Tuesday, December 07, 2010

Death by shark bite or piranha bites?

** "BIAS" is a special feature in my blog where I get to say whatever I want with scant regards for your feelings. I'm not politically correct in this feature, so go ahead, judge me."

Piranha attack in swarms. Each bite is small and if there's really only one piranha, it's not going to be fatal. But as nature goes, piranha are deadly when they attack in a massive group, each taking a small bite. On the other hand, shark bites are likely to be one massive chunk of flesh bitten off your body. Very deadly even if there's just one shark.

This concept can be applied variously and here are some examples:

1. In trading, multiple piranha bites is when you have a strict stop loss discipline. Let's say you will stop loss whenever the stock goes against your direction by 6%. In this way, you keep the losses of individual trades very small and manageable. However, if you've made 20 trades in that month and all of them requires you to cut loss at 6%, the small manageable losses of each individual trade will add up to bleed you to death. Hence,  you 'die' by piranha bites.

There are those who do not have strict stop loss discipline too. They might lose massively on one single trade, maybe 60% losses before the pain is too much and they cut loss. After that, they either refine their technique or run away swearing never to touch this counter again. Thus, you 'die' by shark bite.

Which do you belong to? I think I'm more of the latter, where I have massive losses on a few counters, rather than small losses on many counters.

2. In spending, I feel that girls generally buy many cheap items that chalk up their expenses monthly, whereas guys spend one or two expensive items in one shot. So while the females tend to die by piranha bites, the males tend to die by shark bites. I think knowing how your spending pattern work is important so that you can recognise when you're overspending.

The typical excuse for females for buying yet another item that they don't need is, "But it doesn't cost much and I can afford it". Yes, one item is cheap but many cheap items can be quite expensive. For guys, the typical excuse is, "I don't buy a lot of items, and this is just one off". Yes, but one expensive items can be equivalent to many cheap items too.

For me, I tend to spend in a few expensive items rather than many cheap items. My kindle costs like $600 bucks but my wife's many potions just cost $15-20 bucks each, even though I don't buy a kindle every week and she buys one of these potions almost every other outing, hee hee :)


AK71 said...

Wah, I kena both shark and pirahna before... :(

Musicwhiz said...

I think I tend to spend very small amounts most of the time which don't add up to much at the end of the month. Simple reason is because I make sure I pay myself first! :)

Thus I can avoid the piranhas and sharks!

la papillion said...

Hi AK,

So do I :) But I'm predominantly kena by shark bites one, haha

la papillion said...

Hi mw,

Haha, don't you reward yourself once a while? Say get yourself something nice to eat? If that is so, it's still considered shark bite :) Amt spent is of course relative, haha :)