- Markets go through at least one big pull-back every year, and one massive one every decade. Get used to it. It’s just what they do in order to make money. And if you can’t stomach this, don’t lay a finger in the world of investing.
- The phrase “double-dip recession” was mentioned more than 10 million times in 2010 and 2011, according to Google. It never came. Surprisingly, there were virtually “no” mentions of “financial collapse” in 2006 and 2007, but it did come.
- There will be 7 to 10 recessions over the next 50 years. Now that we have told you this, don’t act surprised or dumb when they come. If you like, call this the SOP (standard operating procedure) of investing.
- The “Wisdom of Buffett” says: “First come the innovators, then come the imitators, then come the idiots.” Well, actually this does not only applies to stock investing, but also other businesses or scams, be it the Genneva Gold scams or Apple’s iPhone and iPad products.
- Warren Buffett’s best returns were achieved when markets were much less competitive decades ago. It’s very doubtful anyone will ever match his 50-year record. Basically, there won’t be another Warren Buffett so stop dreaming you can become one, even though your Chinese name is “Wah Ren Bu Fei” (*grin*).
- Some “legendary” investors whom we worship have barely beaten an index fund over their careers, with a small exceptions. Since there’s no other Warren Buffett, you can go learn from people like Daim Zainuddin or Chua Ma Yu on how to become “The Wolf of KLSE”.
- The more comfortable an investment feels, the more likely you are to be slaughtered. Remember the infamous Malaysian Genneva Gold and U.S. Bernard Madoff investments, which turn out to be nothing but ponzi scams?
- Saying “I’ll be greedy when others are fearful” is much easier than actually doing it. The fact is when others are fearful, you’re doubly as fearful, and vice versa. It’s extremely difficult to buy for your clients when stocks are plunging, let alone putting your own money during the bear market.
- Not a single person in the world knows what the market will do next – will it goes up, goes down or circles around. End of story. Watch “The Wolf of Wall Street” and listen how DiCaprio’s boss (Matthew McConaughey) advises him about making clients happy with profit on the paper while brokers make real money in commissions.
- Mark Twain (Nov 1835 – Apr 1910) says this about truth: “A lie can travel halfway around the world while truth is putting on its shoes.”Like it or not, (Wall Street) big boys talk about lies more than the truth, everyday.
- More than 10 years ago General Motors was on top of the world and Apple was laughed at. Today, the reverse is true. A similar shift will occur over the next decade, but no one knows to what companies.
- Professional investors have latest information and faster computers than you do. You will never beat them short-term trading. Don’t even try. And if you manage to, that’s pure luck and chances are you will not be able to do it again.
- If you’ve grand plan of trading penny stocks, do yourself a favour – just light your money on fire. Same for leveraged ETFs and perhaps Malaysian Unit Trust. Watch “The Wolf of Wall Street” and you will understand why this is so.
- The analyst, fund manager or stock-broker who talks about his mistakes is the person you want to listen to. Avoid the person who doesn’t – his are much bigger.
- When someone mentions charts, moving averages, head-and-shoulders patterns, resistance levels or whatnot, walk away. Run if you can, forget about your shoes.
- The market doesn’t care how much you paid for a stock or what you think is a “fair” price. So, when stock brokers or investment banks publish analysis about “fair” price, you know what craps they are talking about. But that’s their job, so don’t blame them.
- What markets do day to day is driven by random chance. Again, nobody knows what the markets will do – up, down or flat. Talking about stock movement is like bitching about 4-D or 5-D or lottery numbers.
- The decline of trading costs is one of the worst things to happen to investors, because it made frequent trading possible. Do you know that Interactive Brokers only charges US$1 in commission for 100 shares or 1 stock option? Decades ago, high transaction costs used to cause people to think hard before they acted, and in the process save them from being slaughtered.
- Most of what is taught about investing in school is theoretical nonsense. Proofs are in abundance. There are very few rich professors. To earn good money, they do mercenaries work. Dean of Columbia University Graduate School of Business, Glenn Hubbard, was paid US$150,000 by insurance arm of the Investment Company Institute for his academic paper. He also earned US$785,000 by serving on three corporate boards.
- The best investors in the world have more of an edge in psychology than in finance. Ever wonder how small-time speculators or gamblers are being lured into stock market casino every day without fail by “big boys”? Go figure.
- How much experience a money manager or fund manager has doesn’t tell you much. They can underperform the market for an entire career. And many have, but they still keep their job, because their job was not to make money for their clients (read: that’s you, dude).
- However much money you think you’ll need for retirement, double it, or better still triple it. Now you’re closer to reality, if you’re lucky.
- Professional investing is one of the hardest careers to succeed at, but it has lowest entry requirement and requires zero credentials. Even fishmongers can become “stock specialists”. That creates battalions of so-called “experts” who have no idea what they are doing. People forget this because it doesn’t apply to many other fields.
- The next recession is never like the last one. That makes recession interesting, and opportunities for Wall Street alligators. If you still don’t understand why recession happens by now, don’t waste your time reading financial columns, anymore.
- The majority of market news is not only useless, but also harmful to your financial health. Despite the fact that you’ve access to information faster than it was 40 years ago, you still can’t become a fraction of Warren Buffett or beat the market makers, so go figure why.
- If you have credit card debt and are thinking about investing in anything, stop and think again. You will never beat 18% to 36% annual interest, some on daily or monthly compounding.
- The most boring companies - toothpaste, junk food, milk powder, toiletries – can make some of the best long-term investments. That makes you think twice about getting MBA in investing, no?
- Stop thinking that your government, Central Bank, Federal Reserve, politicians and whatnot will solve your financial problems. They’ve bigger things to do – how to solve their economic mismanagement (quietly). It’s easier for you to focus more on your own well being instead of screwing it up, hoping and waiting for the government to step in to help you. And when government suddenly tells you the country’s fundamental is strong and urges you to trust them, you should start selling like crazy (*grin*).
- Trust no one who screams buy or sell, whether they are from CNBC or innovative stock trading software. When they tell you to buy, chances are “fucking high” they want to unload desperately. And when they tell you to sell, they want to buy every single shares that you’ve got. Plain and simple.
- Don’t fall in love with companies you invest. Companies die and new ones emerge. Treat them as prostitute or gigolo whom you’re interested to get orgasm, nothing more than that.
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