Peregrine Falcon = Psychology Focus
Devise my own strategy = Hong Arts of War King = HAWK
Do not be influence my noises
Turtle Trader = mechanical trading method
Do not try to be something you cannot do
be realistic
nobody can predict the future, nobody know what will happen tomorrow- John Henry
focus on my strength
focus on option
don't predict future, don't gamble, only win, don't guess, go for sure win
1. soccer bet draw sure win
2.fundamentals investing sure win
3.mechanical trading sure win
4.trend following on option sure win
No Second Best
trade with my own strategy - the strategy should be simple and easy to execute.
Pound on mistakes of mass investors.
Pound on their weaknesses of fear and greed.
my enemy : mass investors.
think like a hedge Fund, my opponents are the mass investors.
I am the hedge fund, I am Soros.
become like puntfast.
use my very own indicators, simple and easy and not a lagging indicators, must be one step ahead of other.
Be an contrarian.
do the opposite of the mass investors.
must try very hard to understand the psychology of mass investors.
Think like a hedge funds and act like an hedge funds.
mix with mass investors to understand their pyschologloy.
hedge funds is up again the mass investors, Hedge unds try to mislead the mass investors.
Refelvicity= market has mismatch info, mass investors make mistakes, be an opportunities and wait to pound on their mistakes.
1 comment:
洪 子 兵 法 (HAWK)
Hong Art of War Knowledge (HAWK)
1. Buy 100,000 shares of CSC - $365,000
2. Short SMCSI index at 480 points 8 mini contract
3. Buy 40,000 warrents of STI - $12,000
Goals, Style and Strategy
Goals
Risk and return are highly correlated. The higher the potential return, the higher the potential risk. For stocks, the highest potential returns (and risk) center around growth industries with stock prices that exhibit high volatility and high price multiples (PE, Price/Sales, Price/Hope). The lowest potential returns (and risk) come from stocks in mature industries with stock prices that exhibit relatively low volatility and low price multiples.
Style
My goal is income and safety, buying or selling at extreme levels (overbought/oversold) is an unlikely style. My goals center on huge profits, high returns and low risk, bottom picking strategies and gap trading is my style.
My Styles is looking to capitalize on long-term macro economic trends. I use a host of possible combinations including position traders, aggressive growth investors, value investors and contrarians. Position traders for 2-10 week trades and value investors for 1-2 year trades.
Not only will your style depend on your goals, but also on your level of commitment. I pursue a patient style with low activity levels. The goals would be focused on less trades, huge profits and very big stop-loss levels. End of day charts would be used to provide timely entry and exit points. A high level of commitment, focus and energy would be required.
Position traders are likely to use daily end-of-day charts and pursue 1-8 week price movements. The goal would be focused on short to intermediate price movements and the level of commitment, while still substantial, would be less.
Having the sense to pick the right investment propositions - and walk away from the others - is key to preserving as well as growing your capital.So I decided to tap their collective wisdom and posed a question to all of them: Whatare the key prerequisites to making it big in investment? Intelligence? Capital? Network?The first guy picked intelligence, network, hunger and discipline as the most importantfactors.'Capital, you can build it up slowly,' he said. He went on to recount the story of someone he knows who trades the market for a living. The guy was caught wrong-footed by the market and lost everything. Not willing to admit defeat, he borrowed $300,000 fromhis mother in 2001 as seed capital to start afresh. And today, his net worth is $40 million.I did a simple calculation on how one can grow the money so fast. Here's what I found:You'd have to grow your pot 23 per cent every quarter to achieve what this persondid in six years. In the bull market of the past three or four years, the prices of somestocks have appreciated 10 times or more in as short as three months.In such a market, picking the right stock and riding with it can be very rewarding.But to make his money grow as fast as it did, the person must have had the guts tomake big bets. Assuming a constant 23 per cent return a quarter, he would have had tostake all his capital and accumulated profits all the time.On the topic of limited capital, a financial market veteran who now manages his own fund had this advice. 'When you have limited capital, you have to increase the velocity of your capital. In other words, you have to go in and out very fast. Always make your money work hard.'How does one then identify the stocks or investments that have a high chance of yielding fast bucks?This is where network and intelligence comes in. One can, of course, observe
developments in the market and try to anticipate what will happen next. This requiresintelligence.For example, a couple of my friends constantly monitor the big picture for theirnext investment idea before the whole world wakes up to the opportunities.A case in point. As soon as it was known that an integrated resort would come up at
Marina Bay. Marina Bay, they reckoned, would be a desirable address in the years to come. They checked out the most iconic project there - The Sail@Marina - and compared prices there with those in other global cities. Their conclusion: Relative to other cities, The Sail@Marina was cheap. So these friends bought several units at The Sail@Marina in 2005. Today they are sitting on very handsome profits. NetworkAnother friend of mine ranks network above intelligence. 'Singapore is an insiders' market,' he said. 'If you know the right people you'll get to invest in the pre-IPOmarket, take up placement shares, etc.' In the past few years, pre IPO’s have beenalmost a sure bet, with very lucrative returns.It even applies to properties. Only the privileged are invited to pre-launches andgiven the opportunity to make an easy $200,000 or $300,000 in just two or threeweeks by simply flipping the units. So knowing the right people is an importantfactor.But my take is that you still need intelligence to make the most of a network.Obviously, if you have the money you will receive a lot of investment propositions.Having the sense to pick the right ones - and walk away from the others - is key topreserving as well as growing your capital.One friend's approach is to get information from various sources - read network. He then puts everything together to form his own go or no-go decision. For example, if a company's numbers look good and people in that industry tell him the management iscapable and trustworthy, and the company is executing plans to take advantage of anindustry upswing, and he notices that some very smart money has just gone into thecompany, chances are he will put his money into it.Entrepreneur spottinganother friend, a financial market veteran who has headed foreign investment houses,
says that identifying up-and-coming entrepreneurs is tremendously rewarding -financially and in terms of satisfaction.His boss took a bet on Li Ka-Shing when the latter was still selling plastic flowers, hesays. There are many opportunities up for grabs. But if you are not hungry, and are contentto just sit back and relax, your wealth is not going to grow fast.Hunger need not be for money. It can be hunger for an intellectual challenge, forthe satisfaction of getting it right and the recognition of being astute.With hunger, you are more diligent when looking for opportunities, more willing todo a little more research and think through more thoroughly the probabilities of successand failure and the likely outcome. Often times, wealth will be a natural by-product.Discipline, meanwhile, is about going through the same rigors for every investment, about admitting mistakes, cutting your losses and moving on.It is also about properly managing risks, not over-gearing yourself and making capitalpreservation a major goal. For the lazy and uninitiated, the stock market is a dangerous place.And finally, you should not downplay the role of luck. The first guy said he has always been lucky. In the previous bull market, his colleagues complained about how their clients' statements and transactions were processed very slowly because backroom staff was so overloaded with work. He lingered to chat with the backroom staff. During the conversation, he found out that they had to handle so many new account openings. 'Grandmas and pops and even blind men are opening accounts,' he was told.That sounded an alarm. The next morning, he went into the office, told his colleagueswhat he had heard and asked them to clear their positions. But nobody listened. He took his own advice and sold everything he had. The market continued to run a bit more - then took a sudden south turn. His colleagues couldn't sell fast enough and suffered significant losses. He emerged unscathed.Concluding thoughtsAfter speaking to and observing many successful investors, I believe you need all the above - intelligence, hunger, capital, network, discipline and luck - to succeed ona sustained basis.With intelligence and hunger, and that little bit of luck, you can amass capital. Discipline and network can send that capital on the next phase of growth - this time, with a steeper trajectory.Some people go for value, invest for the long term and allow the compounding effect to work. Some trade in and out, creating a lot of velocity with their capital. A few are constantly on the lookout for arbitrage opportunities - almost risk-less propositions with near-guaranteed profit - present in mergers and acquisition deals.You have to find a style that suits your temperament and situation.
For most of us with day jobs, the first option is the most viable. And it's not any less of an option. Pure and simple analysis of a company's financial statements, plus an understanding of its business can - without any access to privileged information - earn you just as good a return as any trader or fund manager.There are a lot of opportunities, especially in the last few years and in the coming years as China and India develop and billions of consumers enter the marketplace. Enormous wealth will be created.
Fundamental analysts believe that a business' fair value will eventually be reflected by the market. This allows investors to gain from the market mispricing. Investors may use fundamental analysis within different portfolio management styles.
Buy and hold investors believe that latching onto good businesses allows the investor's asset to grow with the business. Fundamental analysis lets them find 'good' companies, so they lower their risk and probability of wipeout.
They may use fundamental analysis to correctly value 'good' and 'bad' companies. Even 'bad' company's stock goes up and down, creating opportunities for profits.
Contrarian investors distinquish "in the short run, the market is a voting machine, not a weighing machine". Fundamental analysis allows you to make your own decision on value, and ignore the market.
Value investors restrict their attention to lower valued companies, believing that 'its hard to fall out of a ditch'. The value comes from fundamental analysis.
Top-down and Bottom-up
Investors can use either a top-down or bottom-up approach.
The top-down investor starts his ananlysis with global economics, including both international and national economic indicators, such as GDP growth rates, inflation, interest rates, exchange rates, productivity, and energy prices. He narrows his search down to regional/industry analysis of total sales, price levels, the effects of competing products, foreign competition, and entry or exit from the industry. Only then does he narrow his search to the best business in that area.
The bottom-up investor starts with specific businesses, regardless of their industry/region.
Procedures
The analysis of a business' health starts with financial statement analysis that includes ratios. It looks at dividends paid, operating cash flow, new equity issues and capital financing. The earnings estimates and growth rate projections published widely by Thomson Financial and others can be considered either 'fundamental' (they are facts) or 'technical' (they are investor sentiment) based on your perception of their validity.
The determined growth rates (of income and cash) and risk levels (to determine the discount rate) are used in various valuation models. The foremost is the discounted cash flow model, which calculates the present value of the future dividends received by the investor, along with the
eventual sale price.
earnings of the company, or
cash flows of the company.
The simple model commonly used is the Price/Earnings ratio. Implicit in this model of a perpetual annuity (Time value of money) is that the 'flip' of the P/E is the discount rate appropriate to the risk of the business. The multiple accepted is adjusted for expected growth (that is not built into the model).
Growth estimates are incorporated into the PEG ratio but the math does not hold up to analysis. Its validity depends on the length of time you think the growth will continue.
Computer modeling of stock prices has now replaced much of the subjective interpretation of fundamental data (along with technical data) in the industry. Since about year 2000, with the power of computers to crunch vast quantities of data, a new career has been invented. At some funds the manager's decisions have been replaced by proprietary mathematical models.
Selection criteria for fundamental stocks (in order of preference): 1. Potential to be a multi bagger (share price can double, triple, etc)2. NTA is at a significant discount to current market price. NTA to me is cash and Singapore properties. This gives a good margin of safety.3. Strong cash flow with conservative accounting.4. It is in a growth industry and has good competitive advantage. The business is scalable. It is not a professional type business.5. Its products can command a premium. It has a brand name or a unique product. It is not a commodity.6. It has strong recurring income.7. Credible management (e.g., no talking up stocks, false promises or creative accounting).
Strategy
Once the goals have been set and preferred style adopted, it is time to develop a strategy. This strategy would be based on your return/risk preferences, trading/investing style and commitment level. Because there are many potential trading and investing strategies, I am going to focus on one hypothetical strategy as an example.
GOAL:
First, the goal would be a 20-30% annual return. This is quite high and would involve a correspondingly low level of risk. Because of low risk, I would allot all my CPF money and high percentage (50%) of my cash portfolio to this strategy.
STYLE:
Although I like to follow the market throughout the day, I cannot make the commitment to day trading and use of intraday charts. I would pursue a position trading style and look for 1-8 week price movements based on end-of-day charts. Indicators will be limited to three with price action (candlesticks) and chart patterns will carry the most influence.
Part of this style would involve a prudence money management scheme that would limit losses by imposing a stop-loss immediately after a trade is initiated. An exit strategy must be in place before the trade is initiated. Should the trade become a winner, the exit strategy would be revised to lock in gains. The maximum allowed per trade would be 40% of my total trading capital. If my total cash portfolio were 100,000, then I might allocate 50,000 (50%) to the trading portfolio. Of this 50,000, the maximum allowed per trade would be 20,000 (50,000 * 40%).
STRATEGY:
1. Focus on only a few stocks2. Identify a tipping point for each stock (e.g. building a MRT station next to its key property)3. Buy slowly into any stock (as my timing is usually not good)4. My investments are long term (This is money I can afford to leave under the pillow for years) 5. Low liquidity is OK (I am a collector and have no intentions of selling early)6. Have an exit price for each stock (but be prepared to sell when prospects are not as rosy or when the entire market is on a bearish mega trend)
The trading strategy is to go long stocks that are near support levels and short stocks near resistance levels.
To maintain prudence, I would only seek long positions in stocks with weekly (long-term) bull trends and short positions in stocks with weekly (long-term) bear trends.
In addition, I would look for stocks that are starting to show positive (or negative) divergences in key momentum indicators as well as signs of accumulation (or distribution).
My indicator arsenal would consist of two momentum indicators (MACD and Slow Stochastic Oscillator) and one volume indicator (Accumulation/Distribution Line).
Even though the MACD and the Slow Stochastic Oscillator are momentum oscillators, one is geared towards the direction of momentum MACD and the other towards identifying overbought and oversold levels (Slow Stochastic Oscillator) to enter a trade.
I pursue a conservative (low-risk) strategy for trading with a big portion of my portfolio and a relatively conservative (capital preservation) strategy for investing with the bulk of my portfolio. The bulk for investing, the equity swings should be lower and the emotional strains less.
Sniper Trading
Goals, Style and Strategy
Goals
Borrow money from bank at an average interest rate of 7% to speculate for short-term gains.
The higher the potential return, the higher the potential risk.
For stocks, the highest potential returns (and risk) center around growth industries with stock prices that exhibit high volume, high volatility and high price multiples (PE, Price/Sales, Price/Hope).
Style
The expected return is 20% and desired risk and cut loss point is 10%. If your goal is income and safety, buying or selling at extreme levels (overbought/oversold) is an unlikely style.
My goals center on quick profits, high returns and high risk, bottom picking strategies and gap trading is my style.
My style is aggressive day trading looking to scalp 20% gains to looking to capitalize on medium-term macro economic trends. Combinations including swing traders, position traders, aggressive growth investors, value investors and contrarians. Swing traders might look for 1-5 day trades, position traders for 1-8 week trades and value investors for 1-2 year trades.
Day traders are likely to pursue an aggressive style with high activity levels. The goals would be focused on quick trades, small profits and very tight stop-loss levels. Intraday charts would be used to provide timely entry and exit points. A high level of commitment, focus and energy would be required.
On the other hand, position traders are likely to use daily end-of-day charts and pursue 1-8 week price movements. The goal would be focused on short to intermediate price movements and the level of commitment, while still substantial, would be less than a day trader.
Strategy
Once the goals have been set and preferred style adopted, it is time to develop a strategy. This strategy would be based on your return/risk preferences, trading/investing style and commitment level. Because there are many potential trading and investing strategies, I am going to focus on one hypothetical strategy as an example.
GOAL:
First, the goal would be a 20% return per trade. This is quite high and would involve a correspondingly high level of risk. Because of the associated risk, I would only allot a small percentage (50%) of my portfolio to this strategy. The remaining portion would go towards a more conservative approach.
STYLE:
I like to follow the market throughout the day; I can make the commitment to day trading and use of intraday charts. I would also pursue a position trading style and look for 1-8 week price movements based on end-of-day charts. Indicators will be limited to three with price action (candlesticks) and chart patterns will carry the most influence.
Part of this style would involve a strict money management scheme that would limit losses by imposing a stop-loss immediately after a trade is initiated.
An exit strategy must be in place before the trade is initiated. Should the trade become a winner, the exit strategy would be revised to lock in gains.
The maximum allowed per trade would be 20% of my total trading capital. If my total portfolio were 100,000, then I might allocate 50,000 (50%) to the trading portfolio. Of this 50,000, the maximum allowed per trade would be 10,000 (50,000 * 10%).
STRATEGY: 1. Stop loss at 5 - 10%.2. Take winnings at 10 - 20%3. Top active counters mainly4. Don't hold longer than 1 week (otherwise, it is likely to become an unwanted baby)5. Trust no one but yourself (don't trust gossips)
1. Go long stocks that are near support levels and short stocks near resistance levels. Use Elliott Wave Theory as a reference. To maintain prudence, I would only seek long positions in stocks with weekly (long-term) bull trends and short positions in stocks with weekly (long-term) bear trends.
2. Look for stocks that are starting to show positive (or negative) divergences in key momentum indicators as well as signs of accumulation (or distribution).
3. My indicator arsenal would consist of two momentum indicators (MACD and Slow Stochastic Oscillator) and one volume indicator (Accumulation/Distribution Line). Even though the MACD and the Slow Stochastic Oscillator are momentum oscillators, one is geared towards the direction of momentum MACD and the other towards identifying overbought and oversold levels (Slow Stochastic Oscillator).
4. As triggers, I would use key candlestick patterns, price reversals and gaps to enter a trade.
I pursue an aggressive (high-risk) strategy for trading with a small portion of my portfolio and a relatively conservative (capital preservation) strategy for investing with the bulk of my portfolio.
Attributes of a successful investor
I am sure we all hold different views on what makes an investor successful. After having gone through the ups and downs of investing over the past 20 years, I think some of the key attributes are:1. Foresight. Above everything else, a successful investor must have foresight. He must be able to successfully look into the future and predict correctly.To develop foresight, an investor should have the experience of running successful and not so successful businesses. I think one of the reasons Warren Buffett did so well in his investments is because he had a bad time trying to turn around the original business such that in the end, he sold it. Hence, I see investing as the next step after entrepreneurship. But one needs to be an entrepreneur first to understand the issues that SMEs face in the real world. After all, most of our investments are in real world SME companies and what we are trying to do is to identify the high flyers of the future.
2. Ability to understand the fundamentals behind a company, especially, the financial statements. This is where those trained in accountancy may have an upper hand. However, this attribute is not that difficult to pick up. One of the first stops for any fundamental investor must surely be the annual report. Successful investors have an ability to read in between the lines of a financial statement such that he can foresee many of the issues that may surface in the years ahead.
3. Ability to appreciate technical analysis. This will help time your purchase and sale of shares. 4. Ability to control fear and greed. This one, we all agree and hence, no need for elaboration.
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