。然而，投资者常犯的一个错误却是：误算自己的投资期限（investment horizon）。

投资目标可分为两个模式：最终价值（terminal value）与提取价值（withdrawal value）。

这两者看似一样，但实质上有很大区别。

最终价值——在投资几年后，利用投资成果去实践财务目标，例如在20年后还清房屋贷款。提取价值——在投资几年后，开始逐步从投资成果中，慢慢提取款项以达到财务目标，例如在20年后退休。

前者没有后续，但后者的后续工作就长了。除非你的资金非常雄厚。

以上述情况举例。假设你希望在步入退休之际就不再投资（即没有后续），并且在退休期间享有相等于目前3000元的每月生活费。

假设每年的通货膨胀率是3％。在不留下遗产、不面对任何紧急开支的情况下维持20年的退休生活，依你看，在退休之际，你必须拥有多少现款呢？

答案是：$1,763,695。

但如果你选择在退休期间继续投资（即后续工作），而退休后20年的投资，每年都可以取得7％的回报率（其他假设依旧），那么在退休之际，你应该拥有多少资金呢？
答案是：$918,989。

前者较后者几乎多出一倍！

再回到当下，从现在到退休，你认为哪一个数目比较容易达到？

对一般人而言，为退休所作的投资，并非步入退休后就可停止。关键在于那退休后的20年里。你的投资时间究竟有多长？这是一道在风险分析（risk profiling）文卷上常见的问题。

任何投资目标，对投资者的风险分析，一般可从三个角度去测试，而且必须综合起来看。

一、承担风险的需要。

你必须取得怎样的回报率，才能够如期实践投资目标？既然天下没有免费午餐，那么越高的风险才有可能得到越高的回报率。在确定自己需要的回报率后，便能知道自己的投资必须多激进。这个步骤算是客观的分析。

二、愿意承担的风险。

投资出现的账面亏损，超出多少百分比，才会让你突然中断投资？

既然人并非完全理性的动物，这个步骤是主观的分析。能承受更多的账面亏损，越能选择更激进的投资，才可能取得更高的回报率。
三、承担风险的能力。这个步骤有两个部分：资金与时间。

如果在任何时候，你的投资亏损都不会严重动摇你的财务健康，那你便能够承担更高的风险，选择更激进的投资，争取更高的回报率。

而如果你的投资期限够长，你便有充足的能力缓冲熊市的来袭，同时能借助复利增长来提高实践目标的可能性。这个步骤，主观与客观兼备。

回到上述的退休例子。如果你有办法在接下来的20年内获得176万3695元，那么从此刻开始，你的投资期限便是20年。如果你只能在这段期间取得91万8989元，那么你的投资期限很可能就是40年了。

过去十年的全球市场动荡，或许让谨慎的你心有余悸，不敢奢望接下来的数十年。肯尼思L.费希尔（Kenneth L.Fisher）在近期的一部新作《市场永远记得，但人总是忘记》（Markets Never Forget,But People Do）中，引用了大量的历史数据、考察与论述，对每一名善忘的投资者都有非常“醒目”的帮助。

作为总结，我举其一。他说：十年的平稳股市，并不意味着下一个十年也是平稳股市！共勉之。

（作者是独立财富策划师）

Source/Extract/Excerpts/来源/转贴/摘录: 联合早报
Publish date: 25/03/12

Should I short the markets?

No doubt, the stock markets have been on an uptrend.

BUT, the broad market has rallied for an unbelievable 3 straight months without pause.

Although April is traditonally a good month for stocks, the months that follow, May and June are not. This is the time to consider shorting. Since it is the small caps that get sold off first, shorting the Russell 2000 is the natural choice. It is at resistance now.

Slowly placing my bets on the short side.

Update: I have decided against  shorting after noticing supports of key indices and blue chips are holding steadfastly. Will look to long instead.

股票经纪日记 - 15 / 10 / 2011

九月的顾客交易记录是2个。

而十月的交易记录是4个。

所以我在10月份的时候的记录是九月的两倍 初略估计一下，若要达到最少的minimum的要求，那么就是你本身要时常Trading，不然就是要很多的顾客来support你。而一个月至少要200个交易。所以，现在距离200个交易还差差不多50倍的距离。

之前有提到说本身会设立自己的彭氏发展基金，然后我询问了坐在我隔壁的aunty，她说最好还是不要梦想成为mini fund manager，原因是这会与你的交易执照起冲突。所以我应该会让我家人设立这个基金，然后通过我来交易股票，那么才算是顺利成章的执行我的“股票交易”的最重要职务。 

基本上很多人都是网上交易，很多人都是看图标为主，很多人都是看基本面，很多人都是靠消息，但能够做到长期持有股票的真的没有几个。他们给的理由通常都是： 看图很容易明白，看基本面的也很容易明白，可是能够做到剖析整个生意里头的生物链（Supply Chain）和周期运作的没有几个。 从理论上来看，只要国家经济发展良好，金融市场肯定稳定向上，可是很多人都是喜欢快进快出。以现阶段来说，我看到的是股市还是处于一个极端的象限。很多人的信心程度不够，就开始了“Cut Loss”的策略，然后到了确定形式向上的时候，说不定就错过了10-20%的起伏的赚幅。有很多股项都是在上几个星期创新低，原因在于很多人都选择Cut Loss观望态度。可是若你以企业主的角度来看，在股价下跌后就出手股票让给另一个人来接管你的生意是最愚蠢的做法。 

股票对于你是什么的想法，会决定你对股票的回酬。有些人会觉得股票就是ATM，所以通常都可以赚到零用钱后就跑人。有些人会觉得股票是短期投资，所以通常到了20-30%的盈利的时候就会抛售。有些人觉得是长期投资，可是又没有对股票研究透彻，就糊里糊涂地当一个大闸蟹很多年，多不知道会什么长期投资为什么没有赚钱。

最简单的股票投资致富方法应该就是如投资房地产一样，首先你需要确定哪一类型的股票你最熟悉，然后确定哪一个公司最值得投资，然后慢慢地有耐心地等待投资的良机。当其达到适当的价格时若你发现到另一个被低估的股票后可以考虑换票，或者慢慢地等待公司管理层把该公司打造成大型顶级企业。 

ok，以上是个人意见，有错请更正。 

正所谓创业初期是最艰难的时候，尤其是当你的收入突然锐减到之前的收入的不到十分之一的时候。 要不是有这份热诚在，我看我也看快就要退出了。

所以创业的基本条件是： 

1. 要有有关领域的经验和措施。 

2. 做生意一定要以顾客为主。不可以把自己的思想强加在顾客身上。

3. 不要一直以金钱有大前提而乱乱介绍顾客股票。这是有违你的职业道德，很快的这个市场就会知道你是个没有道德的人。 

4. 把自己的思想扩大，允许顾客并非以长期投资为理念，而是让他们知道股票的风险（提醒一下），还有就是不要认为自己是最了不起的，因为人外有人，天外有天。 

5. 要有创新的精神。要在这一条line里头杀出一条血路。所以我不会以图表或者基本面来做主抽，我会以个人的整个人生生涯为最高投资理念为主。投资的目的不是为了赚钱，而是为了完全人生和了解自己人生目标为其大方向。（很奇怪吧？我也不知道，可能是受到了易经和道德经的影响）。

人生与绝望

悲伤与绝望。人们到一些时候，总是会遇到绝望的时候，所有的努力，所有的理想都化为乌有，这时候，就产生了绝望的思想。这时候，你放弃了自己的理想，这时候，你放弃了自己，这时候，你告诉自己已经不可能了，这时候，你已经彻彻底底的放弃了自己，准备死神的到来。你从前伟大的理想不见了，你从前的愿望不见了，留下的只是害怕，绝望，自我摧毁自己。这些都是错误的，你的信心打击了你自己，你的声音告诉你是不可能的，你的声音告诉你完蛋了，你的声音告诉你放弃吧，你的声音甚至告诉你死了吧一切都结束了。你绝对不能放弃，没有任何东西会让你放弃，所有的声音都是假的，都是来打败你的，你不能让自己的声音打败，不要相信这些声音，你必须坚强，忍住任何的压力，你可以失败，但是你会再来，你的增长无限，你的智慧转变无限，你认错改过，你从来没有对自己失去信心，你一定要做到，不管什么声音，再也不能影响你，你已经不再理会任何的声音，你只会将愿望达成，将理想成立，让伟大的力量释放出来。创造吧，勇敢吧，世界需要你的力量。你唯一不管的东西，就是失败。

投资股票能否积德行善？

记得之前读过一篇文章，有关投资股票能否当成是一件善事来评论。我个人觉得这是一个很好的课题，原因是大多数的人认为股票是一种赌博，而他们的观点来自于太多人在股票上身败名裂。

凡事都有阴阳两面，有不好就有好的一面。若你把股票当成是赌博的话，那么你只会把它当成是赌博工具。若你把它当成是帮助别人的工具的话，那么你就会慢慢地累积做善事。

一般来说，很多人对股票的印象就是要炒上去的才是好股，而没有说进一步去了解股票或者公司是做哪一行的。在少算的情况下，仰赖股票波动赚钱显而易见就是只是在期望从股价波动中取得盈利。这也就是为什么很多人在牛市的时候才进场而被烧伤后在也不愿进入股市。大多数人没有进一步去了解本身投资的公司是否能否在赚取盈利之际也对社会有否贡献。

我们都可以在有关上市公司的Corporate Social Responsibility (CSR) 报告中, 来看看有关公司是否有帮助到社会的比较弱势的一群。这是比较直接可以看到公司是否有做善事的方法之一。

另一方面，我们也可以透过公司在不断壮大提高盈利的时候，也增加雇员。一个雇员就是一个家，那么几百几千个职位代表着公司也在照顾上百，上千的家庭。在公司和雇员拥有良好的合作关系下，大家都能够取得更好的利益。

Will the Market Rally Last?

By: Shai AhmedPublished: Friday, 16 Mar 2012 | 7:30 AM ET Text Size 

CNBC Associate Editor

The market rally seen in recent sessions could be short lived as many downside risks remain, Gemma Godfrey, head of investment strategy at Brooks Macdonald Asset Management told CNBC Friday.

“There are signs of nervousness and that is down to the fact that this rally is on low volumes and the flows that are coming in, and there might be a correction,” Godfrey said.

She added that the rally was fragile and if any negative data were released or another issue regarding the euro zone crisis were to flare up, it would be derailed.

“Within the growth story the downside risks include the fact that while job numbers look good. There isn’t any wage growth and the consumer is under downside pressure. The focus has also gone to the fears of inflation,” Godfrey said.

The S&P 500 rose to a 52-week high on Thursday, breaking the 1,400 points barrier for the first time since June 2008, before the financial crisis.

Others felt the rally was just the beginning of a more sustained upward trend for the markets.

Jack Bouroudjian, CEO of bull and bear partners, was more optimistic, arguing that growth in the United States was underpinning the rally.

“This is a broad-based rally. This is capital that has been parked and now is coming in waves and I would expect a little of this to continue. A lot of portfolio managers are starting to play catch-up, that have been sitting on the sidelines and are still non-believers of this rally,” Bouroudjian said.

He added that the broadly positive stress tests for U.S. banks earlier in the week and the reduced likelihood of contagion from Europe were all bullish factors. 

Beware Of The Goody Goody Guy!

When I was selling furniture at IMM and Park Mall during my furniture salesman days in my mid-twenties, I have an older lady colleague who was in her mid-30s.

In her youth (she would probably give me a slap – 30s very old meh), she used to work in the high class fashion boutiques at Orchard Road. That’s why she looked so different from the “normal” furniture sales staff – always fully make-up with branded attire and never a hair out of place.

Oh the stories she would share on what goes on in the changing rooms between bored tai-tais and the male salespersons… (Of course I dare not ask her what she did with her male customers!)

Opps! That should be another post for another day.

This lady colleague was married to an insurance agency manager. And her plan was to retire with her husband in their early 40s.

She is rich; you should see her Chopard watch – the one with gemstones moving freely on the dial ;) She works merely to pass time.

One day, a drop dead gorgeous lady customer walked into our showroom. After this customer left, my lady colleague asked me who is prettier – she or the customer?
Ah ha! By now I knew how to speak “woman”. So I replied, “Her long hair very nice; but you prettier! Your skin so very de fair and your eyes so big big. Can hook any man’s soul!”

My lady colleague laughed. I can be very over the top!

She later revealed that lady customer was one of several ex-girlfriends of her husband. And on that day, I learned a lot about how some women got use strategy and tactic when it comes to “hooking” the significant other of their choice.

Her husband is very handsome. And together with a good career, it’s not surprising during their courtship, her husband did stray and became a playboy…  Instead of throwing tantrums or breaking off in a huff, she let her then boyfriend “sow his wild oats” and patiently waited.

Needless to say, her brave contrarian bet paid off!? Once the playboy boyfriend had got his “excesses” out of his system, the desire to settle down to start a family and focus on his career took root.

And lo and behold! My lady colleague was there when her boyfriend came to his senses.

Sob, sob. How’s that for a fairy tale end?

OK, foreplay over.


When I read in the news of how powerful or rich guys get themselves into trouble over their inability to zip up, I always recall the above episode and what I’ve learnt from my lady colleague.

For young teenage girls, there’s this “convent girl syndrome” for girls that are too “repressed”.

For men in their 40s and 50s, there’s this lao hero mid-life crisis phase. Especially if they have been always the goody goody guy with no vices during their early manhood.

Imagine being in a position of authority and/or wealth during your middle age and find to your surprise that mei-meis are now “bumping” into you and “chatting” you up?

Never mind if you are short, fat, and ugly (OK, OK, I add in bald if you must insist).

All your life you have done the “right thing”. And now you tell yourself you “deserve” a little bit of fun and reward for all those years of hard slogging to get to where you are.

When I hear people say only buy blue chips, or dividend paying stocks are great, I smile when I recall what I've learned on that afternoon with my lady colleague.

So I’ll flirt with the S-chips and penny stocks today. You never know, one of them one day, may be the next great blue chip and dividend play of the decade!

Will Value Investing Cease to Exist Soon?

With the rampant proliferation of workshops, courses and books purporting the theory of value investing the Warren Buffett way, will there be lesser value buys in the future when more investors follow the “rules”? Will the stock market tend to become more efficient in the future? Will value investing cease to exist soon? These are scary thoughts that a value investor would not want to see being materialized.

Nowadays, when you flip open the Straits Times, there are many advertisements about courses on value investing showing up almost everyday. Just recently, more books were published on investing like Warren Buffett. I came across  three and they are “Creating a Portfolio like Warren Buffett”, “Moats : The Competitive Advantages Of Buffett And Munger Businesses” and the best title so far goes to “Warren Buffett Invests Like a Girl: And Why You Should, Too”. More people are becoming financially savvy and more knowledgeable. I’m taking notice of all these as I’m into value investing and my eyes choose to “focus” on these proliferation. Just think about it. Let’s say you have chosen to buy a particular model of a car. As you are out-and-about, you will take notice of the very same model of the car you have in mind and see many cars of the same model on the road. They were all the while there but your eyes chose not to focus on them. Even though there has been a perceived proliferation of value investing courses and books, my take is that value investing will not cease to exist.

Why would value investing still prevail? Most people are still encouraged to trade and make quick bucks out of the market. People don’t like waiting and long-term investing is an oxymoron to many. Just look at how the prices of stocks shoot up when there’s a good news and prices plunge when there’s a bad news. Institutional traders, part-time/full-time traders, people who don’t know much about stocks, people looking to make quick bucks and people with “itchy fingers” still trade widely in the markets. The media (TV, newspapers, Internet, etc) encourages trading. Research houses and analyst reports encourage trading. All these heavy buying and selling bodes well for value investors. Trading creates liquidity and volatility. Good news = buy, bad news = sell become the rules of the day. When the crux time comes and a crisis strikes, not many have emotional stability and thus, sell heavily in panic. They flee the market wondering why they bought the stocks in the first place. This is when value investors rejoice. It’s like a Great Singapore Sale, except that now it’s in the stock market and it can happen in any month.

There can be lots of courses and books on value investing but not everyone’s psychology is suited for long-term investment. It’s the psychology and lack of emotional stability that will cause value investing to flourish and has caused it to flourish since the time of Benjamin Graham. When crunch time comes, how many investors become greedy when the world is fearful? Not many. This was seen in the Great Financial Crisis of 2008/2009 and it was seen in all the past crises. It will still be seen in all the future crises that’s about to come. Old habits die hard.

financiallyfreenow

STI - The Surreptitious Setup

Today as I was observing the action and activity of the entire market, I saw the BBs were performing some kind of stealth setups to trick the public into buying. Of course, there were some stocks that ran like Ezion, CapMallAsia, Osim and some others, however if I were to judge the overall market, I won't be longing. I am skeptical and cautious just in case of a sudden flush down. As the market trended higher in the morning and afternoon, it started to cool off profusely in the late afternoon and that's where I knew this was another trick to trap the "bullish" traders. For me, I won't be tricked because I already got a speculation plan. I am trying a new technique, if it works, it shall reward me with the largest amount of profit possible. :)

Ronald K - Market Psychologist - The Big Speculator

STI: Will it break up of 3030 or break down of 2910?

I have mentioned that it isn't easy trading the market in March mainly because it is like a sideway month to trade as I have explained in my article at the beginning of the month. I still do not expect Dow Jones to go up a lot like 500 points though we have a good Jobs report this month.

For Singapore stocks, I think it seems like a tougher market as STI struggles to stand above 3000 points firmly. After it exceeds, it begins to drop after a few days. This is never a sign of firmness. It has been in a Box Pattern fluctuating between 2910 and 3030 for the past one and the half months. This is a sign of consolidation in a tight Box Pattern as shown in the charts. 

We shall see whether it breaks up of 3030 or breaks down of 2910. This month is coming to an end next week. Let us see if we get an answer by this week? If not, I think we may have the answer by end of next week.

Like what I emphasize in the beginning of the month. I hope that this run will continue, but eventually it will end. I hope that it ends in a peaceful way instead of a big drop. Hence, I would rather there be a small correction instead of a big one. The longer the run, the harder it falls.

If next month employment reports cannot meet the expectations after good reports all these months, this might be the consolidation that I am seeking. Before the next run-up again.

How is the US market this week?

US Dow Jones 30 has stood above 13000 points but yet STI drops below 3000 points again today. Sad to say, we have to wait a little longer for STI. So Stubborn. If US rises this week amid no bad news, I believe STI still has a strong chance of standing above this figure. Just be patient and pick the right stocks.

The focus on US this week will be on housing data. Look at the reports coming up.

It is Housing from Monday to Friday. Let us see how it is. Housing has reached its bottom recently, so there may be some good figures coming in. The thing is Housing sector is closely linked with Banking sector.

One of the major reasons why Banking sector has been on a blistering pace is because Housing recent months has bottomed and start to rise. Banks are able to sell away their assets they hold after the property bubble. Cash is coming into the banks, people are buying houses, new or old.

So if housing is ok, I expect the banking sector to continue its run. However be careful that banking sector are in very overbought region. Just in case it breaks down, put your stop loss tight.

Rgds
Daniel

It's confirmed! Dow has stood above 13000, heading into next box top!

After a seven day winning streak, Dow Jones has successfully stood above 13000 points. But where is the next top now? Let me do a study and keep everyone posted.

These 2 days, I am enjoying my weekend at Malaysia after bit of a windfall...ha. This should be the life of a trader, FANTASTIC!

Apple met its resistance at $600 exactly. This stock just flew to the sky this week. I happily pocketed USD $17000 in 4 straight days, after I let go when the stock is at $595, near its highest!! Remember I ask everyone to enter when it is at $540??? This is pure product launch play at its best!

I knew that there be some consolidation at $600. This is what I called Law of Gravity of Price. I would do a post mortem analysis for everyone about my views on Apple.

Rgds
Daniel 

Quotes

" I want to be in the strongest position possible all the time when I am trading. ~ Flos "


You have got to have courage. I don't care how good a man is, if he is timid, his value is limited ~ Theodore Roosevelt 


1)Skilled use of margin gives marked gains. Unskilled use of margin gets you killed. 
2)Learn to use leverage. Every businessman and speculator, who has ever made it big, know how to use it. 
3)It is all about proportional exposure, with the right risk and reward ratio catered to your earnings ability and time horizon. 
~ Creativesage


"Life is not fair, get used to it" ... Bill Gates 


'So the key learning here is that you undo mistakes when you make them, not that you don't do anything.' Nobel laureate Michael Spence 


" companies are set up to make money . . . so most of them will thrive . . . and a handful of them will perish . . . " Ochartist(on the long term uptrend bias of mkts) 


“The greatest mistake you can make in life is to be continually fearing you will make one”(dtd 09 Jan 2010)


" the only way to avoid making mistakes is not to do anything. And that...will be the ultimate mistake. " (Dr Goh Keng Swee)

Should Remisier Encourage Contra or Long Term Investment

Remisier is faced with dilemma whether to recommend short-term play stock or long-term fundamental investment to a particular client. This is not an argument but some points for my own case study. The points may be wrong in terms of legality or ethicality. If is a case study for myself in dollar and cent.

If remisier’s clients play contra, it will generate more brokerage income for the remisier as compared with buy and keep. But what if the client always lose money? Very soon he may be stop playing and the remisier will lose the client and will also lose the brokerage income.

Ok, let take Mr A as an example.

Mr A doesn’t play contra, but sometimes use small amount do short term trades.

Majority of his fund is for long term investment.

Those short-term trades he normally lose money.

Those long-term investments he normally make money.

Although his long term trades are not that frequent, but his remisier are earning more and more brokerage income from him. As his investment profit grew, his portfolio also grew. His confident grew, he also continues to inject more money for investment and his average value per order has also increased.

Therefore, it is not a bad idea to encourage client to trade long term. However, in the above case, if his remisier want to make more brokerage income from him, he should encourage him to contra or to do more short-term trade/play. Why? This is because the remisier knows that the amount he uses to contra or play is small in comparison to what he can afford. If he keeps losing money, the impact is not that great and he still will continue to invest in long term. Furthermore, there is no guarantee that he always lose money, he may make more than lose.

Therefore, there is no fixed rule of whether to encourage contra or long-term investment. Remisiers need to know the client’s background. Let us look at the factors below:

Money

If the clients have a lot of money, the amount that they invest is not big as compared with what they can afford, and/or have steady income, don’t worry about them losing the money because they will still have money to play.

Easily Give Up?

If the client will easily give up if losing money, then encourage long-term. Because short-term or contra chances are half-half. If he loses money in short-term play, he may stop investing.

Track Records

If the client has good track records of making money in short-term, then no need to encourage them to invest long-term. Short-term can generate more brokerage income for the remisier. But if the client always lose money, then may need to consider encourage the client to do long-term fundamental investment before the client stop investing.

What is The Best For The Client

Some remisiers are very good. They don’t bother about their brokerage income, but they are thinking about what is the best for the client. For example if the client wants to buy a speculative stock that the price has gone up very high, some remisiers discourage the client from buying. They discourage the client for the benefits of the client, although they will lose out the brokerage income.

But I have a question. How remisiers will know that it is not good to buy at that price and at time? Who can guarantee the price will come down? What if the price keeps going up?

From what we can see, there is no fixed rule of whether to encourage contra or long-term investment. Many factors need to be considered, and most of the factors are about Know-Your-Customers (KYC). What is the best for client or brokerage income also may need to be considered.

Please note that the above is for my own case study purely based on dollar and cent comparison and may not be legally right. This is because the stock market and remisiers are governed by a strict law that specifies the conducts of remisiers. I just want to find out how to improve brokerage income for my own understanding. This is purely a case study on numbers or money. Please refer to relevant rules or law for further info.