Be discipline

Did you notice that you always change your buy and sell price very easily because you got influence by something or someone? In the end, you either missed or buy/sell at a bad price.

I used to do that and still have the tendency to do that, but I am trying to change.

Few strategies which I adopt:

• I know that I cannot be a discipline frequent trader that keep buy and sell. However, I always has to desire to buy and sell to trade/speculation. (bad me!) Thus, I ensure that no more than 10% of my portfolio per trade. This makes me sleep more peaceful at night.
  (My savings and thus investment captial will grow overtime, hence the majority of capital will still be for growth/undervalue stock with decent yield.)
• Only speculate bluechips. Fast in fast out. Chances of bluechips bankrupt is lower. (for speculation only.)
• Write down all my buy and sell price in my handphone. Hp is something which I bring around everywhere and touch it most often everyday, thus it would be the best equipment to remind me that I must not be so emotional.

What are your strategies?

Does account size matter?

Does account size matter?

Yes it does! Very often, we would say we earn a return of capital of example 6% after this trade of xxx days.

This 6% seems simple but it is not exactly simple.

6% of 10k = 600
6% of 100k = 6000
6% of 1 mil = 60000
6% of 10 mil = 600000 = 600k
......and so on.

DO you get the story?

Two different investors may say that they have 6% gain, but their absolute gain is different.

Investor A may have 100k in capital and earn 6000 in that trade. However, investor B may have 10 mil in capital and earn 600k gain for 6%. 600k - 6000 = 594000 which is much more than the capital of investor A. In extreme case, even if investor A manage to pick multibaggers and earn 100% in trade, it is only 100k as compared to 600k.

In addition, don't forget that you can diversify or plan the allocation of money easier if you have huge capital. Assuming that you only plan to have no more 10% of your entire portfolio in any stock and each purchase is example 10k.

With huge capital (10 mil), you can keep buying at ALL supports. If this support breaks, you can buy at next support and the amount of money you allocated to this stock still never exceed the planned 10% of your portfolio. Once the market starts to recover, you can slowly sell in batches at different resistance and huat. However, if you have limited capital (100k), you can only buy at one support. If this support break, you cannot add more as it may exceed 10% of your portfolio and need to wait very long to repent and earn profit.

That's why you see some bloggers can keep buying and keep selling at many levels of supports and resistance while some cannot. Ops! who am I referring to? :)

Thus what is the moral of the story?

Account size does matter!!!

Work hard and increase your account size when young! Delay gratification? Don't get marry? eat bread drink water?

月光族 or 发薪日光光族？

There are people who are 月光族.

For me, I am very poor on the immediate day of my pay check! 发薪日光光族？

On the immediate night of my pay day every month, I would:

• Transfer around 60-65% of my pay to my Joint account and personal saving account for investment and saving - pay myself first.
• Give 15% to parents as allowance.
• Take out a sum of few hundreds cash as food expense and put in cupboard.- this would be my pure food expenditure in hawkers, coffee shops, ntuc groceries for the months. Amount taken out would be dependent on how much I had left from last month.
• The rest will remains in daily account for stuffs like occasional credit card spending for entertainment, utilities, singtel, conservatory charges etc. 

Thus effectively, 80% of my pay is gone on the immediate day of my pay. Even if I want to overspend also cannot.

I live a poor but happy life! Delay Gratification!

I am 发薪日光光族.

Are you 月光族 or 发薪日光光族？

(sometimes I wonder how great would it be if I can be like my siblings, earned at least double my earned income but yet either don't give parents money or delay very long then give a bit and refuse to offer their place for my parents to stay. I would be able to save much more and reach my FF goal faster. I am just stupid. )

For sharing: SDIC

https://www.sdic.org.sg/di_calc_of_comp.php

In the event a DI Scheme member fails, all insured deposits placed with that member, except for deposits under the CPF Investment Scheme and CPF Minimum Sum Scheme, are aggregated and insured up to S$50,000. If you are a sole proprietor, your personal eligible accounts will be aggregated with the eligible accounts of your sole proprietorship(s). Trust and client accounts held by non-bank depositors are insured up to S$50,000 per account, without aggregation.

Deposits are not insured separately in each branch office of a DI Scheme member i.e. all your eligible accounts maintained with different branches of a DI Scheme member are aggregated and insured up to S$50,000.


Moneys and deposits under the CPF Investment Scheme (CPFIS) and CPF Minimum Sum Scheme (CPFMS) are aggregated and separately insured up to S$50,000.
_______________________________________________________________

In summary, it is 50k per bank per name. 

Example:
If you have 80k in bank A as joint account with your spouse and you also have 20k in bank A by youself while your spouse has 5k in her account.

Amt considered under your name: 80k/2 + 20k =60k. Thus you are insured with 50k but the remaining 10 k is not insured. For your spouse, the full amount is insured because 80k/2 + 5k = 45k <50k.

If you have also placed S$70,000 of your CPF monies in a fixed deposit under the CPFIS, you are insured with 50k but the remaining 20k is not insured.
___________________________________________________________

Thus, moral of the story, spread your money in different bank and make sure you have max 50k per bank per name.

But as personal opinion, I think local SG banks such as DBS, UOB and OCBC should be safe. I won't not mind put more than 50k in these bank. However, for bank such as CIMB, Maybank, Citi etc, I will aim for 50k per name.

In the event that DBS, UOB and OCBC really die, I cannot imagine what will happen to Singapore then....

By the way, for those who is interested, CIMB starsaver give you 0.8% per annum, not bad as compared to 0.05% of DBS. However, the best choice is put your money in CDP to generate passive income from equity/fixed incomes :)

Economic news?

Remember this news?
http://opposethetrend.blogspot.com/2011/09/good-news-bull.html

What about this?
Remember that yesterday and last friday, STI was in red?

What about today?

So is market going up or down?

I guess many people are thinking of bull or bear or sideway everyday?

But do you really have control over these?

Is there a simple formula news A + news B - bad news C = market up?

NO!

It is too complex. Even the so called economic experts or guru couldn't get it right.

It is impossible for layman like us to get it right?

Since you cannot control the market, cannot control the news, what can you do?

CONTROL YOUR OWN PORTFOLIO AND YOUR MONEY!
Place yourself in a way that suit you and could take advantage of both the up and down.

Book summary - Alexandra Elder - Sell and sell short

 As usually, I like to record what I had read in blog just in case I forget it in future.(only read front portion of books so far.)

• Limit your loss on any trade to 2% of equity in your trading account.
• Whenever the value your account dips 6% below its closing value at
  the end of last month, stop trading for the rest of this month.

(meaning if you got 100k in total, per trade max can only lose 2k. If you lose 6k in that month, stop trading, take a break and look though and learn your mistakes.)

His money management rule is so strict. No wonder he can preseve the captial in his portfolio so well. However, I don't think I will follow the above two rules strictly unless I am doing active trading daily.

Instead, I am currently trying to restructure my portfolio with the aim of controlling the amount of money which I put into each type of stocks. I only understand the important of this idea recently. I aim to have around 10-15% per type with no more than 60% invested in current market condition.

Mr Market, please give me a chance to succeed in rearranging!

Reminder to myself: Don't average down without proper money management