Tuesday, September 8, 2015

Random thoughts: Holiday break...

I am still going back to work for 8-5 although it's the school holidays. But I have so much brain space now. I need not constantly think of 6-7 issues every single hour. I have a bit more breathing space to step back and just hey, think about life. 

Investing:
More time to think about how to make money from stock market, how to build a more diversed portfolio. I even read a book. Lol. "Why moat matters" the morning star approach is a good read. It's did not deviate or extrapolate too much from what Pat Dorsy has written, but 2 chapters particularly caught my attention. One on valuation, I have a clearer picture on how ROIC and WACC WORK in tandem With DCF, together with the qualitative analysis of Moat sources.

Next, stewardship. Basically is a chapter on management and Coporate actions like share repurchase etc. 


This is the nitty gritty part of the Method of research.

Mind part, I have come to 2 conclusions. Losing money is inevitable when investing. When market goes down, you will lose "unrealized" money. Assuming we have the common tactic of accumulating on weakness. I think we underestimate the stress on the mind for this tactic. Assume:

You buy a $10 dollar stock/fund or basket of counters as it head south. You have 50 dollars and your plan is to go in in 5-6 tranches. 

You bought 1 lot at $10
It went to $9,  you bought one lot 
It went to $8, you bought one lot 
It went $7, you bought one lot
It went $6, you are convinced great singapore sales, u bought 2 lots

You have 4 dollars left and 6 lots of $6
Your $50 become $40

It went to $5, your $50 become $34

And u have $4 left... You need just $7.5 to almost break even. Huh the market rise for 50% and I just break even! How does this tactic sound to u now? Market goes 100 percent and recovered! Yeah! Your gain? You portfolio will be $60+$4 cash. And this of from heaven to hell and back to heaven again. 30% gain for all that roller coaster and years of youth? 

Does a 10% fall freck u out? 20% fall? 

The recent correction will give u an answer. 

Are you really nibbling? Or are u Frecking out? 

If u are not nibbling, it is scary

1 lot at $10
1 lot at $9 
2 lot at $8 ( av down) 
2 lot at $7

U expanded all your rounds at 30% correction. You left $1

It goes to $6. Your $50 become $37

It goes $5, it become $31. You need it to bounce to$8 just to almost break even. Market double and u earn 20%. Huh?


The Maths is clear, be light at the beginning for your mind to be clear. If u have a crystal ball. Wait for $5 to buy 10 lots. How's that for a strategy man! (Ok I say that in a suaning way.) 

That's the mind of investing. Go light, sleep well. Also know losses is part of the game. U decide which of the Above scenario freck u out. If none does, then Mr Zen... Dividends will tilt the Maths in your favor though. The lower the price, the stronger the yield. Doesn't matter yield hog or growth dividend stock la, must have decent yield. Pure grow plays or super miserable dividends of less than 3%? Sorry, next better player 

The money of investment.

No 2 ways about it. Frugality is the fastest way to accumulate wealth. Dividends help too. Successful switching will accelerate the process, but the heavy lifting is still how much you save. 

The 3 M. Applying in warfare analogy like SMOL, money is Ammo, method is tactics and strategies, mind is the commander. 

Life---
Well, if the going gets tough. Suck it. Talk to people. When u see the real issue, u will be more "at peace"

Also, live the moment. Investing is really more of a interešt than tool for finacial greatness/ freedom now. 

6 -12 months ago, I am upset that my investible fund is small and not growing and I have the cheek to blog about investing. I thought about stopping to blog. To the hell man, I enjoy the genre of investing, call me shameless, I am poor but I still want to invest, I am not frugal but I still want to talk about money matters, I happy, cannot meh... 

I know, as long as I continue my work, my CPF would really take care of things. Assume the CPF system is what it is like now, I am quite sure it will be different, but I will not lose sleep over it. Last look, I already had the minimum sum after working 10 years. If I slog another 20, think that is the advantage of being a man whore isn't it? 

I am quite sure my cash... Will continue to grow too, albeit super slowly. Finacial freedom? I am working towards it in a chill manner, get it fine. Dun? I had my reasonable amount of 天伦之乐,my window of job satisfaction, the security of monthly pay cheque, money to pay for materialistic Indivigules. 

Because I did not delayed my gratification, I rightly did not deserve FI and doing whatever I like and working at my pace. 

But I go for the 1 bird in my hand. I pick whatever I have. 

Self-Delusional? Maybe. After talking to a fellow blogger, i had this thought.

Best investment teacher- Mr Market
Best way to riches- Mr Frugality
Best way to wealth- Mr Contentment.

I have problem with Mr market and mr frugality. I will try my hand on Miss contentment. 


2 comments:

  1. I like this post. It's so 'you' - always analysing (some say over analysing) and talking to yourself. None can blog with the voice like you do :)

    Let me give my take on who is the best teacher:

    Best investment teacher - Mr Bear, not Mr Bull. A crash will teach you much more than a bullrun can ever do.
    Best way to riches - Miss Fortune (what a pun lol) - Only when you lost everything, will you realise how rich you are or once were.
    Best way to wealth - Dr Sick. When you are in ill health, then you know what's wealth.

    Sorry for the rather morbid teachers - I just recovered from a very bad flu/cough/runny nose and I'll feeling extremely extremely grateful now.

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    Replies
    1. Hi LP,

      Glad u recovered, guess the haze made things worse. Yup, not Ying where got yang.

      Now I dun feel lousy in work, how to appreciate feeling power. Lol.

      Man whores. 10 more years! I am stepping down! Then 10
      More years !! I am getting out !!

      Best overall teacher? A beautiful lady!! Who? My wife la, what u thinking lol

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