27 Jan 200000 Units, 4 Strategies, a 911 Carrera and the purpose of BigFatPurse
This is the 14th article I have written for bigfatpurse. My greatest fan (my wife. she has no choice. I force her to read all) has complained more than once that I am too long winded, provide too much details and that the stories that I use to bring out my points are not succinct enough and often leaves too much room for interpretation. She dared me to write another ‘long winded’ story.
For the benefit of bigfatpurse readers and at the risk of pissing her off, I shall share not one, or two, but three vignettes that happened recently.
A classmate just bought himself a Porsche 911 Carrera PDK. He has done well for himself since starting his own firm in 2006 and now owns a string of companies around the region. He had been mulling over the purchase for a long time. During the initial stages he was tempted to walk into the authorized agent and drive away with a spanking new car. It was the easy and painless way out for a newbie car buyer like him – not having to deal with owners and agents and inspections and all the one thousand and one intricacies of buying a used car. But he learnt fast, never stopped asking questions and gradually got into the spirit of car hunting. After a month and three rejected offers to different owners, our friend walked away with a fine specimen of a pre-owned that is just slightly over a year old. In the process, he saved way in excess of $100 000 off the listed price of a similar brand new car. He could not wipe the silly grin off his face, and I suspect as much of it is from securing a good deal as it is from his new vroom vroom car.
200 000 units.
Minister of National Khaw Boon Wan recently reminded the whole world via his blog that the most recent round of property cooling measures is necessary to soften to market and that there will be plenty of new supply coming online in the next few years.
The alternative of doing nothing and allowing prices to run beyond economic fundamentals will only invite a large and serious price correction in the future… … For those contemplating buying a property, please study these websites and be prudent. Do bear in mind that these current interest rates are unusual and the normal high interest rates will return in time to come.
I strongly urge everyone to read his blog to better understand the man. Like the parent who cautions his child against going near the hot stove and boiling kettle, this is the man who supposedly welds the greatest influence over our property market and we will be ignoring his advice at our own peril.
The Straits Times index has done exceptionally well over the recent months, returning close to 10% since mid November. Like the hot girl that walked up to the bar alone, it has created a stir and is starting to attract its fair share of interest. Many of my friends have made tentative forays into the market again after a layoff. A user left a comment on the blog sharing about the trend following strategy that he has been trading with, and how he has finally understood it after such a long time. He claims that the understanding is finally bringing him positive returns. I am skeptical and wonder if his stellar performance recently is due to his new found understanding or due to the favorable market conditions. I also wonder what will happen when the market decides to stop trending and range, and whether he would be able to obtain any returns from his trading activities if he were to utilize this strategy alone.
Alvin spoke at the How to Invest 2013 seminar held last weekend and shared four investing strategies with the audience. You can read more about it here. Each of the strategies demand different things from the investor, and what is crucial is being able to decide which one is a good fit for your own personality, commitment level, time frame and risk tolerance.
Warren Buffet’s partner and confidant Charlie Munger famously said ‘To a man with a hammer, every problem looks like a nail‘. My trading and investment universe used to be focused on Singapore stocks and nothing else. I now realize how lacking that could be. The markets are dynamic. Different strategies work well in different market conditions. Instead of going around hammering away, I now want to build a toolbox for myself with tools that fit me, and that I would be able to use them as and when I require.
When Alvin first approached me to write for bigfatpurse, I had my reservations. I knew that bigfatpurse was an excellent platform to reach out to retail investors, but writing and sharing my thoughts and lessons learnt in the market seemed extremely (too!) noble and run counter to my approach to making money. I have been gloating for years about the level of knowledge local retail investors bring with them to the market. I always say that many people trade simply because they can, not because they know how to. I love it when people focus on price and disregard value. I get excited when crowds turn up at showflats and get seduced by all the fancy fittings and interior designs and sign on the dotted line that very afternoon. My goal in life has always been to exploit others’ lack of awareness and irrationality for my personal profits rather than share and help them to become better investors. Markets are my passion, and I take pleasure in reaping the rewards. But it was Alvin who made me realize that I am missing the third and most important P in life, and that is Purpose.
Whether or not blowing big money on a 911, and whether that money could have been put to better use is debatable, but there is no doubt that my good friend has managed to see beyond price and bought value. By sharing this episode, I hope when it comes to investing, that you would not be ‘the man who knows the price of everything but the value of nothing’. (Oscar Wilde probably did not meant for it to be used this way but I am sure he won’t mind it too much).
Whether or not property prices will come down, when, and by how much is debatable, but again there is no doubt that our good Minister is doing all he can to ramp up supply, rein in developers and discourage home owners from being seduced by all the bells and whistles. The intent is unmistakable. By sharing, I hope potential investors can exercise rationality when considering their purchase and decide for themselves if there is really value in the market at this point in time.
And finally, whether or not bigfatpurse will succeed in our movement to create awareness and educate investors and traders, we have no idea. Your overwhelming response to the seminar moved us and will spur us to do better. We have thrown up four strategies and there are many more out there we have yet to discover and experience. By sharing, we hope that everyone will join us on the journey to become better traders and investors. We have made that our Purpose!