You Don't Need Luck to Make Money, once you learn this rule

This forum is created to discuss broad Financial Principles pertaining to Personal Finance

Moderators: alvin, learner, Dennis Ng

You Don't Need Luck to Make Money, once you learn this rule

Postby Dennis Ng » Tue Jun 28, 2011 2:06 pm

Do you need luck to make money from Investing? The answer is Of Course you don't need luck.

One you learn the Simple rule of only investing when the Upside Potential is at least double of the Downside Risks, you don't need luck to make money from Investing.

Do not underestimate the Power of this Upside double downside rule that Rich people use to make ALL Decisions, NOT just Investment decisions...

Frankly, ever since I started using this Rule to guide me in making decisions, even if I'm wrong 6 out of 10 times, I still get Richer and Richer over time. And it helps me to be clear of my own decision making process.

Decision Making, most of the times, become Simple and Fast once I apply this Rule to making decisions.

Note: just work out the numbers yourself. If upside at least double downside, and I look for min 50% upside, then max downside I accept is 25%.

If I'm wrong 6 out of 10 times, I would lose 6 x 25% = 150%.

While I'm just right 4 out of 10 times, I would Gain 4 x 50%= 200%.

So overall, I made 50%, NOT lose money.

If I make 50% total returns in 5 years, then my average annual returns is 10%.

The average person do NOT use such an Investment Rule to make decisions, they make decisions based on Hope, Fear and Greed, which make them forever worried and feeling insecure about their decisions...

Is such way of making decisions effective for them? Nope, most of them end up losing money on an Overall basis. Yet they refuse to learn and change their ways, and continue to repeat their mistakes time and again...

getting excited and Buy when prices are High and Upside is limited while Downside Risks High...while frozen by fear and do NOT dare to invest when prices are Low and Upside is High while downside risk is actually Low...so ironical...
.but so reflective of the common Mistake most people make (including me, Dennis Ng) before I learn how to Invest from the Rich.
Last edited by Dennis Ng on Sun Jul 03, 2011 11:26 pm, edited 1 time in total.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
 
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Postby Dennis Ng » Sun Jul 03, 2011 11:20 pm

You can make mistakes 6 out of 10 times investing and still make money from Investing.

One real life example is Temasek Holdings. For the last 36 years since it was set up in 1974, its average Annual returns is 17%, despite we come across news from time to time about them losing money in investments and their investment mistakes.

More details of the investment performance of Temasek Holdings is here:

http://www.temasekholdings.com.sg/pdf/T ... 7_50am.pdf

FAQ to Temasek Holdings:

http://www.temasekholdings.com.sg/pdf/T ... 011%29.pdf

Below is one such investment mistake they made:

http://www.irishtimes.com/newspaper/fin ... 57349.html

BUSINESS OPINION: An injection of about €400m is needed – STT have to figure out if they would ever get it back

PRESSURE IS starting to mount on STT to decide what it is going to do about Eircom.

The Singapore-based group – which is owned by the city-states sovereign wealth fund Temasek – has been a model of eastern inscrutability since taking control of the national phone network at the start of last year.

They paid a mere €140 million for the company, but it came with an unsustainable debt mountain of €3.75 billion.

For the last year the Singaporeans have been sitting on the sidelines weighing up whether they want to roll up their sleeves and follow their €140 million with however much more money it is going to take to sort out Eircom.

The figure put on the amount of equity that needs to go into the company is about €400 million and, presumably, the question STT is trying to figure out is whether they will ever get it back.

One of the things they have been watching is how chief executive Paul Donovan has been getting on with his cost-cutting plans. The most recent advance on that front has been a deal that will see staff take a 10 per cent pay cut. Some 1,000 jobs are to go over the next two years.

The other variable which no doubt will be watched by STT is the performance of the Irish economy given the pretty direct link between economic activity and telecoms traffic.

There does appear to be a consensus that the economy will return to growth next year, albeit based on a two-speed economy.

The last consideration, and the one that has now come into very sharp focus, is when is the best time to move when it comes to trying to strike a deal with the company’s bondholders.

It would appear that time is running out in this regard, with management conceding on Friday that it may breach its financial covenants within three months. This would point to a deal sooner rather than later.

Donovan is clearly keen to get the job done, arguing on Friday that it “is imperative that we accelerate the discussions with our lenders and shareholders about how we manage a potential breach.

“We will need to put the company on a sustainable footing with regard to a future financial structure and that includes the amount of debt that we have on our balance sheet and the terms of that debt.”

The senior creditors also seem ready to go with advisory firm Houlihan Lokey signed up to represent them. Eircom has also got tooled up, engaging investment banks Gleacher Shacklock and JP Morgan, and law firm Linklaters to represent it in talks.

However, it might be rash to discount the possibility of STT playing for a little bit more time by just dribbling extra capital into Eircom to allow it avoid a breach of its bank covenants. Although some debt is due for repayment in June, the first really big tranche – of €1.2 billion – does not fall due until 2014.

Bank of America Merrill Lynch estimate about €25 million should do the trick and keep the company out of default until the end of the year. It must be tempting. The uncertainty about STT’s commitment has certainly helped Donovan drive through his cost-cutting and will ensure that they take hold.

Likewise the prospects for the economy should be a deal clearer come the end of the year.

The downside is that the longer STT prevaricates the worse the trading position at Eircom becomes. The latest set of figures indicate the difficulties the company is facing.

Group revenues fell 11 per cent to €407 million in the first quarter while adjusted Ebitda – earnings before interest, taxes, depreciation and amortisation – fell 6 per cent to €170 million.

Fixed-line revenues fell by 6 per cent while its mobile sales were 11 per cent lower.

The company shed 21,000 mobile customers in the nine months to end the period with 1.04 million subscribers.

The other problem facing Eircom is that its competitors – and NTL in particular – are currently investing in infrastructure and stealing a march on it, particularly in cable.

The worse the trading position the more likely the bondholders are to agree to a bigger haircut in the inevitable restructuring.

But, by the same token, there comes a point when so much damage will be done to the company and its prospects by the stand-off that it becomes counter-productive.

On balance it looks as though STT will bite the bullet sometime over the next three months but there is quite a game to be played out first.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
 
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Postby TieGe » Sun Jul 24, 2011 3:57 pm

Hi all
Thank Dennis.

This is a very powerful rule. I do know this but Dennis make it so clear. There are a few times I missed the opportunity cos i asked my friends should I venture into it and they said no.
I am going to teach others and also my son this powerful rule.

I just taught my son about rule 72 and I am pleased to have imparted some financially literacy to him.

In fact since last year I give him $120 for this birthday and I told him he can spend it or keep with me papa bank and I offer him 10% interest. He decided not to spend it. This year his birthday he also choose to save with me for 10% interest. If this is useful, use it.

Tie Ge
TieGe
Investing Mentor
 
Posts: 133
Joined: Sun Jul 03, 2011 8:38 am

Postby Dennis Ng » Sun Jul 24, 2011 4:23 pm

TieGe wrote:Hi all
Thank Dennis.

This is a very powerful rule. I do know this but Dennis make it so clear. There are a few times I missed the opportunity cos i asked my friends should I venture into it and they said no.

I am going to teach others and also my son this powerful rule.

I just taught my son about rule 72 and I am pleased to have imparted some financially literacy to him.

In fact since last year I give him $120 for this birthday and I told him he can spend it or keep with me papa bank and I offer him 10% interest. He decided not to spend it. This year his birthday he also choose to save with me for 10% interest. If this is useful, use it.

Tie Ge


Hi Tie Ge,
I'm so happy to hear this.

The good news about Financial Education is that when a person attend my seminars, the knowledge he/she acquire can then be spread to his/her family and friends.

This is how I intend to help 1 million people, becos by having 10,000 seminar graduates in 5 years, (currently already over 2,100), each seminar graduate helping 100 people, together we will help 1 million people.

You have NOT joined a Seminar, you have joined a Movement, a Revolution of Wealth.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
 
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Postby zipink » Mon Jul 25, 2011 12:18 am

TieGe wrote:Hi all
Thank Dennis.

This is a very powerful rule. I do know this but Dennis make it so clear. There are a few times I missed the opportunity cos i asked my friends should I venture into it and they said no.
I am going to teach others and also my son this powerful rule.

I just taught my son about rule 72 and I am pleased to have imparted some financially literacy to him.

In fact since last year I give him $120 for this birthday and I told him he can spend it or keep with me papa bank and I offer him 10% interest. He decided not to spend it. This year his birthday he also choose to save with me for 10% interest. If this is useful, use it.

Tie Ge


Hi TieGe,

Wow. How old is your son now?

Your child really has a head start in financial education. He will be grateful to you when he grows up.

I wish I had such an "education" when I was young. :)
http://www.alexyeo.com - Ramblings of an Internet marketer and His Life
zipink
Investing Mentor
 
Posts: 358
Joined: Sun Apr 03, 2011 9:02 pm

Postby TieGe » Mon Jul 25, 2011 11:37 am

zipink,
He is 13 this year.

Tie Ge
TieGe
Investing Mentor
 
Posts: 133
Joined: Sun Jul 03, 2011 8:38 am

Postby Dennis Ng » Sun Jul 31, 2011 4:51 pm

My No. 1 question is:What if I'm wrong, will I be Financially OK?"

I'm sure this is something all my seminar graduates have heard me said and repeat many, many times.

From what Billionaire Peter Lim said in an interview in year 2007, you would probably conclude that the No. 1 question he ask himself is probably the same as me. (which ALL the multi-millionaire sifus also shared the same view).

'A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today's market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.

'So I always tell my friends: 'Make sure you stay alive. The market won't die, so there's always a next time.' '
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
 
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Postby zipink » Sun Jul 31, 2011 6:39 pm

Dennis Ng wrote:My No. 1 question is:What if I'm wrong, will I be Financially OK?"

I'm sure this is something all my seminar graduates have heard me said and repeat many, many times.

From what Billionaire Peter Lim said in an interview in year 2007, you would probably conclude that the No. 1 question he ask himself is probably the same as me. (which ALL the multi-millionaire sifus also shared the same view).

'A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today's market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.

'So I always tell my friends: 'Make sure you stay alive. The market won't die, so there's always a next time.' '


I only invest with money I can afford to lose. To put it in another way, I already have >6 months of emergency funds.

So even if my investments lost some of its values in the short term, I won't lose sleep over it.

If you invest with money you can't afford to lose, you will be very stressed if the market turned against you, because that's all the money you have. If you are stressed, you can't think properly. If you can't think properly, you will tend to act irrationally.

Yeah, so make sure we stay alive first. ;)
http://www.alexyeo.com - Ramblings of an Internet marketer and His Life
zipink
Investing Mentor
 
Posts: 358
Joined: Sun Apr 03, 2011 9:02 pm

Postby Dennis Ng » Thu Sep 22, 2011 9:12 am

Upside/Downside Analysis. To go ahead if Upside is at least double Downside.

This Decision Making Rule seems so simple, which is why many Seminar Graduates underestimate the POWER of this rule.

Even U.S. government if they had used this rule to decide whether to save Lehman Brothers might have saved U.S. trillion of dollars in QE1 and QE2...all U.S. needs to save Lehman Brothers is just to standby as "Guarantor" to US$20 billion!

Astonishing, but this Disastrous Consequence was clearly becos U.S. government did NOT Use this Decision Making Rule in making decisions. It'll be shocking to know that they can learn this rule from my FREE Path to Financial Freedom Workshop!

http://www.youtube.com/watch?v=Ms_tnEe4 ... _embedded#!
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
 
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Re: You Don't Need Luck to Make Money, once you learn this r

Postby ngtfook » Sat Jan 21, 2012 9:59 am

Sharing an article by Mr.Koon Yew Yoon who is a prominent civil society leader and one of the founders of IJM Corp.
RayNg


How to beat the market and become a super investor
Written by Koon Yew Yin

Risks in doing business:

It is important to stress that all businesses involve risk; hence the selection of shares is also a risky business. This is not the same order of risk as may be involved in going to the casino or betting on the four digits which in 90-99 % or even more of the cases, results in the patron losing his money, if not his pants.

Picking winning stocks means that we pick the companies that can meet the constant challenges of competition, supply and demand, change of fashion and style design, obsolete stocks write off, etc. There are also unforeseen factors such as variation in interest rates, import and export restriction, foreign exchange variation, change in Government regulations, etc. Inclement weather such as flooding affects production as we have seen in Bangkok so that even the most well run of companies such as Toyata and Honda cannot escape it.


Best form of investment

In my view, stocks are the best form of investment. They are tax free, have no management problem, and you can reduce or liquidate all your holdings at any time. There is a classical saying in the market - “You can buy the winning horse after the race”. This means that you can still buy a good share after the company has announced its profit. This does not mean that stocks are entirely risk-free


Fundamentals of Stock Selection

The basic fundamentals for share selection are P/E ratio, NTA, Revenue, cash flow etc. How important are these factors?

The most important criterion is profit growth prospect. Never buy any share if the company cannot make increasing profits. You must buy shares that Fund managers are interested. They are the movers and shakers. Do not buy too much of illiquid shares because it is cheap. It is cheap for some reasons which may keep it at basement prices.

The main reasons why share prices go up include the following:

a. Exceptionally good profit growth prospect

b. Fund managers must be interested, liquidity, publicity etc.

c. Dividends are an important catalyst for moving share prices up

d. Unexpected good news of profit, bonus issues etc. will push up share prices.


When to Sell

When to sell? Do not worry about the daily share price fluctuation if you have a target price. Quite often the share you hold can move up rapidly and continues to go up. You must remember that no share can go up indefinitely for whatever reason. Sell when you are not willing to buy at the price or the reason to buy is no longer valid. Remember you must sell so that you can have funds to buy back during correction. If the fundamentals have not changed, the share price will go up again.


What to Buy

After having seen so many unexpected surprises in the stock market, I consider the safest shares to invest are undervalued oil palm shares. The reasons are:-

a. The production cost for CPO is about Rm 1,300 per ton and the average selling price has been more than double the production cost in the last 10 years or more. The average CPO price for 2011 is more than Rm 3,000 per ton. Which business can offer such big profit margins?

b. The demand and profit are sustainable due to population increase. Moreover, both China and India who are our buyers have been improving their economy. The financial problem in Eurozone and US has little or no effect on our palm oil market.

c. A palm tree will start fruiting after 3 years. It will continue to bear more fruits until it is about 16 years old after that age it will begin to bear less fruits. Only after about 22 years a palm tree needs replanting.

d. The land always appreciates in value.

e. There is good profit growth prospect and sustainable profit

I am obliged to tell you that plantation shares form the major part of my investment portfolio. If you decide to buy, I am not responsible for your profit or your loss.


How to become a super investor?

I started serious investing in public listed shares when I retired from executive work at 50 years old. I was not an accountant nor have I a MBA degree. I was just a civil engineer and I hardly knew how to read a balance sheet at that time.

I started by reading to understand the basic fundamental principles of share selection as practiced by Warren Buffet, Peter Lynch and other great investment gurus. These are the key traits to being a super investor that I picked up.

Trait 1: Be a contrarian investor, that is, the ability to buy stocks while others are panicking and sell stocks while others are euphoric. In 1983 when China declared that they wanted to take back Hong Kong, the people were selling as if there was no tomorrow because the Communists were coming. The Hang Seng Index plunged to about 700. Currently it is around 18,500.

In such a situation at that time, would you buy Hong Kong shares? I did.

Trait 2: Obsession in playing the game and wanting to win. Winning investors don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching. They are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk.

They are obsessed in enhancing the value of their holdings. I am that way.

Trait 3: The willingness to learn from past mistakes. Most people would much rather just move on and ignore the dumb things they’ve done in the past. I believe the term for this is repression.” But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career.

Trait 4: An inherent sense of risk based on common sense. Most people believe analysts’ reports which are often ‘a buy’ recommendation. It is very seldom they recommend ‘a sell’ because they would lose the business from the company he has recommended ‘a sell’. You must always take any analyst report with a pinch of salt.

I believe the greatest risk control is common sense which is not so common sometimes.

Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism. Buffett never got into the dot-com mania though he was being criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship. He was proven right when the dot com bubble bust.

Trait 6: Clear thinking. When considering a share, you must try to understand the nature of the company’s business and its inherent difficulties so that you can evaluate your risk exposure. There are a lot of people who have genius IQs who cannot think clearly, though they can figure out bond or option pricing in their heads.

Trait 7: And finally the most important, and rarest, trait of all is the ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do. When the market makes a severe correction, most people dare not buy more shares to average down or to put any money into stocks at all when the market is plunging. They would begin to doubt their own judgement.

Wishing you a season of happy and profitable investing!
Last edited by ngtfook on Wed Mar 21, 2012 11:03 am, edited 1 time in total.
Price is what you pay; Value is what you get
RayNg
ngtfook
Platinum Forum Contributor
 
Posts: 625
Joined: Sat Mar 12, 2011 8:16 pm
Location: SG

Re: You Don't Need Luck to Make Money, once you learn this r

Postby racoon12 » Wed Mar 21, 2012 10:52 am

Hi Mr Ng

Thanks for sharing
racoon12
Platinum Forum Contributor
 
Posts: 342
Joined: Sun Jan 29, 2012 2:02 am

Re: You Don't Need Luck to Make Money, once you learn this r

Postby Dennis Ng » Wed Mar 21, 2012 11:16 am

thanks rayng for sharing this wonderful article.

yes, I really agree with what Mr Koon Yew Yoon says.

If you read through the article, you would also realise that I emphasize the importance of some of the things he mentioned, which were also KEY THINGS I teach in my 2-day Secrets to Making Money in Stocks Seminar. (You can take out your seminar notes to verify what I said).

Synopsis of my 2-day Secrets to Making Money in Stocks Seminar is here:
http://www.masteryourfinance.com/web/in ... &Itemid=35

Mr Koon said:

The basic fundamentals for share selection are P/E ratio, NTA, Revenue, cash flow

When to Sell

When to sell? Do not worry about the daily share price fluctuation if you have a target price. Quite often the share you hold can move up rapidly and continues to go up. You must remember that no share can go up indefinitely for whatever reason. Sell when you are not willing to buy at the price or the reason to buy is no longer valid. Remember you must sell so that you can have funds to buy back during correction. If the fundamentals have not changed, the share price will go up again.

These are the key traits to being a super investor that I picked up.

Trait 1: Be a contrarian investor, that is, the ability to buy stocks while others are panicking and sell stocks while others are euphoric.

Trait 3: The willingness to learn from past mistakes

Trait 4: An inherent sense of risk based on common sense

Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism.[/color]

Trait 6: Clear thinking. When considering a share, you must try to understand the nature of the company’s business and its inherent difficulties so that you can evaluate your risk exposure.[/color]

Trait 7: And finally the most important, and rarest, trait of all is the ability to live through volatility without changing your investment thought process.

Cheers!

Dennis Ng

ngtfook wrote:Sharing an article by Mr.Koon Yew Yoon who is a prominent civil society leader and one of the founders of IJM Corp.
RayNg


How to beat the market and become a super investor
Written by Koon Yew Yin

Risks in doing business:

It is important to stress that all businesses involve risk; hence the selection of shares is also a risky business. This is not the same order of risk as may be involved in going to the casino or betting on the four digits which in 90-99 % or even more of the cases, results in the patron losing his money, if not his pants.

Picking winning stocks means that we pick the companies that can meet the constant challenges of competition, supply and demand, change of fashion and style design, obsolete stocks write off, etc. There are also unforeseen factors such as variation in interest rates, import and export restriction, foreign exchange variation, change in Government regulations, etc. Inclement weather such as flooding affects production as we have seen in Bangkok so that even the most well run of companies such as Toyata and Honda cannot escape it.


Best form of investment

In my view, stocks are the best form of investment. They are tax free, have no management problem, and you can reduce or liquidate all your holdings at any time. There is a classical saying in the market - “You can buy the winning horse after the race”. This means that you can still buy a good share after the company has announced its profit. This does not mean that stocks are entirely risk-free


Fundamentals of Stock Selection

The basic fundamentals for share selection are P/E ratio, NTA, Revenue, cash flow etc. How important are these factors?

The most important criterion is profit growth prospect. Never buy any share if the company cannot make increasing profits. You must buy shares that Fund managers are interested. They are the movers and shakers. Do not buy too much of illiquid shares because it is cheap. It is cheap for some reasons which may keep it at basement prices.

The main reasons why share prices go up include the following:

a. Exceptionally good profit growth prospect

b. Fund managers must be interested, liquidity, publicity etc.

c. Dividends are an important catalyst for moving share prices up

d. Unexpected good news of profit, bonus issues etc. will push up share prices.


When to Sell

When to sell? Do not worry about the daily share price fluctuation if you have a target price. Quite often the share you hold can move up rapidly and continues to go up. You must remember that no share can go up indefinitely for whatever reason. Sell when you are not willing to buy at the price or the reason to buy is no longer valid. Remember you must sell so that you can have funds to buy back during correction. If the fundamentals have not changed, the share price will go up again.


What to Buy

After having seen so many unexpected surprises in the stock market, I consider the safest shares to invest are undervalued oil palm shares. The reasons are:-

a. The production cost for CPO is about Rm 1,300 per ton and the average selling price has been more than double the production cost in the last 10 years or more. The average CPO price for 2011 is more than Rm 3,000 per ton. Which business can offer such big profit margins?

b. The demand and profit are sustainable due to population increase. Moreover, both China and India who are our buyers have been improving their economy. The financial problem in Eurozone and US has little or no effect on our palm oil market.

c. A palm tree will start fruiting after 3 years. It will continue to bear more fruits until it is about 16 years old after that age it will begin to bear less fruits. Only after about 22 years a palm tree needs replanting.

d. The land always appreciates in value.

e. There is good profit growth prospect and sustainable profit

I am obliged to tell you that plantation shares form the major part of my investment portfolio. If you decide to buy, I am not responsible for your profit or your loss.


How to become a super investor?

I started serious investing in public listed shares when I retired from executive work at 50 years old. I was not an accountant nor have I a MBA degree. I was just a civil engineer and I hardly knew how to read a balance sheet at that time.

I started by reading to understand the basic fundamental principles of share selection as practiced by Warren Buffet, Peter Lynch and other great investment gurus. These are the key traits to being a super investor that I picked up.

Trait 1: Be a contrarian investor, that is, the ability to buy stocks while others are panicking and sell stocks while others are euphoric. In 1983 when China declared that they wanted to take back Hong Kong, the people were selling as if there was no tomorrow because the Communists were coming. The Hang Seng Index plunged to about 700. Currently it is around 18,500.

In such a situation at that time, would you buy Hong Kong shares? I did.

Trait 2: Obsession in playing the game and wanting to win. Winning investors don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching. They are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk.

They are obsessed in enhancing the value of their holdings. I am that way.

Trait 3: The willingness to learn from past mistakes. Most people would much rather just move on and ignore the dumb things they’ve done in the past. I believe the term for this is repression.” But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career.

Trait 4: An inherent sense of risk based on common sense. Most people believe analysts’ reports which are often ‘a buy’ recommendation. It is very seldom they recommend ‘a sell’ because they would lose the business from the company he has recommended ‘a sell’. You must always take any analyst report with a pinch of salt.

I believe the greatest risk control is common sense which is not so common sometimes.

Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism. Buffett never got into the dot-com mania though he was being criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship. He was proven right when the dot com bubble bust.

Trait 6: Clear thinking. When considering a share, you must try to understand the nature of the company’s business and its inherent difficulties so that you can evaluate your risk exposure. There are a lot of people who have genius IQs who cannot think clearly, though they can figure out bond or option pricing in their heads.

Trait 7: And finally the most important, and rarest, trait of all is the ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do. When the market makes a severe correction, most people dare not buy more shares to average down or to put any money into stocks at all when the market is plunging. They would begin to doubt their own judgement.

Wishing you a season of happy and profitable investing!
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
 
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Re: You Don't Need Luck to Make Money, once you learn this r

Postby Dennis Ng » Fri Mar 30, 2012 6:54 am

Temasek Holdings LOST money again (140 million Euros in Eircom)! Don't worry, despite it making losses here and there, its average Annual Returns from inception in 1974 to year 2010 is 17%!

It goes to show that in investing, if you invest based on Upside at least double Downside, you would still become Richer even if you're wrong 6 out of 10 times...

Cheers!

Dennis Ng

DUBLIN, March 29 (Reuters) - Eircom, Ireland's former state telecom operator, on Thursday applied for court protection to allow it to restructure its 3.8 billion euro ($5 billion) debt mountain.

The application follows the company's agreement to support a proposal under which most senior lenders take control of the company from current majority shareholder Singapore Technologies Telemedia (STT) and cut its debt pile by more than 40 percent.

A representative of the company told the High Court eircom was applying for examinership, a process that protects company assets from creditors for up to 100 days while a survival plan is worked on to keep the business afloat.

The examinership - akin to the Chapter 11 bankruptcy process in the United States and administration in Britain - would be the largest in Irish corporate history. The application will be heard in full later on Thursday.

Lenders believe that the process will move more quickly as eircom is supporting the restructuring.

Laden with debt and suffering from serious under-investment since its privatisation in 1999, eircom's fate highlights the risks of privatisations and casts a shadow over government plans for new state asset sales.

Shares in the telecoms monopoly collapsed after an IPO marketed as a one-way bet to the Irish public. It built up the debt during a series of changes of ownership.

Singapore sovereign wealth fund Temasek unit STT bought 65 percent of eircom in 2009 for 140 million euros in cash and shares. An employee share trust owns the other 35 percent.

The Irish government is currently planning the sale of state assets worth 3 billion euros ($4 billion) to meet a target imposed by its International Monetary Fund and European Union creditors. The largest asset on offer is likely to be the energy business of gas utility Bord Gais.

Eircom is supporting a proposal from lenders which will write off 1.8 billion euros of 4.1 billion euros of gross debt in a restructuring, sources close to the negotiations said.

The company has more than 300 million euros of cash, leaving it with a net debt of around 3.8 billion euros.

The proposal will wipe out nearly all of the company's junior debt and senior lenders will take a 15 percent haircut in return for control of the company, several bankers said.

Trade creditors will be unaffected by the restructuring plan and will not bear any losses, unlike lenders, bankers said.

http://www.reuters.com/article/2012/03/ ... O120120329
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng
Site Admin
 
Posts: 9781
Joined: Tue Nov 29, 2005 7:16 am
Location: Singapore

Re: You Don't Need Luck to Make Money, once you learn this r

Postby sereneloong » Tue Jul 10, 2012 2:30 pm

For those who never quite understood why Dennis' Upside Downside rule works, I have explained it here in a simple video:
http://www.reallifetheory.com/DecisionMakingVideo

To help 1 million people become millionaires, do spread the word by clicking 'Like' here:
http://www.facebook.com/reallifetheory?v=app_190322544333196

Cheers,
Serene
Zero Cuisine Cauliflower Mash. 60 calories. Zero guilt. Limited time offer: Free shipping! http://www.zerocuisine.com
sereneloong
Investing Mentor
 
Posts: 155
Joined: Mon May 24, 2010 11:18 pm

Re: You Don't Need Luck to Make Money, once you learn this r

Postby ngtfook » Mon Jul 16, 2012 9:55 am

Hi Serene,

4/10 Win with 50% upside and 6/10 Lost of 25% downside does not result in 50% gain.
Let's say if we invest 10 counters with $10K each, at the end of investment period, the gain is only 5%.

No...Capital...Win/Lose...Reliase Gain/Lost
1___10,000___1.50_____15,000
2___10,000___1.50_____15,000
3___10,100___1.50_____15,000
4___10,000___1.50_____15,000
5___10,000___0.75______7,500
6___10,000___0.75______7,500
7___10,000___0.75______7,500
8___10,000___0.75______7,500
9___10,000___0.75______7,500
10__10,000___0.75______7,500

Ttl_100,000 ________105,000 ----->> Profit = 5%

sereneloong wrote:For those who never quite understood why Dennis' Upside Downside rule works, I have explained it here in a simple video:
http://www.reallifetheory.com/DecisionMakingVideo

To help 1 million people become millionaires, do spread the word by clicking 'Like' here:
http://www.facebook.com/reallifetheory?v=app_190322544333196

Cheers,
Serene
Price is what you pay; Value is what you get
RayNg
ngtfook
Platinum Forum Contributor
 
Posts: 625
Joined: Sat Mar 12, 2011 8:16 pm
Location: SG

Next

Return to Financial Principles

Who is online

Users browsing this forum: No registered users and 4 guests

cron