The siren's song

Recently, I've heard a lot of people wanting to get into the stock market. They really think the market is their mother, who is there to give them milk. These people do not have an emergency funds set aside, do not have adequate insurance, and worse of all, do not have savings. Yet they are all too ready to jump into the market after reading some rags to riches success stories displayed so prominently every sunday in the newspaper.

Alas, they got the sequence all wrong.

First, you need a good job that pays reasonably well, so that you can begin to save up a big amount. Then you need to protect that amount from unexpected circumstances. After which, you can then start thinking on how to best grow your savings. I see many people going straight to the 'growing' part without the first and second foundations laid properly.

But you know, I've been ranting on and off about this, I don't think I should talk more about it. Let them find their own mistakes to learn from. When the musical chairs end, they will realise that there are not enough chairs and someone had to be left standing.

Here, I just want to talk about the idea of having a warchest. A warchest is a special storage of capital used to capitalise on extraordinary conditions. It can happen in the property market, business opportunities and even the stock market. By buying things at maximum danger point, you're reducing your risk to the minimum because the valuation is the lowest. I know I know, it's hard to buy at the danger point because you're the lone ranger walking in opposite direction to a crowd of running people. That's why we need a support group!




Before meeting the enchanting sirens, the greek legend Odysseus had his crews' ears filled with bee wax and had himself tied up, with a firm instruction to his crews never to let him go no matter what happens. I think here, we all have to do a reverse Odysseus. Fill your wax with ears, then encourage each other to get blue chips when the market sirens sing their enchanting voice. No matter how bad, buy some!

Of course you need a steady warchest to get in. How to do that? How else but to save? Instead of spending money on things you don't like and buying clothes to impress people you don't care, try saving them up for special opportunities. Start soon...I can hear the soft whispers of the sirens getting louder.

I better put on my bee wax now.

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Hey hey, I realised that the siren's song equally lull people into the market when it's at the peak, as it 'lull' people away from the market when it's at the trough. Haha, this sudden realisation prompted me to add in this appendix.

I apologise profusely for this insane way of writing things forward and backward. This is what happens when I blog from the heart. You start off with a plan but the plan starts to come alive and takes control over the direction. Hence, the many digression here and there.