On... KEN

The company that I used to work for, focused on Safety as a main priority. Therefore there's a Safety Day every year.  I remember one of these events had a number of booths set up in the main lobby of the office, where we can participate in Safety related 'games'. There was one where you had to simulate driving a car, controlling a toy car on a map. An instructor would give you directions for you to move your car, and at the same time another instructor would talk to you about casual stuff. This is to simulate talking on the phone while driving.  Needless to say, it was not easy to multi task. And I remember the conclusion of that game very vividly - "You will either end up in an accident, or you will have a very poor conversation". Multi tasking rarely end up with very satisfactory results. The same for driving a car or most other tasks. Of course, for very mundane tasks like listening to music while having a jog, you can multi task as it doesn't require conc...

In my early teens, I was very much into skateboarding. It was a passion that I pursued for about 10 years of my life, from the age of 15 to 25. Besides learning to stand and stabilize myself on the board and how to move, one of the very few important lessons I learned was how to fall. Arguably how to 'fall properly ' was more important than anything else because it helped me escape severe injuries, which otherwise were usually quite harmless and it also gave me the confidence to attempt more challenging tricks and obstacles.  What has learning to fall got to do with investing and trading? In my honest opinion, learning how to fall is almost similar with learning how to take a loss in investing. It seems counter-intuitive that taking a loss is one of the most important lessons to learn instead of learning how to pick stocks. Sure, picking the right stock is important, but if you invest long enough, you will certainly end up with bad picks. Even the best of the breed only gets it...

Recently a friend asked whether he should buy Telstra shares. My reply - "Short answer is no. Long answer is it depends". Generally, there are 4 types of games in my opinion; with different levels of time frame and complexity. These 4 are as follows :- Passive/index investing. These are generally for know nothing investors ( although   a lot of knowledgeable investors such as Morgan Housel do invests passively ). If you don't know where to start or are not interested in picking individual stocks, this is the best game to play. Apparently, just doing Dollar Cost Averaging into an index would beat most active fund managers out there.  Active investing. If you're interested in business and picking individual stocks - this is the game you play. Basically, buying a stock is a partial ownership of a business. Generally speaking, if you're investing in a business, it should be a quality business. You need to be able to value a company and buy it when the stock price is b...

Contrary to the title, this post is not about fishing. Having gone fishing only once, there's not much I can share about fishing.  What the post is about is the saying that goes "Give me a fish and it lasts me a day, teach me to fish and it will lasts me a lifetime, ". You see, my friend who had recently went on to the app Spaceship voyager had been sharing his equity returns with me and the results were astounding. A quick check on the Spaceship voyager  website shows that the fund has been compounding north of 20% P. A. Note that I am not recommending to invest with Spaceship voyager - I don't have an opinion for or against ( Do Your Own Research ). The question is - Why should I do my own investing?, rather than just allocate my capital to a fund manager who can compound my returns at a high rate. As a fellow investor would point out to me "Do you want to be right or do you want to make money? ". At the end of the day, of course I want to make money. But ...

How much capital should we risk? That depends on how much time we have.  Let's say we aim to achieve a million dollars ( by age 76 ) and we use 10% CAGR as an assumption for our rate of return, we can take a look at some scenarios to give us an idea. The below chart shows 3 scenarios. Red bars ( starts investing with 90,000$ at age 50 ), Yellow bars ( starts investing with 15,000$ at age 30 ) and Blue bars ( starts investing with 2,000$ at age 10 ). Note that to simplify the maths, a once off capital is used. In real life, you probably would add to your investments as you age.  I think it doesn't come as a surprise that the younger you start, the less capital you need to reach a million dollars; and the older you start, the more capital you have to risk. And that's a conundrum because the older people get, the less risk averse they become.  For example, if you're not starting at 10 years old ( and it's safe to say most people don't ), you have no choice but to r...

The purpose of trading is to earn an income. Or is it? Obviously, the final objective of trading is to earn money to support your living expenses. However, the initial objective is actually to grow your account. Because if you treat your trading profit as an income in the early stages ( and spend your profits instead of reinvesting them ), then your account will not grow or at best grow at a relatively slow rate. What's the point of trading then, if you can't spend the profits? It's a paradox. If you roll a snow ball down a slope, initially it takes a lot of effort. The longer you roll, the larger the snow ball gets. The magic happens when the snow ball reaches a certain size, and without effort it will roll downhill on its own. However, if you keep taking chunks of snow out and not allow the snow ball to grow, it will not reach the stage where it will self propel. A roller coaster requires energy to pull the coaches up in the initial stage. Once it crosses the first ...

Wealth is what you don't spend - Morgan Housel. Also usually equated as Wealth = Income - Expense. Earning money to increase ones wealth is one of the more stressful thing in people's life. I very seldom meet people who are not stressed about work. And this is probably driven by the need to increase ones income. How is it that people do not look at the Expense side of the equation? In my previous job, I used to travel on and off - for meetings, trainings, conferences, etc. And when we travel, we normally lodged at 5 star hotels. Needless to say, our stay comes with buffet breakfast and I must say buffet breakfast at 5 star hotels are pretty good, in terms of taste and choice. And what do I normally have? Bread, butter and omelette. That's silly isn't it, considering I have so much to choose from? Well, not really....  Because bread, butter and omelette is what I want to eat, so that's what I ate. I'm just a simple fella who eats to live, instead of those ...

Recently the ASX200 entered into a bear market and then reversed into a bull market shortly. Was that a true rebound or a bear market rally? As posted in the last blog , since we don't know the reason for entering a bear market, we sure will not know the reason for entering a bull market. If you don't know the reason, then you can't time it as there is no reliable signal to use ( Well, some people can pick tops and bottoms, but not me ). If I can't determine the reason for the start of a bull market, and I can't time the bottom, how do I know when to start investing again? I was lucky to go to a high cash level in February, but when do I start to deploy that cash? I have already missed the rally in April. Will this rally go on or will it fizzle out and retest the lows? Somehow, I'm suddenly reminded of the story of Noah's ark. In the story, GOD sent a flood to destroy most of the Earth except for Noah and his family ( and some animals ). For forty days...

Recently the global markets crashed, with the ASX200 index dropping about 30% in less than a month. What was the reason that sparked this crash? Most commentators blamed this on the COVID-19 pandemic as the catalyst, made worse with the oil price war between Saudi and Russia ( which sent Brent price tumbling as low as 25$/bbl ). If you ask my opinion, my answer is "I don't know ".COVID-19 seems like the highest probable cause but to be fair, news of the virus was not new and had been circulating in the news since January, yet the market still went on to reach All Time Highs . The only thing I know is that there are more sellers than buyers. To pinpoint why the market sold off, you probably need to go to Game Theory ( my favorite one being The Prisoners Dilemma ). In theory, regardless of the underlying reasons, IF stock holders decide not to sell at a lower price, the stock price will not go down. Imagine the following scenario happening in an alternate universe. C...

Wealth is like a bucket of leaking water - you need to constantly fill it up or it will run dry. I spoke to a friend and he thinks as long as you work hard and earn lots of money, you can outsource your financial management to your Superfund. Whilst some other people think that you should manage your own wealth. I don't have a strong opinion but I tend to favour the latter. Since it's your bucket, who better to look after it? I ran some numbers for comparison with the following assumptions. High Earner has a Lifetime Average Salary of 200K per year with 10% Super contribution. His Superfund returns 6% after fees annually. Lazy Compounder earns enough money just for living expenses - although he spends most of his time managing his investment resulting in returns of 15% annually. Assume they both have 200K invested by the age of 40. Let's see how they fare over the next 20+ years. The chart above shows their net worth by age. By the time they retire ( roughly 60...

When asked how he managed to survive and swim all the way to shore, he replied "I just kept kicking!". Many years back ( circa 2001 ), I was involved in a near death experience. We were having a dragon boat training session in the sea, when the weather picked up unexpectedly. The waves started getting stronger and we quickly headed for shore. Unfortunately not fast enough, as a strong wave capsized our boat. Fortunately, we were not too far from shore and I was a relatively good swimmer. However, there was friend in the team who could not swim but with a life jacket and a lot of luck, he survived! How did he managed to do it? He just held on tight and kept kicking. Of course, he was lucky that he was moving in the right direction ( he could have moved further out to sea instead ). What has this got to do with investing? Basically, it is about trusting and following your process. Investing/trading is a difficult task because you very seldom or almost never get a feedback...

The bad news is I am not able to beat the market in 2019 ( ROI since Inception ASX200: +10.22%, Me: +7.51% ). The good news is my return is positive this year, which is good because making money is more important than beating the market. For annual updates, see  Portfolio Update . The portfolio performance started strongly in 2019 and reached its peak at about 20% in July. Unfortunately, it went all the way down South from there. At the beginning of the year, the ASX was lifted by the RBA cutting interest rates ( and the ASX200 index reached an all time high of 6834 in July ). The escalation of the US-China trade war towards the second half of the year sparked the ASX200 sell off, and the market continued to be volatile with each tweet from President Trump. The best performing stock ( ROI since Inception ) of the year was RHT ( Resonance Health Ltd ),  +35.3%. Although, RHT being a microcap can have very volatile returns. The worst performing stock ( ROI since Incepti...