InvestIdeas

After a break of some time, we are please to introduce Trendlines this week:-


1) InvestIdeas: What can you tell us about your background ?

I am an engineer by training, in my mid-30s, and a part-time trader/investor mostly based in Singapore. Learnt investing/trading the-DIY-way.

Started out as a Value Investor. During the crash of 2007, realised the importance of sentiment in the market, and branched out into trading.

After initial success, paid back all the trading capital and more, due to excessive trading and the lack of a money management strategy. Those were my "tuition fees". If one wants to learn to swim in water, one has to swallow a few mouthfuls of it at least

Realised that money management strategies + portfolio allocation is more important than knowing market direction, and started researching them. Elliott Wave Theory gave me an intuitive framework for the market, and I have not looked back since.


2) InvestIdeas: How long have you been investing / trading ?

Investing for about 5 years, and trading for 3, and always learning. A newbie really, compared to the wealth of experience on this forum.


3) InvestIdeas: What is your Investment Strategy ?

It's a Mixed Bag. Both VALUE INVESTING and TRADING have a common underlying theme - markets react to SENTIMENT in the short-medium term, and FUNDAMENTALS in the long-term.

(Ben Graham - "In the short run the market is a voting machine. In the long run it's a weighing machine.")

The Elliott Wave Theory(EWT), first developed by Ralph Nelson Elliott, essentially describes market sentiment in price form on a chart. This method resonated with me inuitively.

Coupled with a few other indicators and simple money management strategies, this has become the framework behind my trading methodology.

Initial Allocation from Savings (Will change with age)
40% - Unit Trusts (Active)
40% - Stocks/ETFs (Passive)
10% - Trading
10% - Cash

Unit Trusts -> All of them in emerging markets, as the only direction in the long-term is UP, and so the surest way to participate in the growth. I do medium-term rebalancing(every 6 months or so) between individual emerging markets & money market funds, using EWT.

Stocks -> Buy & Hold Dividend yielding stocks/reits, with a few Growth stocks thrown in. But, i never buy a stock without reading its chart.

Trading -> Mostly using leveraged ETFs / Warrants. 1-2 trades a month(best ideas), maximum 4, to supplement investment income.


4) InvestIdeas: What are your favorite books on trading/investing?

Elliott Wave Principle, Frost & Prechter
How to Make Money in Stocks, William J. O'Neil
Long-Term Secrets To Short-Term Trading, Larry Williams
The Intelligent Investor, Benjamin Graham
Fooled by Randomness, Nassim Taleb


5) InvestIdeas: What are your investment vehicles ?

Investment: Unit Trusts, Stocks/ETFs, Property, ILP
Trading: Leveraged ETFs, Warrants, Stocks


6) InvestIdeas: What has been your best investment so far?

- I have to say, it is the time spent studying and applying Elliott Wave Theory.

- China was one of the first markets to recover after the recent crash. Piled into selected Chinese instruments in Jan-09 at the beginning of the Elliott Wave A correction upwards, and got out in May-09 (too early), for a 50% profit.


7) InvestIdeas: What has been your worst investment?
Bouyed by initial success (beginners luck?), I started trading excessively. This coupled with leverage eventually erased all my trading capital and more.

Learnt to enforce trading rules & limit my trades to the best opportunities only. (Value Investing parallel: Swing only at the best trade setups, market's always there for you)


8) InvestIdeas: What advice do you have for a young/newbie who is just starting out ?

a) Know thyself, Know thy risk appetite, Know that you need to lose to learn how to win. (Figure out your strengths & weaknesses)

b) ALWAYS have a money management strategy before the trade. (Stop-loss, Trailing stop-loss, Profit % target, etc)

c) Take responsibility for your investing/trading decisions. Collaborate but do your own research.

winston wrote:...

After initial success, paid back all the trading capital and more, due to excessive trading and the lack of a money management strategy. Those were my "tuition fees". If one wants to learn to swim in water, one has to swallow a few mouthfuls of it at least

..

Trendlines,

Thanks for sharing your charts and insights.

The "tuition fees" reminds me of this scene...and I guess it is a path where we have to go through in order to appreciate the wisdom behind.

Agree agree agree 100%! Really great stuffs.

I love to use trendlines as much as you do. It works exceptionally well for the past 1 year. But must bear in mind market is not always linear.

At this young age, maybe you can be a bit more aggresive, why believe in fund managers? I believe you more than those unit trust fund managers. Haha just ignore me, I'm a gambler.

Regarding Elliot waves, I always try to count lei count hui, count dou tau tong. Maybe I have not dwell into it yet. Maybe I should read that book you recommend. But I'm planning to read intelligent investor first. Because 1 day when our fund size reach multi million (in my dreams) we can't trade that much anymore.

Very happy to have you in this forum. I think we can have lots of fun.

Thanks for sharing TL!!!

We are all here to learn from each other.

i feel like i know you already

welcome...enjoy....HUat HUat

iam802 wrote:The "tuition fees" reminds me of this scene...and I guess it is a path where we have to go through in order to appreciate the wisdom behind.

A picture speaks a thousand words.

TL,

Your blog is my bookmark.

Thanks for sharing!

Hi TL,

Many thanks for sharing.

All the best.

Tony Lim

Thank you iam802, lithium, MM, K, SS, TL for your welcome msgs.

lithium wrote:At this young age, maybe you can be a bit more aggresive, why believe in fund managers? I believe you more than those unit trust fund managers. Haha just ignore me, I'm a gambler.

Lithium, some fund houses in Emerging Markets do outperform the benchmarks all the time, even after their mgmt fees. As for ETFs, most of them traded on SGX involve multiple currency risks (traded in US$), i prefer to use selected UTs to ride the medium-long term trends in emerging market indices.

lithium wrote:Regarding Elliot waves, I always try to count lei count hui, count dou tau tong. Maybe I have not dwell into it yet. Maybe I should read that book you recommend. But I'm planning to read intelligent investor first. Because 1 day when our fund size reach multi million (in my dreams) we can't trade that much anymore.

Elliott Wave Theory is not an exact science. Reading waves in real-time requires one to take into consideration volume, momemtum and sentiment trends, along with technical tools such as trendlines and ratios. Chart's must be read in different time-frames to get the best results. It is a good tool to guage the maturity of a trend.

Probably a good idea to learn from Uncle Ben(not the helicopter one) first. I firmly believe that trading cannot be one's sole investment vehicle, unless one is a full-time trader. Moreover, there will be too much pressure to perform, which works against a trader's psyche.

Do you need a trendline to tell you where the market is heading? hehe

Welcome welcome! Hope to hear more from you!

Huat arh!
Cheng