I cannot imagine that a book on Forex would teach me life lessons. But that is essentially what trading is all about and why I have became so fixated or passionate about it. It used to be solely for the money, but that will lead to greed, which translates into failure.
I was put backed into perspective by a certain person close to me about doing it because of the passion and not being so myopic about earning quick money. Trading is all about achieving financial freedom. That's the target. Hard work, discipline and focus are the means. It's all about creating a profitable system and having the discipline to stick to it. So here's the plan for the next 6 months,
1) Acknowledging unconscious incompetence
2) Translate it into conscious incompetence
3) Make a change to conscious competence
4) Repeating it till I arrive at unconscious competence
In achieving that, I have purged myself of my bad habits and replaced them with productive, automatic good habits that allow me to perform successful actions without thinking about them.
Failure is like cancer, and you don't treat cancer by cutting it out, cos by then, it will most probably be too late. You treat cancer by preventing it and you treat success by creating good habits from the beginning. This way, you are preventing failure. As you trade, you will need to get into the habit of thinking through all the details potentially involved in that trade. You will need a checklist. You will need to get into the habit of creating a trading plan and maintaining the discipline. That habit forces you to think before you act. This where unconscious competence comes in, avoiding impulsive, emotional actions that generate unsuccessful trades. Ignorance will be the death of traders.
And yes, I got this idea from a Forex book. Real applicable to life if you ask me..
Tuesday, April 28, 2009
So you want to trade?
Friday, April 24, 2009
Blind Faith
I love Paul Krugman, Joseph Stiglitz, what do they have in common? Both are renown economists and Nobel laureates. Sometimes I wonder why these people are not in the FED or white house. They seem to have all the answers for our current economic woes.
Let's see, almost a year into this credit mess, are we in a better position than we were 12 months ago? Not really if you asked me. Paulson talked, Bernanke talked, Obama talked, G20 talked, but I agree with Prof Krugman, dire actions are still needed.
Why do banks always get the upside and taxpayer's bear the risks? First the govt agrees to guarantee the banks' troubled assets and use $700bil of taxpayers money to stimulate them. Outcome? Banks 1 Taxpayer 0. Second, it now wants to encourage private investors to auction off or purchase the bank's' troubled assets to the extend that the govt would even lend money to the investors. If the assets go under the water, the investors can walk away, and the govt bears the brunt. Again, Banks 2 Taxpayer 0.
If the small banks can be shut down, why not the big ones? Some conspire that Wall Street and the govt/ FED have links that Main Street is oblivious about. After all, most of the financial wizardry that controls the economics of the US is concocted between the two. Of all the ideas and plans implemented, why is it that the US govt is not exploring the notion of NATIONALIZATION? Citibank and Bank of America are already zombie banks, the only reason why they are still alive are because of the constant capital injection by the govt.These zombie banks must be rescued. We cannot afford another Lehman Brothers collapse and the repercussions to the world financial system. The most efficient way would be to temporary nationalize it. It would be a blow to the brand equity, and management of the big banks, but it is needed. No more cover ups, no more goodwill. The blind faith that the banks will recover by itself with massive stimulus and "washing" its balance sheets will only hinder the recovery of the economy. And that is bad news for the world.
Case in point South Korea.They had a similar crisis in 1998 - 1999. A balance sheet crisis so to speak. What did the government do? Nationalize or close the insolvent banks, big or small. And allow profitable banks to rise. Kookmin bank was one of the small solvent ones. To date, it is the biggest bank in South Korea.
"Why should hardworking middle class Americans who fail to pay their mortgages lose their homes while Washington spends federal money to bail out irresponsible and greedy bankers? Why not allow the market system to discipline failed financial institutions and let shareholder's suffer a loss?"
The only ray of light now I guess is the FED's direction to convert most of its preference shares in to common ones to boost the banks' equity and increase its stake in it. Subtle nationalization perhaps?
Bank Stress Test results next week
This is the leaked results from my broker:
The Turner Radio Network has obtained "stress test" results for the top 19 Banks in the USA.
The stress tests were conducted to determine how well, if at all, the top 19 banks in the USA could withstand further or future economic hardship.
When the tests were completed, regulators within the Treasury and inside the Federal Reserve began bickering with each other as to whether or not the test results should be made public. That bickering continues to this very day.
The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.
1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent.
2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans.
3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital!
7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
The debt crisis is much greater than the government has reported. The FDIC`s "Problem List" of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.
Put bluntly, the entire US Banking System is in complete and total failure.
Thursday, April 23, 2009
Intersting...
I think we should have this in our streets. A PR idea perhaps? In any case its a beauty to see coordination and style. Reminds me of the MK chain of restaurants in Bangkok, where all the waiters just stop and dance whenever a music is played every 20min or so...cos dancing makes all of us happy!
Wednesday, April 22, 2009
Elitist Chauvinist Pig
Ah, Elitism is breeding amongst us. It is a disease that infects us subconsciously and we only realize it when reality strikes.
It is inevitable especially in society where meritocracy is prevalent. Just refer to our educational system. We've been streamed or "put into our places" since primary school, you're smart if you land in EM1, screwed if you're in the Accounts or Arts class in secondary school. I was from the Accounts class, and we were told that being in the "last" class, we have already closed many doors in life -- Oh come'on... Coming into adulthood, the pain is more evident. There are annoyingly sanctioned paths to success in Singapore. Private/Investment Banker, Doctor, Lawyer, are all the desired paths. Take the boom of the financial sector in the last 3 years or so. Every university grad wanted to get into the banking band wagon. Never mind if you're not suited for the position or it is'nt your passion, status co is more important.(one of the reasons why bad banking practices occur -my previous article) Such society pressures actually restrict talent to be harnessed in the most efficient way. Our government is not really concerned actually. Lack of sporting or artistic talent? Import blatantly. (I shall explore this issue in another article ya.) Our free market economy, capitalism, materialism and government direction all contribute to the elitist chauvinist concoction.
Such meritocracy makes us Singaporeans painfully aware of our relative positions in society. We just need a form of measurement and feedback to satisfy our need for status co. A MNC company, a corporate rank, your office address, will quench that need. No where in the world will being an insurance agent, or doing sales for a multi level marketing firm bring about such social stigma. Its really astonishing sometimes.
Adding to that ingredient of elitism is that we are insufferable materialist. Nothing titillates our senses more than the Bang & Olufsen system, BMW car or Hermes bag. It is actually very human and even more so for Singaporeans. How about the 5Cs, something we all aspire to attain once we enter the workforce? Basically such superficial items helps you differentiate yourself and put you in an elite class of citizens.
In retrospect,we really can't fault the Singapore government. Human capital is our one and only resource. We must stay competitive externally and internally. Performance triumphs all else. Lure of the elite class will attract more wealth, talent and lead the nation to its development path.
On a personal level, I am guilty in certain aspects. Being educated in Singapore Management University, it is real simple to identify with the elitism mindset. Almost everyone is fighting for that management trainee spot in JP Morgan, Mckinsey, GE, just to name a few. Most of us come from the upper or middle upper class families, and traveling to places like Eastern Europe or America on a study exchange is becoming more of a norm. We are marketed as the best, and thus we think we are the best.
Here's my take on how to eliminate the elitism mindset in us.
1) Be aware of the difficulties of others. We don't have to look too far. There are many needy families in Singapore too. My university professor once mentioned that the gross average/mean monthly income of a Singapore household is a mere $2500. Go figure.
2) Volunteering. Being aware is not enough, action is required.
3) Appreciate a person for who they are. Character, passions, interests should take precedence when we want to know a person. NOT where he works or studied or whether he drives.
4) Finally, to totally get out of the rat race and for a total change of mindset, I suggest to relocate to another country, something that I intend on.....
A Banker's Reflection
Ever stopped in the midst of work one day and reflect on the meaning of our job? How does it add value to society? Is it a function of life?
Being in the midst of this unprecedented credit crisis, I can't help but question the validity of my job. Have we bankers lost all sense of morality in the craze for sales and dough? One caveat. When I mention bankers, I refer to the sales people. In my short 3 years, I have witnessed far too many misrepresentations and incompetencies. It could be generalizing on my part, but safe to say that our beloved regulator, MAS has been sitting on the sidelines for way too long. The way bankers are remunerated needs to be changed. The way how bankers are motivated only by the carrot is preposterous. With the ridiculous targets thrown, what kind of personal relationship do you expect to cultivate with the clients?
Treat this banking crisis as a blessing in disguise, re structure, rebuild the respect and professionalism into the profession. On a personal note, I hope that there are more fee based independnt financial advisors out there. I even salute those who give financial advice and charge by the hour, just like how lawyers or doctors do. We need more professional financial practioners like that. If developed countries in the US, UK and Australia are practising it, I don't see why Singapore cannot follow suit. It all balls down to the consumer, and the regulators. First, the consumer must see the value in seeking such advise. Now that the financial Tsunami has occured, it is hopeful to think that most clients treat investments more seriously, and not some sure win game of chance. On the other hand, the regulators need to tighten its belts on bad practices among the financial institutions, especially the banks and raise the qualification and competency level of the practitioners. This is the way forward, especially if Singapore wants to be a financial hub in the coming decade.
I really question the need for a bank to segmentize itself into mass, emerging affluent and high net worth. Well, of course the simple rationale is for profit maximising, stakeholders satisfaction, blah blah. But if we look at in from another angle, from my perspective as a Relationship Manager in a bank, why should a poor man's money be any different from a rich man's one? Why is it that the high net worth category of customers get all the pampering, aesthetics, and most importantly better banking products? I'm just jaded to a certain extend. I understand that its all the effect of capitalism, elitism, which can be clearly witnessed from this little island of ours.
The Beginning
Let the pen be your sword, some might say.
Too myopic, too immeresed, well that's a shame, and it happens to all of us as we get caught in this rat race of life.
Let this blog shape who I am,
Let this blog be a portal of knowledge
Let this blog engrave memories that I cherish
Let this blog ignite the passion that's within
Let this blog lead to the path of enlightenment