The Next Big Crash - Are You Prepared?

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hi specuvestor, i thought abt wat u said yesterday.
hmm...at sti3k, every mil i hv yields me 40-50k passive. if sti goes 4k, that 1mil might turn 3mil with 120-150k passive. while i could get that 4k peak wrongly when in actual fact perhaps the bull run might go to 4.3-4.5k, i still get my raised dividends and would continue my buying when sti goes to my comfort level. only thing i dun add 'soldier' when sti high but i add ammo to my pocket. it hard to predict the exact bull height or length but i think the key is to stat vested. cash can be used to but more solders at later date. no bull or bear ladts forever. bull time is to build cash. bear is to build soldiers.
gautam.
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Bull markets can last very long... you have to know yourself if you can withstand being mocked Smile IIRC Buffett was skeptical of dot com as early as 96 and was mocked repeatedly in 1999 and early 2000. He was holding high cash all the way.

Buffett has shared most of his investment secrets. The problem is whether we have the tenacity and aptitude which cannot be studied.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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(20-12-2013, 10:03 AM)specuvestor Wrote: Bull markets can last very long... you have to know yourself if you can withstand being mocked Smile IIRC Buffett was skeptical of dot com as early as 96 and was mocked repeatedly in 1999 and early 2000. He was holding high cash all the way.

Buffett has shared most of his investment secrets. The problem is whether we have the tenacity and aptitude which cannot be studied.
i agree completely.
i have shared this article on some other blog. Some of you may have read it or come across. but i think it's still worth to be shared here again.

Reading this won’t make you great
What makes someone a great investor? It’s something you have to be born with, said Mark Sellers.
Apparently, it’s not about your IQ, the education you have had, the books you have read, or the experience you’ve accumulated. “If it’s experience, then all the great money managers would have their best years in their 60s and 70s and 80s, and we all know that’s not true,” he said in a speech to a class of Harvard MBA students.
Intelligence and learning are obviously necessary too, and are sources of competitive advantage for an investor, but there are structural assets some possess that cannot be copied or learnt by others. “They have to do with psychology and psychology is hard wired into your brain. It’s part of you. You can’t do much to change it even you have a lot of books on the subjects,” said Mr. Sellers.
He said that there are 7 traits great investor share that are true sources of advantage because they cannot be learned. You are either born with them or you aren’t. (Is it true or not?)
The seven traits are:
1. The ability to buy stocks while others are panicking, and the ability to sell at a time when other investors are euphoric.
“Everyone thinks they can do this, but then when October 19, 1987, comes around and the market is crashing all around you, almost no one has the stomach to buy,” Mr. Sellers said. “When the year 1999 comes around and the market is going up almost every day, you can’t bring yourself to sell, because if you do, you may fall far behind your peers.
“The vast majorities of people who manage money have MBAs and high IQs and have read a lot of books. By late 1999, all these people knew with great certainty that stocks were overvalued, and yet they couldn’t bring themselves to take money off the table because of the ‘institutional imperative’, as Buffett calls it.

2. The great investor has to be obsessive about playing the game and wanting to win.
“These people don’t just enjoy investing: they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk.
Their head is always in the clouds, dreaming about stocks. Unfortunately, you can’t learn to be obsessive about something. You either are, or you aren’t. And if you aren’t, you can’t be the next (want to be) ‘Buffett’.
3. The willingness to learn from past mistakes.
“The thing that is so hard for people and what sets some investors apart is an intense desire to learn from their own mistakes so they can avoid repeating them. Most people would rather just move on and ignore the dumb things they have done in the past.
I believe the term for this is ‘repression’. But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career. And in fact, even if you do analyse them it’s tough to avoid repeating the same mistake.
4. The fourth trait is an inherent sense of risks based on common sense.

“Most people know the story of long Term capital Management, where a team of 60 or 70 PhDs (inclusive of a few Nobel prize winners) with sophisticated risks models failed to realized what, in retrospect, seemed so obvious: they were dramatically overleveraged. They never stepped and said to themselves, ‘Hey, even the computer says this is OK, does it really make sense in real life.
“The ability to do this is not as prevalent in human beings as you might think. I believe the greatest risk control is common sense, but people fall into the habit of sleeping well at night because the computer says they should. They ignore common sense, a mistake I see repeated over and over in the investment world.”

5. Great investors have confidence in their own convictions and stick with them, even when facing criticism.
“Buffett never get into dotcom mania, though he was being criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship and Barron’s was publishing a picture of him on the cover with the headline ‘What’s Wrong, Warren?’ Of course, it worked out brilliantly for him and made Barron’s look like a perfect contrary indicator.”

6. It is important to have both sides of your brain working, not just the left sides. – The side that is good at math and organization.

In business school, I met a lot of people who were incredibly smart. But those who were majoring in finance couldn’t write worth a damn and had a hard time coming up with inventive ways to look at a problems,” said Mr. Sellers.
“I was a little shocked at this. I later learned that some really smart people have only one side of their brain working, and that is enough to do very well in the world but not enough to be an entrepreneurial investor who thinks differently from the masses.”
“On the other hand, if the right side of your brain is dominant, you probably loathe math and therefore you don’t often find these people in the world of finance to begin with.”
So finance people tend to be very left-brain oriented – and Mr. Sellers said that that is a problem. A great investor needs to have both sides turn on. He said. “As an investor, you need to perform calculations and have a logical investment thesis. This is your left brain working. But you also need to be able to do things such as judging a management team from subtle cues they give off.
You need to be able to step back and take a big picture view of certain situations rather than analyzing them to death. You need to have a sense of humour and humility and a common sense. And most important, I believe you need to be a good writer.”
He cited Warren Buffett as one of the best writers in the business world. “It’s not a coincidence that he is also one of the best investor of all time.
If you can’t write clearly, it is my opinion that you don’t think very clearly,” Mr. Sellers said.

7. And finally the most important, and rarest, trait of all: the ability to live through volatility without changing your investment thought process.
(I, believe you can perform No. 1 only if you have No. 7.)
This, said Mr. Sellers, is almost impossible for most people to do; when the chips are down they have a terrible time not selling their stocks at a loss. They have really a hard time getting themselves to average down or to put any money into stocks at all when the market is going down.

“People don’t like short-term pain even if it would result in better long-term results,” he said. Very few investors can handle the volatility required for high portfolio returns. They equate short-term volatility with risk.
This is irrational; risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss.

“But most people just can’t see it that way; their brains won’t let them. Their panic instinct steps in and shuts down the normal brain function.”
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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(20-12-2013, 09:52 AM)gautam Wrote: hi specuvestor, i thought abt wat u said yesterday.
hmm...at sti3k, every mil i hv yields me 40-50k passive. if sti goes 4k, that 1mil might turn 3mil with 120-150k passive.

Bro, you expect to outperform the index by such a huge margin, i.e. STI up 33% and your portfolio goes up by 200%? You da man!Big Grin
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well, using princles of raised dividends n compoundatn plus essence of time(from 3ksti to 4k sti might take a a few yrs), by which time, my soup gets tastier with time. so its certainly not audacious to think that sti goes up 1k n my portfolio turns 3x. because time is everything. soup needs time to cook. sti needs time to go so high.
for nearly 10yrs n thru sars n gfc, i've been doing so and so far, and its doing just fine.
haha..best thing apart fr this forum n few close friends, no one got a clue to.what i am doing. so so far, no one mock at my stupidity of not takimv money off table.
hehe.
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What i know is for every pros you can think of or say about your investment, someone can counter with a cons. And in actual practice it's the truth.

Extract:-
{ Note also, please, that these 10-year figures do not include any allowance whatsoever for volatility. Someone who invested in Wall Street in 1928 and held on for 10 years earned a real return of just 0.25% a year, after accounting for inflation. But just to earn that miserable payoff he had to stick with his stocks during the biggest crash in modern history, the 90% collapse of 1929 to 1932.

If he lost his job, or even just lost some of his nerve (understandable), and trimmed his position in the meltdown, he didn’t even get his 0.25% a year. He probably lost money.

The go-with-the-flow crowd pretends that these long periods of poor performance are basically costless. “Just sit there and wait,” they say, “and the next bull market will come along in due course. Don’t try to time these things.” But that’s deeply disingenuous. While you are earning nothing in stocks, you are missing out on gains in bonds or other assets.

The full cost of waiting out these bear markets is horrendous. When you factor in the fees, the taxes, the volatility, and the opportunity cost of what you could have been earning elsewhere, the investor gets hosed.}

http://www.marketwatch.com/story/you-rea...genumber=2
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
(19-12-2013, 01:40 PM)Drizzt Wrote:
(19-12-2013, 11:11 AM)specuvestor Wrote: People who think they can time the market properly and do asset allocation properly go for high beta

(19-12-2013, 10:26 AM)Drizzt Wrote: hi specuvestor, does people buy high or low beta?

ah i see. thanks.

Er.. Both alpha and beta are based on historical records right? How they calculate? Historical av.? Most recent year? It is a general guideline and reference point, only IMHO..
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
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ya agree... and if you see my posts you know I am inherently skeptical about quant and statistics.

In this case I am actually referring to the essence of Alpha and the actual practice of it... companies with BUSINESSES that do well in up and down cycles relative to their competitors, rather than some stock PRICE actions. Beta are companies we know that are junk but prone to speculation. Former slow and steady, latter Fast and Furious (no pun to the deceased actor)

YZJ and Cosco are good examples of what I mean
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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Woke up this morning and saw the US market down 2% overnight!
I'm quite taken by surprised, whats happening man?

anyway be prepared for monday, gonna be a very red day for the STI too
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(25-01-2014, 09:58 AM)felixleong Wrote: Woke up this morning and saw the US market down 2% overnight!
I'm quite taken by surprised, whats happening man?

anyway be prepared for monday, gonna be a very red day for the STI too
Ha! Ha!
You beat me to it. i want to write "Fat Tail" is coming are VBs prepared? May be Vbs are prepared for all seasons?

And if you are in the Market long enough you will get use to White Swans, Black Swans, and even some terrorists masquerade as Black Swans; (remember Sept 11 2001)?
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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