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A Leo. Others perceive me as arrogant, pompous, aggressive, dominating, disparaging, unforgiving, demanding, impatient, obnoxious, loud and uncouth, intimidating, poor listener, generous, kind, intelligent, and open. Agree with the attributes as perceived by other. See or portray myself as original, flexible, skeptical, philosophical, logical, rational, analytical, interesting, hardworking, knowledgeable, keen learner, mischievous, worldly wise. Self aware of short coming and trying to change. Progress slow.

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Past Experiences 1 - Unit Trusts

Of Unit Trusts and Fixed Deposit in Ringgit

It would be fifteen years later, likely around year 2000, that I had have the funds to invest.  In the 1990s, I was very busy with my business which was doing very well.  In early 1990s, the Singapore government allowed us to use CPF funds for investment purposes.  Banks, financial advisers and insurance agents were actively pursuing Singaporeans to invest their CPF savings with them.  

Statistics showed that between 1993 and 2004, nearly three out of every four people who had invested under the CPFIS ended up worse off than if they had just parked their money in their CPF accounts. It is believed that these Singaporeans got burnt because of a lack of financial education.
http://www.asiaone.com/Business/My+Money/Building+Your+Nest+Egg/Investments+And+Savings/Story/A1Story20071010-29246.html

My earliest experiences were buying $5,000 worth of UOB Regional Growth Funds in 1995 using my CPF. I am still holding this fund today.  The fund did more than double in price in 2006 but in recent two year ranged from 105% to 140%.  After 15 years, this is disappointing.   So much for buy and hold approach.

I used UOB predominantly for my business and personal banking needs.  Most of my Unit Trusts were products of UOB Assets Management SIN. These unit trusts were bought between 1997 and 2001. Flush with cash in the bank, I invested in unit trusts, stocks and currencies based on friends’ and bankers’ recommendations. 

My first major purchase of UOB European Equity Fund in 1997. It increased in value substantially after a short time. It looked as though it was so easy to make money buying unit trust.  The difficulty I faced was trying to sell as high as possible.  As a result, I was very confident.  The overconfidence was reflected by a 6 folds increase in the amount of fund I placed in unit trust between Feb 2000 and Apr 2001.
 
兴奋
Xīng fèn
be excite
急起直追
奋起,激动
因好奇心而变得兴奋起来
控制不住自己的感情

 
The riskiest moment is when you're right. That's when you're in the most trouble, because you tend to overstay the good decisions. So, in many ways, it's better not to be so right. That's what diversification is for. It's an explicit recognition of ignorance.
Zweig, J. (15 Oct 2004). Peter Bernstein Interview. CNN Money, http://money.cnn.com/2004/10/11/markets/benstein_bonus_0411/index.htm

At about the same time, in early 1997 the interests on Malaysian Ringgits had increased very much to 10 to 15% per annum.  On the suggestion of my business partner, we changed our SIN dollars into Malaysian Ringgits to place in fixed deposit to get The exchange rate was about SGD 1.00 to MYR 1.70.  We were not aware of the risks at all.  When Mahathir imposed capital control, we lost at least 40% of our funds.

亏损到屁滚尿流
Lose until shit and urine in the pants

Actually, it was not so bad as we are able to bear the losses. 


High yield is never low risk and a rapid rise in yield often spells trouble.
You can have low risk, or you can have high yield.  But you can never have both in the same investment.
Zweig, J. (2010). The Little Book of Safe Money. John Wiley & Son Inc

Thailand, Korea, and Indonesia had to be bailout by IMF after their currencies plunged dramatically in 1997.  This was 9 months to 1 year before Malaysia enacted its capital controls.  Its economy was already declining sharply all the signs of danger were there but we were blinded by the interest rates/yields.

Warren Buffett's Top Three Investment Rules for the Average American
1) If it seems too good to be true, it probably is.
2) Always look at how much the other guy is making when he is trying to sell you something.
3) Stay away from leverage. Nobody ever goes broke that doesn't owe money.
Crippen, A. (10 Jul 2009). Warren Buffett's Top Three Investment Rules for the Average American. CNBC , http://www.cnbc.com/id/31849504/Warren_Buffett_s_Top_Three_Investment_Rules_for_the_Average_American.


The value of the UOB European Equity Fund had increased to 140% if I recalled correctly, between 2000 to 2001 as the stock market of USA continue to be buoyant  with the dot.com craze.  Like all beginners, I could not resist taking some profit by selling part of the UOB European Equity Fund.  Selling 60% of it was a good move. I did not sell all as I was worried that it would go higher!  Luckily I sold it before the Sep 11 terrorist attacks on the USA in 2001.  When the price plummeted with burst of the dot.com bubble in early 2002, the reduced holding also made it more comfortable for me to do nothing with it.

For most investors, the prospect of missing a chance to grab profits isn't easy to swallow. It's my belief, however, that the profit itself isn't as valuable as the winning position.
 The most powerful, highly probable place to be in the market is to hold an open winning trade. At any given moment, it's the one asset the vast majority of players don't have.
Hoenig, J. (14 Nov 2005). How to Sell a stock. Smartmoney , http://www.smartmoney.com/investing/stocks/How-to-Sell-a-Stock-18592/.

I lost interest in these unit trusts when their value depreciated below my cost after 2002.  At that point of time, I was pleased that I took partial profit earlier.  With the depreciation in value, I was not longer keen in further purchases.  I would not sell them at a lost, believing and hoping that they would increase in value later.  Fortunately, I did not need the money and I could not bear selling at a lost emotionally.  

畏避
wèi bì
avoid out of fear
I only revisited the unit trusts and stocks in 2006 when the market showed much improvement and my unit trust holdings had appreciated much in value.  I had regrets of selling major portions of European Equity Fund and Asia Growth Fund  as their values had further increased by additional 30% and 60% respectively.  After selling off most of the stocks in Feb 2006, I sold off the balance of the unit trust at good profit – a list of them (profit as percentage of purchased value/date of purchase in red):

25 Jul   1997          UOB European Equity 62%
11 Feb 2000           UOB Millennium III 23%
20 Feb 2000           UOB Europe Small Caps 5.2%
21 Mar 2000           DBS Knowledge Fund 75%
30 Apr 2001           Schroeder Asia Growth Funds 95%
                             Schroeder Emerging Market Funds 33.6%  
30 Apr 2001           UOB Asia T50S 0% 
                             Asia Tiger Funds -23%

On the other hand, investments with Citibank Hong Kong were however disastrous. 

In 1999, when the Euro was established, I diversified my USD by buying Euro at about USD1.12 to 1 Euro.  When Euro depreciated to about 0.80 Euro to one USD, I used the Euro to buy 2 Luyxor fund relating to science and biotech denominated in Euro.  The price of these two unit trusts also decreased and I sold them at a more than 60% loss in 2004. I compound this stupidity by converting the Euro into USD.  I am not aware of the prices of these Euro Unit Trusts today. On hindsight, I can see it is wrong to sell them at a loss especially when I did it out of frustration.  Neither was there a need to convert the Euro back to USD at that time.  At one stage this year (2010), 1 Euro is more than USD 1.48. Even with the Euro crisis this year, the lowest rate is about 1 Euro: USD 1.28.

I bought and sold these products barely aware of what they were.  I am betting on the appreciation in price of the unit trusts and not investing in them. 
The gains in the Unit Trusts after selling all of them in Nov 2006 was barely sufficient to cover all the losses in the Ringgit fixed deposits and Euro investments in Hong Kong. The piglet was lucky not to be roasted into a suckling pig.




There's just no way we can always make the right decision. That doesn't mean you're an idiot. But it does mean you must focus on how serious the consequences could be if you turn out to be wrong: Suppose this doesn't do what I expect it to do. What's gonna be the impact on me? If it goes wrong, how wrong could it go and how much will it matter?

Pascal's Wager doesn't mean that you have to be convinced beyond doubt that you are right. But you have to think about the consequences of what you're doing and establish that you can survive them if you're wrong.

Consequences are more important than probabilities.
Zweig, J. (15 Oct 2004). Peter Bernstein Interview. CNN Money , http://money.cnn.com/2004/10/11/markets/benstein_bonus_0411/index.htm


I was lucky.  Simply I am able to hold my purchases. It is most likely because I do not like the idea of losing.  I did not use leverage. I was also busy with my business and is not preoccupied with the investment. 

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