Investments – Page 8 – Greg Fok Advisory

How to buy low and sell high

October 1, 2018
by Gregory Fok

How do you buy low and sell high?

One of the most difficult strategies to implement in investments is to buy low and sell high.

In a roaring market, no one likes to be left behind and have to take on less risk.
In a bearish market, everyone is fearful that it might just get even worst so people hold on at the side lines.

We put a system in our wealth management strategy to consistently rebalance at particular points irregardless of market conditions.

Rebalancing helps us to take the emotions of investing away and make very rational and logical decisions. And that is to buy lower and sell higher.

Speak with us to take the emotions away from systematic investing.

https://www.bloomberg.com/view/articles/2018-09-27/no-taper-tantrum-here-emerging-markets-look-like-a-haven

Investing in a volatile market

September 20, 2018September 20, 2018
by Gregory Fok

What to do when markets are volatile?

How are you feeling?

With the backdrop of the increased volatility in the markets, it can be
unnerving to be seeing your portfolio too frequently. There is going to be
a US-china talks held on the 21-22nd Aug in the United States, to speak on
the tariffs.

Not much might change, as both sides are still going strong with their
views but it seems that both countries eventually want to achieve a win
win situation.

It is also time to bring you back to the
fundamentals of investing.

1) Time is your friend
Speculators who have short time horizons will be very fearful at this point because of uncertainty. Long term investors will be happy because it
can be good time to buy in when markets are discounted right now. You get
to buy more when markets are cheaper.

2) Stick to your original objectives
Do not shift your long goals just because markets have shifted in value.
In fact, any downward shift is good for long term investors.

3) Do not let emotions take over.
Back in 2008, there was extreme fear in the markets especially when
markets collapsed unexpectedly. However, if a person stayed the course
of investing and topped up, he would have emerged much better off today
than 10years ago.

4) diversify
In volatile markets, single companies could collapse and never recover. In a portfolio of diversified investments, continuing to buy in a downtrend market is fine.

A 100% equity allocation like China would have dropped by about 25% by
now, but because we are widely diversified in a portfolio, we are still
affected, but slightly affected, down in the range of 5-6%.

In short, what should you do now?
a) Stay calm and relax, drink your coffee.
b) Stay invested and TOP-UP if you have extra money meant for the long
term now.
c) Continue to rebalance regularly.

What type of investor are you?

August 6, 2018
by Gregory Fok

Which type of investor are you?

Through my 13 years of investment experience, I have concluded that there are typically 3 types of investors.

Category 1
This is a very hands-on investor. They do all the research in the companies and markets by themselves. They have absolute interest and time to invest. They love to have full control of their investments and they know how to control their emotions when markets swing even as fear and greed sets in. They’re exactly able to invest like Warren Buffet. Only 1% of the world’s population will be in this category. They know exactly what strategies to adopt when market conditions turn either ways. However, this group have large blindspots which they never think about in protecting their assets when health changes. Transferring wealth with minimal complications are hardly thought about since they are very investment focused which might cause future problems down the road. The biggest downfall for this group of investors is that they assume they know it all.

Category 2
This is a combination of a full hands-on and hands-off investor. Whilst they want to have some control, they know they do not know have all the answers. Some start off as category 1 investors and after 5-10years of investing by themselves, they realize they are not getting anywhere. This is when they turn to some professional help.
They have some interest and some time but identify that they may not be able to manage it all by themselves especially when markets swing. Amateur investors who try it by themselves end up badly burnt and never want to enter the markets again or they do investments based on managed risks. They might need some help but have no trusted source to turn to. This group of people want to be able to journey with a trusted advisor to help them to clarify their decision making. They are also willing to pay fees to seek help because they have gone through the pain of trying out on their own.

Category 3
This is a hands off investor. They do not have the time or interest when it comes to investments. So they will not have any interest in researching or reading up. This group just live their lives on a month to month basis and it is paycheck to paycheck. They are stuck in a rat race and have no solutions to do something about it. They might have a desire to change their lives but the mundane life takes over and they only wish for a better way out. They hope and rely heavily on the government to help them out.

Which type of investor are you? If you are the category 2 type of investor, be open and have a chat with an experienced financial advisor who can journey and guide you through the ups and downs of life.

Key risks to consider investing in corporate perpetuals

July 6, 2018July 6, 2018
by Gregory Fok

Key risks to consider investing in corporate perpetuals

A corporate perpetual can be able to generate potentially more returns and can seem pretty attractive compared to deposits in the bank.

However, do take note the risks that comes along with it can be significant as well. The largest risk could be the corporate might not be able to perform as what was originally planned.

Some of these perpetuals are deemed to be “safer” as it is a bond like structure. Unfortunately, there is a very large risk of non diversification.

Hyflux was considered as a “blue chip” that had great “potential” due to it’s background and ownership from even Temasek Holdings.

Of course, to Temasek, this was just a small portfolio held by the very large company and they could afford that single company risk. Most of us individuals do not have such large holdings to diversify into that many companies.

Remember, look at the downside risks before you look at the headline returns.

Speak with your experienced investment advisor to help to value add to you.

https://www.businesstimes.com.sg/investing-wealth/key-risks-to-consider-when-investing-in-corporate-perpetuals

Investing Mistakes : best investors with their worst mistakes

June 10, 2018
by Gregory Fok

Investing Mistakes : best investors with their worst mistakes

Most books tell you their success stories but few actually tell you the realities of struggles these successful investors go through.

1) Success in one part of life does not mean they succeed in all areas of life.
There are investors may be successful when it comes to investing but they have big problems in their other parts of their lives like marriage, family, addictions etc.

2) Benjamin Graham lost money in the Great Depression.
Benjamin Graham who is one of the grandfathers of investing, had lost almost 70% during the Great Depression. He thought that the market was at the depths of it and went in strongly and even leveraged. What he did not know was that it would have taken a longer time than expected to recover. The news hardly published the struggles he went through during that point of time. That is also around the time he coined “Margin of safety”.

3) Expect losses when investing
If a person will be investing, he has to know that there will be pockets of time that losses will appear in his statements and that is normally expected.
Charlie Munger drove home the point. Munger said: “We got drubbed by the 1973 to 1974 crash, not in terms of true underlying value, but by quoted market value, as our publicly traded securities had to be marked down to below half of what they were really worth. “It was a tough stretch – 1973 to 1974 was a very unpleasant stretch.”
The difference between Munger and other investors is that he expected to lose money on occasion. He builds it into his investment process which helps him control his emotions when it does happen. Far too many investors hope and pray that they’ll never experience a market or portfolio crash. It’s just not realistic.

4) Know yourself
There is no right or wrong way in investing for a person or an organization. Every person is unique and special.
What I’ve learned over time is that even the best investment strategy is worthless if it doesn’t align with your personality, values or way of looking at the world.
Every philosophy or strategy has its effects so the best route is to find something that has a high probability of working that you have a high probability of sticking with.
An seasoned investor writes, “It took me around seven years and nearly $30,000 in commissions to realize that I was not going to be the next Paul Tudor Jones. I was too emotional to be a successful trader, which led me into the arms of funds.”

5) Admitting to your mistakes when it happens
Everyone makes mistakes or is wrong in the markets so the best way is to know and know that sometimes mistakes might occur.
In fact, one of Buffett’s strengths is in recognizing that mistakes are part of the game. Buffett has included the word “mistake” 163 times in his annual letters. He, like everybody else who has put a dollar into the market, is no stranger to lousy investments.
This extends beyond the investment world as well and into other parts of life. Admitting to your mistakes and learning from it is a path to success.

Speak with your experienced investment advisor to know how you can invest appropriately.

Investing is more about emotions than knowledge

May 28, 2018
by Gregory Fok

Investing is more about managing emotions than knowledge.

More money is lost because an investor did not know how to mange emotions rather than investments.

In investing, we tend to have lots of bias which leads us to make very emotional decisions especially in a volatile market.

However, we can find ways to control our emotions, bias and even take advantage of situations.

Here are the common bias.

Bias 1 : Herd Instinct.
This leads to follow everyone else just because they are doing it. When markets are in a sell off mode and everyone is fleeing, there is an irrational decision to sell before more losses are made. Even if it is irrational, the fact that everyone is doing it makes it seem logical to follow.

Bias 2 : loss aversion (heads or tails)
We are very willing to make money but most of us are very unwilling to lose money. The first of sight of loss of money comes and we feel jittery about it. We should instead know what goes down on a highly diversified basis will always go up. In fact, down markets present good buying opportunity and bad selling options.

Bias 3 : recency bias
Based on our own experiences, mostly bad, we are paralyzed by fear and do not want to make decisions to move forward to plan to invest. Or because we had a great market last year and we want to chase that return. This blurs our perception of what might happen again.

Bias 4 : familiarity bias
We mainly invest in things we are familiar and comfortable with. For example, we stay in Singapore so we naturally will find opportunities in Spore. However, we might not be open to potentially better opportunities elsewhere because we have not heard about it or are comfortable with it.
If we look elsewhere in China, India, technology and small cap companies in Asia, we could find great opportunities that we might not have thought about.

Bias 5 : overconfidence
Most people think we are better investors than average. However, do not underestimate the sudden change of the market. We have seen traders who had consistently made money for 2 years in a row lose all of it and more in one single trade because they became overconfident.

Speak with your experienced investment advisor to have a conversation on how to control the avoid the above bias.