Question on war chest and market timing

Work for 6 years, accumulate enough money in CPF, bought first condo with wife(no timing of market), collect rent for 2 years, sold it. Capital gain + savings = first small pot of gold.

Bought a condo again last year (no timing of market). Increase investment in equity.

Adopt a long term view for property investment and any time can be a good time to buy.

(19-03-2015, 08:00 AM)ValueMushroom Wrote: Work for 6 years, accumulate enough money in CPF, bought first condo with wife(no timing of market), collect rent for 2 years, sold it. Capital gain + savings = first small pot of gold.

Bought a condo again last year (no timing of market). Increase investment in equity.

Adopt a long term view for property investment and any time can be a good time to buy.

Base on observation, timing is important, but more important one is value.

I saw property investor managed to get a undervalued property, during a peak, redeveloped it and rewarded handsomely shortly later.

Right on timing is difficult, and depends on luck, but right on value is a skill, which can be sharpen over time, and effort.

I reckon the same applies to equity investment.

I think a lot of people having this thinking of striking it big ie get their first bucket of gold. Their belief is probably that once getting this pot of gold, things will become easier.

To some people, it might mean queueing up to buy toto to win it big. To others, it might mean betting it all on a single counter, hopping that it will multibag and then can retire liao.

The truth and reality of it is far from above.

Since this is an investing forum, I shan't delve onto toto and 4d.

Just a day or two ago, I saw a fellow forumer said that he was wipe clean, I believe it is at least 200k and above sum, by a single counter China Oilfield.
Like many others, he too, was looking to his first pot of gold, hoping that this counter will double or even triple, then life would probably be easier.

Think again.

1) to win big in a single counter, which doesn't have strong fundamental history and which doesn't pay a dime is far far from an easy feat. one needs to have the money, the conviction, the guts to buy it all at that price and having the patience to wait. every passing week or month of waiting, be it bearable or unbearable, means that the reward needs to commensurate upwards with all this waiting.

2) even if that sort of counter does multibag, unless one makes enough to retire, if one would to repeat this again, it is high doubtful that he would be lucky the second time round.

3) its far easier to buy into a few wonderful counters with pays discernible increasing dividend trend, at an acceptable price and let compoundation do its 8th wonder. It's actually quite fast to accumulate wealth over time. And one can sleep in peace when this is happening.(that's impt)


my 2 cents.

^^ I actually agree with Paullow but the issue is timing (pun intended)

When we first start out and young with little to lose and little obligations, it might be worthwhile to search for that pot of gold because having a base is important to compound. As we age the remaining compounding years shortens and your opportunity cost for mistakes increases. Question is how do u get that pot of gold? By luck or hard work or leverage? I don't propose recklessness either.

And I don't suggest people aim for retirement with pot of gold. That's called laziness ie trying to hit a quick one to stop work

With a capital base then one can have something to grow on. $10k starting capital and $100k is very different. Thereafter what Paullow advocates is very sound wisdom.

(19-03-2015, 11:30 AM)specuvestor Wrote: ^^ I actually agree with Paullow but the issue is timing (pun intended)

When we first start out and young with little to lose and little obligations, it might be worthwhile to search for that pot of gold because having a base is important to compound. As we age the remaining compounding years shortens and your opportunity cost for mistakes increases. Question is how do u get that pot of gold? By luck or hard work or leverage? I don't propose recklessness either.

And I don't suggest people aim for retirement with pot of gold. That's called laziness ie trying to hit a quick one to stop work

With a capital base then one can have something to grow on. $10k starting capital and $100k is very different. Thereafter what Paullow advocates is very sound wisdom.

I concur, except the "timing".

Starting point is important, as important as the starting early.

Quote:3) its far easier to buy into a few wonderful counters with pays discernible increasing dividend trend, at an acceptable price and let compoundation do its 8th wonder. It's actually quite fast to accumulate wealth over time. And one can sleep in peace when this is happening.(that's impt)

It doesn't even have to be wonderful. Just acceptable.
If you are happy with a 3-5% dividend with enough MOS in EPS and NAV, there are plenty around in SGX with reasonable period of track record of dividend payment.
Many of them have no debt, lotsa cash, low PE and decent dividend payout.

(19-03-2015, 11:30 AM)specuvestor Wrote: ^^ I actually agree with Paullow but the issue is timing (pun intended)

When we first start out and young with little to lose and little obligations, it might be worthwhile to search for that pot of gold because having a base is important to compound. As we age the remaining compounding years shortens and your opportunity cost for mistakes increases. Question is how do u get that pot of gold? By luck or hard work or leverage? I don't propose recklessness either.

And I don't suggest people aim for retirement with pot of gold. That's called laziness ie trying to hit a quick one to stop work

With a capital base then one can have something to grow on. $10k starting capital and $100k is very different. Thereafter what Paullow advocates is very sound wisdom.

Well, we can always set aside money for a "one-shot", while slowly accumulate from the slower returns from the compounding effects as mentioned by Paullow. At least 2yrs ago, there were already talks about market crashing, and till now, it has not happened yet. For those who are sidelined 2 yrs back, they will be losing out as their cash will be earning them insignificant return.

Furthermore, if someone depends much on that "one-shot", and the "one-shot" ends up on the wrong counter, the consequence will be terrible. I know many here are great investors who know where to aim, but as a terrible investor myself, I will rather depend more on the compounding effect to make my money. I had too many bad experiences in the past...

Thanks for all the input.

Large capital base will be an advantage. So is starting early. But for people who start only during their mid 30s or 40s, only have limited capital, have limited inflow of fund monthly due to family commitments, what option do he have? (Lets not talk about the career part but focus on what other alternatives that is available)

Should he time the market by waiting out for a recession or should he just invest in some good dividend yield counters and keep re-investing the dividends to grow slowly with whatever number of years he had left?

Market timing or consistently ploughing cash into good dividend counters is always an issue I am thinking about. Currently walking the middle road now by staying partly cash, partly invested. Even so, ratio of how much of each is another matter I need to keep thinking about...

Anyway, how much will you define as the first pot of gold? 1 million?

I thought it would be a joke if I were to disclose that I have nearly 50% of my portfolio as cash, but I realised that I am not alone in the forum.

I keep a significant size of my portfolio as cash for few reasons:

(i) I am heavily indebted with my HDB mortgage, my mortgage interest is fixed as 1.2%/1.6% for the next two years, my cash savings is not sufficient to pay off the mortgage but earn me 1.5-2.0% interest, so I am not losing

(ii) I time the market, Mr Buffet did the same. With the last bear market left approximately 6/7 years ago, I am expecting it to come back any time soon

(iii) As Paullow said, I want to "striking it big". But I am on a more prudent approach, my aims is to strike historically stable high-yield play when they are much cheaper, of course with diversification

(iv) There are not much undervalued stocks around

(v) I want to keep high liquidity so that I can afford a property for investment when time and price is right

There is no right or wrong with one investment strategy because of different risk appetite. For me, my appetite is not good as the food been offered now is not so nice and not really suit my taste.

(19-03-2015, 01:01 PM)pubster Wrote: Anyway, how much will you define as the first pot of gold? 1 million?

I think first pot of gold is the amount that can generate dividends/interest income "passively" to pay for your living expenses. Like in the RDPD Cashflow Game, can exit rat-race when passive income > fixed recurring expenses.

So using yeowiki/paullow hurdle rate of 3-5%, probably $1 - 1.5m, assuming $50k living expenses.