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i think there are different forms of indexing.
Dow works by price weighting, i.e. like since Ibm has a high price, its changes in the Dow is very significant. Put it this way, if berkshire A shares is included in the dow, then the dow will basically track berkshire, cos berkshire is now around 135000.
If i am not wrong, S&P 500 is by market cap weighting. So a company with a large market cap will lead to a more signficant change in the S&P500
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19-10-2012, 02:43 PM
(This post was last modified: 19-10-2012, 02:46 PM by Temperament.)
(19-10-2012, 02:14 PM)money Wrote: i think there are different forms of indexing.
Dow works by price weighting, i.e. like since Ibm has a high price, its changes in the Dow is very significant. Put it this way, if berkshire A shares is included in the dow, then the dow will basically track berkshire, cos berkshire is now around 135000.
If i am not wrong, S&P 500 is by market cap weighting. So a company with a large market cap will lead to a more signficant change in the S&P500
And textbook says S&P 500 is a more accurate index telling us about the current market's health than the DOW, But looking at the historical charts of both side by side, it seems they are about synchronized, if i am not wrong. How come not much different?
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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(19-10-2012, 11:09 AM)Janjansen Wrote: It is generally not a good time to buy anything now, stock prices have gone up a lot since 2009, and while you can still find some fairly valued companies, there is nothing "cheap" out there. Sometimes when you have missed the boat, the best thing to do is just to wait it out. I know this is not an easy thing especially if you have spare cash in the bank and inflation is eating away at your wealth. But patience is a virtue when it comes to value investing. Just as night will follow day, there will be a down cycle after an up cycle. Economic cycles are getting shorter with each passing year and I believe there will be at least 2 more major crisis in my lifetime to pick-up heavily battered blue chips at bargain prices. Just like the poster above me said, if you buy in 2008-2009, you can close your eyes, pick any stock and chances are you will make significant returns. Opportunities like these doesn't come very often, but it will come, and it is worth waiting for. Meanwhile, just load up your ammunition and wait.
I like this idea too; it's like doing a big project that will last for a few years, before another big project comes round.
But not sure if I can really identify the timing when it comes. And when it does come, do I have the guts to go in big time?
Perhaps some kind soul will ring a bell when the time is here?
Well, as always happen, we can't see it clearly when we are too near, until the opportunity has slipped by.
Yes, meanwhile keep building up the opportunity fund!
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(19-10-2012, 01:58 PM)Temperament Wrote: i think one of the reason is some counters in the basket of stocks will be replaced from time to time when they are not performing. Like NOL and SMRT. And there are other reasons too which i have forgotten or too cheem for me to remember. Will some experts please chip-in. Help! i need somebody help! (The Beatles). 
Yes, how it's constructed will affect the way it works. But if I'm not wrong, those folks with the phd in math will also backtest the new index to see if it tracks the old index well. IIRC, that's what they had to do when introducing the FTSE STI as compared to the old STI or whatever it was called.
Anyhow, if you don't buy the index, it shouldn't affect you no?
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19-10-2012, 03:30 PM
(This post was last modified: 19-10-2012, 03:46 PM by Temperament.)
(19-10-2012, 02:50 PM)etan Wrote: (19-10-2012, 11:09 AM)Janjansen Wrote: It is generally not a good time to buy anything now, stock prices have gone up a lot since 2009, and while you can still find some fairly valued companies, there is nothing "cheap" out there. Sometimes when you have missed the boat, the best thing to do is just to wait it out. I know this is not an easy thing especially if you have spare cash in the bank and inflation is eating away at your wealth. But patience is a virtue when it comes to value investing. Just as night will follow day, there will be a down cycle after an up cycle. Economic cycles are getting shorter with each passing year and I believe there will be at least 2 more major crisis in my lifetime to pick-up heavily battered blue chips at bargain prices. Just like the poster above me said, if you buy in 2008-2009, you can close your eyes, pick any stock and chances are you will make significant returns. Opportunities like these doesn't come very often, but it will come, and it is worth waiting for. Meanwhile, just load up your ammunition and wait.
I like this idea too; it's like doing a big project that will last for a few years, before another big project comes round.
But not sure if I can really identify the timing when it comes. And when it does come, do I have the guts to go in big time?
Perhaps some kind soul will ring a bell when the time is here?
Well, as always happen, we can't see it clearly when we are too near, until the opportunity has slipped by.
Yes, meanwhile keep building up the opportunity fund!
Bravo etan! Congratulations too!
i think you have got my message and your courage back, not that you have lost it, i hope.
Repeat of my message below:
Hi etan, do not be discouraged about making back money you have lost. Actually you have your lifetime to invest to make back. How old are you now? I am going to be 65 soon and i started investing only at 40 year-old. (Everyone "old" in this forum will know) And as long as my wits live with me, together we will invest.
This last 2008/2009 Big Bad Bear pawed my stock portfolio down to about 50% at once stage. Now 2012 not only i recover my losses, i make some money too. If Mr. Market keeps on going North, i will keep on unwinding my position as i travel with Him. If Mr. Market suddenly decides to take a fighter plane and dives South, i am prepared to go with him too.
Another words be prepared for all eventualities Mr. Market throws at you. This then is my investment's "principles".
May you recover your losses.
Amen.
NB:
To tell the truth, i thought 2008's low was the lowest point but it was actually 06 march 2009. i was buying until now ( 06/03/2009) then i chickened out as i couldn't take it anymore. Though i still have more than 40% of our capital in "save investment" . On hindsight i should have put in all our remainder 40%. i did it when i started investing because i was quite youngish old then. i think it is more "fun" in investing in stocks when you are younger; as you can afford to take more risks. Or put all your money in stocks except your emergency fund.
Now it seems preservation with a little profit to keep up with inflation is more important for our capital. But i may get greedy again, once of these days. Really i hope not. What's the point isn't it? We all ended on the yellow-brick road in the end. And we can not bring it with us.
NB:
Our capital means me and wife. But i am the only one managing the money, since day one. Luckily for me my wife is not a spendthrift and by now of course she trusts me in managing our money. The proof of the pudding is in the eating kind of logic, you know.
Amen.
(19-10-2012, 03:15 PM)kazukirai Wrote: (19-10-2012, 01:58 PM)Temperament Wrote: i think one of the reason is some counters in the basket of stocks will be replaced from time to time when they are not performing. Like NOL and SMRT. And there are other reasons too which i have forgotten or too cheem for me to remember. Will some experts please chip-in. Help! i need somebody help! (The Beatles).
Yes, how it's constructed will affect the way it works. But if I'm not wrong, those folks with the phd in math will also backtest the new index to see if it tracks the old index well. IIRC, that's what they had to do when introducing the FTSE STI as compared to the old STI or whatever it was called.
Anyhow, if you don't buy the index, it shouldn't affect you no?
Even if i don't buy any stock in the STI index, it will still affect me or anyone who invested. As the index is like the tide that lifted all boats during high tide and lowered all boats during low tide as many textbooks like to state.
In truth, not all boats are lifted or lowered by the same rate and same amount. Some may even sink during a high or low tide. Especially in a low tide, more boats will be beached and never, ever sail again. MHO.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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19-10-2012, 03:50 PM
(This post was last modified: 19-10-2012, 03:54 PM by etan.)
(19-10-2012, 03:30 PM)Temperament Wrote: Bravo etan! Congratulations too!
i think you have got my message and your courage back, not that you have lost it, i hope.
Repeat of my message below:
Hi etan, do not be discouraged about making back money you have lost. Actually you have your lifetime to invest to make back. How old are you now? I am going to be 65 soon and i started investing only at 40 year-old. (Everyone "old" in this forum will know) And as long as my wits live with me, together we will invest.
This last 2008/2009 Big Bad Bear pawed my stock portfolio down to about 50% at once stage. Now 2012 not only i recover my losses, i make some money too. If Mr. Market keeps on going North, i will keep on unwinding my position as i travel with Him. If Mr. Market suddenly decides to take a fighter plane and dives South, i am prepared to go with him too.
Another words be prepared for all eventualities Mr. Market throws at you. This then is my investment's "principles".
May you recover your losses.
Amen.
NB:
To tell the truth, i thought 2008's low was the lowest point but it was actually 06 march 2009. i was buying until now ( 06/03/2009) then i chickened out as i couldn't take it anymore. Though i still have more than 40% of our capital in "save investment" . On hindsight i should have put in all our remainder 40%. i did it when i started investing because i was quite youngish old then. i think it is more "fun" in investing in stocks when you are younger; as you can afford to take more risks. Or put all your money in stocks except your emergency fund.
Now it seems preservation with a little profit to keep up with inflation is more important for our capital. But i may get greedy again, once of these days. Really i hope not. What's the point isn't it? We all ended on the yellow-brick road in the end. And we can not bring it with us.
NB:
Our capital means me and wife. But i am the only one managing the money, since day one. Luckily for me my wife is not a spendthrift and by now of course she trusts me in managing our money. The proof of the pudding is in the eating kind of logic, you know.
Amen.
Hi Temperament,
TQ! But it's still too early to say whether I will indeed put action into it, and how it will pan out. But I will be definitely be on the look-out for that pot of gold! Come on everyone, come and join in and scoop up as much gold as your hands can hold!
I learnt a new word from you today - youngish old! Like that also can!!!
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(19-10-2012, 03:50 PM)etan Wrote: (19-10-2012, 03:30 PM)Temperament Wrote: Bravo etan! Congratulations too!
i think you have got my message and your courage back, not that you have lost it, i hope.
Repeat of my message below:
Hi etan, do not be discouraged about making back money you have lost. Actually you have your lifetime to invest to make back. How old are you now? I am going to be 65 soon and i started investing only at 40 year-old. (Everyone "old" in this forum will know) And as long as my wits live with me, together we will invest.
This last 2008/2009 Big Bad Bear pawed my stock portfolio down to about 50% at once stage. Now 2012 not only i recover my losses, i make some money too. If Mr. Market keeps on going North, i will keep on unwinding my position as i travel with Him. If Mr. Market suddenly decides to take a fighter plane and dives South, i am prepared to go with him too.
Another words be prepared for all eventualities Mr. Market throws at you. This then is my investment's "principles".
May you recover your losses.
Amen.
NB:
To tell the truth, i thought 2008's low was the lowest point but it was actually 06 march 2009. i was buying until now ( 06/03/2009) then i chickened out as i couldn't take it anymore. Though i still have more than 40% of our capital in "save investment" . On hindsight i should have put in all our remainder 40%. i did it when i started investing because i was quite youngish old then. i think it is more "fun" in investing in stocks when you are younger; as you can afford to take more risks. Or put all your money in stocks except your emergency fund.
Now it seems preservation with a little profit to keep up with inflation is more important for our capital. But i may get greedy again, once of these days. Really i hope not. What's the point isn't it? We all ended on the yellow-brick road in the end. And we can not bring it with us.
NB:
Our capital means me and wife. But i am the only one managing the money, since day one. Luckily for me my wife is not a spendthrift and by now of course she trusts me in managing our money. The proof of the pudding is in the eating kind of logic, you know.
Amen.
Hi Temperament,
TQ! But it's still too early to say whether I will indeed put action into it, and how it will pan out. But I will be definitely be on the look-out for that pot of gold! Come on everyone, come and join in and scoop up as much gold as your hands can hold!
I learnt a new word from you today - youngish old! Like that also can!!!
Anything (investment) is possible is also can!
What more can i say?
Hallelujah!
Amen.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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Wow. A lot replies and discussions in the past 2 days.
THANK you all for your every advice.
Jeff.
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When to buy? My $0.002 view.
First, the company must be inherently strong, i.e. no fundamental deterioration. The business advantage must be there.
Second, if and when the price drops, for whatever reason(s), if you are certain that the majority of players out there are wrong, then that is the right time to buy.
These are the points which made money for me so far.
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22-10-2012, 08:38 AM
Not vested in ST Eng.
Oct 2012, I'm still buying - small chunk thou.
To buy a stock to me is this:
1. It's definitely not about making $$. If I buy and make $$, then very good. This is a reward to my good judgement/choice.
--> I read, I monitor, I took actions
----> my actions produce positive result -> I'm satisfied.
2. It's definitely not about short term gain/loss. If I buy and market turn downward or my share tanked. This gives me a chance to exercise another part of my game plan.
--> I'm prepared, I understand why the market/share goes against my initial buy, I took actions
-----> my actions pen-out as I wanted --> I'm happy (even with losses).
So long as I am reasonably " investor" (based on Graham definition of Investor vs Speculator), I should be able to gain more than loss...
plus, I'm sure that I'll be a happy man because I think and I execute.
Enjoy:
v=qfvqOzNB6ts Wish we are in a perfect world.
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