Investment Strategies 01 (Nov 08 - May 10)

[winston]

At the end of the day, it depends on how much investment knowledge the guy has.

If he's very investment savvy and knows what he's doing, the capital of Sin$10,000 may be adequate for some speculation.

In Singapore, one can also do contra trading. So assuming there's a 10% stop loss of max $2500 per trade, the position can be as high as Sin$25,000, which is not too shabby. And he can lose 4 times before he's totally wiped out ....

Hmmm.. it has been years since I last used Margin and Contra, that I've already forgotten about these two useful tools...

[lithium]

By the way winston, he thank you for introducing AMVIG.

Ha Ha .. then introduce him to this forum.

I guess he knows about this forum

[kennynah]

personally, i don't agree with "contra" policy. i think this has led to many people losing more money than they can afford. brokerages used to be very lenient and reckless in granting "lines of credit"... many years ago, many people could easily secure an uncollateralized S$200-500K credit line... for the purpose of contra trading...

contra trading for the undisciplined trader is waiting for disaster to happen....

posting margins for futures trade is actually a better risk management policy. besides the need to post money in trading account before a Futures trade can be transacted, brokerages will impose "maintenance" margin, which can be anything from 10%-40% of the initial margin; eg. To buy/sell 1 contract of e-mini SP500 Futures, at current practice will require some USD5,625 to be posted in the trading account, before the actual transaction can occur. beyond that, if that position suffers a loss beyond a certain amount, the trader must "top up" funds, commonly known as "margin call", failing which the brokerage has the right to liquidate that position at will. such "maintenance margin" helps minimise gigantic losses. it's an automatic "stop loss" trigger alert to the trader.

the point being that the trader/investor must possess the funds to trade futures.... in US, no contra trading in futures or stocks or any exchange traded underlying can be done without funds in the trading account... with some funds, one can achieve leverage, but it's only possible when you first show you have money in the first place.

imo, MAS is very shortsighted, reckless and irresponsible to allow for "contra trading" practice to continue...

unfortunately, there is no public accountability for many office bearers here... so...better ka ki gu ka ki (自己顾自己), ok....

[winston]

Ha Ha ... small capital but want to speculate, then how ?

So contra is one of the option. It's legal so use it if you know how to speculate ..

[kennynah]

just speculate the amount one has....not more than that amount...got $1K, play $1K....buy stocks to $1k and pay up...lose also lose at most $1K.... now, you can contra play by buying $200K of stocks without depositing a single cent in the trading account... tmrw, stock gap down 20%, that's $40K into the hole.... that fella's father rich man, maybe no problem...but if he is a working man with a wife and 2 young children, then jia lat liao loh.....

at least in casino, you play using cash.... no cash no play.... the same should also be applied to stock market...(leveraging story aside)

[lithium]

Here is another one, I don't know you guys like his posting or not. Please let me know if you don't want me to post it here.

Lithium,
You are welcome to post this writing to other forum.

I have a very straight forward stock selecting method for investing. I cannot violate my rules. This is the reason I didn't participate in the stock buying when HK market approaching the top in 2007.

If I use technical analysis method for stocks selecting, I should chased the stocks during the market top in 2007. But I didn't. I wrote in the forum during May 2008.

I use chart at the last step to check the price of stock for stock selecting but the chart is never the determining factor.

For stock selecting, point a. is the most important. That's why I list at the first. I should say that the business model, the business nature or the business type of the company determine my choice of the stock.

For this knowledge, I cannot expose in the forum and I don't expect I will teach someone. One of my classmate of my university found out my phone number from my friend and asked me to have a free lunch with him and his son. I knew his intention is to ask me to teach him and his son(now studying in Stanford ?) how to invest. I refused his invitation. I just asked him to read my posting in forum and send him the book list.

I study Warren Buffett many years and finally I understand his stock selecting method. But Buffett never expose his method in the public.
One of a stock market guru said that if you tell Buffett the name of the company, Buffett can tell you whether the company should invest or not.

Me too. I almost get all of the Buffett's stock selecting ability. When I study the business model of the company, I know should I buy the stock or not. Basically, I don't need the chart. My method is the same as the Warren Buffett method but I apply it in HK. This is a investing method, not a trading method.

Therefore, after I buy the stock, I will hold quite a long time period until the company violate my rules. So, the investing is very simple.

For you, I don't think a investing method is good for you. Maybe the combination of trading and investing is better because you can get the highest speed of capital growing in the first ten years. When your capital grows bigger, like 5 to 10 mil, you should consider investing method.

Thanks.

marcuse

[lithium]

just speculate the amount one has....not more than that amount...got $1K, play $1K....buy stocks to $1k and pay up...lose also lose at most $1K.... now, you can contra play by buying $200K of stocks without depositing a single cent in the trading account... tmrw, stock gap down 20%, that's $40K into the hole.... that fella's father rich man, maybe no problem...but if he is a working man with a wife and 2 young children, then jia lat liao loh.....

at least in casino, you play using cash.... no cash no play.... the same should also be applied to stock market...(leveraging story aside)

I agree with Kenny, contra play is worst than casino. You have only 3 days, can anyone time it correctly in such a short period?

That's why if fund size is small, and still wants to invest in stocks, your should be strong in FA and do buy and hold. Otherwise go for Mutual Fund to minimize your risk.

[winston]

It really depends on the situation.

If you dont have capital but KNOW how to speculate then Contra is an avenue for you.

If you dont know how to speculate, then you should not even be speculating with the Sin$10,000 in the first place.

[lithium]

Can anyone consistently speculate successfully in 3 days?

[winston]

1) If I use technical analysis method for stocks selecting, I should chased the stocks during the market top in 2007. But I didn't. I wrote in the forum during May 2008.

2) I use chart at the last step to check the price of stock for stock selecting but the chart is never the determining factor.

Hi Lithium,

Please do feel free to post any "strategies" that you think is useful.

My comments:-

1) If your friend is good at using charts, he would have first bought. Thereafter, he would have also sold when momentum was weakening.

2) I use Charts, WB, CANSLIM, Peter Lynch, FA etc. I'm not that good with any tool and I'm not too sure that using a combination of tools are much better than just using one tool. We just do our best with what we know.

Some people do swear by a certain tool. I have no problem with that. He will learn very quickly that every tool has it's limitations

Take care,
Winston