Financial Lessons

Someone wrote me something @25/11/2008 that changed my view of "long-term investment". Very insightful. Here is goes:

1. Citigroup's stock quote in NYSE is C, how appropriate. If you are thinking of buying/punting into C, just remember AIG.

2. This is not the end of it. There will be more blow ups to come. More banks, GE, GM, Ford and many others. But the market may rally for a few days, just as an expression of relieve that Citi is bailed out. Yet another dead-cat bounce, in my opinion.

3. I have covered half of my shorts over the past few days, once I feel that this short rally is over, I will short again.

4. Did anyone watch last Sunday's Channel 8 gala show on 45 years of broadcasting? It brings back a number of media artistes, especially from the 1990s. Also reminds me that STI is back to 1993 level, certainly not a pleasant experience to those that adamantly believe in "long term investment". If you are into properties, you will also note that Singapore property prices are now back to roughly 1994-95 level. And still falling, if I may add.

5. I am amazed at the continued popularity of "long term investment strategy". After almost 20 years of lousy results, vast majority of people are still firm believers. When will people start to examine the basis of all the academic studies that promote "long term investment", and realize that these studies are largely based on data derived from a very unique period of ONLY US stock market from 1900 - 2000?


6. If you must make only one distinct investment, would you rather bet on China (current GDP per capita less than USD3,000), or on Singapore (current GDP per capita about USD35,000)?

Wow! Now, after the age of 42, I finally realised what is meant by Financial Cycle - definitely not 10, 20 years.... lah... but such cycle may be as short as 5-7 years. It is important to liquidate the returns and treading the market with extra care!

I realised that the best learning path is not from the text book, but rather talk to the expert. It may be confusing initially, but this will complement the text book learning... Learning commenced from a period of confusion before clarify emerged!

Let un-learn to re-learn.