Sunday, October 31, 2010

6 years is a long time....

I've stopped trading, I am not wired for TA. Position trading sounds good in theory, but in practice I cannot predict the market direction clearly enough. Whipsawed by non-trending markets. The time and risk to get a mere 10-20% return is not worth it.

My best bet is to wait for the next bear marker or recession, when I can easily get a 50-100% gain within a few years with less risk. I am comfortable going against the crowd. Wait for:
  • Newspaper says recession and job loss.
  • Stocks fallen 50% from previous highs
  • Revenues have fallen for 2 or 3 quarters, PEs become compressed.
Historically, bear markets may take up to 6 years in to occur Singapore (1998, 2001, 2003, 2008). 4 more years to go....

Next time, remember to:
  • Buy and hold. Bull markets last a lot longer that expected, and its painful not to participate. Don't know when/if I'd sell.
  • Beware the market taking off too fast (e.g.: Mar 09, or after the AFC).... Need a simple criteria to catch this and speed up my buying.
In the meantime, my goals are:
  • Save enough for a meaningful stake.
  • Research and track enough SGX companies (aim for 10) that I would be comfortable buying when things are going to hell..

1 comment:

Drizzt said...

i too realise the importance of spotting a trend. trend trading is difficult but i think for working people the most important thing is to find a style that you monitor sperodically.

day trading is out. short term weekly trades are also out.

so only trend trading on break outs or holding well bear market stocks work best.

Drizzt
Investment Moats.com