Thursday, December 22, 2011

Why cash is a position and why letting inflation gets to you is crazy.

Dennis Ng, of Leverage Holdings, posted a good article on this issue.
Good for a read for anyone who's interested. Compared to him, I am ball-less 'coz he also short CDL in this article. This is conviction man..

Short term trading vs Investing, what's the difference?

Based on the Rich people I know, including myself, NONE of us become Rich or make millions from short term trading. We make millions by Investing, by Buy Low, Sell High based on Major Market Trends.

There are times we do NOTHING, and money sits there idly, (actually we purposely raise our Cash level to have Opportunity Fund). Becos to a Real Investor, there is a Time to Invest, and there is a time to Raise Cash and do nothing. eg. right now I have 70% of my wealth sitting in Cash.

I don't bother about inflation, becos when I deploy my Opportunity Fund, minimum returns I aim is 50%, so what is 5% inflation to me?

Becos when we invest, we don't invest like 1% to 5% of our wealth (that is what a prudent trader should limit max exposure to each trade), we may invest 50% of our wealth or even 100% of our wealth fully invested (but in different investments).

And we deploy our funds to make minimum 50% returns. So imagine, if a person has wealth of S$100,000. Investing 100% of it, and make 50% make S$50,000. While a trader has S$100,00, cap trading to max 1% to 5% of wealth to a trade, or only traded $5,000 and even if make 100%, only make $5,000.

So in this example, the Trader needs to have 10 winning trade to make as much money as the Investor making a 1 time investment. And what if the investor makes 2 rounds of 100%....well, then the trader is left further and further behind, since the Investor now would have S$300,000 (grew from S$100,000) and the Trader might have S$100,000 + S$10,000 or S$110,000 Wealth.

Trading is lots of fun, quite a lot of action, but really, look around at all the Rich people around, and you would realise that NONE of them make REALLY Big money from Trading.

Even Remiser King Peter Lim (a billionaire) cautions people that one can't make much money from trading when he was interviewed.

For me, I think overall market trend is down, so I shorted City Development at S$10 instead, of course price can rebound, but overall trend is down.

Last round, I shorted S$10.70 and bought back at S$9.20, then I waited for price to shoot up to S$10 and shorted it again, still holding on to my short position.

I'm unlikely to Long, buy any stocks for the near future as long as the overall Market Trend is down, not up.

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.

Wednesday, December 21, 2011

Robert Kiyosaki - Everyday CASH Heist

Robert Kiyosaki was the one who flipped my mind when I read his book the Cashflow Quandrant when I was 29yrs old. From then on, I started to focus on becoming financial independence thru' the acquisition of assets, prudent leverage of debt and generation of cashflow to finance expenses and do more investments.

Do take a look if nothing else at this wonderful video and the rest of the series.
Of particular interest to me is his dim view on mutual funds(have to agree right??) in the 24mins onwards.

As for stocks..well.. it's anybody's guess. For me, I am becoming more interested in acquiring tangible properties and not sell them anymore... hehe..

Thursday, December 8, 2011

Investment Myth : Inflation erodes your savings

Don't invest your money in stocks, says Mark Cuban. Wall Street is no longer a good place to make money.
Cuban discusses how average investors looking to invest $25,000, $50,000, $100,000 or more can get return on their money.
"There is a transactional value to cash, and I think that the whole concept of you fall further and further behind because of inflation is ridiculous," he says.

Sometimes, when you hear investment managers tell you the savings rates are below inflation rates and if you don't invest in equities, your savings will be eroded by inflation. This compelled retail investors to look for alternatives (which incidentally will be the equities the investment firm is trying to sell you).

To a certain extend, the manager is right if you are one who will never invest but only saved. However, if you have been investing and is just merely waiting for a better entry point, then the 1 or 2 years of "inflation" erosion is not going to hurt you as you will be able to get 10-20% min. discount on prices.

So... no hurry, just be patient with your cash. Cash is not King but it certainly allows you to grab discounted items when the time comes.