Imagine you love oranges (or maybe you do) and post chinese new year, they are selling at $0.10 each only. You'd WHACK and buy a basket of them right?
In every "SALE", you are the WINNER...
Simply because you've taken "advantage of a situation" and gotten a Great deal!
But for Mr Market... be careful of using "SALE".
Especially if he is on a Bear mood because cheap can also get cheaper.
It's not so fast that you are the winner...
Story of SIA: Once $20 a share
Back in my uni days when I was doing a lot of swing trading, SIA was quite a market darling.
Back then, corporate travel was booming, budget airlines were still in infancy etc...
SIA was quite simply one of the best brands in airlines.
Accounting terms, it had tons of "intangible asset" in brand you know...
It was $20 a share in 2007, I kid you not, check the graph below from yahoo
Today, SIA is languishing at around only $8 a share.
It is still one of the best airline brands in the world.
But do you consider it a "SALE" to buy it now?
"SALE" in investment is hard to define
Something important to share with you, investment is really like a "never-ending game".
There's really no line where by past it we win...
So the search for profit is ONGOING.
One person sells the share to another person based on "Mr Markets Price"...
Have you thought of this: Why does a person sell in a bear market?
Why does a person "cut losses" and give you a "SALE"?
We all have heard that at the market bottom is where most investors sell out....
Bear markets are like dementors
Truth be told, I've only seen Harry potter movies, not read the book. =P
I remember these dementors... they suck out the happiness of anything. Right?
I invested through the global financial crisis (GFC) of 2007-2009.
It was hard.... Mr Market sucked out any happiness (just like the dementors) from the investors.
At least that was my memory of it. I'm sure an experienced investor who have profited from it tremendously.
But I was new then. Maybe you're new now, I don't know..
Mr Market when bear in GFC and sucked out all the happiness - "SALE"?!?
This is key: Full GFC took 17months and a total of 53% loss.
It was smarter to predict how ridiculously low it can go to. Everyone was let me WAIT FIRST! Sounds familiar now?
Those who didnt sell earlier regretted it quietly... No one at the bottom talks about buying into a "SALE".
Serious, that was my CNY 2009 talk with my uncles.
Let 53% loss sink in abit.
If you invested $100,000, you'd have lost $53,000.
No low cost method, roboadviser, auto-rebalancing, all weather fund really matters at all.
Everybody lost... at least on paper.
What if you've invest only on the day Lehman Brother's Collapsed?
Congrats you avoided 1 year of bear market misery.
Lehman Brother's collapse was such an iconic moment of the GFC bear market.
Was it really a "SALE" moment then?
Sorry it wasn't.
In this example above, your $100,000 would have lost $38,000 (38%!) AND JUST IN 6MONTHS!
What?!? Serious, check the charts.
The pain Mr Market can inflict on all of us cannot be underestimated.
Don't celebrate a "SALE": Pray to the investment mountains
I want you to win. That's why this post and this reminder.
I wished I was wiser before GFC but some lessons are hard to understand. This by Benjamin Graham was something I also read before and if you haven't here's it...
- Is emotional, euphoric, moody
- Is often irrational
- Offers that transactions are strictly at your option
- Is there to serve you, not to guide you.
- Is in the short run a voting machine, in the long run a weighing machine.
- Will offer you a chance to buy low, and sell high.
- Is frequently efficient…but not always.
He is qualified to throw names at Mr Market.
For the rest of us, let's be humble and respect Mr Market first.
It's like the porters going up Mount Everest. You know those Nepal guys who carry the bags and face extreme dangers?
They are humble because going up the mountain is not for glory but for survival.
Before every trip up, they pray first. No matter how many times they have survived a hike because that very hike, could be the last.
Find someone you feel is experienced
Of course, I'd love to throw my name into the ring. Investment advisory is a core part I've helped many private clients for their financial planning and retirement planning.
At least, I've also survived GFC once and armed with that experience to help you.
These are some video sharing on investment, if you like them check them out!
Otherwise, find someone experienced.
Don't listen too much to the news who love to exaggerate...
Don't listen to forumers who may be also newbies...
Don't celebrate a "SALE" prematurely.
Be humble, expect a hard battle when it comes to investing. Good luck!