Tag: t_xxAsRecreation

beatIndex^ livelihoodBoost: choose your goals #R.xia

Posted on by tiger40490

 

See also

As I continue to invest more money + time, and write more blogposts evaluating my MOETF vis-a-vis other investments, there’s a real growing concern like

Q1: is my time and money well-invested in MOETF?  It is quite productive compared to my other investments, but perhaps an ETF/eqMufu would achieve higher total return and lower tcost?
%%A: even if you hold a SP500 ETF, there’s always [2] a legitimate need for an alternative equity portfolio with lower volatility, lower risk of a “down year”, higher cash payout, higher reassurance,,, Therefore, it’s my mistake to pit MOETF against SP500, when it’s not designed to compete with SP500.
A: tcost is addressed below

There’s a widespread perception that “mindless (therefore easy) investing in the U.S. [1] large-cap index will outperform most hand-picked MOETF in most years“. Buffet has struggled against the SP500 index for decades. I believe many value investors achieve lower return than the US large-cap indices. (Note SP500 is all-large-cap and all-US.) See Buffett no longer beating SP500. I do have some ETFs and mutual funds (T.R.Price) to capture the index appreciation. If after X years (to be decided) I still believe that MOETF consistently underperforms SP500, then I would allocate more to an SP500 ETF.

One portfolio in MOETF would become a fund comparable to a cash-cow retirement account; another portfolio an absolute-return fund without a benchmark. As such, MOETF is designed to meet those “other” needs.

Jolt: Similarly, most SP500 ETF investors also have assets in retirement accounts (401k), bonds (or money-market funds), gold, Reits, rental properties, dividend stocks etc, so it’s unfair to look down on those assets or MOETF.

[1] How about mindless investing in non-U.S. indices? Much weaker?
[2] many investors put aside that need .. unwise

— OPP .. It’s crucial to be clear what exactly we want out of stock trading. Many valid priorities of other investors are not important to us. In fact, these OPPs (other people’s priorities) may get in our way.

  • when you take on those OPP, your life becomes more complicated, when it can be simpler like mine. You may have to babysit your positions. Your firewall is strained.
  • when you take on those OPP, they could displace some of your true priorities. Analog: carry-on luggage (i.e. limited holder of true priorities) vs checked luggage i.e. holder of lower priorities
  • when you take on those OPP, you may inadvertently take on more risks.

Matching SP500 return … is a bad OPP. Investing 80% of my assets, and minimizing idle cash (make every dollar work hard) … is an OPP

Q2: how important is total return (including current income) vs beating some index?

These questions arise more often when I discuss with fellow investors. An unwise investor may have an implicit goal “match other people’s returns” even though he doesn’t know their pain/risk profiles or even their actual return rate. I try to avoid that unwise goal. I often justify MOETF using phrases like “absolute return”, firewall (sleep well), recreational (learning), DYOC(current income),,,

div stocks: widely seen as low-growth #valInv #laughing described the recurring scenario .. When I show my 5% current income to friends, they probably walk away laughing …

— Question 2 is similar to FOMO^livelihood  — am happy with the current income, the low-stress (firewall), the relatively low but positive return, but not so happy when I compare with some “high flyers”. Why the hell do I bother with other people when I’m happy with MOETF?

MOETF generates a few times more current income than any SP500 ETF or cryptos, if I (arbitrarily) exclude the low-yield stocks that I bought for growth.

— rental yield .. is a parallel. So far I’m satisfied with my SEA rental properties esp. the rental yield, perhaps more than my Beijing property. If I were to compare myself with those who achieved 10x returns in some Chinese-hot locations then I might feel diminished.

However my Q1 above is different. Compared to those hot property markets, SP500 is widely perceived as less risky and tracking ETFs are much more accessible (low entry requirement, very passive,,,)

— Learning and fun.. relatively vague ROI, but as a ROTI it is growing more important. See learning: fund^stock-pick

  • If you don’t need learning, then SP500 ETF beats almost all ETFs or eqMufu.
  • If you want learning, then growth stocks and cryptos threaten my firewall (babysitting, buy-n-forget)

— le2 XR… a summary on a familiar question. Q3: given that MOETF can’t outperform a SP500 ETF, why bother to hand-pick to construct MOETF?

  • A(mentioned in earlier mail): foreign stocks .. missing from SP500.
  • A(mentioned in the call): recreation and learning (see above)
  • A(mentioned in the call): dividend payout, esp. during a downturn.
  • A(mentioned in earlier mail): selective cash-out
  • A(mentioned in earlier mail): selective buy .. esp. if I know a company well. This feature could help me outperform SP500
  • A: consider retirees. They don’t focus on “return” only, so they allocate heavily towards bonds, annuities, dividend stocks outside SP500. One retiree I know invests heavily into a rental property for rental income. MyOwnETF doesn’t aim to outperform SP500 but aims to provide other benefits such as access to cash flow.
SP500 return is hard to beat, so I will probably maintain 50% allocation to SP500. As I age, we will need to reduce SP500 allocation.

buy small,learn fast: adv@stocks+ETF #Zeng #w1r2

Posted on by tiger40490

The trigger : a stock coach compared properties, gold, mutual fund,, and pointed out a unique advantage of stock as an asset class. I’m even luckier, due to Robinhood.

When buying small, the Impact of missing latest news is proportionally small.

— update

if you want to gradually develop a personal stock-picking “system”, then you need to make a large number of small but real decision, over different times. A few big trades won’t grow your confidence fast enough.

To become an experienced stock investor, you also need to make many informed decisions and learn from that experience.

Q: how much retrospective analysis needed?
A: not about how many hours but how much real traction you gain (not wheel-spinning). You should cut down the review when you notice diminishing return.

Quick learning is an advantage of stock vis-a-vis other investments.

— buy bigger .. When we have some confidence and experience then we can put in bigger trades up to $5k. Even at this level the impact of missing some news is not huge.

After you learn the art and grow in confidence, you may need to bet bigger, or ROTI remains low. But it’s not a harm in itself as explained below

Nevertheless, Low ROTI is no real problem for recreational investing.

— I always favor small trades below $1000, like $500. This way, we don’t need so much due diligence.
My learning comes after I hold the name in my portfolio and I get to monitor it in my portfolio, just as you monitor the stocks of you past employers, the stocks behind the brands you buy. A bitcoin researcher, an economist by profession, bought some coins just to motivate himself to monitor it.

This is a benefit of investing in individual stocks rather than ETF.

— downside of this “buy-small” advantage

  • Low entry barrier means too many small retail investors … herd instinct
  • low ROTI
  • hard to find bargains

— Fractional shares are a great training tool, though there are some limitations.
— Buy without fear if below $50.
— Compared to mutual funds, PE etc, I feel ETF/REIT/Stocks support faster, safer learning curve.
You get to climb the curve faster thanks to the cushioned training outfit.
— mutual funds learning by small trades, as compared to ETF

  • 🙁 annual fee
  • 🙁 no limit order
  • 🙁 you can’t learn by buying one share as in stocks

Both mufu and ETF offer

  1. 🙂 less distraction at work
  2. 🙂 pre-clearance exemption

— email to fellow investor Zeng
Q1: Is there anything harmful in buying very small quantities of a stock?
I don’t know any. I believe lower profit is not a harm in itself. Likewise, keeping money in time deposits is no harm.).

Q2: Is there anything harmful in buying “too many” stocks?
I don’t see any.

Q3: is it ok to buy-n-forget? Many people say “you need to monitor your portfolio once a while and have a plan when to sell”.

  • I think it’s OK. Buffett once said something like ” Our Favorite Holding Period Is Forever“, so I think it’s entirely possible to make a decent profit with buy-n-forget.
  • If I must babysit my positions, it would affect my sleep, my work, my mental energy for workouts, and parenting… all of them bigger than stocks. As busy fathers, we all understand that our total mental energy per day is a limited resource. I don’t think it’s worthwhile to spend my precious mental energy on babysitting my positions.

Q4: is it wiser, healthier to focus on a smaller number of (say 10) stocks or 100+ stocks? You gave a valid argument that since I can only allocate up to 10 minutes, and invest small amounts on each stock, I won’t make big gains.

  • my stock picking is recreational, perhaps with $15-20k risk capital. Am not aiming for big gains[3]. For each stock XYZ, I’m OK with XYZ if over 10 years XYZ temporarily rises above my initial purchase price. “Temporary” so as to give me a chance to exit. Even if I exit with 2.2% return over 3 years, I’m fine.
  • I have learned from experience that more time spent on analysis doesn’t lead to better trades. Sometimes I spend only 3 minutes on an unfamiliar stock, before buying. No major mistake so far. Some of the regrettable stocks were bought after longer due diligence.

[3] If you want big gains, just buy SP500. I do that too, but doing that is too boring and not recreational. (If some investors want to beat SP500, I wish them good luck.)

For my investment to remain recreational, it must not create undue stress. Therefore, diversification helps. Meaningful diversification is not easy, and my 100+ stocks represent a wide spectrum, with superficial diversification. Concentrating on 10 stocks would be even less diversified and more stressful.

Q5: Just what have I learned from so many stock-picking decisions? Here’s a random list of answers, half-ranked by unique/specific value

  • I am learning how to read news, and I learned how much to trust analyst ratings. Now I know there is a validity period, a target price, and a rating in each analysis. I have very limited time and must zero in on the key points.
  • I learned about various zero-commission brokers. Robinhood is a poster boy among them. There are many limitations to the platform. I learned many of those limitations.
  • I learned a lot about how to assess dividend history and dividend safety. I also learned about share buy-backs.
  • I am learning how to group my 100+ stock positions into categories… crucial for the purpose of benchmarking
  • I learned about (sector) concentration risk within my portfolio.
  • I learned about risks in REIT, utility/telecom, pharma, cars, oil majors, energy mid-streams, tourism/airline sector, banking/insurance, mining .. among other sectors.
  • I learned a bit about Russia, India, Canada, Japan, China… Many of these stocks trade OTC .. low liquidity
  • I learned some of the limitations of country-specific ETF or mutual fund. I pick my own stocks for exposure to specific geographies.
  • I learned about withholding tax implications for Canadian (+other) stocks
  • I learned that more time spent on analysis doesn’t lead to better trades, as explained earlier
  • I learned about the risks of fractional shares vs big-quantum stocks (above $200/share), and also market- vs limit-orders
  • I learned about emotions, impulsive trading, over-buying, obsessive trading, distractions from work…
  • [v] I read about legendary investors’ styles including Buffett. They make mistakes too and they seldom can beat SP500.
  • [v] I learned about why the U.S. index beat all regional market indices hands down.
  • I am learning about blue chips vs small caps. Most people seem to favor large caps if they only buy a few names.
  • I learned a bit about leveraged REITs. I think you need to invest in many REITs before you start seeing the differences in leverage.

[v=Note some of the things above can be learned without buying 100+ stocks (thought more trades would speed up learning). I have marked these items with v]

learning(as recreational investor) #fund^stock-pick #w1r3

Posted on by tiger40490

Q: How do I compare with my wife, as a stock picker? My view is likely biased, though I would try to counter-balance my bias
%%A: I think she dare not touch other names. Good for her.

… This question belongs to the end !

Q2: “learning” is a vague buzzword. What kind of thing can you learn? A vague question but be as specific as you can, please?

  • PP) (self + market) psychology  .. The crazy psychology of those investors… we just get used to it, without gaining insight. It’s a big rough sea.
  • EE) economists’ (like Shiller) analysis ..  including market valuation and timing. I took two modules under Mark Hendricks.
  • AA) security analysis as in value investing or quant analysis .. I only spend 10 minutes per name.
  • .. pre/post trade dividend analysis.
  • TT) trading techniques .. risk control, order placement, position mgmt,,,

中长线 analysis (I never did) sounds like learning in EE and AA, but if not applied on stock-picking, then I guess it is only applied on sector picking and market timing.

bccy market is so unstable and fluid that I don’t see any learning in terms of EE, AA,,,

Q6: what are your specific reasons for learning? A vague question but be as specific as you can, please?

  • motivation: intellectual curiosity — some people earn a degree in their 70’s, not to use the knowledge in some career. See also recreational investing
  • big motivation: total return (including current income and windfall far out)
  • motivation: better understanding (of the rough sea PP + EE), better control (of my little dug-out). [1]

[1] Is this motivation underneath the big motivation? Probably not. My twin brother, an ETF investor, could end up with higher profit at some point, but without any understanding/control. I don’t want to end up like him.

Q11: Do I gain any insight from hot growth stock picking? (Similar question can be asked on FX, FXO, gold, oil.)
A: not sure. Whatever capital appreciation could be due to timing or dump luck. In contrast. I gained AA/TT insights on div stock picking only months later, when my div stocks performed well during a downturn — unexpected success.

Q22: did I learn anything from years of mufu “research”?
A: close to zero in EE, some self-discovery in PP.

Q22b: with so limited learning, do I get any real joy from mufu/ETF investing?
A: I feel it’s like watching sex vs having sex. If you don’t know why you made money, then it’s mostly dumb luck with timing… no joy. Doesn’t satisfy my intellectual curiosity.

Q33 (Dahlan discussion): do you learn the most from investment failures, or do you learn more from expected success, unexpected success…?
%%A: I feel some failure is required learning (re commodifies and FXO..) in the PP, AA and TT domain. You won’t become competent swimmer without scary encounters with killer waves.

— The 10Y-question. Context: Like many investors, I started investing during my internship [commodities, UniFund…].
Q: with a 10Y career as an amateur investor ..  am I better than an intern?
A: No better, as a mufu picker. Answer is similar to Q22.
A: Yes as a rEstate and stock(?) picker, I had more frequent buying experiences than many. For rEstate, “Test Result” comes in very slowly. I did lots of research into EE/AA and some PP.

I don’t know Adam Khoo. I think he is an experienced motivational speaker, and trainer, where his talent and wisdom have sustainable value. I don’t know his investment skills.

Q: why does no investor give money to an intern as a fund manager?
A: because the intern shows no wisdom, no trec, and is mostly a blind follower of sentiment. In contrast, an intern can work as a junior but professional programmer, thanks to his technical knowledge gained over 3Y at least. Learning is an essential ingredient. Buffett: “Only when the tide goes out do you discover who’s been swimming naked.”

  • Q: Compared to many seasoned investors like me, an intern can achieve better return via SP500 ETF over 3Y. I think it is sustainable.  Is the intern better than me?
  • Q: Compared to many seasoned investors like me, an intern can achieve even higher return via ARKK over 3Y. I think it is less sustainable.  Is the intern better than me?
  • Q: Compared to many seasoned investors like me, an intern can achieve even higher return via BTC over 3Y. I think it is less sustainable.  Is the intern better than me?

big loser despite analyst ratings: fallen angel@@ #div

Posted on by tiger40490

Many people say that “since analyts were positive but this stock fell, this is evidence against all the analysts”. I adopt a different perception…

  1. go to any site listing the biggest losers for the day (or the week?)
  2. Now go through a 10-min due diligence on each name
  3. is it a household name? More familiar names are slightly easier to assess
  4. check analyst rating. If no rating, then stand aside. If you see a positive analyst rating before the drop, then the drop may imply that the price is even more attractive than when ratings were published.
  5. check CDY after the fall
  6. (time consuming, so do it last) check fool.com to see why the sudden drop
  7. for the 1 or few surviving items, pre-clear.

Most of the time, CDY would be way below 4%. This is a harsh reality. Therefore, babysitting might be required. No buy-n-forget.

Half the times, quantum would be more than $50, and requires fractional. This is a harsh reality.

Beware the infatuation… A wrestle of greed vs fear.

— FSM also lists biggest losers. Used for a year. No analyst rating ! No news articles explaining the drop.

ez2hit high return but..Sustainable@@ #luck #w1r3

Posted on by tiger40490

MOETF return is likely lower than Buffett, which is likely no better than sp500
Do I envy those with higher annual returns? Typically we are seeing BTC or growth stock investors.

——

See also

  1. ##hot^beloved asset classes 喜新厌旧
  2. MOETF: lower return than SP500 likely which points to beatIndex^absReturn: choose your goals
  3. j4 MOETF #w1r4

Background: I often feel my MOETF “system” is under fire when lots of fellow investors seem to make higher returns either quickly or over a short few years. Are their returns sustainable?

It’s crazy to use (realized or unrealized) return alone to compare 2 portfolios, ignoring quality of return, fundamentals, crashes, and variouis risks (liquidity risk, credit risk, investor sentiment risk). Buffett’s portfolio probably shows better risk-adjusted return than sp500.

I would say if the investor pockets the realized profit and stand aside with detachment, then she is wiser than most. But such wise investors are rare.

Some investors make “enough” (like USD 2M) and then scale back risk capital level to $100k .. “cash out n quit”.  But such ungreedy investors are rare if under age 60.

— jolt: sustainable if buy-n-forget→ sleep]peace, focus@work. With high growth investments (including BTC), can you sleep in peace?

— jolt: Intern… Learning is an absolutely essential process (takes years) before people can have reason to believe your high return is sustainable.
There are various types of knowledge/experience to learn. Here I tend to think of EE/AA.

If higher return were sustainable without substantial learning and risk analysis, then this would be similar to an arbitrage or a Ponzi scheme.

— jolt: arbitrage or Ponzi/pump-n-dump
Q: deep down, do you really believe your SP500 ETF would show compound return at least 8% a year for the next 40Y, with at most one negative year in any 5Y window? I think many respected publication assume just that.

If you believe it, then to you this represents an arbitrage or Ponzi scheme. You should really borrow money to the max and invest in SP500 ETF.

— jolt: diversification .. A related perception is “To beat the broad SP500 index, you will need higher concentration on growth stocks.” — this perception is very dangerous. Look at Shopee. High-risk-high-return.

Diversify to international stocks .. is a recommendation for U.S. stock investors. However, if you allocate 30% this way, usually it would reduce your portfolio average return.

— eg: hot growth stock investors … even index investors can hit higher return than my div-centric MOETF system.
— eg: personal xp: 1997 commodity trading .. return too high. My agent said 18% a month. Clearly unsustainable.
leveraged trading !
— eg: dot-com boom-n-bust .. https://www.fool.com/investing/best-warren-buffett-quotes.aspx says “I can’t think of another period of time when it was easier to make money in the stock market. ”
— eg: bccy.. I think the believers of growth stocks would also consider cryptocurrencies (Zhang Jun?), even though they recognize the fundamental differences between bitcoin and growth stocks in terms of economic value.
— eg: leverage .. some investors even borrow money to trade stocks. With $100k capital, they get to trade $200k and hit higher returns on capital
— eg: xp of many non-US investors .. newbies tend to lose money in stock-picking outside the U.S. I guess this is worse with growth stocks. In contrast, index investing looks like safer.

ETF invest`=far simpler than stock-pick`#Dahlan

Posted on by tiger40490

k_ETF_assetClass

I told my young colleague Dahlan that “ETF investing is much simpler than stock trading”.

  • no analyst research or rating
  • no need to identify defensive stocks or stable cash cows
  • no worry about buying at the peak
  • no worry about buying in a volatile time
  • no dividend safety concern
  • no dividend trec to check
  • no special dividend
  • no stock splits or buyback
  • no dividend cut surprises … as ETF dividend is always fluctuating.
  • no surprise about dividend processing
  • no surprise about tax withholding in Canada dividend
  • no surprise about low liquidity in pink sheets
  • no pre-clearance required for most ETFs

— learning as a recreation .. is a major advantage of MOETF.  Simpler implies less learning.
We learn and grow wiser mostly from mistakes and losses.

What if your stock pick doesn’t really lose money but trails the index and most index-tracing ETFs? I guess you too learn something.

You also learn something if your pick beats the index.

I feel the more names you pick, the faster you learn. You also learn by selling, but I practice buy-n-forget

My comment to Dahlan has a hidden meaning “Similar to a bigger board game, Stock picking is more fun more anti-aging, more recreational.”

recreational investing #w1r3

Posted on by tiger40490

limit order (rather than fractional) is part of tCost optimization.

My stock investing can be characterized as recreational_investing. Biggest risks are 1) sleep]peace, focus@work 2) mkt risk.

I feel the tension between two forces
* self-hate due to low $ROTI, low commitment amount… tolerable for recreational investing
* if I bet bigger, I hit high tcost (due diligence + babysit) and much higher market risk.

The most promising solution is bigger buy-n-forget, buy-n-hold for bigger dividend. I can also stick to recreational investing, and keep my portfolio NAV below $20k.

— ROTI .. as a metric is critical. The time must be time well-spent, in terms of

  • (Most of the benefits are related to retirement.)
  • brain stimulation (anti-aging), highest in stock-picking, lowest in mufu picking [1]
  • learning, self-growth, self-discovery
  • meaningful interaction with real people not automated programs [1]
  • pnl .. is usually below $3k, but can become 10k
  • joy.. I think many retirees use stock investing as a pastime. It’s their own money, not wasted on unhealthy activities.

Some retirees use recreational investing to fend off inflation, and build a small legacy for a grandchild. Could be as small as $5k, but it gives meaning to the effort. Meaning can be important to an otherwise meaning-lite recreation.

In contrast to roti, the ROI metric is less critical for a recreation [1].

— [1] discussions: single stocks far exceed funds
I have found far more online discussions of single stocks than funds.

In my chats with friends, fund investing is a shallower topic than stock-picking.

— risk capital i.e. money you can afford to lose. See blogpost on risk capital
— Pool size: perhaps 10->20-100k, depending on your family brbr, mtg/college and other obligations, dependable income, retirement time-frame,
— asset classes:

  • stocks; reputable funds; REIT fine but rEstate is not recreation 🙂
  • FX, gold, oil

risk rating: high-risk assets are welcome due to the small exposure.

wiseInvestor[def]: RPR profile #zqbx^xx #w1r2

Posted on by tiger40490

Interns can hit more profits, perhaps by trading cryptos or hot tech stocks…

pain (as opposed to risk and reward) also includes anger.

As I grow older, I am more aware of my pains in investment.
10% loss generates more pains in me than 10% gain can generate happiness.
No pain no gain. I still have 40Y+ to live, so I need to take on some risky assets such as SP500, or Sgp rEstate

k_investor_selfEval

See also

Too broad to be useful? Will focus on my idea of wise investor [mellowing up], which is mostly about 1) breakaway from convention wisdom, or wrong priorities [i] … and 2) risk profile self-discovery.

In addition, 3) Pain is also center stage of becoming “wise”, but behind the scene and less talked about. Various psychological pains [including stressors] are part and parcel of investing.  Those pains need to be  managed. Unexpected, unmanageable pain can be classified as One special risk.

[i]A wise investor understands that her own priorities [Risk/Pain/Return profile] are subtly unique and invariably different from the stereotypical investors. Therefore, a lot of “other investors’ priorities” are the wrong priorities for her. see also

— risk: over-commitment of personal time… A wise investor recognizes the risk of regrettable ROTI, even with the firewall intact
— risk: infatuated investors .. wise investors understand this tendency in herself
— risk: liquidity risk .. often requires large allocation to low-return assets. See make every dollar work hard4us @@
— other risks not specific to the “wise investor”:

  • long-term inflation risk .. See my Nov 2021 mail to Edmund
  • personal legal risk .. A wise investor would not lose sight of this risk.

— pain: stressors in eq-investing has a small section on “wise investor”. A wise investor would notice her internal stress sensitivities and work on stress prevention/reduction/protection.

Disambiguation : in this blogpost, “risk” refers mostly to financial risks; mental/health risk is classified as psychological pain.
— pain: firewall .. handles multiple risks and pains that I won’t list.
— pain: missing the boat on some high-growth assets
pain: FOLB by the cohort
— pain: setbacks .. (various types) A wise investor accepts them as facts of life in investing. She could choose to avoid certain assets forever [FXO, commodity futures..] Like R.Xia, she could decide to stand back and watch certain hot assets after losing money. No right or wrong.
— expected return .. if (a big if) and when all risks are understood and under effective monitoring, then the target return is a simpler question.

To reduce risks and pains, for some wise investors (or older investors), risk_capital could be a very small allocation. The smaller this allocation, the less pain/risk. My HY/PE is one example. Therefore, expected return is largely determined by the personal pain/risk profile.

Non-risk capital would go into low-return liquid assets including contingency_reserve. Some wise investors would find the low return painful.

jolt: It’s no shame to allocate 90% to low-return liquid assets.

I want to be an aggressive wise investor, with growing equity portfolio and rEstate portfolio.

jolt: equity portfolio doesn’t have to beat SP500. A wise investor won’t insist on that as a priority.

hot assets .. require a lot of wisdom and cool-headed detachment. Missing the boat is quite common and acceptable.

Q: Is zqbx [working towards higher returns] or passive acceptance of low returns a quality of some wise investors? 
Jolt: A: yes to passive acceptance. Investing is not personal improvement, not a noble cause, so I don’t associate it with zqbx.  However, I don’t like “lazy” investing. Some due diligence, some PP learning (separate section in this blogpost), some personal growth is part of being a wise investor. It requires effort, focus and dedication, but not zqbx.

— learning .. is a valuable bonus, not always necessary and not always possible.
Jolt: A wise investor may invest in 9 different “things” and learn nothing in depth from half or all of them. Note the different types of learning
— xpSelf has joys from learning and at moments of “short-term”[ii] profits like doses@delight. A wise investor recognizes that. By definition, a wise investor is 100% judged by the rmSelf.. These joys may not be significant to the evaluative rmSelf are are mostly forgotten.

[ii]In contrast, “long-term” profits by definition are very few, and much harder to achieve. For example, I had many joys with Jill’s HY/PE, and FXO, but mostly forgotten. The long-term result seems to be  a negative return.
— what experts to trust .. lots of theories make sense but are not really practical. Some academic theories have limited validity — most eq investing theories use U.S. stocks only, with a few (to a few hundred) thousand data points only. They don’t even recognize regime change.

— small number of experiences.. I told Caroline of  Propnex that most rEstate investors are not wise because we can’t try too many times, esp. compared to stock investors. After one or a few tries, we are experienced, but not necessarily wise.

Buffett said each person has a punchcard and 20 punches to make, and a few good punches would be enough!

==== some patterns of my bad bets. (I keep this section here as relevant.)

  • tx costs.. see https://tanbinvest.dreamhosters.com/18406/3episodes-of-non-recreational-trading/
  • non-positive DYOC .. see https://tanbinvest.dreamhosters.com/18406/3episodes-of-non-recreational-trading/
  • HY/PE poor transparency or regulation .. But German PE, Dr Soo’s first, E12 .. didn’t fail.

See also ## key variables in my bad/good bets
— eg sReit .. good transparency, highly regulated.
The blue-chip sReits have good bid/ask spread
— eg bccy .. bad bid/ask spread and fees; zero DYOC; poor regulation
— eg (neutral experience) US HY mufu .. real net DYOC was 1-3% considering fees and NAV erosion

div ] MOETF^DIVA #learning

Posted on by tiger40490

In 2021 I had a brief “debate” with a DBS consultant after a Takashimaya seminar. He is conversant with stocks.

DIVA shows 10%+ compound return (assuming DRIP) over a decade+. Impressive, but most of it probably is capital gain, rather than dividend income from constituent stocks. The presentation by DBS/OCBC etc is probably misrepresentation of DIVA dividend dependability.

Q: if an equity mufu like DIVA can pay 4% dividend, then what’s the advantage of MOETF hitting DYOC 4% after tax?
A: This blogpost on DPR is the big picture. I doubt a mufu can generate 4% DYOC consistently without eroding NAV. I have yet to see an example.
A: An big point of confusion — when I say 4% DYOC I’m referring to my entire portfolio, where 80% of t could be earning 5% and the other 20% earning close to 0%. For a mufu investor, DIVA would be part of her portfolio, so her portfolio DYOC is unlikely to be same as DIVA.
A: an equivalent ETF will probably beat the mufu in terms of expense ratio. However, mufu manager can trade better than the ETF robot. Over the decades, countless papers have demonstrated that virtually all eq mufu’s under-perform the index in the long run.
A: MOETF will beat ETF on a few fronts. One financial reason — MOETF gives me the option to liquidate individual constituent stocks.

However, I do agree that dividend tax is a disadvantage of MOETF. Luckily, as U.S. tax payer, my annual income would be so low that my marginal tax rate would be far below 20%.

Tcost is another disadvantage but as an recreational investor I treat it as recreation and learning. Anti-aging.

By the way, the DBS consultant made another misrepresentation implying “10% return every year.” I challenged him “Are you sure there’s not an annual return below 10%”? I believe 2011 and 2018 are negative.

[15]poor ROTI @learn`2invest

Posted on by tiger40490

I often feel I’m spending too much time trying to learn to invest.

There’s substantial literature, b/c many organizations, pensions, and families have a real need for preservation, and protection against inflation, but that’s all in theory. Let’s focus on the practical justifications for spending precious time…

A: I need to spend time experimenting to find the right mix that fits my risk appetite.

Q: Am I spending too much time given I invest merely ~20k?
%%A: i will invest more but only if I get confident.

Q: Am I spending too much time given I’m not improving as an investor?
%%A: my inv performance is not improving, but I have to feel more confident about it before I can lift more money out of time deposits.

Q: so many retail investors win then “give back” their /winnings/, and end up with no better performance than the index, so why bother and why spend the precious time?
%%A: i think many of them lose 30% of principal but learn something and then make 23% (or 61% or whatever) if you blindly look at end-to-end return over a few years. Note this is possible only with eq
%%A: It’s not fair to dismiss “retail investors” as a whole. Some do better.

Q: maybe just keep money in time deposits. Why bother investing?
%%A: there’s good chance (80%) that prudent and careful personal investment would grow your family savings by a steady rate of 4% or (much) more, while controlling the risk. It takes quite a bit of practice.

I need to learn to use limit orders…

— This is serious, grave matter —
By default, without enough sense of confidence, I would keep everything in bank accounts. Remember this 250k is my entire family savings. It will make (and feel like) a big difference when we lose it. It’s the basis for a lot of planning in the family. Many say you make this much a year, so 250k is no big deal, but in reality it probably takes 5-10 years to accumulate this much. Also, your income may drop – non-zero risk.