Are you affected by the recent market gyrations?

eagle SG

Don't. Follow your plan.

The following is an excerpt from The Intelligent Investor by Benjamin Graham:

A serious investor is not likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer. But what about the longer-term and wider changes? Here practical questions present themselves, and the psychological problems are likely to grow complicated. A substantial rise in the market is at once a legitimate reason for satisfaction and a cause for prudent concern, but it may also bring a strong temptation toward imprudent action. Your shares have advanced, good! You are richer than you were, good! But has the price risen too high, and should you think of selling? Or should you kick yourself for not having bought more shares when the level was lower? Or—worst thought of all—should you now give way to the bull-market atmosphere, become infected with the enthusiasm, the overconfidence and the greed of the great public (of which, after all, you are a part), and make larger and dangerous commitments? Presented thus in print, the answer to the last question is a self-evident no, but even the intelligent investor is likely to need considerable will power to keep from following the crowd.

It is for these reasons of human nature, even more than by calculation of financial gain or loss, that we favor some kind of mechanical method for varying the proportion of bonds to stocks in the investor’s portfolio. The chief advantage, perhaps, is that such a formula will give him something to do. As the market advances he will from time to time make sales out of his stockholdings, putting the proceeds into bonds; as it declines he will reverse the procedure. These activities will provide some outlet for his otherwise too-pent-up energies. If he is the right kind of investor he will take added satisfaction from the thought that his operations are exactly opposite from those of the crowd.

eagle SG

Another excerpt

Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr. Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers either to buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.

If you are a prudent investor or a sensible businessman, will you let Mr. Market’s daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.

The true investor is in that very position when he owns a listed common stock. He can take advantage of the daily market price or leave it alone, as dictated by his own judgment and inclination. He must take cognizance of important price movements, for otherwise his judgment will have nothing to work on. Conceivably they may give him a warning signal which he will do well to heed—this in plain English means that he is to sell his shares because the price has gone down, foreboding worse things to come. In our view such signals are misleading at least as often as they are helpful. Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.

dragg SG

how many people are genuinely rich enough to invest?

eagle SG

how many people are genuinely rich enough to invest?

My questions back are

How many people are willing to delay gratification for a few years just for investments?
How many people are willing to sacrifice rest time for a few years to earn extra for investments?
How many people are willing to spend massive amounts of time to study through books on how to invest?

I see many people with iphones around. In fact, the difference between an iphone with 3G plan vs a normal Nokia phone without 3G plan is sufficient to buy half a Starhub lot when it is at distressed prices. This would already yield nearly $120 per annum for a start.

Before the question on how many people are genuinely rich enough to invest, ask yourself if most of these people worked sufficiently hard and smart to start out.

Hard work always play a bigger role than mere complaints.

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Fcukpap SG

whatever the case, if you have the holding power, hold it...short term gains by selling off are simply common mistakes of investments....an investment on 1200 points years ago now stands at 2,800 points....sound financial management and patience calls the day...

dragg SG

there is always the issue of opportunity cost.

Fcukpap SG

of course, risks and greed go hand in hand and cost a fortune.

Rooney9 SG

gold will exceed $2000 an ounce soon due to uncertainty. there will be plentiful of markets like this in the next few years due to US and EU periphery debt.

eagle SG

gold will exceed $2000 an ounce soon due to uncertainty. there will be plentiful of markets like this in the next few years due to US and EU periphery debt.

$2000 an ounce is in USD.

With USD weakening against SGD significantly, the gains are likely not high for us.

Rooney9 SG

I heard Jim Rogers said, you should buy when people mass sold their holdings, you should stand opposite them. is he right? so when people sold USD, he bought it, same when people mass sold Euro previously, he went to buy more Euro.

he said he is not buying gold, as it is getting more expensive, but when gold drop, he will buy some more. at the moment, he has holdings in GOLD and he is not planning to sell.

Rooney9 SG

its a good time to buy shares now that they are low, but the question is nobody know if this is the bottom. if it continue to drop, you should buy. its a matter of time before shares rebound unless something catastrophic happened, like US went into recession.

eagle SG

You can’t control whether the stocks or funds you buy will outperform the market today, next week, this month, or this year; inthe short run, your returns will always be hostage to Mr. Market and his whims. But you can control:
• your brokerage costs, by trading rarely, patiently, and cheaply
• your ownership costs, by refusing to buy mutual funds with
excessive annual expenses
• your expectations, by using realism, not fantasy, to forecast your
returns7
• your risk, by deciding how much of your total assets to put at
hazard in the stock market, by diversifying, and by rebalancing
• and, most of all, your own behavior.

Domo Kun SG

BUT USD kept on dropping.

Fcukpap SG

behavioural finance is the crux of the matter...an investor with an intelligent grasps of crowd psychology and its delusions would make a better investor...

Rooney9 SG

behavioural finance is the crux of the matter...an investor with an intelligent grasps of crowd psychology and its delusions would make a better investor...

u mean people like jim rogers is a genius? u bet he is.