I have just blogged about having the type of “investment game” that you are most suitable for your temperament and something spectacular happened today. What was it? Behold the image below.
This is an example Nassim Taleb was talking about in his book fooled by randomness. This currency pair climbed up slow and steady for the past 1 year and suddenly flashed crashed in a day. If you did not have a proper stop loss in place, you might have been closed out. The cause for it was due to the central bank of Switzerland removing its peg to the euro dollar at 1.2. Well fortunately for me I was not trading in this pair, but I held 2 positions in 2 carry trades, the Kiwi and the Aussie. I was lucky the news did not hit them.
As per my previous blog article, I found out that I did not really have the risk appetite and temperament to continue trading in the FX market, thus I closed off both my position and emailed my broker to closed down my account. I will be focusing on passive investing (Perm portfolio) and more of dividends investing of stocks trading below their NTA. This was really a wake up call to me to remember Taleb’s warnings of tail risks.
Although these events don’t occur normally, we cannot dismiss them. You’ll probably should grab all 3 of his books to read.
1. The black swan
2. Fooled by randomness
Well. the first thing you will need is to be truthful to yourself. If you are one who cannot take losses, then your money should be placed in banks. There are a few good products out there like the OCBC 360, Standard chartered Bonus savers and the CIMB star savers. However if you can take in more risk and don’t mind your money “locked in” for at least 5-10 years, do read up on some passive investing styles like 60/40 stock bonds portfolio, permanent portfolio or the dollar cost averaging purchase of the STI Index ETF. Books which I can recommend are
1. The millionaire teacher
2. The permanent portfolio
3. Fail Safe investing
If you would like to take in more risks, you may wish to look at dividends investing, value investing etc. First step is to be honest with yourself and find out who are you before you can start to invest.
I have found that by changing strategies all so often, I ended up with a net loss even though I was watching the market the whole time since 2012. Where as, my side business, dotcom culture had earned me a $3000 income in the past year without me spending so much time as per watching the market, my brickify sales business had also generated close to $750 in the past year. I realize that I should focus more of my energy on something I am better in, instead of spending too much time trying to beat the smartest traders and investors in the world.
By the way these are 4 of my focal points which I hope I can attain
1. Meditate at least once a day
2. Start on my app gaming project
3. Start on getting my certification from coursera.org on dinosaur paleontology
I have found my own “investing game” and I hope you can find yours too. So the next time if you ask me what happened to the market yesterday, I will most likely answer : “I Duno”.