An anology of investment VS trading
1) Investment
1.1) Investment analogy1:
In those old fashioned chinese families, the parents will save up monies and buy expensive golds and jewelries for their child's downry marriage which will happen years and years later. To their parents they see their 1 gold necklace as ONE GOLD NECKLACE. The parents did not even think of checking the current gold price every now and then.
1.2) Investment analogy2:
A couple adopts a child, and raise him up for 20 over years. During this 20 years, the couple sees the child as A_CHILD. In the end of the 20 over years, the child can either repay the parents upbringing or leave them in the lurch.
It is very similar to investment. Concurrently i hold more than 20 individual stocks and ETFs.
When i look at my holdings, i only see the number of shares i hold for that counter.
For example, i hold 1234shares of stock_A. 1234 means 1234shares only. i don't even look at the price.
1.3) Common mistakes by investors
A common mistake by many investors is that when they look at their 1234shares, they will look at the price, example $1. They will have the following statement in their mind:
ah, if i sell these 1234shares now, i will get $1234!!!
The next day, the share price say becomes $2, then their mind will change:
ah, if i sell these 1234shares now, i will get $2468!!!
Then the next day the price drops back to $1, their mind thinking changed again and again each day.
All these 20over babies of mine, i look at them as babies, i don't intend to sell them unless my profile change, for example, i am going to get married, or getting retrenched.
The only difference between the analogy of adopting a child and holding my 20"babies" is that these babies can provide me some money every quarter and sometimes allow me to participate in corporate actions such as rights issue. Every year, the baby will cook a sumptous meal for me and called the tok cock sing song event "AGM".
2) Analogy of a trader:
In contrast with the couple who adopts the child as a longterm view, the trader has a short term view. In SinKapore, there is a famous filmmaker
found with numerous affairs. This "trader" seeks for short term XXX. One day, one of his bitch spill their affair all over the media. By then, it is too late for the trader to cut
The writer of this blog is a mysterious man called ZGL.
