Thursday, August 19, 2010

Random thoughts

Once a while, I gathered all the thoughts that I had in my mind - those that are worthy enough to blog but not long enough to write on a post by itself. For me, it's therapeutic to blog down these random thoughts. I love blogging, it converts formless thoughts in my head into concrete words. The act of converting them into forms that others can react to is itself a joy to me. Sometimes, when I write along, more thoughts will form to give framework and structure to my initial spark that prompted the blogging in the first place.


Random thoughts:


1. Why do I get the impression that FA guys are more critical of TA guys but not the other way? It seems like there is a universal disdain for the use of charts and indicators by those who walks the investing pathway. On the other hand, those who practice TA would think (in my impression, of course) that knowing the fundamentals of the stocks they are trading would definitely be of some value to their craft.



2. I think there are a lot of mindset differences between a self-employed and an employee. Speaking from my point of view of being self-employed for 7-8 yrs, I am always trying to initiate something. I've to look for work all the time, instead of letting it be arrowed to me. I've to handle my career image well and to constantly look out for ways to improve and get more work. I wonder how someone in the employee path will do. From what my friends told me, they seem to be avoiding work if and when possible. Innovation isn't that well regarded if your boss don't recognise it. Besides, if you initiate a project, you might not have any personal benefits at all.


I don't think I'm can be a model employee. I hate bureaucratic paper pushing and will never do well in such environment.





3. I don't think you have to ask someone how well they do in the market. If they make a profit, they would open their floodgates and tell you all about it, if you only allow it. The sense of joy and happiness when they win something cannot be contained easily. The same goes when they lose money in the market. A general sense of gloom will prevail and they are generally more quiet. The same cannot be said for those who had been in the market for a longer period of time. They generally have a calmer disposition and are immune to both the joys of winning and the pains of losing.


If I've the time, I would so wish to sit at the financial districts and watch whether people lose or gain money just by observing them. It'll make an interesting study.



4. I've saved accordingly to my target for the past 8 months. Another 2 more months of savings and I'll have finished my savings target of 50k. This would be the second time I'm doing this and I'm getting quite used to it. This system, though tough and demanding, does have it own advantages. The most obvious one is that I got to enforce a certain discipline to how much I can spend in a month. The not so obvious advantage (it even surprises me) is that I can know how much to work. Before I had this system, I was always trying to work a little more, save a little more without a fixed goal. Thus, being much a workaholic, I take work as it comes along. These days, once I reached my monthly saving goals, I tend to cancel lessons so as to take breaks to walk further. My journey ahead is long and winding, seemingly no end. Thus, I cannot afford to burn myself out prematurely. A break every now and then is crucial for my mental well-being.


I'm so looking forward to my end of the year trip to anywhere, to take my long deserved break from the bondage of work.

24 comments :

Drizzt said...

omg another 50k! you can really save! how the heck do you keep doing that. its like 5k per month!

Jeremy said...

Ha ha,
LP earns quite a good amount of monthly income as a tutor since he is quite experienced and good. LP is also very thrifty I guess. He does not own a car and rarely spends on big ticket items. I guess his girlfriend (wife-to-be) is also not the usual sort of girl that overspends (though I think girls generally tend to do more shopping than guys).

Anyway, work hard, save up, and manage one's finances wisely. If one manages to become more wealthy along the way in life, also think of how to make use of one's wealth and time to help others that really needs help so that one can do meaningful things for others leaving positive impact in their lives.

Life is just a short span of time and will be gone before we know it. Live it meaningfully for others.

Jeremy,
God bless!

Anonymous said...

On the attitude between employer and employee, that is the difference between a boss and a worker.
Employees will mostly work the minimum so as not to be fired. But of course many bosses also squeeze whatever they can out of the workers.

Potential bosses will need to work hard and pick up as much as you can to possibly start your own company, go into a partnership or be notice by the industry to be headhunted. If there is no problem, there is nothing to learn. If you are afraid of hard work, then better be an employee. No salary headache at the end of the month. Otherwise, get notice for the right reasons to move your career forward.

Y

PanzerGrenadier said...

Hi LP

I think an employee mindset doesn't have to mean that one will basically just avoid risk and do the minimum to get by. Working up in my career, I was previously someone who did what he was told to do, a bit more to get noticed for promotion and that's it.

After I worked in the private sector for a couple of years, I learnt to work "smarter", i.e. to focus on the 20% of things that affect the bottom line for my projects that contribute 80% of performance. Managed to survive by delivering on consulting projects, making customers (mostly) happy and generally making profits on the projects I handled.

Now that I am still an employee but head my own department, I am much more innovative even though I am an employee, have expanded the scope of my department by 30% ish and raised the profile of the dept. I still have so many things I want to roll out by am hampered as one of my staff is leaving due to further studies and another is on long MC due to unforseen accident.

I just read the book, "Drive" by Daniel Pink. A useful book to understand when money motivates and when it doesn't. :-)

Be well and prosper and congrats on saving $50k!

Createwealth8888 said...

Be an employee but make more money than your boss's salary can liao

Createwealth8888 said...

Wrong leh!

Only FA who is still walking the investing pathway of 70s disdain the use of charts and indicators

Createwealth8888 said...

Forgot to include the url

http://createwealth8888.blogspot.com/2010/02/what-will-benjamin-graham-say-today.html

Wealth Journey said...

I guess FA followers being more critical and condescending to TA followers could be due to the character.

FA investors typically have to focus on the study of underlying securities and make a judgement on the value of the company. They thrive on the belief/fact that the market is mispricing the company and thus, as long as they have bought into it at a discount, they will see the light of day when market priced the company correctly. Ie, they are actually quite stubborn on their view/belief that the market is wrong and they can wait until proven correct. So character of the investor is patient and seek facts to justify his decision.

TA followers in the meantime sees market as efficient and prices reflect the unknowns. They use charts and indicators to go with the flow without extensive study of the underlying securities. Their character is that of being flexible and not question the market when the charts/indicators is in conflict with their own personal belief of the company(even if they think the company is going to survive, they will still rely on the charts/indicators more to make the decision). So character of TA followers are very reactive(I can't say proactive as they react to indicators) and very flexible in their beliefs that whatever makes money is good.

So when a FA follower meets a TA follower, the FA follower will definitely be disgusted that he spend so much time studying a company to make a judgement call whereas a TA follower just flip-lop around a company price(sometimes he is bullish, sometimes he is bearish).

P/S : I am not a pure FA or TA. I see myself more of FA for security picking and TA for macro-trend changes.

Createwealth8888 said...

Anthony Bolton in his book - Investing Against the tide.

Read chapter 12 - Technical analysis and the importance of charts.

"The truth is more important than facts" - Frank Lloyd Wright

If you think you are wiser than the two gentlemen, forget about the book.

http://createwealth8888.blogspot.com/2009/11/why-do-we-still-need-to-read-charts.html

la papillion said...

Hi Drizzt,

If you earn more than 5k per month, excluding bonus, I think you can also do that too. I do not have cpf, so the actual amt seems like a lot. For a salary of 5k per month, you'll save 21k per year without including bonus (based on 35% total contribution).

To save 50k, one needs to save another 29k on top of the 21k saved in cpf. 29k over 12 months is $2420 per month. After contributing to CPF, the 5k take home pay becomes 4k. Thus one would have to save like 60% of the take home pay to save 50k.

I think 60% savings ratio is quite alright, with the absolute amt around 1.6k per month to spend. If one is single and not married yet, like me, I think 1.6k is highly do-able. Shouldn't have to eat salted fish and vegetables for lunch everyday :)

If one earns lesser, say 4k, then the savings ratio either had to be increased to 86% of takehome pay, on a shoe string budget of $430 to spend per month (impossible!!) or had to reduce the savings target to maybe 40k (in which case, you just have to save 60% of takehome pay, with 1.2k to spend per month - highly do-able).

I think whether one can succeed or not depends on why you want to save that amt. I want to get a resale flat with the high COV, and pay for reno and wedding without borrowing and had no external help from parents. I had to do it.

la papillion said...

Hi Jeremy,

Haha, I guess you are quite the same as me too, earning good monthly income, thrifty and not spending on big ticket items.

My gf spends her own money. As long as she keeps a certain portion of her income as savings, she can spend what she wants. If I feel like treating her nicely, I'll pay for it and she does the same to me too. But mostly, we pay for our own expenses and wants. I don't believe that a guy should pay for everything for the girl - unsustainable and inequitable.

la papillion said...

Hi PG,

Oh, I see what you mean. You have a say within your own sphere of influence. I think this kind of work will be very satisfying as opposed to just following orders from superiors.

I can do good in that, haha :)

I haven't saved 50k yet, haha :) 2 more months to go!

la papillion said...

Hi bro8888,

Read both books - the one on graham and antony bolton. I think both are good books to give a more balanced views of things...and I highly recommend them, as do you :)

la papillion said...

Hi Wealth Journey,

Hmm, I've a faint idea that it could due to personality but I couldn't put it down as nicely in words as you could express it.

I think you make a good character study on the type of people who employs TA and FA.

What then, are your views on the personality of those who do both TA and FA? Want the best of both worlds? haha

mm said...

Hi LP,

This TA/FA thing will never end. ;D Luckily CANSLIM combines them both. :)

Saving is good. I think our young is not saving enough. read that they are all "月光族". Finish everything by the end of the month :P

You are doing well. Back when I was still a young engineer, I was saving 100% of my salary cos' i was on expat terms and had living allowance.

The savings all these years really helped me with my apartment buying as well as growing my money. I bet you are doing the same and will do better than me :D

It certainly feels good to know that you are totally debt free before the age of 40. No housing loan, car loan or loans of any kind.

Good luck to your target and I hope you find the nice apartment you want. :)

Cheers,
mm

Wealth Journey said...

People who employed both FA/TA now understands that the market is not a binary system where there is a pre-defined set of rules to follow for an event to be triggered. It is rather a combination of human behaviour, market perception, company fundamentals, macro trends. It is a system with the above variables that interlinks and influences each other.

They now understand both the internal and external workings of the market system. I would think TA/FA people relates more to the Reflexivity Theory by George Soros.

They know that market perception sometimes will also drive a perfectly fine company into doldrums and it becomes a negative feedback loop. Look no further than year 2008-2009 when market reprices everything.

Likewise, a non-event(unrelated to the fundamentals of the company) like a WIDELY FOLLOWED AND TRADED technical indicator showing bullishness or the introduction of a reputable shareholder for the company will drive the prices higher and market will reprice itself and investors will reprice the company to form a positive feedback loop. One I can think of is BYD which EXPLODED when Buffett bought into it and now is totally not a value investment.

In Chairman Mao's words, There is no difference between a black cat or a white cat. As long as it catches the mouse, it is a good cat.

Wealth Journey said...

CreateWealth,
Don't get me wrong. I am not a FA hardcore. I believe your results matter more than the methods. Your result is the testament to your method.

I totally support Don't care if it's TA or FA, whatever makes money counts.

Musicwhiz said...

Hi LP,

Just want to comment on the stock market gains/losses point you mentioned. It's true that one has to be quite indifferent to it; otherwise you become an emotional mess and cannot carry on to achieve your investment objectives!

Regards,
Musicwhiz

Drizzt said...

thanks for the advice

la papillion said...

Hi mm,

Haha, indeed - canslim combines both together :)

Thanks for your encouragement...you do provide a role model for me to follow :)

la papillion said...

Hi wealth journey,

Haha, as usual, you provided me with a good understanding of personality types :)

I agree with what you have mentioned :)

la papillion said...

Hi mw,

Emotional mess is no good :) But sometimes, I think being emotional can make one decisive when the situation calls for it. Then again, it can make one scramble for the fence, not knowing what to do :)

I won't be so quick to dismiss emotional decisions as a bad thing, haha

beary said...

Once again LP does the 50k a year thingy again.

Im impressed! And someday i hope I will have your drive and determination to do it!

la papillion said...

Hi Beary,

Haha, I already mentioned to Drizzt how it can be done for anyone, so I'm sure you can do it too if you want :)

A bit hard now for you cos of all the things on-going now...but once it stabilizes, you can try doing it :)