Year 2023, 30 Years In Stock Market

Year 2023 would be ending soon.  Year to date so far nothing drastic has happened to global stock markets and probably the next 3 weeks would be the same.  However, year 2023 spells a significant milestone for me in stock market.  This year marks the 30th year that I have been invested in Singapore stock market.  While the past 3 decades wasn't a very eventful periods but did encounter the ups and downs of the stock market.  Of course not to mention the mistakes that were made and the precious lessons that were learnt throughout.

The Early Year (1993)

Singapore stock market in 1993 was a total difference as of now.  There wasn't online trading, every transaction has to call up broker or remisier to place the order.  Commission then was 1% per transaction, contra period was 7 days and only aged 21 and above was allowed to open CDP account to trade or invest in stock.  Payment of share has to be settled in either bank cheque or ATM transfer as there wasn't any online banking then.  IPO adopted a dual system in which apart from the normal application, investors were allowed to bid for it at the same time. 

After opening a CDP account in 1993 and with limited capital since still an undergraduate then, the only mean to get into stock market was applied for IPO.  After numerous unsuccessful attempts, SingTel IPO was the first successful and needless to say SingTel was my first stock holding.  Due to popular demand, every normal application of SingTel share were allocated a small portion of it.  I also managed to successfully bid for the IPO.  The bidding price if remembered correctly was $2.10 compared to IPO price of $1.90.  Then IPO was like a sure bet as price highly likely surged on the first day of trading.  Managed to sell the bid portion and got myself a decent profit for it.  The normal application portion decided to hold for long term to collect dividend annually.  After SingTel, again met with several failed IPO applications and finally managed to get the second one through bidding.  The stock was Pan United and the bidding price was $1.80.  Every good thing must come to an end, of course the bull run then eventually stop and very unfortunately, was caught at the wrong end with the Pan United IPO.  As a novice then, probably didn't know of risk management so just held onto Pan United share to collect annual dividend despite the paper loss.  

The Passive Year (1994 - 2006)

With the bull run came to an end, decided to take a back seat and refocus back to my varsity education.  For the 1997 Asian Financial Crisis, I was lucky enough to not taking big hit from the stock market as was in the early part of the working life so focus was more on career than any other things.  The only stocks I have then were SingTel and Pan United.  Paper loss was there (which stocks not in paper loss from 1997 AFC ?) but with annual dividend to collect so just practically shelved them aside to concentrate on my career.  That was the same for the stock market crash in 2003 due to SARS.  Well, the cons was missed the golden opportunity to buy some cheap blue chips.  So, that the first mistake and lesson learned from stock market.  

For that period onwards till 2006, I would consider myself a passive investor by just holding onto those 2 stocks and collect annual dividend.  Somewhere down the road, probably Lady Luck shone on me as firstly, managed to get some discounted SingTel share in my CPF account (not the CPFIS account, some special scheme which can't remember the exact name though) and some Pan Marine share from Pan United when it span of that unit.  Of course years later Pan Marine was privatized and delisted from Singapore Stock Exchange.

The Aggressive Year (2006 - 2014)

2006 was the year decided to return to stock market or rather came out of hibernation.  This was mainly other aspect of life has pretty much stabilize and refocus to gaining some financial for future retirement.  Then stock market was in a bull run so the attractiveness was there.  With a little more knowledge on stock market and the introduction of online trading (very much lower commission than in 1993 and not to mention DIY), I started actively doing stock trading (contra to be exact) on top of investing.  Since it was a bull run, chances of gaining from stock trading was very highly and every Technical Analysis you've learned and applied to it all seem so accurate.  Apart from that also decided to build a portfolio of stocks for long term investing.  

Firstly, talked about building up portfolio for long term investing.  Pan United was sold at a loss (dividend collected so far and profit from Pan Marine wasn't enough to offset), that the first realized loss in my stock investing after holding for 13 years.  Robinson, Genting, MMI, ChinaESave, Cambridge Industrial Trust and First Reit were bought between 2006 to 2007.  SingTel was sold off in 2007 after holding for 14 years (both the CDP and CPF holding) netting myself the first realized profit in investing.  Along the way, Robinson and MMI were both privatized and delisted so getting myself another investing profit.  Genting was bought before being announced winner of Singapore 2nd IR (just confident they will win).  Both Cambridge Industrial Trust and First Reit were bought purely on Reit play, collect high dividend yield annually and hoping somewhere down the road the amount of dividend collected is able to recover the whole of capital being put in.  ChinaESave was purely a bet on the future about reading about those sexy stories painted by analysts.  When the US sub-prime crisis kicked-in in 2007 leading to global financial crisis, this time really took hit.  ChinaESave was cut loss while Genting, Cambridge Industrial Trust and First Reit continued to hold on.  ChinaESave was my 2nd realized loss in investing.  That the 2nd mistake and lesson learned, never ever trust analysts and till today, this notion remain the same.  However, lesson learned from 1997 and 2003 market crash has taught me to grab the opportunity to bargain hunt in the 2007 Global Finance Crisis.  To continue to build up my 2nd Investing Portfolio, I began to buy SingPost (2008), CapitaMall Trust (2009), SIA (2009), Kep Corp (2010), Sem Marine (2010), MapletreeInd Trust (2010), CapMallsAsia Bond (2012) and Kep DC Reit (2014).  Together with Kep Reit which was given as an entitlement from Kep Corp in 2013, that form the 2nd Investing Portfolio.  

It was also these periods that I started investing with CPFIS and SRS.  For CPFIS, there was STI ETF (2008) and First Reit (2009).  In SRS was mostly short term investing.

During these periods also started to gain more knowledge by reading up on Value/Fundamental Investing and started an Incubator Portfolio.  As the name incubator suggested, it is looking at those mostly neglected stock with good fundamental and invest during cheap for the future.  The first stock in that portfolio was Nordic (2014).

Next, talked about trading.  Before 2007 market crash, stock trading was like out of 10 times, 9 times you would gain.  Even the one time you cut loss, the next trading gain will recover back that loss.  As the saying good thing never last, stock trading was taken a badly hit when stock market crashed in 2007 and practically unable to make any gain in 2008.  However, when global stock markets hit the bottom in March 2009 and recovered, stock trading was back with a vengeance.  I took this opportunity and actively traded from 2009 till 2014 to not only fully recover whatever was loss during the 2007 - 2008 period but also build up capital to inject into the Investing Portfolio.  During these periods, contra trading to me was like daily ATM money withdrawal, everyday can profit from it.  Record like more than 20 consecutive contra without a single loss and contra for whole month without loss were achieved. 

Basically for these Aggressive Years, was playing a dual role of both a stock trader and a value/fundamental investor.  Wouldn't termed it as hybrid investor as whatever stocks being traded in were not in the investing frame and vice versa.

The Transitional Year (2015 - 2019)

2015 started the transitional years that lasted till 2019.  Trading conditions have started to deteriorate from 2013 due to adopting smaller bid size (risk reward no long attracting) and stock market undergone periods of uncertainty from global events (US Fed QE, Euro crisis dragging on, China bubble burst, Oil crisis, US-China trade war, etc).  There were some changes in the Investing Portfolio.  Sem Mar was divested in 2015, Cambridge Industrial Trust was divested in 2015, STI ETF from CPFIS in 2015 and CapMallsAsia Bond was redeemed in 2017.  The divestment of Sem Mar or rather cutting loss (but overall still net profit with inclusion of dividend collected) has triggered a reaction to think out of the box in investing for me.  Putting aside the traditional of using Technical Analysis and Fundamental, I started to try out using Sun Tzu Art of War in investing.  Well, we probably heard of success stories of people using Sun Tzu Art of War in politics and business but never heard of using in stock investing.  Then I do not think it was impossible, just need to understand the underlying and essence of Sun Tzu Art of War and how to translate to stock investing.  It was never a straight forward thing for sure as for every principles (13 of them) I have to figure out how it could be translated to stock investing.  At the same time, I have to experiment those translated concepts with real investing to determine the feasibility.  It took me a few years to realize some basic essence of Sun Tzu Art of War, the 13 principles form a system for stock investing.  Said system is able to self defense and attack at the same time.  Coupled with Warren Buffett's advice of not losing investing capital, this translated to defense in protecting capital and attack as in capital gain (凡战者，以正合，以奇胜).  This was when I started using CPFIS and SRS account to experiment with the concept.  That was further extended to CDP holding later.  The principle is simple, I would accumulate stocks with either very little or no capital injected.  Exactly how that was done afraid is confidential.  As such, should anything happen like market crash, fundamental of the company worsen and etc, I won't suffer heavy capital loss.  The initial experiment was using Reits.  This is because Reits unlike other stocks do not suffer from great volatility frequently and the high dividend yield is an additional gain on top of capital gain.    FrasersCom Trust was experimented with both CPFIS and SRS.  After few months, the feasibility of the the concept was positive and this led to further extended to CDP holding with Cambridge Industrial Trust (reinvested), Kep Reit (shifted from Investing Portfolio), FrasersCom Trust, MapletreeCom Trust, Mapletreelog Trust and CapitaR China Trust.  Feeling too much holding, Cambridge Industrial Trust was fully divested in 2016.  Since it was of little or no capital being injected, Cambridge Industrial Trust didn't suffer any capital loss.

While focusing on experimenting the Sun Tzu Art of War system, I still manage to keep a lookout of bargain hunting opportunity for the Investing Portfolio.  The 2016 market crash due to China economic growth concern helped me to pick up Frasers Cpt Trust.  The Incubator Portfolio wasn't neglect too, Valuetronics was added to it in 2017 at $0 cost and Creative Technology in 2018.  There was also some changes made to Nordic.  A partial divestment was carried out in 2017 when the prices rose to a point that gain of the partial divestment was able to offset the whole of the capital being injected in 2014.  As such, Nordic has reached the objective of being mathematically impossible to lose money in just 3 years of investing.  There was also a significant milestone being achieved for First Reit.  In 2017 after 10 years of investing, the amount of dividend collected was 100% of the capital being injected.  Thus, it has also became mathematically impossible to lose money.

The Sun Tzu Art of War system of stock investing is not just about self defense and attack at the same time, it is also about ability to analyze the future and make preparation for it.  This is the part where Technical Analysis comes in.  Looking at all the TA tools, the one that found suitable was none other than Elliott Wave Analysis.  It has a steep learning curve but once got the concept right, it is pretty deadly accurate especially looking at long term.  To assist me in Elliott Wave analysis, I even developed an app for it and the STI Analysis which I have started in 2016 (still continue as of now) was using Elliott Wave to analyze.

From the Elliott Wave analysis, in 2019 sensing STI would be going into big correction next, decided to divest all of the experiment stocks from CPFIS, SRS and CDP holding.  That divestment netted me a profit return of +105.70% for CPFIS, +106.48% for SRS and +639.12% for CDP (27.34% with respect to total capital for the Investing Portfolio, refer here) for just purely investing in a 4 years duration.  These outcome more or less concluded the feasibility of the Sun Tzu Art of War system.  

The Sun Tzu Art of War experiment has taught me another precious lesson though not a single mistake was made.  If sensing something wasn't right and didn't think out of the box to make changes, just like the political party who always pride themselves in white only know one direction, sooner or later will fall off the cliff.  The Sun Tzu Art of War experiment that I carried out with CPFIS suggested to me that the present CPF retirement scheme which many believe is one of the best in the world can be better if you willing to put hard work for it.  The Sun Tzu Art of War system which used on CPF monies will overperform over purely letting the money sitting there to collect the higher than bank interest.

During the transitional year, I see myself transforming from a traditional trader and traditional investor into a strategic investor.

The New Phase (2020 -- )

2020 was the year in human history that nobody can forget, the Covid-19 pandemic which many infectious specialists all gotten their analysis of the virus wrong in the early phase.  Remembered the "Health No Wear Mask" advice ?  Like SARS in 2003, global stock markets were not spared from Covid-19 when the whole world went into lock-down mode.  Well, my 2019 Elliott Wave analysis that stock market will undergo a big correction next didn't prove wrong.  Not that I have a crystal ball to see Covid-19 coming, just that when it is about to have a big stock market correction, somehow something will trigger it.  Thus, the full divestment of the Sun Tzu Art of War part was a shrewd move.  Whenever there is crisis, there will be opportunity.  I took the opportunity of market crash to restart the Sun Tzu Art of War part (which I termed it as Strategic section in the Investing Portfolio) for CPFIS, SRS and CDP holding and this time wasn't an experiment.  CapitaR China Trust, Lendlease Reit and STI ETF was added to the CDP holding in 2020.  Except for STI ETF which small amount of capital was injected, the other 2 were at $0 cost.  For CPFIS, MapletreeCom Trust was added and Mapletreelog Trust was for SRS.  In 2021 adjustment was made to swap all of CapitaR China Trust to Lendlease Reit and added both InnoTek and Fu Yu to the CDP holding all at $0 cost.  

At the same time, First Reit was fully divested when its fundamental has gone from bad to worse.  While the selling price was below holding price, didn't make any net loss as the dividend collected already way way exceeded the total capital being put in.  SingPost was next to be fully divested in 2021 and again the dividend collected managed to offset the capital loss to conclude a net positive return.  These 2 divestment taught me another precious lesson.  Though the dividend of the 2 divestment managed to offset capital loss to give a net profit, this method of investing cannot sustain.  Sooner or later, will be hit with dividend collected unable to offset capital loss.  This was when I started to think of rebuild and restructure the 3rd Investing Portfolio.  For the whole of year 2022 divestment of stocks that didn't fit into my 3rd Investing Portfolio was carried out.  SIA, Kep Corp and Genting were divested.  Except for Genting, both SIA and Kep Corp suffered capital loss but the dividend managed to offset to give a net profit gain.

What I have in mind for the 3rd Investing Portfolio is to build on the Sun Tzu Art of War system.  

• An Income section to house all the Reits to collect dividend, the dividend is the self defense part (正兵) of the Sun Tzu Art of War system.  As such, Lendlease Reit was shifted from the Strategic part to the Income section.  In actual fact, CapitaMall Trust and MapletreeInd Trust have achieved the mathematically impossible to lose money status in 2020 as dividend collected all those years exceeded the capital injected.  As of now, CapitaMall Trust (CICT), MapletreeInd Trust, Kep DC Reit, Frasers Cpt Trust and Lendlease Reit compromise the Income section.  
• A Strategic section (STI ETF, InnoTek and Fu Yu) is the attack part of the system whereby little or no capital is being put in, the so-called 奇兵.  
• Also added Cryptocurrency in the Blockchain section.  Frankly speaking, sooner or later cryptocurrency will be forming an essential part of any investing portfolio in the future.  However, the risk is still relatively high at the moment mainly due regulatory.  As such a $0 cost policy was adopted.  This is another part of the 奇兵 in the Sun Tzu Art of War system

Not only in investing moving into new phase, stock trading too.  Stock trading nowadays is more of strategic oriented rather than the old aggressive style.  While might not be making more profit than in the past, still able to create a little side income and keep myself active in the stock market.

关羽过五关斩六将寻刘备，吾三十载历五阶段.  

That practically sum up my 30 years in stock market so far, made 2 investing realized loss, not afraid to admit mistakes instead of giving excuses for it and most important of all not just learn the lessons but put that in action.

Elliott Wave Analysis on Singapore Political Landscape

Update of the 5th edition of the analysis after the outcome of the July 2020 General Election.

Elliott Wave Analysis on Singapore Political Landscape -- Part V

Elliott Wave Analysis on Singapore Political Landscape -- Part IV

Elliott Wave Analysis on Singapore Political Landscape -- Part III

Elliott Wave Analysis on Singapore Political Landscape -- Part II

Elliott Wave Analysis on Singapore Political Landscape -- Part I

A Decade of Blogging

Market Daily -- 31st Jul 08 was the first post on this blog,  

That is to say I have actually blogged for a decade already.  I started this blog back in 2007 with the blog title "Patience Market Zone", that why the URL to this blog is https://patiencemarketzone.blogspot.com/ rather than the same as the title now "ccloh Strategic Investor Zone".  One need a lot of patience to be in stock market and that is how the initial title came about.  

I started the blog for only 1 reason back then, that is to provide stock market information to my clients.  I post daily stock market news, daily stock market summary, markets and stocks analysis.  That journey ended in 2013 for daily market news as I have no more obligation for my clients anymore.  It was thereafter I changed the blog title to "ccloh Singapore Market Zone".  I continued to post about market analysis and daily market summary (which eventually discontinued in 2015).

In 2010, I also started to include my investment portfolio in this blog, keeping track of its performance every month against the STI index.  It was until 2011 when I started to blog in detail those stocks I have in my investment, mainly the reason why I bought.

Can't really remember when I finally changed the blog title to "ccloh Strategic Investor Zone", Maybe in 2015 as that was the period when I started to adopt Sun Tzu Art of War as a main form of strategy for my investment.  Technically speaking, I have been researching Sun Tzu Art of War as investment strategy as early as 2013, translating the 13 principles to stock investing strategies, doing "live" testing of those strategies on stock market.  It was until 2015 which I "officially" used it in my Investment Portfolio (the Strategic section in my portfolio) and later extend to my Incubator Portfolio.  I do have another blog that blogged on the 13 principles of Sun Tzu Art of War translating them to investment strategies but not releasing to the public at the moment.

So what'll happen to this blog now ?  Well, apart from writing about my stock portfolio (investment and incubator), tracking their monthly performance, I still do market and stock analysis.  The reason that keep me still blogging now and in the future is none other than "blog for archive".  Everybody make mistakes in life and it is through these mistakes that one learnt and improve on.  Be it in investment decision or market or stock analysis I will just blog it down regardless it is correct or wrong.  Should it be a wrong decision in investing or analysis, in the future when I look back I could know where I got it wrong and learn from that mistake.  By doing so, I believe that the only way to improve on my quality.  That is why my blog is relatively different from other financial blogger in a way even if it is a mistake I will blog it down.

Talk about quality, that bring me to a hot topic talking point now in Singapore.  The high salary - quality - mediocre saga.  Well since my blogging is for archiving purpose, I will archive it down the following :-

High Salary =/= Quality

Whoever (be it CEO of a company, leader or ex-leader of a Nation or just an average citizen) believes that only in providing high monetary reward then can attract quality personnel, YOU will go down in Singapore history as VERY WRONG ! 

Quality is achieved by be honest about the mistakes, admit the mistakes, not pushing away or buy yourself out of the responsibility, make sincere and not political PR style of apology for the mistakes and learn from the mistakes.  This is the type of quality that is priceless, no money in this world can buy and definitely not just elite has it.

Elliott Wave Analysis on Singapore Political Landscape

Elliott Wave principle is predominately used in analyzing prices in stock market based on investors psychological behavior toward it.  Should said subject also involve mass population then it should be possible to use Elliott Wave principle to analyze it too.

The Singapore political landscape does involve mass population (citizens of Singapore) to vote in the political party the right to govern the nation or to vote out the political party who deem unfit to govern the nation.  Thus, the possibility of Elliott Wave principle is able to describe the political landscape is there.

Below is the detail analysis.

Elliott Wave Analysis on Singapore Political Landscape -- Part I
Elliott Wave Analysis on Singapore Political Landscape -- Part II
Elliott Wave Analysis on Singapore Political Landscape -- Part III
Elliott Wave Analysis on Singapore Political Landscape -- Part IV

From investment perspective, knowing the political landscape can no doubt bring opportunity, a probably once in a life time opportunity since any change of political landscape happens in multi-decades time frame.

10 Year Full Time Trader Recap -- Part II

Continued from 10 Year Full Time Trader Recap -- Part I.  I have discovered some interesting fact about stock market for the past 10 years and to me is considered priceless.

Pandora's Box
Stock market is the Pandora's Box of a nation's economy, happenings and future.  Once you know the rationale behind the irrational market movement, it is like opening up the Pandora's Box, the good and bad all presented in front of you.  Perhaps that is why stock market is known as a forward indicator of its economy.  Why is it so ?  Stock market is a place where it records billion dollar of transaction daily from domestic and global players.  Stock prices move up or down with respect to the future prospect of the listed companies' earnings.  Companies' earnings are directly linked to the economy without any doubts.  How a nation economy pens out depend on the foresight and policies of the Government implementing it.  While nobody has that crystal ball to correctly predict the future, the many players in the stock market with their majority believing will in one way or another shape the outcome towards it.  It is the bigger market trend we are talking about and not the daily or weekly or monthly fluctuation.

An example was the FTSE STI index till now since recovering from 2008 GFC has unlike most regional market fail to surpass the peak in 2007.  As such, Singapore economy after registering an almost +15% GDP growth in 2010 has practically on a downtrend hitting a multi-years low in 2016 before rebound.  The rebound of Singapore economy as seen presently was reflected by the rebound of the stock market around April last year.

During early 2016 when Singapore stock market (and global stock markets) was on a crash scenario and people were concerned about the nation's economy, there were ministers coming out to ask people disregard the negative sentiment of the stock market but in actual fact, the nation economy hit multi-years low in 2016.  Then few months ago there was a novice MP during PM's special parliament session (which should not be held at all as that is not the correct procedure in the history of Singapore) to address his siblings' accusation of him abusing of power, instead of questioning PM about the accusation, gave an account of the muted market reaction to support the PM's innocent.  Disregard the stock market when it is against you ?  Emphasis on the stock market when condition is in flavor of you ?  That should not be the way to look at stock market and stock market should in no way to be used as a political tools for any political party's agenda.

There is another insight information we can get from stock market.  How the listed company performs depend on how the management manages the company.  The way how the management team manages the company especially domestic company with local management team very much resemble how the people at the top in managing the country.  This is very much so because these people were born, grew up, educated, nurtured and believed in the way the country is being governed.  As such, that influence has more or less being adopted in running the company.  Hence, how these companies fare more or less can tell a thing or two about the people at the top.  Complacency, inability to think out of the box, conservative, lack of innovative, short of creativity, slow to react, etc are some of things that worth noting.  Just look at some of the companies like NOL, SMRT, SPH and ComfortDelGro and I need not elaborate further.  The latest big news was SMRT, the collision at Joo Koon station, the faking of maintenance records that led to the flooding of MRT tunnel, the "deep-seated culture" that was used to justify all the problems our rail network system is facing and not to forget the "volunteered CEO" issue.  If all these can happen to a government linked corporation, there is nothing to prove that it is not happening to the political party that is governing Singapore now.  上梁不正下梁歪, if you know what that Chinese phrase means, you will understand the point.  Something for you to ponder about which I strongly believe should be recorded in the history of Singapore.  It always said it takes two hands to clap.  We have a scenario in which one neither have the experience of running a big corporation nor any direct experience relating to railway network system volunteered to be the CEO of SMRT but if SMRT or LTA or the ministry does not give the green light to appointed such a person, instead opting to go for one with the relevant experience then the whole saga might be different.  So to put the blame solely on the CEO for all the problematic issues is rather unfair as both parties should be equally responsible for it.

Emulator and Simulator
Stock market is a life event emulator and simulator.

"Whenever there is crisis, there will be opportunity".  This statement should be no stranger to anyone.  While some might not experience that in his/her lifetime or even if it has he/she might just have missed the opportunity but in stock market, that event frequently happened and if he/she missed that, the result will be pretty much immediate and significant.  Looking at the past 10 years, we have 2008 GFC, 2011 Japan tsunami, 2012 Europe debt crisis, 2013 US Fed indicating tempering of QE, raising of interest rate, 2014 crude oil price crashed due to supply glut, 2015 China stock market crashed, early 2016 global stock market tanked due to concern of China economy, mid 2016 Brexit and November 2016 US Presidential Election outcome.  All these were events that led to crisis in stock market whereby stock prices fell to cheaply level and after the fear subsided, stock market rebounded and moved higher.  Should one fail to capitalize on those opportunities, the next thing will be missing out that big profit gain.

"If ain't broken, don't fix it".  Another statement that should not be a stranger to most.  The SGX trading system was doing fine with daily volume recorded at least 3 billion during the 2007.  However, in 2011 to salvage the low daily volume due to the fall out of the s-chips, SGX decided to do away with the 1.5 hour lunch break and minimize the tick size so as to attract more high-frequency traders.  The daily volume failed to increase after those new measures and retail traders were sidelined as the new tick size became very difficult to churn profit.  After 6 years of fruitless result from the new system, SGX decided to reinstate the lunch break (but instead of 1.5 hours, shorten to 1 hour) and widen the tick size for stocks price at $1 and above.  This no doubt is a classic example of "If ain't broken, don't fix it" scenario.  Lately, there is a talk by DPM that instead of "If ain't broken, don't fix it", it should be "If ain't broken, experiment it".  Well, what he said could be true BUT to experiment on new things, one must be prepared to take full responsibility for the casualty of the experiment.  Just like the case of SGX did away with lunch break and reducing the stock price tick size 6 years ago, brokers and retail traders were mostly the casualty but who has actually came out to claim responsibility for the "failed experiment" ?  So if one want to experiment, make sure don't just talk only and must prepare to take full responsibility of the outcome of the failed experiment. 

Confident, determination, patient, persistent, hardworking, meticulous and discipline are some of the positive features one must have in order to succeed in life, to reach your goal.  Without those, be it trading or investing, it is very difficult to success in stock market.  One needs to be hardworking to do all the research on the correct stock to buy, one need to be meticulous to look into all the risks involved so that every move will be a calculated one with manageable risk.  One needs to be disciplined enough not to chase the price as any rush move can result in capital loss.  Stock prices fluctuate and one need to have that confident in what you have research so far, be determined, patient and persistent to wait for the eventual gain.

Complacent, emotional and indecisiveness are some of the negative features that associate with failure.  These also apply to stock market and the outcome can be felt almost immediately.  When stock market is running up, making good money suddenly becomes very easy, people will become emotional with the fear of losing out, rushing in with a complacency mindset but when stock market suddenly takes a turn, any indecisiveness to cut loss will lead to a bigger loss.  Stock market only allows one that split second to make decision and any indecisiveness is very costly.

To summarize my 10 years as a full time trader :-

Engineering taught me to be analytical but stock market perfects that.  Be a trader in stock market widen my knowledge in the borderless horizontal dimension while my previous job could only do it in the capped vertical dimension.  The flexibility and freedom of a stock trader could not be exchanged for any money in the world.  While others have the fear of losing their job during recession, a stock trader has no such fear.  As long as stock market is there even if the nation is into recession, profit can still be made.  As such, stock trading is an unique surviving skill.  The emergence of AI brings out the thought of replacing human's job but AI is a plus tools for a stock trader on the contrary.  The high of being a stock trader is you could earn the monthly pay of a fresh graduate in just a day but the low is it could take you 6 months just to earn that same amount.

10 Year Full Time Trader Recap -- Part I

2017 is a special year for me as I've reached several milestones be it in investing or trading.  Just last month, it marked my 10th year as a Full Time Trader.  In 2012, I've blogged my 5th year as a Full Time Trader (5 Year Full Time Trader Recap -- Part I, Part II).  Now, in my 10th year, a recap of what has happened no doubt will serve as an education for me going forward.

It was like 2 different worlds for the first and second 5 years.  The first 5 years, stock market was like an ATM to me when consistently I can churn out profit on a daily basis.  However, for the second 5 years, though I can still maintain a consistent profit every month but the profit level was much lower.  For the first 5 years market conditions were very good for trading as global stock markets recovered from 2008 GFC with a bull run and the high profit level was due to leverage on contra trading.  After 2011 when SGX decided to reduce the minimum tick size, that when the "nightmare" started.  The contra trading method no longer able to churn out good profit level and it also increased the risk.  For the next 3 to 4 years I have no choice but to test out different trading methods thus affecting my profit level.  It was until 2015 that I finally found a method (probably not the best) that allowed me to churn out consistent monthly profit.  The negative for this method was lower profit level but the positive is it comes with lower risk (no leverage involved).  Though profit level was not as rosy as before, the present set up also allows me to face the market more calmly, confidently, more relax in trading and not affected by how other regional markets perform.  I also found that I am able to read the market better in the second 5 years.  However, there is still one thing that puzzle me and yet to understand why.  Should I not be getting overly greedy, my analysis of the market will be very spot on but if I start to get greedy financially, my analysis will be way out.  As such, for most part of the analysis, each twist and turn of the market I have to keep it to myself and that the reason I seldom post market analysis on my blog anymore.  SGX will be increasing the minimum tick size from 0.5 cents to 1 cent for stock in the price range of $1 to $1.99 next month, that should be a very welcome move not just to me but traders in general and my profit level should be able to go up.

I even encountered some "weird" things during the 10 years period.  Just 2 years ago, through an old friend I was introduced to be a trader for some high net worth individual.  The deal was this individual will be providing huge trading capital for me to trade, the profit will be split 50-50 but the loss this individual will be absorbing.  The only condition was should I recklessly or carelessly incurred too many losses, I will be out.  Accordingly can easily get a 5-figure income every month, sound good deal ?  Whether such a set up is legal or not I  do not know.  In the end, I did not take up as to me, I would prefer to trade with my own money, hey at least have some backbone right ?

People might question me did I make the right choice in becoming a full time trader.  Well, if just purely from financial point of view, answer probably is a no.   Should I still stay as a salary employee (engineer) financially I should be doing better than what I am now.  I need not face with market risk and probably I can afford to be off focus on my work for half of the month and still get my pay cheque at the end of the month.  In addition, I will have title to my name after climbing up the career ladder.  However, taking away the financial factor, I strongly believe I have gained more in becoming a full time trader.

From 2013 to 2014, I have taken 11 Coursera courses to gain more knowledge on the fundamental of finance and economics (something that I do not have in my education).  One of the course was on Financial Engineering which later spurs me to develop several software applications in 2013 for me to use in stock market and those probably now known as FinTech (refer here).  Another course I took was about Business Startup and that later gave me an idea of setting up my Incubator Portfolio.  It was also in 2013 that I started to research and study how Sun Tzu Art of War (孙子兵法) could be used in investing strategy.  For the next 2 years I spent times correlating the 13 principles that formed the Sun Tzu Art of War into 13 principles in stock investing.  To ensure the principle works I even tested it out in the stock market using CPFIS, SRS and cash account doing short to mid term trading.  Then in 2015, after getting some confirmation result, I finally used it in my investment portfolio -- the Strategic section.  Apart from that, I also managed to spend more times with my children, never miss a single event during their growing up phases, always be there when they needed help.  These are those things that I believe no money can buy.  Hence taking that into account, I prefer the challenge of being a full time trader, the satisfaction I can get from trading and I don't think I regretted in being a full time trader.

This is so much for Part I of the recap, will continue on Part II....

10 Year Full Time Trader Recap -- Part II

 

10 Years As A Passive S-Reits Investor Recap

2017 is a special year for me as couple of milestones (in regard to investing or trading in stock market) have been reached.  One of those is being a decade of passive S-Reits investor.  Prior to 2007, I did invest in S-Reits but mostly on a short to mid term basis in which after getting dividend and seeing some capital gain just sold it off.  However, a personal experience then got me decide to become a real passive S-Reits investor.

Then S-Reits were considered defensive stock (as for now whether that still valid I'm not sure) given that the company has to give out at least 90% of their earning as dividend for tax incentive.  With an average dividend yield of around 5% for the S-Reits, some even can get as high as 8% - 10%, that was very attractive compared to bank saving rate and dividend from defensive stocks (like SPH, ComfortDelGro, SingPost, etc) then.  As such, my primary objective then was to just collect dividend annually and aim for that eventually one day the amount of dividend that was collected along the way allow me to get back the initial capital that I have put in.

The first S-Reits that went into my passive investment portfolio is First Reits followed by Cambridge Industrial Trust both in 2007.  I have to ride through the 2008 GFC with those two despite their stock prices fell below my holding price, injecting more capital to take out their right issues against the concern by analysts about their debt level and ability to pay dividend.  All this was because I BELIEVE in S-Reits and now I still believe in them.  Then when GFC recovered in 2009, I slowly added in more S-Reits to my portfolio with the like of CapitaMall Trust (2009), Mapletree Industrial Trust (2010), Kep DC Reit (2014) and Frasers Centrepoint Trust (2016).  Along the way I have to admit I missed out some of the better fundamental S-Reits when I have to opportunity to get them real cheap from the period of 2009 to 2012.  The like of Ascendasreit when I once bought around $1.20+ level during the GFC but sold it off after getting some gain as with my limited capital I could only choose between either CapitaMall Trust or Ascendasreit.  MapletreeCom Trust IPO was another that I have overlooked as then I already have CapitaMall Trust as a retail reits and see no point in getting more of the same sector.  Similarly, that was the reason for missing out on Parkway Life too (same sector as in First Reit).  However, I have made up some ground with some of those missed out S-Reits in 2015 when I started the Strategic section according to 孙子兵法, acquiring S-Reits with either $0 cost or a very low cost.  Now, my S-Reits base has included FrasersCom Trust (2015), MapletreeCom Trust (2015), Mapletreelog Trust (2015) and CapitaR China Trust (2016).  I do not rule out the possibility of getting more S-Reits (Ascendasreit, Parkway Life, CapitaComm Trust, MapletreeGCCT, Frasers L&T, and etc) into my portfolio just a matter whether I want to use cash to invest in my non-Strategic section or the $0 cost (or low cost) Strategic section.

The reward for being a decade as a passive S-Reits investor is the return (unrealized for capital gain and realized gain for dividend) that I have achieved.  As according to the closing price on 16th Jun 2017,

First Reit  --  Capital Return 117.07%, Dividend Return 96.97%

Cambridge Industrial Trust  --  Divested in 2015 with Capital Return 6.93%, Dividend Return 42.08%

CapitaMall Trust  --  Capital Return 66.59%, Dividend Return 69.85%

MapletreeInd Trust  --  Capital Return 107.14%, Dividend Return 56.42%

Kep DC Reit  --  Capital Return 35.01%, Dividend Return 11.06%

Frasers Cpt Trust  --  Capital Return 27.03%, Dividend Return 10.49%.

Kep Reit, FrasersCom Trust, MapletreeCom Trust, Mapletreelog Trust and CapitaR China Trust (all under Strategic section)  --  Capital Return 4102.85%, Dividend Return 134.47%.

Try not to read some much into the Capital Return and Dividend Return of the Strategic section (as those figure are meaningless to me), what important to me is the market value now for the Strategic section is 17.22% of the non-Strategic capital cost.  That is to say with the Strategic section, the cost of my non-Strategic section is cut by 17.22% or in another view, I am having an unrealized gain of 17.22% addition for the non-Strategic section.  That was my intention of having the Strategic section though it is still under constructing.  The progress is only about 13.34% and that means should the build up is 100% complete, the reward is very very attractive.

With most regard S-Reits as defensive investment, I have further classified a sub-level for the S-Reits in term of their defensiveness.  Health care S-Reits is the mother of all defensive, Retail (referring to those suburban assets) and Data Center are the second most defensive among the S-Reits.  Third is Industrial S-Reits, fourth is Office S-Reits (or commercial maybe some refer to) and the least defensive of all is the Hospitality S-Reit.  With this classification, I have put a restriction on my S-Reit investment of not investing in Hospitality S-Reits given that their business is very cyclical in nature and even if gives out a very high dividend yield still not worth for me to take the risk.

Being passive S-Reits investor is not an easy task as some of the time you have to resist divesting due to negative analysis from analysts like in 2013 when US Fed decided to start taping on its QE and embarked on hiking rate and analysts started to weigh in concern on the impact on S-Reits earning and their distribution.  You also have to resist to divest when you see the price of S-Reits rose to some super high level despite the fact that you see at that price level it is unsustainable.

As mentioned earlier, my primary objective for S-Reits investing was collecting dividend as a form of constant income and also hoping one day the amount of dividend collected equal to the capital I have put in.  However, in recent years that have changed.  I realized that if I want S-Reits dividend as a form on constant income say $2,000 per month, that is $24,000 a year and if the dividend yield is 5%, I would have to put in $480,000 in total, if dividend yield is 7%, the capital requirement would be about $343,000 and if lucky enough if the dividend yield is 10% then the capital requirement is $240,000.  Now the question is with a capital of $480,000 (a sum one can easily fully paid up a new 4 Rm HDB without taking a single cent of mortgage loan) do I want to just dump everything into S-Reits when the very basis of investing is not putting all the eggs in one basket and adopt diversification instead.  As such, in recent years especially after I adopted 孙子兵法 approach in investing I have completely dropped the objective of investing S-Reits as a form of constant income and I will also not constantly inject capital (I see a lot of people doing that so that they could invest in more S-Reits to eventually hit that constant income amount they are aiming for).  I am GOING FOR THE KILL in investing S-Reits ie putting in the minimum amount of capital and getting the maximum amount of return.  Isn't that what investing is all about ? Multiply up you money with little money and not keep putting in more money.

Since today is Father's Day, I will include the message I have for my children

Human Beings love and yearn for power and wealth, finding various means to achieve that.  Once they got it, they will trying ways to maintain or hold on to it as long as they want.  Unfortunately, not many can still maintain that purest, innocent and noble character and integrity they once used to have.  As such, I have chosen the most difficult task in life -- to live a simple life.

20 Years in Stock Market

2013 marked a milestone for me personally, 20 years in stock market.  Dare not say after 2 decades in stock market I have become an experienced investor or trader but gain lot of valuable experiences in investing and trading.  For that 20 years, been through couple of bear and bull markets and see global economy moved from prosperous stage to recession situation and not to mention the profits and losses that accompanied it in stock market.

Entered the stock market in 1993 in which then it was a very hot stage, every uncles and aunties were talking about stock markets.  Back then it was a totally different environment.  No internet trading (every transactions have to go through a broker), brokerage was 1% (compared with now average 0.28%), IPO was able to bid for it apart from the normal balloting, contra trading for 7 days period as compared with current 3-days, teletext was the main source of monitoring stock prices back then and trading in Malaysia stocks were punters favourite due to their wild swing of prices. 

Was still an undergraduate when I entered the stock market in 1993, with little capital, all I can do was doing the normal buy and hold style, applying for IPO (then IPO was super hot, difficult to get and if get, it will be sure win type, before the bubble bursts in the later stage) while some of my uni friends were daring enough to punt (of course later got burnt when the stock market collapsed).  After numerous unsuccessfully attempts in getting IPO then, finally managed to get my first stock, SingTel, was successful in getting the balloting portion as well as the bid portion.  The IPO price was $1.90 while the bid price to pay was $2.10.  As a novice then, initially has an intention to just sell it off on its first day of trading but later have a second thought only sell off the bid portion (can't really remember at what price did I sell it off but definitely with a gain) thereby making my very first profit in stock market.  The remaining of the balloting portion I kept it to collect dividend after listening to what most of the people were saying then.  It later turned out to be a very good advice.  After that IPO success, I continued to aim at almost every IPOs that came out but most were unsuccessful.  Finally, near end of 1993, I got my second stock through IPO bidding, Pan Utd and the price to pay for was $1.80.  However, that also spelled the end of my novice investing/trading.  Stock market soon crash in the subsequent years, bubble burst and I still holding on to both SingTel and Pan Utd and stomaching those paper losses.  A novice mentality, do not know how to cut loss.  As I only have small capital invested in those 2 stocks so I didn't bother much, just put one side and concentrate on my studies and career.

From then till 2006, I was holding to both the stocks and totally not active in the stock markets.  Maybe due to inactive, I have sort of escape the various bear markets in 1995, 1997, 2001 and 2003 undamaged but then also missed golden opportunity to bargain hunt during those periods.  In 2006 when I decided to re-enter the stock market, found that I wasn't too unlucky with the 2 stocks.  SingTel has been giving me good dividend annually, so as Pan Utd.  A big bonus was PanU Mar share being given to me free by Pan Utd.  My second spell in stock market was more eventful and exciting than the first and from that I have learned a lot in the stock market, transforming myself from a novice to "verteran" ( :) ).

In 2006, I decided to take more risk in stock market and started doing trading on top of investing.  Like any novice trader, win some lose some and probably nett off still make a loss but the most important was finding out the reason how I ended up losing money and learned from those mistake to improve myself.  In 2007, I decided to become a full time trader (5 Year Full Time Trader Recap -- Part I, 5 Year Full Time Trader Recap -- Part II) and started another chapter of my life in stock market, the third spell which I considered.

Before that, from 2006 to 2007, lot of things happened as stock market was in the bull stage, I finally sold off my SingTel share in 2007 after holding it for 14 years at a price of $4.10, making very good profit (plus dividend return), the PanU Mar share I  got it for free was being acquired, the Pan Utd share I also sold off with a loss (but with the gain from dividend and PanU Mar share, nett off still not so bad), I also bought share in MMI and Robinson which later also being acquired making good profit.  The only stock which I made a loss was ChinaESave, which I eventually sold it off at a loss (some 50+% loss if i remembered correctly).  That was my first investment portfolio, overall still make a profit, considered a good investment for a novice standard.  It was also in 2006 that I started to construct my second and current investment portfolio.  The first stock for my second investment portfolio was Genting SP, bought it before they were being announced the winner to build the Sentosa IR (as then I was very confident Genting SP will win the bid) and that turn out to be my best investment so far.  The next 2 stocks which I bought before the market crashed in 2008 was First REIT and Cambridge.  Both of them were reits and like many were attracted to their dividend so decided to hold it for long term.

Good things never last as most said and it turned out to be true when the US sub-prime crisis soon hit in late 2007, global economy went into recession in 2008 before it rebounded in 2009.  It was a terrible start for me being a full time trader during those periods.  I also have to stomach all those unrealized losses in First REIT and Cambridge and barely surviving in Genting SP.  Then I remembered most were very negative on S-Reits but I am determined to hold on to it for long-term and stomach the paper loss as much as 50%.  My determination did not fail me as the 2 S-Reits allowed me to collect dividend throughout those periods and now the amount of dividend I have collected is equivalent to average 30% of the capital being put in.  Not a bad deal by ignoring those critics and held on to my belief.  The bear market, the "first" bear market that I experienced surely taught me a lot of valuable lessons.  From that after several reflections, I learned to become a better trader and investor.  In 2009 when I started to trade in my own unique method to slowly recover all my losses in 2007-2008 and by end of 2009 I did it.  It was also in 2009 that I started to have capital to buy more share in my current investment portfolio.  Though now on an annual basis since 2009, I am making nett profit on trading but nothing compared to being a fundamental and value investor as you got to buy quality stocks at great bargain, hold them for long term and have peaceful night sleep without worrying of volatility.  That was the most valuable lesson I have learned from the 2008 market crash.

Presently, I am doing trading for a living and with my own unique trading methodology, I am able to get at least 75% hit rate in doing purely contra basis trading and even have a 100% hit rate (without suffering a single contra loss) in a month in August 2012 (Trading Statistic) but to me trading is never the way to build up one's wealth and it is only through value and fundamental investing then one can truly build up the wealth.  Trading to me is to build up capital and earn daily expenses.  For investment wise, though my current second investment portfolio is doing pretty well but that is not the end to it.  In fact, currently, I am planing on my 3rd investment portfolio (Investing Research), learning the mistakes that I have made in my 2nd investment portfolio.

Stock market is a long and winding roads, with never ending learning opportunities and one has to stomach the roller-coaster ride in order to eventually achieve the reward.  Never afraid to make mistakes but must learn from every single mistake in order to improve.  The most important is to believe in yourself, do your own research, have the patient to wait and determination to overcome all the downs.

5 Year Full Time Trader Recap -- Part II

2010 :-
If 2009 was the year to bear fruits for my customized strategy trading then 2010 no doubt will be the peak with maximum return so far.  The sharp rebound of the bull in 2009 carried over to 2010 and getting profit consistently on a daily basis was like everyday drawing money from ATM to me.  However, there was a correction in the market around June period when the Greece's debt saga first emerged and that was the first time my customized strategy undergo some serious test.  The sudden drop due to fear of the Greece's debt can cause global economy on a double-dip recession no doubt caused me to take hit as when on contra play, time is the number one enemy for me.  The hit wasn't that serious but caused me to reflect on refining my strategy.  From that lesson learned I began to cut down on trading in stocks that are slightly more volatile to avoid this type of sudden turn of event in the future.  Months later when global stock markets recovered from that shell shock Greece issue, I earned back what was loss during that period and market continued to scale new high.  Around September that year, I also started to document my Trading Statistic as I wanted to keep a record of what I have done (right or wrong) so that in the future I can look at them, enhanced on the good points and rectified the bads.  It was in November and December that probably hit the peak of my strategy trading as I have been chalking up 25 consecutive contra gain from 11 trading days (a record which I held until was broken just recently).  Needless to say the rewards came with was a sweet sweet one as the nett profit I achieved for that year was more than I can ever get from being a paid engineer and best of all, capital gain from trading is non-taxable in Singapore.  It was like in cloud nine for me in 2010.

2011 :-
2011 was a year that clearly divided into 2 distinct half.  First half of the year apart from the March Japan tsunami disaster rest of the months were pretty much the same for me as in 2010.  The Japan tsunami did cause market to sharp drop within days and this sudden unexpected event no doubt caused me to take some damage but the loss was minimum as most of the stocks that I traded were less volatile and the downside was pretty much controllable.  Furthermore, the Japan tsunami event to me was just a temporary short-term setback as from past history knowing Japan always managed to recover back from such natural disaster.  Hence the loss was pretty much recovered back within weeks.  However, second half of the year was another game changer for me which required me to change my trading strategy again.  Couple of events took place and I have go back to drawing board again.

1. There will be a change in minimum bid size of the stock price in August and that change definitely will have impact on my contra trade.  The notice was known months prior to the change so I was already planing how to change my strategy to counter that coming in June.  As contra play time is the critical factor (T+3 days only) and with the reduce bid size, within that contra period might price might not move enough for me to churn some reasonable profit.  The good thing about the reduce bid size was damaged can be reduced from previously too.

2. The Greece's debt crisis again resurfaced in June and well lightening strikes twice and people started to talk of double-dip recession again.  That event caused some correction in June.

3. Come August, the US deficit ceiling issue which led to downgrade of US Government from its AAA status for the first time shocked the market as fear of US entering double-dip recession (also QEs effect from US was ineffective as unemployment rate stayed high, economic data stagnant) caused global stock markets to be extremely volatile (swing of +/- 3% to 4% from day to day in US and +/- 1% - 3% in STI).

4. The boiling point of the year September to October when Europe crisis melting point in which globally known that should it cannot be contained systemic risk will appear and the impact could be global depression.

In June I was changing and testing my new strategy to cater for the coming August changed in minimum bid size system.  In doing so, I was mentally prepared to pay some school fee too and that was why in June I recorded my top worst performance of 7 consecutive contra loss within 4 trading days so far.  The testing carried on till July and that was the reason both June and July I recorded the worst monthly hit rate too (Trading Statistic).  Getting into August I was more or less ready to change strategy to cater for the new minimum bid size but unfortunately the US issue in August caused the market to be extremely volatile and at one stage didn't know whether my new strategy was not working or because due to the extreme volatile situation.  To prevent unnecessary contra loss, I decided to sit deep and observe and trying to rethink the strategy again.  That was one of the reason despite the market volatility I did not suffer big hit then.  The global events which led to market great volatility has somehow taught me another lesson and at that stage I decided to try something daring and different.  As an engineer I was very analytical, every issue will analyze on their pros and cons before making decision to act.  With that in mind, I decided to use that on stock market.  It was daring and high risk as if analyzed wrongly will incur losses but I decided to give it a try as I knew if I get it right, I will be ahead of the market and easily beating the market.  Then I started to focus on the global events, reading all the positive and negative views and analyzed for myself which view should be correct.  During that process, I further confirmed that market analysts are either most of the time wrong in their views or lagging in it.  This gave me a moral boost as I know if I get it correctly, the market is there for me to beat it.

My first testing on this approach was September and October when the Europe debt crisis hit melting point.  Talk of Greece default, Euro breakup and global recession also surfacing in the market and it was in October after reading a statement by European Central Bank President Jean-Claude Trichet on “The crisis has reached a systemic dimension” (Market Analysis -- 15th Oct 11) that resulted in me making an analysis to conclude market has hit the bottom (till today I yet to hear any analysts saying so despite market really rebounded more than 20% from there).  That was a breakthrough for my analytical approach in trading and that gave me some confidence in my new trading strategy.  In my engineering days I remembered all the extreme conditions  (best and worst case scenarios) must be thoroughly tested before the product or solution could be certified usable.  That was why for the rest of the year I continued to use the analytical approach as the core engine for my new trading strategy and slowly test on it with the view that market has hit bottom in October.  Trading results were mixed as the volatility sometime took me out due to contra play time constraint and I have to accept that as time factor is always an handicap in my trading.  Despite paying school fee in the second half of the year to change and test out new trading strategy, the profit from first half of the year still enable me to record a nett profit for the year.

2012 :-
My testing continued into 2012 as I want to make sure most of the trading scenarios were tested and not rushing to it.  By March I felt that my testing was almost done and during those testing months I still manage to edge out profit on a monthly basis so I actually quite glad with it.  April onwards was the bearing fruits stage for my new trading strategy as I have been hitting more than 90% hit rate on a monthly basis (Trading Statistic).  Well it might also partly due to market was on an upwards rally then which I will not rule out that contribution factor.  In April I analyzed that market will hit another bottom in June (Market Analysis -- 1st April 12) and highlighted again in June (Market Analysis -- 1st June 12) citing Europe debt crisis as the game changer for the reversal and with that analysis in mind, I planed my strategy around that direction and trade accordingly.  The result was correct and didn't suffer any major loss despite I only trade on the long side with market slowly trending down (trade against market general trend and still can profit, that is probably something not anyone could do it).  That was the second correct analysis since October 2011 and that without any doubt given me more confidence on my analytical approach.  With that strategy, I hit new records on my trading statistic, Best Performance (hitting 29 consecutive contra gain within 26 trading days surpassing previous record of 25 in November 2011) and Best Monthly Performance (hitting 100% hit rate, that is no a single contra loss in a calender month) categories in August.  That was something very very sweet and satisfaction given that the trading conditions were more difficult (reduce minimum bid size and low volume) than in 2010 and 2011.  My next analytical view on the market will be between October to December market will hit another low due to issue from US and whether can I hit it 3 in a row to be analytically correct months later will I know.  A bear fruits year so far for my new analytical trading strategy.

A brief outline of my analytical trading strategy, not the detail as trade confidential and furthermore this approach is very much customized to suit my personal risk.  Each individual has different risk hence should I detail out and others without my risk appetite follow suit it will be dangerous for them.  In analytical trading strategy, I look at global events that could dictate direction of market and do analysis on it to see which direction they could move the market.  With that in mind, all possible scenarios would be taken into consideration and then tactically crafted each move.  A typical TA trader would say "Never fall in love" with a stock but to me it is totally wrong, I would like to know the stock inside out so that how they behave under what conditions is all within my grab.  To put it in laymen term, I treat the stocks as my "lover" and know that every move inside out.  Another thing is I am also better mentally prepared now for another change of trading strategy should trading conditions change again in the future.

Looking back as a full time trader (or Strategic Investor which I term myself) I might be losing out to my peer in term of financial aspect.  Most of my peers probably now staying in private property, driving big car and having a fancy or blown your hair away job title in which all I don't have as a full time trader.  However, there are things which I achieved and have they never get to have.  The satisfaction in beating the stock market consistently, able to spend time with my kids' growing up phase (that is priceless and no money in the world can buy) and not worry about retrenchment should economy goes to tailspin again.  To me as long as stock prices move, I can trade and earn profit from it.  It is a niche skill that even in recession I should have no worry about being unemployed and no income.  Many see trading to get rich but not me, I am a strong believer of only fundamental and value investing can get one rich (Investing) and to me trading is to provide daily income that all.

Trading Is A Science But With The Skill It Could Turn Into An Art

5 Year Full Time Trader Recap -- Part I

5 Year Full Time Trader Recap -- Part I

5 years ago this month I gave up my more than 10 years engineering hat and ventured into the finance sector.  Reason not being for the money or anything wrong with engineering career but rather for a more personal specific reason.  The thought of becoming a full time trader will on any day scared off anybody including myself as there is no secure income and the risk in loosing capital is high too.  After much consideration, I decided to go ahead as could not resist the high challenges I will be facing and of course the ultimate satisfaction after overcoming those challenges.  Since 2007 till now, there were lot of ups and downs happened being a trader, to summarize it, made mistakes, learn from mistakes and improved a lot.  A recap of what happened for these 5 years.

2007 :-
Officially became full time trader in September, 2 months after global market crashed due to US sub-prime crisis.  Prior to that was on a part-time trading basis and prior to that was solely a passive investor.  Like everyone else started off trading like punting, followed here, followed there, making money here a bit, losing there a bit and nett off not very impressive.  Next, realized in need of a skill and hence turned to Technical Analysis and that was in the early month of 2007.  Became a TA trader for quite some months, to test out before turning into full time in September.  Market condition for 2007 wasn't that bad except for the crash in July and August, rest of the time relying on TA to trade was pretty much straight forwards and the result wasn't that bad.

2008 :-
The first game changer and also the lowest point so far in my life as a full time trader since 2007.  Due to the US sub-prime crisis, global economies and stock markets were deteriorating as months went by in 2008.  The game changer event was in September the collapse of Lehman Brothers.  Prior to that I was still trading with the help of TA and as market condition slowly sinking towards September, was taking hits along the way.  Initially, was thinking that the TA skills I normally used were not good enough and hence starting to enhance and at the same time trying to learn more TA indicators to assist in trading.  As I'm a contra player (strictly follows the T+3 due date) and also don't believe in shorting the market when the trend is down (due to my mindset of being a fundamental and value investor), hence could see others making good profit while shorting but still maintain on playing the long side only.  Then came the unexpected collapse of Lehman Brothers and there were fears everywhere with countries sinking into recession and stocks were beaten down to dirt cheap prices.  Taking hit, not making enough to survive and the stress that followed was not something any full time trade would enjoy.  Back to the drawing board and started to rethink all over again where went wrong and how to rectify it was on my mind then (engineer instinct I supposed, when all failed, back to drawing board).  Couple of thinks struck my mind then :-

1.  I remembered a meeting an ex-army friend some months ago in which he told me his brother was a remisier and has been making good money as he managed to capture the trend correctly.  Must look at the bigger picture even though I am on contra trade and that was what appeared to my mind. 

2.  With everyday looking at every ticks of the stock prices I started to see stock prices moving like a music groove and with my good memory of able to remember the short-term support and resistance of the stock prices without the need to refer to charts.  For contra trading I could leverage on the swing range and take advantage on it, moving along with the music groove.

3.  From the background of being a fundamental and value investor, when prices of the fundamentally strong stocks are beaten down to dirt cheap and if don't buy then will be a big big mistake (look around how many billionaire investors became billionaire when they bought stocks at dirt cheap prices).  This has somehow contradicted to what TA practices (ie looking at TA indicators for buy signal and normally when buy signals appear, prices already move up from their low).  With that, I started to think that TA might not suitable for me as a trader.

4.  I also found weaknesses in TA.  TA can help to minimize losses but cannot prevent unnecessary one.  TA does not require the knowledge in knowing the company fundamental and TA is based on past pattern to predict for the future.  Who can predict the future with 100% accuracy ? 

5. I like reading Romance of The Three Kingdoms and Sun Tzu's Art of War.  Those are exciting to read because of the various war strategies that involved and what astonishing was even with a smaller army size, with the appropriate strategy one can still defeat an army of size bigger than yours.

With all the above thoughts I finally realized I need strategies in trading, different strategies for different market conditions (market conditions are forever changing).  Slowly I crafted a strategy for myself to trade, one that aiming to have consistent contra gain and not venturing into something that cannot cater for unnecessary losses.  Hence, that was the point I started to ditched TA as realizing TA is just a tool in a toolbox and nothing else.  Next for the rest of 2008 I started to test the strategy I crafted and along the way refined it.  The result was I slowly getting rid of those unnecessary losses and at the same time started to earn back those "school fees" I paid to the stock markets prior to that.  The year 2008 wasn't a nice one for me as suffered nett loss in trading.

2009 :-
With 2008 being the game changer year for me, 2009 without any doubt was the bearing fruits year for me.  I continued to crawl back those losses in 2008 with my customized strategy in trading and with global markets did a sharp rebound after hitting low in March, my trading performance starting to bear fruits and consistently hitting profit months after months.  Before end of 2009, I already recovered all I have loss in 2008 and started to get nett profit for the year.  The sharp recovery in stock market and economy in that year did bring relief and satisfaction to me as a full time trader but at that point didn't really realized that my customized strategy did not actually went through a serious stress test as the worst scenario for stock market was over and everybody started to buy the "green shoot" story by US Federal Reserve.  I supposed at that time nobody care as long as everybody were making good money from stock markets.

5 Year Full Time Trader Recap -- Part II