55 SG Financial Blogs that Actually Inspire You to Think Rich and Grow Rich

(05-08-2015, 10:18 PM)CityFarmer Wrote:

(05-08-2015, 09:31 PM)weijian Wrote:

(05-08-2015, 02:47 PM)Musicwhiz Wrote: It is therefore important to always ensure one takes care of the worst case scenario through downside assessment and analysis - you cannot completely eliminate losses but it is possible to minimize their impact on your portfolio. And oh yes, dividends do help too - so make sure the companies you analyze and buy will be able to weather storms and still generate FCF and pay a dividend*.

I find it especially amusing when one's way to deal with the worst case scenario is 'if it continues to go south to XXX (price), i will average down. If it continues to fall another X% and i run out of bullets, then i will just hang on for the next X years. Anyways, based on the XXX dividends that i will receive, i will break even after Y years'....These are the new fools in the market.

The old fools know better after making so many mistakes (and survive and prosper for some). They abhor 'average down' because they understood the financial and emotional pain of catching that failing knife. They respect the Market because it has been 1 of his/her greatest humiliator based on the surprises it never fails to dish out every time. For example, our residential 'old fool' forummer GG has played this game long enough to hypothesize that the end of the O&G cycle will come if our 2 biggest rig builders merge in their final attempt to survive...This is what i would call a worst case scenario insight/planning.

Worst case, is usually happen at the tail end of the bell curve, which is un-predictable, and a black-swan event. The last encounter of mine, is the Japan Earthquake, followed by a Thai Flood. I have ever imagined the two will happen months apart, and affecting the auto and electronic market in sequence, of a company I vested then.

What a lesson.

For those events, generally the affected companies recovered fairly quickly and strongly from it, didn't they? It didn't have the contagion effect that lingers on after the countries recover.

(06-08-2015, 05:29 PM)arriyana Wrote:

(05-08-2015, 10:18 PM)CityFarmer Wrote:

(05-08-2015, 09:31 PM)weijian Wrote:

(05-08-2015, 02:47 PM)Musicwhiz Wrote: It is therefore important to always ensure one takes care of the worst case scenario through downside assessment and analysis - you cannot completely eliminate losses but it is possible to minimize their impact on your portfolio. And oh yes, dividends do help too - so make sure the companies you analyze and buy will be able to weather storms and still generate FCF and pay a dividend*.

I find it especially amusing when one's way to deal with the worst case scenario is 'if it continues to go south to XXX (price), i will average down. If it continues to fall another X% and i run out of bullets, then i will just hang on for the next X years. Anyways, based on the XXX dividends that i will receive, i will break even after Y years'....These are the new fools in the market.

The old fools know better after making so many mistakes (and survive and prosper for some). They abhor 'average down' because they understood the financial and emotional pain of catching that failing knife. They respect the Market because it has been 1 of his/her greatest humiliator based on the surprises it never fails to dish out every time. For example, our residential 'old fool' forummer GG has played this game long enough to hypothesize that the end of the O&G cycle will come if our 2 biggest rig builders merge in their final attempt to survive...This is what i would call a worst case scenario insight/planning.

Worst case, is usually happen at the tail end of the bell curve, which is un-predictable, and a black-swan event. The last encounter of mine, is the Japan Earthquake, followed by a Thai Flood. I have ever imagined the two will happen months apart, and affecting the auto and electronic market in sequence, of a company I vested then.

What a lesson.

For those events, generally the affected companies recovered fairly quickly and strongly from it, didn't they? It didn't have the contagion effect that lingers on after the countries recover.

Indeed, those weren't events that affected the business environment or industries structurally, the effects were relatively short-lived. What I think investors should look out for are "disruptive technologies" that can change the playing field forever, these aren't one off events that will only affect businesses temporarily, the effects are usually permanent.

I do not believe that any company can maintain a "moat" forever, we see evidence of this in the form of changes in the major stock indices. The companies that make up the S&P500 or the Nasdaq100 today are very different from the ones that made up the indices just 15 years ago, this is proof that even well-run businesses can go downhill some day.

The Dow in 1915:

Amalgamated Copper Mining Company Central Leather Company The Peoples Gas Light and Coke Company
American Car and Foundry Company General Electric Company United States Rubber Company
American Smelting & Refining Company General Motors Corporation ↑ United States Steel Corporation
The American Sugar Refining Company National Lead Company United States Steel Corporation (Preferred)


Dow today:

3M Company General Electric Company Nike, Inc.
American Express Company The Goldman Sachs Group, Inc. Pfizer Inc.
Apple Inc. ↑ The Home Depot, Inc. The Procter & Gamble Company
The Boeing Company Intel Corporation The Travelers Companies, Inc.
Caterpillar Inc. International Business Machines Corporation UnitedHealth Group Incorporated
Chevron Corporation Johnson & Johnson United Technologies Corporation
Cisco Systems, Inc. JPMorgan Chase & Co. Verizon Communications Inc.
The Coca-Cola Company McDonald's Corporation Visa Inc.
E.I. du Pont de Nemours & Company Merck & Co., Inc. Wal-Mart Stores, Inc.
Exxon Mobil Corporation Microsoft Corporation The Walt Disney Company

(06-08-2015, 05:54 PM)lilvestor Wrote:

(06-08-2015, 05:29 PM)arriyana Wrote:

(05-08-2015, 10:18 PM)CityFarmer Wrote:

(05-08-2015, 09:31 PM)weijian Wrote:

(05-08-2015, 02:47 PM)Musicwhiz Wrote: It is therefore important to always ensure one takes care of the worst case scenario through downside assessment and analysis - you cannot completely eliminate losses but it is possible to minimize their impact on your portfolio. And oh yes, dividends do help too - so make sure the companies you analyze and buy will be able to weather storms and still generate FCF and pay a dividend*.

I find it especially amusing when one's way to deal with the worst case scenario is 'if it continues to go south to XXX (price), i will average down. If it continues to fall another X% and i run out of bullets, then i will just hang on for the next X years. Anyways, based on the XXX dividends that i will receive, i will break even after Y years'....These are the new fools in the market.

The old fools know better after making so many mistakes (and survive and prosper for some). They abhor 'average down' because they understood the financial and emotional pain of catching that failing knife. They respect the Market because it has been 1 of his/her greatest humiliator based on the surprises it never fails to dish out every time. For example, our residential 'old fool' forummer GG has played this game long enough to hypothesize that the end of the O&G cycle will come if our 2 biggest rig builders merge in their final attempt to survive...This is what i would call a worst case scenario insight/planning.

Worst case, is usually happen at the tail end of the bell curve, which is un-predictable, and a black-swan event. The last encounter of mine, is the Japan Earthquake, followed by a Thai Flood. I have ever imagined the two will happen months apart, and affecting the auto and electronic market in sequence, of a company I vested then.

What a lesson.

For those events, generally the affected companies recovered fairly quickly and strongly from it, didn't they? It didn't have the contagion effect that lingers on after the countries recover.

Indeed, those weren't events that affected the business environment or industries structurally, the effects were relatively short-lived. What I think investors should look out for are "disruptive technologies" that can change the playing field forever, these aren't one off events that will only affect businesses temporarily, the effects are usually permanent.

I do not believe that any company can maintain a "moat" forever, we see evidence of this in the form of changes in the major stock indices. The companies that make up the S&P500 or the Nasdaq100 today are very different from the ones that made up the indices just 15 years ago, this is proof that even well-run businesses can go downhill some day.

Agreed. I think the spirit of value investing is buying into a company that can survive and emerge from a black swan event, with the assumption that you cannot predict a black swan event. If the company survives through, it usually will emerge stronger after the shakeout of the weaker players.

Losing a moat is significantly more painful but a moat loss gives you time to react. Most moat is not lost overnight but after years of technological advancements.

or rather, wait for blakc swan event and buy-in?

remembered that OCBC was $4++ GFC2009,

to catch durians during crises, you have to have cash. Either from half-invested portfolio OR a judgement call to go cash. Fully invested portfolio cannot catch durians one.

I am guessing most VBs here went into GFC with fully invested and ride it out. Seldom heard of anyone sold out in 07 or 08.

(07-08-2015, 11:56 AM)opmi Wrote: to catch durians during crises, you have to have cash. Either from half-invested portfolio OR a judgement call to go cash. Fully invested portfolio cannot catch durians one.

I am guessing most VBs here went into GFC with fully invested and ride it out. Seldom heard of anyone sold out in 07 or 08.

Catching "durians", means catching during a crisis of "durian" market or a "durian" company, rather than overall market. In other words, recycling of capital, is possible to catch the "durian", rather ONLY with reserved cash, IMO.

This is the approach followed.

There is a season for everything. Sometimes certain durian trees mature faster and drop unilaterally. But sometimes when the soil is fertile, weather accomodative and the fruit bat population is large enough to pollineate entire tracts of durian plantations, durian season will be here!

If you are a durian connoisseur (ie. you can differentiate a D24 from a D13), you will have fun all year around. If you believe you are not good enough and continue to get conned by those expert durian ah beng sellers (in geylang), better to wait for durian season to enjoy the fix and save all those frustration.