Thursday, October 13, 2011


Not going to talk about charts, big pictures and other stuffs today. I rarely use charts unless we have come to critical turning points. A time when it reaches all time high or all time lows. The higher a market goes, the sharper and the faster the market falls. A breakdown of a new low is something I pay attention because when people are giving up hope, they become unpredictable. Other than that, I leave them alone.

I was wondering if people ever consider risk and reward other than thinking of going for a quick flip. It's like going to Jenting casino. I'm going to do the last bet, if I win I will go home. Most people rarely stick to his/her promise and end up going home empty handed with sappy eyes.

I have a quiz question for today:

I assign the targets and probability arbitrary but I think they are right directionally. I cannot understand why people want to take a small pay off of 1-5% for 50-50% chance.

The pay-off is a better at higher targets but the odds are less than 50% in short term(1 year or less). Some may want to challenge me saying I assign low probabilities in the latter scenarios. I am sure many can agree with me that the economic conditions are going to be weaker, 3-6 months from today, why should we then assign higher probabilities for less favourable conditions?

I rather step aside when risk and reward situation is not compelling. Why risk our money for a small gain but with larger downside potential?


Datuk said...

If you truly believe in the equation of risk and reward ratio and link it to the current economy scenario, i suggest you should shy away from follow the stock market until December end 2011.This is the best approach for you!!!

You are not oblige to justify your invesment decision.You are responsible for your own performance. I can see your thinking is not stabil although you are trying to reflect otherwise.

I expect very big drop in equity and comodity markets in OCT. The worse in economic history!!! Let's start the count down to oct 31.....oct 14, oct 15,oct 16 .....

God blessed you!!!

Shocked ! said...

Sigh...I am aghast and astounded with your posting.

In fact, you strike me as trying to time the market which we all know it is impossible to do. I was under the impression you were more of a value investor who places more emphasis on understanding the business models, earnings, growth etc.

In fact, you have wonderful stocks which you sold off just because DOW broke the "supposedly" critical level. If you do understand some of the businesses of those stocks, you would hardly been worried and sold off in a panic...