methinks it all depends on the net position of the portfolio at the end of the day. Sometimes, if you have cash, buying in deep returns far better than cutting loss, especially if the stock is already at a bottom/near bottoming. It all depends on method, what you're prepared for. Can't go chasing after all the colourful balloons and neglect the one in your hand.

The final aim should determine everything.

generally, i agree though: an early stop loss is much better than a DCA.

--------------------------

So what is meant by the final aim: ie, basic money management:

1) How much do you need to make for retirement? The quantum sum and the no: of years. 

2) Hence, how much must you make every year/month?

3) From there: how much risk do you need to take?

And from the above three questions, one outlines a portfolio: allocation, strategy, targeted returns, aims. Try it. For those of you intending to be serious investors for the long run: Don't go for "kopi money" and neglect the big picture. ie, never take unnecessary risk.

What is unnecessary? Easy: question for yourself, what is a need, what is a want?

Do you want that couple of 100s that can be potentially scalped daily? Sure. We could always do with more money.

But, in light of a longterm folio and longterm aims, do you need that couple of hundreds, do you need to take that additional risk, such that you miss the chance of buying your longterm counter, being low in cash and stuck in too many impulsive 'punts'? Because really, how many retailers out there are excellent, consistent day traders?

Be realistic, be honest.  

The answer to the final two questions above determines whether or not you take the plunge each and every time.

i passed by a bank yesterday. they give computer terminals for people to watch their markets. looking at the group of old retirees staring at the screen, with their notebooks beside them, can only say that i felt sorry for them. all clutching at losses.

and the irksome thing is this: yes, it's partly their fault, greed for getting into "hot" stocks. but can one blame a child for reaching out for a sweet, when he's not been told that there are wolves around?

just thinking: if they knew the truth of the market place, isn't that better.

But i guess. that's the pecking order of the market place. Retailers are bottom-feeders. the BBs need to keep them dumb, keep them stupid. Because only then can they win.

To follow the trend is to follow the global flow of money. Just speaking for Asian equities alone now:

So Freddie and Fannie are bought and sold out. Lehman has collapsed. Oil and gold are collapsing. What are we to make of all this?

In the backrooms of power, kingmakers decide where the money will go. There are princelings, there are kings, and then there are kingmakers. Who ultimately controls and possesses the most money?

The near-sudden collapse of the Euro, the collapse of oil and gold are no coincidence. I've been watching it since July. Federal intervention has its marks all over. And only the wilest of the banking institutions managed to ride with the trend.

Quite simply it is this: governments are kingmakers. the foreign BBs--hedge funds and legit banks--are kings. the local BBs are princelings.

To shore up the all important US economy, it is necessary that the USD strengthens, it is necessary that oil and gold goes down. So government acts against the BBs. Where will oil fall to? As i posted earlier before: Hedge funds have taken massive longs on commodities, to make up for subprime losses. What they did not count on was government selling them out. When--at its peak--96% of funds have taken longs, if you have the funds, and need to raise funds badly, what do you do? You short down the market.

The critical point is oil at 100. Because most funds have put stop losses at 95-98. So what the kingmaker needs to do: short oil down to below US$95.

This will cause massive unwinding of positions by the hedge funds.

And the ball passes. So the kingmakers have made their money. The kings hold losses. What will they do?

Asia is a free market. Two choices: short, or long.

The easiest way for kings to make money is to pass the buck onto princelings. So what you can likely expect in the local market in the coming two months: a further tanking, alternatively, a very, very rapid recovery, that then peters out.

Which way it goes will be determined by the volume. if more local people are keen to sell, you can expect a ramp up. If more local people are keen to buy, you can expect a selldown.

What i am sure of is this: if it is a ramp, most retailers will miss it. So what retailers, as bottom feeders, need to make sure of: do not get caught out by the princelings.

Because the one rule in trading is this: Never be left holding the baby.

And yes, crazy_fave. There is money in one place: forex. Stocks do not give an adequate risk/reward ratio any longer. At best you get a 1: 1 risk/reward ratio. So the simple choice is to stay out, wait for long term. The way if, you bought in 2004, and sold in 2006-7, you'd be a winner no matter what you bought. Keep eyes on the longterm goal, and ignore the rest of the sound and fury, opinions that you *should* do this, or *should* do that. What matters is longterm: what is your net position.

Hahaha... maybe it's better if you take him as your sifu...

I am happy with my own sifus... hehehe...

Anyway, this Mr Choo is obviously a more polished guy than just any cashier...

One need not have the full amount to start retiring...

If one waits to have the full amount then start retiring, one may only retire for a very short time.


But in Mr Choo's case, once he has made suffiicient seed money, he can start retiring while in the meantime continue to relax and make money in his hobby of forex playing (since he is very good at it).

 

 

To retire at age 26,one needs S$5 million.

bear in mind that he or she can probably live up to 80 years old.So he or she need to cater for another 54 years.

The story of Mr. Choo is very inspiring to all.

I should think Mr. Choo should stick to what he is good at, namely forex play, rather than going into business ventures. The basic idea of all businesses is to make money.

With the money good he continues to make in the market, he can plan how to live his to the most. If one has a business, one still has to slog and have not much time to do any real living.

But Mr. Choo has shown us he can do it...

"I want to make enough money to retire by 26"

Choo Koon Lip turned his back on his salaried job.

Fri, Sep 12, 2008
The New Paper

By Desmond Ng

He was jobless, broke and demoralised. To make things worse, he faced endless criticism from friends and relatives about his unemployed status

It came to a point when Mr Choo Koon Lip decided that he had had enough.

In September last year, he boldly declared in his blog that he would make enough money to retire in a year's time, by the time he was 26.

Said Mr Choo: 'It was a bold statement to make, but my intention was to let people know that I could live comfortably without any financial worries. I think I have achieved that.'

Silenced critics

Mr Choo left his full-time job as an advertising sales manager at a publishing firm in April last year. He was then drawing a monthly salary of about $2,800.

Since then, he has not looked for another job, but instead has been trading in the foreign exchange market.

In the last year, Mr Choo has made a tidy profit of over $100,000, or an average of $10,000 a month.

Not bad for someone who was considered a deadbeat by his peers.

Said Mr Choo: 'It was a message to my peers that I could survive without holding on a full-time job and taking the traditional route of being a salaried worker.

'When I quit my job, I faced a lot of scrutiny from friends and relatives who thought I was a slacker for not looking for a new job. A friend commented that I was not really working and not taking care of my career. I got angry and started the blog. I felt like an outcast then.'

The National University of Singapore (NUS) graduate, who has a degree in Applied Mathematics, has always preferred the road less travelled.

His parents wanted him to be a maths teacher, or work in a bank, but he would have none of that.

He first started options trading in 2004, as a first-year student at NUS. But he lost $25,000 within two months. Undeterred, he pressed on and recovered his losses.

A year later, he started his own publishing firm, Pixie Media, which produced the magazine Snag in September 2005.

But it bombed about a year later in December 2006, due to poor circulation and advertising, incurring a debt of over $70,000.

It was a big blow to Mr Choo.

'I had to borrow money from my younger brother. It was quite pathetic and I also had to ask him to treat me to lunch from time to time,' he said.

Mr Choo, who graduated in June 2006, then took on a full-time job in February last year as an advertising sales manager but left after two months.

'I went to see a new $1.3 million condo in town. I was calculating the initial deposit of about $260,000 and realised that it would take me a very long time to save that kind of money.

'After realising that there is an income ceiling as a salaried worker, I decided to call it quits,' he said.

Humble background

He has been jobless since last April.

Mr Choo, who is single, currently lives in a three-room HDB flat in West Coast with his parents.

His father, 54, is a welder while his mother, 47, is a factory operator. His 23-year-old brother is a business undergraduate at the Singapore Management University (SMU) who's also runs his own online sea shells business.

Mr Choo then turned to forex trading. He also started a trading academy in May this year to teach investment strategies.

His lessons are conducted both online and in a serviced office, but he was quick to add that there are risks.

Mr Choo's mother, Madam Yong Siew Lan, said she always had faith in her son.

She said: 'He has always been driven since young. I wanted him to be a teacher but he has his own path to follow.'

This article was first published in The New Paper on September 10, 2008.

Livermore... :)

What you said is what I call wise words of wisdom...