WARREN BUFFETT ROX-Rationality is the key

RE:Life

2011-09-04T01:19:00.001-07:00

I've just been hurt deeply. I will try to regroup my life and focus on the following tangible things:

1. Improve my trading performance
2. Achieve all As this sem to get magna cum laude
3. Get CMT level 1

Jirong

Value Averaging

2011-07-21T09:51:00.000-07:00

I just encountered this method which I might be using for the rest of my life. This method produces the best internal rate of returns as compared to more conventional methods such as dollar cost averaging.

However, I might tweak the strategy a bit. For instance, when the stock prices are below the 250 MA, I would increase my contribution rate from $500 to $600.

On a side note, I might want to be a teacher rather than going to the financial sector. I'm really confused now and I do hope that someone can shed some light on this matter.

Jim Roger's analysis of UN's 'aid'

2010-11-29T08:44:00.000-08:00

Does aid help Africa at all?

We do know that stuff such as clothes are being sent to the continent. But, does it really help them at all?

Jim rogers mentioned that these shirt that are meant to be aid are being sold to the people in Africa instead. And, these will bring about few problems. One of them is, the clothes producers are not able to compete with these 'new sources/supply' which are being sold at a cheaper price.

The developed countries might have already understood this situation, but they might still choose to do nothing at all, since cutting this source of 'aid' would be deemed as a move that is not 'humane'. Also, the alternative solution of purchasing these clothes from the African producers would result in intense competition with its own manufacturers.(which seems to be a bad thing for them even though competition is often good for an industry to progress) and this is not viable to them.

All in all, even though the better solution is to import the clothes from Africa, the developed nations are not wiling to adopt this stand since it might 'hurt' its people instead.

Pondering

2010-07-16T08:09:00.000-07:00

Many people who have achieved financial independence keep mentioning about 'Pipes'. Right now, I don't really have a solid pipe yet. I keep harping on reaching the $100k goal before I graduate, but I do feel that this goal is getting further and further away from me. How do I maximize my time. Time=money! Right now, I'm often free at nite. I do feel that I should really convert the precious commodity of time into money! How can I do it. Can anyone enlighten me? By trading FOREX? How? People are not willing to teach you for free man.

1.) Work on MON, WED and FRI. 15 x 8= $120 ($480/ month)+ tuition($400) or $600++ instead of $480. $880 or $1000

I want to get rich!!!!!!!!!!!!!!!!!!!!

Re-assessing my goals

2010-07-12T20:12:00.000-07:00

1. Do 1 major event per semester-most probably I will doing one of the social enterprise projects this semester.)
2. Increase cash flow-find 1 more tuition during the weekend
3. Increased EQ, broaden social network
4. Broaden my knowledge-look up to charlie munger
5. Do not be stagnant
6. Step out of my comfort zone
7. Improve on public speaking skills
8. Increasing net worth to $30,000.(I'm really lagging behind!!!!!!!So long and it's still $25,000. It's really quite hard to increase my net worth while I'm still in school. But, nothing can stop me man.)

Re-assessing my goals

2010-04-20T09:50:00.000-07:00

Regarding my earlier post, I stated that obtaining a good GPA is not important. However, I think I have changed my mind. Why? Because a good GPA looks good! And since I am paying so much for my school fees, why should I give up a golden opportunity to make full use of it.

1. Brush up on FA
2. Increase independence
3. Increase knowledge on philospophy
4. Prep for case study competition
5. Apologise to brother( find correct timing)

OMG

2010-01-22T07:29:00.001-08:00

I think I have found the holy grail in my life man. Trading sti etf. How cool can it be? Generate $800 per month! I'm on my way to financial freedom. The key now is to increase my cash flow and I think I should be on my way there.

Contrarian

2010-01-16T10:25:00.000-08:00

How do you really succeed in life?

I have heard from numerous people who are really really successful and they said the only way is to be a contrarian- one who does not follow conventional wisdom; one who does not tread the same path that many before him has walked; one who is daring enough to venture out into the uncharted waters on his own; one who deeply believes himself and one who is not affected by 'noises'.

Parabolic SAR FTW

2010-01-15T08:50:00.001-08:00

Omg! This indicator is so damn bloody accurate! Freak OMG, I'm fainting. This could be one of the biggest discoveries in my life

Cash flow

2010-01-12T20:56:00.001-08:00

How do I increase my cash flow whilst being an undergraduate. This represents one of the conundrums that I am facing now. POKER, STOCKS, FOREX, TUITION, GRANTS, COMPETITIONS, BUSINESS. Are these really my strengths?! What are my strengths? I have always wanted to achieve financial freedom but I am still very clueless in how to achieve it. Furthermore, I am also clueless in what I really want to achieve in life? Studies or wealth? I am in a hurry now to achieve my dream.

FINANCIAL INDEPENDENCE

2009-12-15T08:54:00.000-08:00

I have set an ultimate goal for myself. My net worth must reach 100k by the time I graduate. It's a must. I have got ample time now and I even rank it above getting cum laude for my degree. It is imperative for me to achieve it. 100k, here I come!

Lee Kuan Yew's article in Straits times

2009-10-13T10:01:00.000-07:00

I would like to refer to the article written by our minister mentor in Straits Times.
In the article, he mentioned about the need for the Chinese to change their thrifty habits. In their culture, they are encouraged to save their money for 'rainy days'. Why do I make this claim? In the Chinese history, during times of disasters, the civilians often find themselves being alienated by the government for it is extremely difficult to obtain financial backing from the central government. Ergo, it is imperative for the people to stash away some of their money, and not spend all their money on material needs instead. However, change they must, since the global economy depends substantially on the rising dragon to drag the world out of the economic slump. If the world economy were to start functioning again, China would certainly serve as one of the most important catalysts.

But, when all is said and done, even though China might be one of the important players for the decoupling effect, America must also do their part for they are still biggest consumer on the earth judging by GDP alone.

Immanuel Kant VS Utiliarianism

2009-10-12T10:06:00.000-07:00

Today, I'm going to express my view on these 2 terms again. Just now, I chanced upon an intriguing article in my AS textbook- A terrorist plants an atomic bomb in a place that is unknown to anyone. And this bomb is going to explode in a few days' time.In addition, this explosion would most certainly claim the lives of millions of people.
After days of intensive search for the terrorist, he is finally caught. One worrying thing to note- notwithstanding pleading with him repeatedly to disclose the whereabouts of the bomb, he simply refused to bulge on his position.

My question to you is, will you approve the use of torture which could potentially salvage the lives of millions of people? On the one hand, torturing has always been perceived as an act that is distasteful and inhumane, but on the other hand, it could be use in this case to save millions of lives. I would like to propose to you on the tools for managing this problem- analysis by implementing both categorical imperative and utilitarianism concepts.

Ethics of technology

2009-09-26T09:57:00.001-07:00

I find this area of ethics particularly interesting. In fact, I published this on my TWC forum.

To first determine whether our ethics have been corroded by technology, it is important to first define the scope of ethics. Generally, there are two approaches towards moral issues- utilitarianism and categorical imperative. I will further elaborate these two points with regards to certain technological issues in the later part of my post.

Utilitarianism is the notion that the right action is understood entirely in terms of the consequences involved. Thus, this means that moral worth of an action is determined solely by its contribution to overall utility of the society.

On the other hand, categorical imperative implies that the action is only ‘right’ when it is morally sound. This can be illustrated from the quote by Immanuel Kant, the forefather of the concept ‘categorical imperative’, ‘Act only according to that maxim whereby you can at the same time will that it should become a universal law.’ This concept tends to rely more on our moral intuitions (feelings) rather than our rational powers. Although ‘categorical imperative’ relies on intuitions, there are certain yardsticks that one could use to gauge whether the action is right such as religion and the legal system. This point to the fact that the ‘consequentialism’ concept embraced by the utilitarians would be disregarded since a follower of Kant would prefer to dwell more on the moral issue of an action rather than what the action will bring to a society.

Let me use these two very different school of thoughts and apply it to an ethical dilemma concerning technology- A man is very sick and he needs to have a liver transplant within two months or he will die. His situation is complicated by the fact that he has a very rare blood type and it is extremely hard to find a suitable donor. Time is running out and he desperately needs a liver transplant if he wants to live beyond two months! One day, he stumbles upon the fact that there is a stem cell research scientist who is able to harness a liver that would be compatible with any blood type. However, there is one issue here – his religion forbids anything to do with stem cell research. This brings me to the point on whether one should act base on utilitarianism or categorical imperative? If the man were to base his action on the former, he would accept the liver. On the other hand, if the man accepts the latter, he would reject the liver that could ultimately save his life.

Let me apply these two concepts to the hypothetical situation where genetic engineering has progressed so far that it is possible to ‘design’ a baby. Designing a baby in this context means that one can determine the fate of the baby by deciding the attributes such as mathematical aptitude and musical ability. If the government were to take a stand on this issue, what will their choice be?

A government that adopts the utilitarian approach would probably pass the bill to make it legal because it would definitely bring net benefit to the nation. Why do I say so? This would definitely raise the standard of living of the nation, not only economically but also in the social cultural aspect. For instance, the people would be better off and they would probably appreciate arts more.

On the one hand, a utilitarian government would welcome this idea, but on the other hand, a government that is leaning towards Kant’s ideology would probably reject it. They might argue based on religious reason as they feel that this whole idea is morally unsound and it is preposterous to play ‘god’ for this instance.

In short, it is very hard to determine whether one’s action is right or wrong, especially in an area such as technology that is filled with countless controversies. If one were to base all their actions on any ideology, he would commit ‘man with the hammer’ syndrome where ever problem will appear to be a nail. This analogy means that one would follow a system blindly without considering the alternatives and this might lead to the situation where the best solution is overlooked. Hence, I propose that in the areas of the ethics of technology, everything should be looked upon in a case by case basis, using both the utilitarianism and categorical imperative approaches.

Analytical skills

2009-09-24T20:43:00.000-07:00

This is one of the situations that my AS professor has given me. The story goes like this- You are currently a SMU student( which I am currently) and you are very interested in writing mystery novels. You are so interested that your dream is to be a mystery novel writer. You have sent drafts after drafts of your work to many publication houses but all you got are rejections, so you feel that this might be the end of your dream of showing the world of your work.

During one faithful day, one of the publishers that rejected your works called and told you that they are willing to accept your work. However, there is one condition- your work will be published under someone else's name. You asked why, and the publisher said that one of their authors have run out of ideas and the author's bank( unpublished finished works) can only last for five more years. They feel that your works are very similar to the best selling author, so similar that it seems like the works are written by identical twins. Hence, they feel that it is a good idea to publish your works under his name as it is almost similar to a franchising strategy where one can use the 'brand' to market their work. Also, you will receive $500,000 for your first work and 50% of the subsequent proceeds from the books that you are penning in the future. This is a very attractive deal considering your current status as a SMU student. However, there is one dangerous cache- if you were to publish any of your mystery novel works under your own name someday, you will be killed by assassins.

The question is- will you accept or reject the deal?

Aung San Suu Kyi

2009-09-24T20:37:00.000-07:00

I have recently come across an article regarding Myamar. I was deeply disturbed when I read that Aung San Suu Kyi, one of the leaders of the opposition party is kept under house arrest by the Burma's government in Burma, known as Myanmar today. How could one be kept under house arrest in the present world just because of conflicting ideologies? This is certainly one of the most disgusting things that I have ever heard of in my life. Also, I feel deeply ashamed to find myself of not knowing this all my life. If there is only one thing that is unjustified in the world, this could be the one!

LIFE

2009-07-25T10:08:00.000-07:00

I think I shoould try to enjoy every moment of my life. Just relax and take it easy!

OIL!!!

2009-05-18T08:52:00.000-07:00

Oil consumption has fallen by less than 10%. However, the price of oil has fallen off the cliff from US$150 to US$38. This represents a fall of around 70%. This tremendous fall is attributed to the fact that hedge funds pump in a lot of money to affect the prices.

However, this might also happen because of the fact that supply curve of oil is very price inelastic where a small fall in demand will result in a very huge fall in the price of oil.

US dollars as a denomination!

2009-03-29T09:31:00.000-07:00

During these few years, fears on the depreciation US dollars haven arisen. The depreciation of the dollars has mainly occured due to the staggering trade deficit. So, why the depreciation of the US dollars has created such a big commotion. This is because of the fact that many of the commodities and investment related products are denominated in US dollars. Hence, the depreciation of the dollars will result in a fall in value of the commodities (for eg. oil). Moreover, the huge spending by the US authorities will bound to result in inflation in the US. This will result in a fall in value of the US dollars as lesser things can be bought with the same amount of money. Thus, people who hold their investments in US dollars will slowly see it fall in value.

Pscycology of persuasion

2009-03-25T09:58:00.000-07:00

Few months ago, I completed a book recommended by charlie munger- PSYCHOLOGY OF PERSUASION. As mentioned by the title, it is a book that described the factors that influenced one's decision. This book is like a spear and a shield in one. Why do I say so? You can actually use the factors in the book to influence someone to follow your will and use it to defend against weasels who might use it to harm you.

The factors are as listed
1. Scarcity
2. Liking
3. Reciprocation
4. Authority
5. Social proof
6. Commitment and consistency

Suffice to say, these factors can affect your decisions substantially. Hence, you must always be aware of these factors that may affect your decision.

ALL THE CASH IS MADE IN THE WAITING

2009-03-20T16:34:00.000-07:00

The problem of not getting the right opportunites stems from the fact that people are not accustomed to wait!!!!!!!!!!

DOWN DOWN DOWN

2009-02-24T19:22:00.000-08:00

Everything is going down again. This is considered good news for me!

OIL PRICE

2009-02-18T07:11:00.000-08:00

Oil price is nearing $US 30/ barrel. This is actually one of the so called 'safety' limit price for me. So watch out for oil prices!!!!!!!!!

Benjamin franklin

2009-01-30T07:10:00.000-08:00

A penny saved is a penny earned! Maybe not just a penny because it might be up to 10 pennies if you invest in the right way

Nobody rings a bell

2009-01-29T09:12:00.000-08:00

Yup! Nobody rings a bell at the bottom of the bear market. That's why one must look at indicators such as the market p/e to allocate their capital.

THINKING

2009-01-28T05:36:00.000-08:00

Soros mentioned in the book 'alchemy of finance' that thinking is a process of making a decision based on the situation or the events that are happening. However, the decision made base on the thinking process will affect the situation and events that are happening. As you can see, this process is like a recursive function where the first factor will affect the second factor, and the second factor will in turn affect the first. This process is known as 'reflexivity', a term coined up by Soros.

Alchemy of finance

2009-01-25T10:18:00.000-08:00

Recently, I read an e book called 'Alchemy of Finance'. This is a book written by George Soros, a famous trader/investor( btw his net worth is $9 billion). One of the concepts he heavily emphasised is 'Reflexivity'. Reflexivity is a concept in which the prices of something( be it houses, stocks or currency) affect the fundamentals of it. This is a different school of thought as compared to the one that warren buffet has been advocating. Maybe, both school of thoughts are interrelated because when buffet buy things he always introduce 'margin of safety' as he feared that the prices might affect the fundamentals.

And most importantly----------------------ORD LOH!!!!!!!!!!!!!!!!!!!!!

Kelly optimization formula

2009-01-01T23:10:00.001-08:00

Today, I went to the times bookstore and picked up the book WARREN BUFFET PORFOLIO, THE POWER OF FOCUS INVESTING and I discovered something interesing. The book mentioned about the kelly optimiztion formula. The below article describes what is actually the formula about. Have fun reading!

A useful mathematical formula, taken from work on probability theory applied to gambling is the Kelly Optimisation Model. Investing is not the same as gambling, you make your own odds by doing research and exploiting the very inefficient market, however money management is helpful in both fields.

Warren Buffett, the famous American stock market investor who has amassed a fortune of many billions knows all about putting maximum money into high probability events. Peter Lynch also believes in this, and refers to the practice of buying big in the best stocks as "backing up the truck"

Without going into probability analysis, this might be a good place to introduce Kelly's formula. J.L. Kelly was a mathematician who studied the works of other mathematicians working on abstract problems in probability theory, Kelly realised that this work could have practical benefits at the blackjack table. It relates the maximum bet size that a gambler should make given the odds of success, this formula is most commonly used by professional gamblers.

The formula is 2p - 1 = x
Where p is the probability of success, x is the portion of your bankroll (or portfolio) that should be allocated to this bet. If an event has a 40% chance of paying off, don't bet. If a bet has a 55% chance of winning, only put in 10% of your money. If the chance of winning is 95%, invest 90% of your money.

A Kelly bet is the most aggressive bet you should ever take. Bets larger than Kelly are inefficient money management and will cause you to lose your money. The Kelly bet size does not ensure the highest probability of making a gain, it ensures the highest profitability for a set of games, or trades. It is also known as "tear your hair out" trading, as in practice they are actually quite big bets for many games and your equity curve will be extremely volatile.

As an alternative, if you are unsure about the probabilities you can adopt a more conservative stance, and that is to use a half Kelly bet. Gamblers use this all the time, and while it may hurt returns a bit if you have in fact gotten the probabilities right, the returns are parabolic and hence you aren't severely penalised. A Half kelly bet is simply to bet half the amount that the Kelly model suggests. Your chances of success are higher with a half-Kelly bet, but your profits will be lower. You won't become a zillionnaire as quickly, but your chances of getting there will be much greater.

Keep Kelly's formula in mind before you "back up the truck" on another speculative mining share. Apart from the use of this formula in money management, you should never look at investment as a gamble. Investing risk is directly related to the amount of work you do. A person that does regular research will have many high probability events to invest in over a lifetime. The gambling element only kicks in for people that are too lazy to do research.

Yup, so have fun calibrating your own odds and exploiting the pari-mutel system.(this line is written by me.haha.)

OIL

2008-12-30T06:08:00.000-08:00

As you all know, oil prices have been falling like crazy from the heights of US$147 during april to US$34 this month. But, what is the bottom line? When will the bottom price surface up? No one knows. So, I believe that historical prices come into play. Throughout history, oil prices have gone up and down like a roller coaster. So, how do you know when to buy it? Why buy oil when there are so many other investments? What are the opportunity costs in buying oil?

I personally look at oil as there is a huge speculative element in it. Moreover, during the last economic boom, there shows a very strong direct correlation between the bull market and the prices of oil. Why prices of oil increase during strong economic growth? This is because of emerging countries like India and China needing these energy resources to feed this phenomenal growth. Coupled with this rise in demand, there is also a fundamental fall in supply of oil reserves. Thus, the soaring demand(during a bull market) and ever fall in supply is bound to rocket the prices of oil up to new heights.

So, when do you buy it in order not to be caught on the wrong side of the roller coaster? I will show you a graph to illustrate the historical prices. However, the graph is not really updated but it still pretty much serves as a powerful reference. (The graph is on top. I tried to shift it down but I don't know why it refuses to come down.)

As you can see, the historical average is around the range of $US 30. WHAT!!!SO LOW??That is the reaction of most people if they have been hearing about the prices of oil. Yup, that is actually the historical average of oil prices. So, with the prices of oil now so close to the historical average, I feel that one must actually seize the opportunity, so that he/she will not miss it when the oil prices rocket up again.

So, what is the exit strategy if you have bought it? My exit strategy would be to sell according to the general p/e of the stock market around the world.(which is around the range of 18-20) Because, I feel that the next boom in oil prices will be due to the surging demand by the economic growth, particularly by countries like India and China.

However, there is one note to caution about making oil as part of your investment portfolio. This approach is a little speculative, so it really not advisable to allocate a huge portion of wealth to it. Who knows? Someday, explorers might disover huge oil reserves that can last the world to 2100(currently, experts believe that oil will run out by 2030, maybe even faster). So, maybe you can allocate just 10-20% to this approach.

Personally, I am a value investor-which means I buy low and sell high. With the low prices of so many companies and commodities lying around, how can one not resist?

INVESTMENT vs TRADING

2008-12-27T06:51:00.000-08:00

Today, I am going to discuss about the crucial differences between these 2 arts in the stock market.
Often people would confuse themselves between these 2 arts. One would often believe that they are investing when they are in fact trading.

One of the difference is the time horizon. When you invest, the time horizon is between 5 years to forever. 'Wa, So long ah!!!!!', that would be the reaction of most people. As I mentioned in my earlier post, investing is just like poker. It is often just waiting for that crucial moment, the point where you can commit a large amount with a very high percentage of winning(that is my style, but some other players believe in playign the bluffing way, which I feel that the downside is way too much than the upside). So, if you cannot even wait for a few minutes for the right combinations in poker, you might as well forget about investing as the time horizon is up to few years!!!!!!!!!!!!!!

Another difference is the way how people allocate their money(notice the word allocate instead of the word invest) when the market moves. Typically, traders' movement is in sync with the stock market movement. They believe in newton's first law-objects in motion will stay in motion.
I am not saying that this approach is wrong or whatsoever. I believe that you should practise at least 2 years before you should try it out. Trading is often said to be a zero sum game which means that 1 player will win when 1 player lose. However, I feel that you got another opponent-which is the commissions fees that you have to pay everytime you make a trade. Which means that technically, the % of you winning is < 50%. On the other hand, when you invest, one MUST NOT follow newton's first law. Instead, one should follow buffett's laws.

Buffet's first law-Invest when market goes down.(be greedy when people are fearful), be fearful when people gets greedy.(notice that I never say sell when it goes up, yes you can sell but you can also hold on to it. I will discuss about it in the future)

Buffett's second law-Returns decrease as motions increase(By the way Issac newton is a dreadful investor. He lost around 3 million dollars in present money in a very bad speculation(NOT INVESTING). Once, he said he can calculate the motions of stars but not the madness of people.

Yup, so these are the differences. Please feel free to comment.

To sum off the whole post, I am not interested in being just temporarily right.(which means earning money from uncalculated risks). Instead, I am interested in being correct for the long term which I absolutely believe that it lies in value investing. A method tried and proven for the past century.

U MUST PASS THIS TEST BEFORE YOU START ANY FORM OF INVESTING!!!!

2008-12-24T08:21:00.000-08:00

What is the test that u must pass to be able to invest? It is actually the poker test. It means that you must be able to win in texas hold them poker over a long term period before you can start any form of investing. To be frank, I have only came across this 'VICE' a month ago . Why?? What is the link between these 2 form of skills? I will try to explain it for the rest of this post.

Firstly, in both type of skills, you must not grieve on lost opportunites, but rather grieve on the ones that you have actually committed mistakes that can be prevented. For eg. the dot com bubble, trying to form a str8 on the last card to be revealed when the probability is only a mere 4/52.

For this paragraph, I shall emphasise on the straight in the poker. Straight in poker is like an investment bubble. It often offers a huge carrot for the person who places a bet. However, one would often find himself disappointed as there is often no carrot. This can be actually prevented when you weigh in the odds and probabilities. Yes, you can try your luck but take note of the amount that you must commit during the showdown. If the pot is big and what you need to commit is small, you can certainly go for it. This is similar to investing where you can actually set aside a small amount of money to spectulate and for arbitrage.

Secondly, in poker people will often raise their bets to confuse you, however it is often your own analysis and judgement that matters. This is a really important point as most people will have a view on how your money should be used.

Thirdly, I often prefer colour than str8 in poker as the odds are higher if you got the right cards and it is a certainly better hand than a normal straight.

While you invest for the long term, take your mind away from the ticker symbols and the market price. Find a hobby instead, which is playing poker, fixing jigsaw for me.(trying to play bridge because my idol-buffett is a fan of the card game). These hobbies can actually train your patience.

INTRODUCTION

2008-12-23T22:13:00.000-08:00

Hi to all! I'm a 20 year old Singaporean chinese male who is very interested in investing.(I have actually devoted 2 years of my life to this skill). Through this blog, I actually hoped to find more like minded people in my age group who share the same phililosophies as me. I'm actually not really good with the animation type of stuff, so don't expect any fanciful stuff in this blog. It will actually be just a simple platform for everyone to share their thoughts. Also, pardon my poor command of the language as I don't get stellar grades for English throughout my school life,

By the way, when I mention investing, most people will just think it is risky. Especially, after so much stuff that has been going on lately. For eg, the fall of large investment banks and large insurance comapnies such as the lehmen brother, bear sterns and the AIG(the one that sponsor manchester united when they can't even sponsor themselves). Surely, we as non professionals can't out-perform the 'PROFESSIONALS' from the various investment banks. I am actually not proven yet, so I can't really say if i can beat the market whatsover, however I actually believe that most people can outperform the professionals!!! HOW??, that must be the question that most people would ask. Actually, u can do that by simply investing in INDEX FUNDS-funds that just practically track the index such as STRAITS TIME index, FXI(china) , snp 500(america) DJA(american). A startling statistics shows that only 25% of the pofessionals can only outperform the market. Yup, that is the truth. The advantage of investing in these type of funds rather than the normal typical mutual funds is the management fees. For normal mutual funds(unit trusts), a person usually need to pay 3-5% of what he invested, whereas buying normal ETFs would only require you to pay 0.25% of the management fees. Most people would think that 3-5% is nothing at all, BUT it is actually very crucial. I find it laughable when those people in the banks recommending unit trusts that say 3-5% is nothing. Even warren buffett's idol, teacher-benjamin graham can only outperform the market by 2.5% throughout the 40 years that he invested. Mind you, outperforming the market by 2.5% a year will make you a very rich man. IMAGINE COMPOUNDING your money at a rate of 12.5% per year for 40 years(a dollar will be transformed into 111 dollars)!!!! It will make a hell of a difference!!!

However, I need to warn everyone that you MUST not invest when the market is euphoric and crazy which is the period when the market p/e is more than 20. If not, you will suffer irreversible losses!!!! Best time of investing is when market is down which is the period when bad news flashes everwhere-p/e of market will be around 10 for this period)-this will only occur once in every 5 years or even more. So, PLLLLLLEASE don't let this golden opportunity pass

For the later posts, I will just discuss about my philosophies and I will not into great length describing the basic jargons.(such as p/e all these stuff)