Sunday, November 10, 2013

Book Sharing: Nicolas Darvas - How I Made $2,000,000 in the Stock Market

This is not a book review since there are many sites and youtube video (like this) which does a better job than I can.

This must be the only book that I managed to finish reading within 1 day, while seating on the floor of the library. This is an easy read and I found the methods to be simple to understand (though it might be difficult to implement it), it is the Darvas box system.

Nicolas Darvas was a dancer and while he was traveling around the world performing, he was able to make himself a cool 2 mil using nothing but price action. He did not have the latest information and only asked his broker to send him the closing price of the day. In some way I think his method might be similar to a points and figures plot (something that I will be learning as well).

I think that the Darvas box is not strictly a TA (technical analysis) but might contain some elements of economic as well, in the sense that he was looking for up and coming business, product or industry.

Well, at this point I am not sure whether his method is usable in the Singapore market, also doing back-testing might not be all that useful since some break-out usually end up either higher or lower. But my purpose for back testing will be to observe how price and volume will differ between industry. 

In the meantime, it seems like the latest US economic data points to better recovery and it might be something that the Feb will consider whether to reduce their bond buying policy. Well, this is a good opportunity for those of use who believed this to start positioning ourselves. 

For me, I am starting to buy into short term bond fund, with short duration of 3-12 months. The reason being that when the easy money ends, cost of borrowing (i.e. interest rate) will rise. So for bonds that offered a lower yield, their price will have to fall in order to compensate holder for the higher interest rate. By holding onto short duration bond, the fund can benefit from buying into the higher yield bonds and the loss of capital via price change might not be so severely affected.  

Well, that is all for me and I would welcome comments from readers on how you are positioning yourself for the eventual reduction of the Feb QE program. 

Thank you for reading.

Sunday, November 3, 2013

First Post - The Agenda

Welcome to the very first post of Investment Explorer. As the name suggest, I am still exploring for ways to invest well and earn a decent return. I am aiming for a annual return of above 10% and will explore and study investment products such as stock, bonds, unit trust, ETF, REIT and business trust for a start. I will not start with derivative since I do not have the necessary experience or knowledge, nor do I have the time to monitor the market.

Some background information, I am a recent grad holding a Degree in Economic and Finance and am working in the financial sector. But I think paper knowledge is only as useful if it can result in a higher return in investment. I also believe that it is not a lack of knowledge that matters but personal self-discipline in investment.

Another areas of interest is retirement planning, as many people living in Singapore will know it is really expensive to retire in Singapore. Some say that to retire in Singapore, one needs to work. Doesn't sounds like a good proposal to me, so I hope to start investing early and let the magic of compounding works for my benefit.

Currently I am putting aside some emergency money before I start investing. Some people advise to have sufficient insurance and emergency money of at least 6 months of current net salary before one consider investing. I agreed to this reason since insurance will cover any major losses with a small monthly outlay of money. Also it can be considered as a form of forced saving (thought I think there are other better financial products), usually the accumulated cash value cum bonus after year 20th will covered all the premium paid. So it is worthwhile to invest for the long term for insurance.

For the emergency money, I am only a few months shy of starting my investment journey. So I will have a few months to do my homework and share with the readers here. In the meantime I am also working on making money with my blog by using Google Adsense and Nuffnang. It would be nice for someone to pay for my kopi once in a while.

Finally, thank you for dropping by. I hope to see you often here and I wish you all the best in your investment and that you can retire well and happy.

 Take care now.