Sunday, 16 August 2015

The Real Life Roller Coaster

Spore market has been volatile in the past few weeks. Impacted by the recent China market plunge, and the unexpected devaluation of the Yuan, STI had fell around 12% off its peak of 3,539 few months ago. It has been a roller coaster ride.

I cant help but draw some parallel between the market conditions to the roller coaster ride that we enjoy so much in amusement parks.

In these theme park roller coaster, visitors queue up to join the ride. There is a starting point when people board the train, and there is an end point after the ride where people get off the trains, feeling exhilarated, thrilled, excited, or jelly-legged from the high speed twist and turn. Regardless of people's reactions: satisfied to have overcome their fear for fast ride, overjoyed and screaming for more, or pale-faced and throw up at the dustbin nearby, all passengers completed the ride and got off safely.

The process may be bumpy, filled with quick turns, sharp corner at high speed, passengers are still fully aware that they will complete the course, even though the lead-up and the anticipation to the ups and downs are very scary. Granted, visitors must do their part by taking all necessary safety steps such as fastening seat belts, hold on to the hand grips, adhere to the height requirements etc.

Is this quite similar to the stock market and one's investment experience?

In investing, we need to know our starting point: our current financial status, personal balance sheet, outstanding loans, monthly income, how far away from desired retirement age etc.

And the end point as well: certain portfolio size at certain age, desired growth rate per year, desired dividend every month etc.

When we have figured out our starting and end point, we go about formulating strategies, methods of investment to reach our goal. We conduct company prospecting, we read up on the economy, and determine tactical decisions such as frequency and amount to invest per month.

Should all these are performed properly, with all due diligence done, we should be reasonably confident that we will attain our goals someday.

But just like theme park roller coaster, the scary part is the process, while you are in the car/train going through the ride.

Every single market correction looks like the start of market crash that shakes your confidence and questions your conviction on decision made earlier.. Your reasoning and hypotheses about companies change because the price is falling. You wonder if you should stop monthly investment and wait for further drop. You ponder about selling to raise cash and hope to buy back at lower price later.

Just when you had deviated from the plan developed with much determination earlier which you swore to stick by, the market makes a u turn. And you revise your plan again to suit market conditions. This goes on and we end up always behind the curve, turning into our own worst enemy at worst time possible.

I wish to always remind myself. The market is like the roller coaster. There are bound to be ups and downs. As a participant in the market, i cant be changing my plans every time it twists and turns, because that happens so often which if I reacted every time, I will die of exhaustion. My plans and discipline gets thrown out of the window and I cant be certain of reaching the end point anymore.

I can only hang on tightly, grab the handle bar, fasten my seat belt properly once I boarded the train, and trust that the ride, although choppy, will eventually be over and I will disembark some time later and step on solid ground again. So long as we take safety precautions like what we do before the roller coaster ride, volatility shouldn't harm us.

Some of  my safety precautions are:
-thorough and diligent research on companies, competitors and industry
-buying reasonable growth of 10% to 20% annually at cheap price: PE < 10
-companies that pay dividends that make the ride more bearable
-monthly addition to investment fund that ensure ammo never runs out to buy cheap during market low. A step up will be sell off some of my high flying stocks to raise even more cash for rainy days
-Most importantly, the unwavering belief, discipline and determination to continue with my plans and have faith that I will reach there one day

The last point is the most crucial in my opinion, and probably takes years to hone and master. I am still learning and probably the best way to shore up the mentality is to go through a full bear market and emerge unscathed. Should i pass that test, I will consider myself one big step closer to being a real investor.

So, the current market pull back is nothing but one of the many mini plunges in this long long roller coaster ride.

Talking about raising cash, I had recently liquidated part of my holdings in Riverstone and realised a 230% profit. It has been a good 2.5 years ride with Riverstone so far. With the sale, I have recouped my capital and my Riverstone shares are practically free. I reduced its weightage in my portfolio, raised cash for rainy days or better buys, and built mental fortitude to hold on to the shares.





1 comment:

  1. Ass...saya tidak menyanka kalau saya sudah bisa sesukses ini dan ini semua berkat bantuan MBAH RAWA GUMPALA,saya yang dulunya bukan siapa-siapa bahkan saya juga selalu dihina orang dan alhamdulillah kini sekaran saya sudah punya segalanya,itu semua atas bantuan beliau.Saya sangat berterimakasih banyak kepada MBAH RAWA GUMPALA atas bantuan nomor dan dana ghaibnya,alhamdulillah kini saya sudah bisa membuka usaha kembali yang dulunya pakum karna masalah faktor ekonomi dan kini kami sekeluarga sudah sangat serba berkecukupan dan tidak pernah lagi hutang sana sini,,bagi anda yang punya masalah keuangan jangan sungkan-sungkan untuk menhubungi MBAH RAWA GUMPALA karna insya allah beliau akan membantu semua masalah anda dan baru kali ini juga saya mendaptkan para normal yang sangat hebat dan benar-benar terbukti nyata,ini bukan hanya sekedar cerita tapi inilah kisah nyata yang benar-benar nyata dari saya dan bagi anda yg ingin seperti saya silahkan hubungi saja MBAH RAWA GUMPALA di 085==316==106==111




    (((( BUKA BLO DANA GHAIB DAN NOMOR GHAIB MBAH RAWA GUMPALA ))))







    Ass...saya tidak menyanka kalau saya sudah bisa sesukses ini dan ini semua berkat bantuan MBAH RAWA GUMPALA,saya yang dulunya bukan siapa-siapa bahkan saya juga selalu dihina orang dan alhamdulillah kini sekaran saya sudah punya segalanya,itu semua atas bantuan beliau.Saya sangat berterimakasih banyak kepada MBAH RAWA GUMPALA atas bantuan nomor dan dana ghaibnya,alhamdulillah kini saya sudah bisa membuka usaha kembali yang dulunya pakum karna masalah faktor ekonomi dan kini kami sekeluarga sudah sangat serba berkecukupan dan tidak pernah lagi hutang sana sini,,bagi anda yang punya masalah keuangan jangan sungkan-sungkan untuk menhubungi MBAH RAWA GUMPALA karna insya allah beliau akan membantu semua masalah anda dan baru kali ini juga saya mendaptkan para normal yang sangat hebat dan benar-benar terbukti nyata,ini bukan hanya sekedar cerita tapi inilah kisah nyata yang benar-benar nyata dari saya dan bagi anda yg ingin seperti saya silahkan hubungi saja MBAH RAWA GUMPALA di 085==316==106==111

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