It's a good reminder to not get caught in the rat race. It's also a sad news knowing that most people are slaves to themselves without evening knowing.
Thursday, June 2, 2011
Singaporeans turning into workaholics - Channel NewsAsia
Singaporeans turning into workaholics - Channel NewsAsia
Wednesday, March 23, 2011
Inactivity strikes us as intelligent behavior
I have family members visiting us this week. They trade in the equities market and use charts to determine whether to buy or sell. Accordingly, I have a week of hearing phases like 'sentiments make up majority of market activities', 'trend is my friend', 'market depth' etc.
But the one question that linger in my head is 'Did you trade today?'
Most of the time my answer is 'No'. But I realised that I spent the same amount of time (if not more) in front of the computer screen as they did. So what's the difference?
Traders spend most of their time looking at price actions, market depth, volume. They uses charts to assist them, and they execute a lot of trades. Such activities give people a sense that they are actively 'doing something'.
Value investors, on the other hand, spend most of their time reading/studying company announcements, stock reports, industry news/reports, view and opinions from experts. They monitor share prices (though not as often as Traders) of their selected stocks with the objective of finding bargains. Accordingly, Value Investors do not trade very often, but they are not 'doing nothing'.
Warren Buffett suggest that 'inactivity strikes us as intelligent behavior'. Buffett also explains that the art of investing is to acquire, at a sensible price, a business with excellent economics and able, honest management. He is searching for businesses that he believe are virtually certain to possess enormous competitive strength ten or twenty years from now.
My personal experience is searching for such a business that ticks all the boxes is very difficult. Even when I actually found one, I still have to wait for the share price to be sensible. Hence, I am 'doing lots of things, just not trading'.
But the one question that linger in my head is 'Did you trade today?'
Most of the time my answer is 'No'. But I realised that I spent the same amount of time (if not more) in front of the computer screen as they did. So what's the difference?
Traders spend most of their time looking at price actions, market depth, volume. They uses charts to assist them, and they execute a lot of trades. Such activities give people a sense that they are actively 'doing something'.
Value investors, on the other hand, spend most of their time reading/studying company announcements, stock reports, industry news/reports, view and opinions from experts. They monitor share prices (though not as often as Traders) of their selected stocks with the objective of finding bargains. Accordingly, Value Investors do not trade very often, but they are not 'doing nothing'.
Warren Buffett suggest that 'inactivity strikes us as intelligent behavior'. Buffett also explains that the art of investing is to acquire, at a sensible price, a business with excellent economics and able, honest management. He is searching for businesses that he believe are virtually certain to possess enormous competitive strength ten or twenty years from now.
My personal experience is searching for such a business that ticks all the boxes is very difficult. Even when I actually found one, I still have to wait for the share price to be sensible. Hence, I am 'doing lots of things, just not trading'.
Monday, March 21, 2011
Don't put all your eggs in one basket
Having gone through a week of dramatic events around the world. I thought it would be a good time to 'turn the market off' and refresh myself with the first principles of Value Investing.
So I started reading the Essays of Warren Buffett again. The following series of post will be a refresher to myself which hopefully you may benefit from it.
Modern portfolio theory is an advocate of holding a diversified portfolio. It suggests that you are better of "randomly selecting a group of stocks by throwing darts at the stock tables than thinking about whether individual investment opportunities make sense". As the saying goes, "don't put all your eggs in one basket". Of course, the finance world uses words like "Beta" to convince everyone (including themselves) that it's a sophisticated process. Sounds good on paper, but the problem is it implies that it is a waste of time to study and understand the business you are investing.
I have a strong conviction that to be good at something, you have to work hard for it. Accordingly, I would put all my eggs in one basket. Because I would have done so much work studying about the basket: how strong is the basket (its fundamentals); what's the chances of it going wrong; and what's the prospect and earning potential. Additionally, I would be watching this basket carefully and constantly (or tracking any changes to the fundamentals).
It's a lot of work. But I can sleep better at night knowing the basket can withstand the test of time.
PS: my basket has less than 10 stocks, compared to a 'diversified portfolio basket' of 20-100 stocks.
So I started reading the Essays of Warren Buffett again. The following series of post will be a refresher to myself which hopefully you may benefit from it.
Modern portfolio theory is an advocate of holding a diversified portfolio. It suggests that you are better of "randomly selecting a group of stocks by throwing darts at the stock tables than thinking about whether individual investment opportunities make sense". As the saying goes, "don't put all your eggs in one basket". Of course, the finance world uses words like "Beta" to convince everyone (including themselves) that it's a sophisticated process. Sounds good on paper, but the problem is it implies that it is a waste of time to study and understand the business you are investing.
I have a strong conviction that to be good at something, you have to work hard for it. Accordingly, I would put all my eggs in one basket. Because I would have done so much work studying about the basket: how strong is the basket (its fundamentals); what's the chances of it going wrong; and what's the prospect and earning potential. Additionally, I would be watching this basket carefully and constantly (or tracking any changes to the fundamentals).
It's a lot of work. But I can sleep better at night knowing the basket can withstand the test of time.
PS: my basket has less than 10 stocks, compared to a 'diversified portfolio basket' of 20-100 stocks.
Wednesday, March 16, 2011
Monday, February 21, 2011
Quotes from Warren Buffett in the book the Snowball
Valuing is not the same as predicting (share price).
In the short run, the market is a voting machine. In the long run, it's a weighing machine. Weight counts eventually. But votes count in the short term. And it's a very undemocratic way of voting. Unfortunately, they have no literacy tests in therms of voting qualifications, as you've all learned.
What you're doing when you invest is deferring consumption and laying money out now to get more money back at a later time. And there are really only two questions. One is how much you're going to get back, and the other is when.Quotes from Warren Buffet in the book The Snowball, Warren Buffett and the Business of Life
Saturday, February 5, 2011
History always repeat itself
I must admit, I never liked studying history in school. I will always asked myself "History is always about dates and events of people so long ago, so what's the point of learning them?"
But recently, I have learned to appreciate what it means when people say 'history repeats itself'... particularly in the financial markets where bubbles and fraud occurs.
In the book / documentary the 'Ascent of Money', author and academic Dr Niall Ferguson went through the history of money, loan, bonds, stock market, and insurance. He discussed how financial markets soar and eventually crashed in numerous accounts. If there's a theme I can gather, then it all comes down to greed and fear.
The idea that fear and greed causing chaos in the financial market is common knowledge but here's my take on what I have learned from history. It always start with a couple of guys coming together with a radical idea, they had a go good at it and things took off. Soon they realised the amount of money they are making, they wanted more and pushed it further. At some point, their idea / model became unsustainable and cracks start to appear. At this point, market prices are still going crazy and everybody wants a piece of it. This is where covering up and manipulation happens. For me, this point is the key. When the fundamentals are no longer there, all it takes is a couple of small events and it send a chain of domino effect. Things will go wrong very badly and very quickly.
If history always repeat itself, then I think there must be signs before the next bubble occurs. One just need to know where to look and what to look.
I don't have the answer to this but I can share my own starting point to figuring out the answer:
But recently, I have learned to appreciate what it means when people say 'history repeats itself'... particularly in the financial markets where bubbles and fraud occurs.
In the book / documentary the 'Ascent of Money', author and academic Dr Niall Ferguson went through the history of money, loan, bonds, stock market, and insurance. He discussed how financial markets soar and eventually crashed in numerous accounts. If there's a theme I can gather, then it all comes down to greed and fear.
The idea that fear and greed causing chaos in the financial market is common knowledge but here's my take on what I have learned from history. It always start with a couple of guys coming together with a radical idea, they had a go good at it and things took off. Soon they realised the amount of money they are making, they wanted more and pushed it further. At some point, their idea / model became unsustainable and cracks start to appear. At this point, market prices are still going crazy and everybody wants a piece of it. This is where covering up and manipulation happens. For me, this point is the key. When the fundamentals are no longer there, all it takes is a couple of small events and it send a chain of domino effect. Things will go wrong very badly and very quickly.
If history always repeat itself, then I think there must be signs before the next bubble occurs. One just need to know where to look and what to look.
I don't have the answer to this but I can share my own starting point to figuring out the answer:
- Don't reply on your local newspaper for information. By the time local media reports it, I think it is too late.
- Focus on Fundamentals: I believe that every country, industry, company even individuals can be assessed using fundamentals (i.e. a unique set of financial measures). The key is to figure out what is the Credit Risk. In other words, what's the likelihood of it going into trouble and seeking financial assistance externally. Companies can raised debt or issue equity. Individuals can apply for a personal loan or home loan. Government can issue bonds.
Tuesday, February 1, 2011
Niall Ferguson: Empires on the Edge of Chaos
Summary
Throughout history the rise and fall of empires isn't slow or cyclical, as we like to think, but arrhythmic...it mostly happens very, very suddenly. America is a superpower on the edge of chaos, according to economic historian and author Niall Ferguson. U.S. debt levels, he says, and its unwillingness to address the problem, has put it in the same category as other great empires which have collapsed throughout the ages.
Ferguson argues the world is changing. There's the rise of authoritarian China as a super-power; a Keynesian president leading a weakened United States; the re-emergence of democratic India as a great power; the continued decline of Japan; and the probability of continued global economic instability ahead.
Is the rise and fall of empires cyclical or arrhythmic? How does economic profligacy -- whether the result of arrogance or naivety -- contribute to the downfall of civilizations? Not to be missed, the address will offer a timely review of primacy, leadership, and the complex factors behind the rise and fall of great powers and civilizations.
Niall Ferguson: Empires on the Edge of Chaos
Throughout history the rise and fall of empires isn't slow or cyclical, as we like to think, but arrhythmic...it mostly happens very, very suddenly. America is a superpower on the edge of chaos, according to economic historian and author Niall Ferguson. U.S. debt levels, he says, and its unwillingness to address the problem, has put it in the same category as other great empires which have collapsed throughout the ages.
Ferguson argues the world is changing. There's the rise of authoritarian China as a super-power; a Keynesian president leading a weakened United States; the re-emergence of democratic India as a great power; the continued decline of Japan; and the probability of continued global economic instability ahead.
Is the rise and fall of empires cyclical or arrhythmic? How does economic profligacy -- whether the result of arrogance or naivety -- contribute to the downfall of civilizations? Not to be missed, the address will offer a timely review of primacy, leadership, and the complex factors behind the rise and fall of great powers and civilizations.
Niall Ferguson: Empires on the Edge of Chaos
Monday, January 31, 2011
Value Investing Conference: Alice Schroeder, author of "The Snowball: Warren Buffet and the Business of Life".
Keynote: Alice Schroeder, author of "The Snowball: Warren Buffett and the Business of Life". Introductory remarks by John Macfarlane.
"The function of margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future" from the Intelligent Investor.
"The function of margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future" from the Intelligent Investor.
Thursday, January 27, 2011
Do you know if you are getting poorer?
For me, the new year started off with a lot of reading about economics and what the future may look like in years to come. But the more I read, the more I am concern about my own future. The reason is because of the following themes that some economist are predicting over the long term:
- Rise in electricity bill (energy)
- Rise in petrol prices (fuel)
- Rise in food prices (soft commodities such as rice, wheat)
Key word.. Inflation!
That said, some suggests that not all things are getting expensive. For example, cars, electronics, airfares. These are some examples of deflation (or simply, things getting cheaper). Hence, even though headline in some of the newspaper suggests that inflation is not a problem. I tend to think otherwise. This is because the prices are rising on things we need, while prices of what we want are falling.
Another problem is that a dollar increase in groceries or petrol cost is not something we may have noticed every time we pay for it. This means that prices are creeping up without us knowing. This is a serious problem since we can't manage things we don't know. And seriously, how many of us compare monthly groceries bills, I don't even do it when I am a professional accountant.
So what we can we do to deal with inflation? Well, one logical step for regular hard working employee (like myself) is to ask for a pay rise. But how many of us can really have that conversation with your boss? Even if you do get "a pay rise for inflation", is there anyway to tell that your increment actually do cover it?
In short, prices on essentials are rising and if you are already struggling to make ends meet, there are no good news in the future.
Do I have a solution? No. The only thing I am doing is to start saving more today and be prepared for this rainy day. Even if it's not raining tomorrow, it's just a matter of time.
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