Sry... but to be truthful, to me, your uncle earning in a bull
market is not ability at all.
I'm more of FA + TA person combined. In 2007, valuations were
sky high, and it's damn dumb to enter. Upside potential was so low,
and downside was so high...
Even using TA, one can see that STI has broken the trendline
support at that time, so I doubt your uncle really know how to
read. I don't even dare to say I can read well... Playing with part
knowledge in this area is something very dangerous... Greed and
emotion had overtaken objectivity.
And about the relative with the most recent meltdown in March,
he/she must have played with money he/she didn't have or need in
short term. And that's also dumb to me... You must hv the money to
hold.
I got caught in the most recent meltdown as well, seeing my
portfolio going down by 40%. But it was already good valuations,
and I held on till it is positive now. E.g. Capitaland, many would
tell me my price of $2.26 was expensive back then, and they are
waiting for $1.50. Right now, many are saying $3 is cheap. It's
like... wth?
In short, they didn't follow your 3 points of extremely sound
advice. Especially part 3 about cannot be greedy.
well, i agree with what you said.
regarding my uncle, each has their own ways and means on reading
the market that they think is right, until they got burnt that is.
the truth is no one is fully aware of the blindspots that exist. no
one has a water-tight, foolproof reading on the market,
including you.
my brother devise his own `software' to analyse wall street as
well. i steer clear of chatting with him on his methods because i
want to keep our relationship going. as you may gather, i disagree
with his methods as i have my own views as well, which is more
conservative and grounded.
the problem is when one gets carried away thinking that they
have the market covered, that's where things can go wrong. it
happened to my uncle. my brother hasn't seen the worst yet but the
way he's blogging about how accurate his read of the market it, it
worries me.
i had my fair share of boo boos. a few years back, i
bought a little known stock called human genome sciences from wall
street on the advise of my `learned' buddy who's working at ubs.
paid something like US$50 per share. i was overcome by greed when
my buddy told me that it is a us$100 stock in 12 months. that
company works on finding cure for a number of critical,
chronic illnesses. so, it is a high risk stock, which i am
aware of. still, i mean, how many have heard of a cure for
cancer (yet)? i should have known but i still went in `blind',
probably blindsided by the prospective gain. i have never heard of
the company other than a few pdfs my ubs fren sent nor am i
familiar with the medical industry. i exited the stock after it
went below $30/share, knowing that i will probably not be able to
salvage anything. luckily, i can take the hit.
as for my wife's uncle, i agree it's pure greed. when the sti
was booming, a blind person would be able to pick the winning
counters. so, he got carried away. what irks me is he never learn.
the sti has a good run of late, and he's back into it. i explicitly
told my wife if he ever get himself into the situation like 7
months ago, i am not giving him a single cent. once bitten, twice
shy.
