On... KEN

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...

I'm running a 20 year experiment - that is to achieve a net worth of 1 million dollars in 20 years time. Why is it an experiment? Because it is based on investing in the stock market and stock market futures are unpredictable. If we can't forecast the future, does that mean we should do nothing ? Probably not. We can at least have a look at history to get a feel of what might happen ( history does not repeat, but it does rhyme - Mark Twain ). So, lets have a look at what 20 years of investing look like. For example, what if I had started investing 20 years ago ( 1999 ), how much would my net worth be if I cash out end of this year ( 2019 ) . If we take the All ORDS index as a proxy for returns - The All ORDS index was roughly 3153 at the end of 1999 and I estimate it to be roughly 6773 end of this year. That means 10,000$ invested in 1999 would be roughly 21,484$ end of this year.  How about if we started end of 1998 instead and cashed out end of 2018? The All ORD...

I told a good friend of mine that I was going to start investing in the stock market and his response was far from unexpected. "You're either going to make a lot of money or lose a lot of money. The stock market is risky". Is it truly though? Generally, risk can be defined as a permanent loss of capital . That also usually happens when you don't know what you're doing. So, is investing in the stock market a risky business? Based on the two criteria I mentioned, I would say it depends ( meaning it can be risky or not risky ). Confused? First criteria - permanent loss of capital . Sure, you can lose money investing in the market but..... how much you lose depends on you. Say you invest in a property which costs 500,000$ and the price of the property drops by 10%, you would have lost 50,000$ when you sell it. On the other hand, you invest 1,000$ in the market and you lost 100% of it. You would have only lost 1,000$ ( yes, you can invest as little as 1,000$ and...