Hi Pezz, Horribly long post to be read by the hardy or insomniac.
It feels good to be back in Hong Kong. The Yichang divestment deal has been agreed in broad outline with the local partner, and now the construction of paper must be completed before the banks change their cowardly minds.
On your post, I appreciate the fact that you have added new blood to this thread. YumJ Please appreciate that I am not posting a response for my benefit, and I am not denigrating your investment style. It is simply different, should be fun to watch over time. Understand that I post for fun, but invest to increase my NAV so that I can have a higher quality of fun, and afford a bit of speculation.
You like the thrill of besting through risking, and winning without self-doubt. You like scoring for its own sake, and money its own joy. You feel young, free, wealthy, smart, fortunate, and invincible. You are the symbol of one historic moment, when the days were electrifying, the nights brilliant. One moment out of many moments still to happen.
I again state that I appreciate your position. I know you, because I know myself, for I have lived through many such moments and intend to live through many more, enjoying each episode. As you have chosen to make this thread a regular hangout, you probably will do as well in time.
I also appreciate the Internet and SI, in that we can exchange knowledge, in the form of facts and experience, and exchange speculation, covering any subject from many angles than we otherwise would. On your …
<<prudent money management>>
Yikes! No, no, no. Absolutely not, and positively no! You misunderstood my basic message, which I state in a condensed form on my personal profile, and it is not so much about prudent money management as it is about surviving, so as to continuing to play the game in the next moment, maybe a different game, the moment after that, with ever-larger stakes.
<<I have little use for nor do I understand "prudent" money management>>
In my experience, you will, no doubt, in good time or bad, happy or sad. If you never do, it will only be because you did not repent in time and fell by the wayside. No hedge words from me in this paragraph, because none is needed.
Again, I know you because I know myself.
Youth and lack of responsibility should not be used to justify an investment style. Preference and successful track record can justify. So, when your style stops working, you will no doubt switch style, right? Else your preference is to simply gamble. This is both an understandable justification and a treatable condition <G>
<<In the last five years or so I have made and lost close to $500,000 starting from less than $50,000 ......three times.[Well currently I am at the sweet spot so the lost part is only two but give me a little more time]>>
I have never in a public post written in absolute numbers regarding what I did, are doing or will do. I prefer to stay with percentages, adjectives, and standard units such as SUVs and platinum watches, without stating the standard brands. I understand your numeric disclosure is to set the context: you are younger and single; made some money, by taking some risks, when there were none; by being nimble in a fast market, along with everybody else, and then lost some money, when there was risk, along with many others.
Suffice to say that, setting the context, that I am in excellent physical condition, look like a youngster, hang out with a much younger group (as opposed to longtime friends across the waves) due to my wife’s associations. I did not get married until 37 (first engagement at 31 fell apart in nick of time for reason stated later), and my wife (11 years my junior) in some sense is more financially secure than I, so I am not exactly weighed down by unbearable responsibilities (yet). My financial investment track record is better on absolute and relative basis than what you stated above, starting at an young age, lasting for a longer period, based on diligent work, investment in different asset classes, speculation in others, through different environments, in varying styles. Oddly, boredom was never part of the script.
More relevantly, specific to the equity portion of the NAV track record, I exhibited the same or more luminous brilliance, based on multiple similar sized positions doubling, tripling and ten bagging, and within a much shorter time frame. Before I made this thread my home on SI, I had only participated in one discussion thread (Softbank), but have talked about other stocks on that thread since the earliest time. Thinking back on those other positions (VERT, ARBA, ICGE, RTRSY, SNE, CHL, AOL, YHOO, MO, CNC, and as another had noted, Any Old Thing), pleasure is too weak a word. I scored a 12-bagger with Softbank starting from an immaterially larger initial stake than you described above, within an 18-months period, with no more than three subsequent adjustment trades. So, we have established the fact that we are all equally brilliant under the sun, as most other SI posters were.
These were silly positions played during a foolish era, making all feeling like a genius. The point is simply that most on SI are equally adept at being geniuses over the past few years.
But I know I am not a genius, and I cannot play the current equity market with any substantial allocation, and there are easier ways to pleasure, on a relative basis. I am a weak-kneed and feeble-minded chip counter cowering in a gloomy corner of the SI community, clutching on to a bag of metal coins. I am too hard on myself at times.
Well, the times have changed, music is different, and so must the dance steps. Large positions in small caps for non-professionals equal funeral waltz, sooner or later, and for professionals, means job loss. Fear in view of the coffin is perhaps understandable.
To sum up your track record, looking backward, I would say that after securing some initial good tidings, you have wasted a substantial percentage of money, and lost a material portion (relative to active savings) of your stakes for the next time. Looking forward, I would venture to guess that a repeat performance is chancy at best, and fatal at worst.
To sum up my track record … could have made more, would have lost more.
I have a friend 6 years my senior who now owns a Philippines pearl farm, Tokyo office building, Utah cattle land, and three Hawaiian ranches. He plays only one stock, off and on, always buying when others are selling, and, you guessed it, selling when others are buying (PLDT, Philippines Long Distance Telephone). He gave me a few words of advise when he was not wealthy and neither was I, when I put him up in my Hong Kong apartment during transit, when before I even knew what he was all about. He had once said, “Jay, when you have no money, $10k is a lot; when you do have money, do not waste the $10k”. At the time I took his words to be kind and ‘elderly’.
People can easily guess wrong, as they can about the market and about any small cap … my friend does in fact know about equity market, having at one time worked for an infamous organization called EF Hutton:)
Anyway, One day he landed in Hong Kong and informed me that he just bought his first of three ocean frontage 200-acre ranch on Maui (then cheaper, but not cheap), and will be allocating much more assets all around. He had just won in the courts (US, Japan, Mexico, Philippines), recovering what was his from his family’s old partners. I then knew he meant his words to be experience that may matter to me one day. And yes, you can say I was a bit surprised that day.
<<Win or lose my lifestyle doesn't change>>
You are right that, after winning, the life style does not change … a lot. He and I still talk about the same matters and play PC games, do joint holidays and all that storybook stuff. He married an international class beauty pageant winner (and no, a smart loyal one), and I get to meet all her friends at parties. Of course, the jokes now seem funnier, the speculations more real, and games more sporting, and scary news headlines less weighty.
You are, however, wrong about losing. It most certainly does change one’s life style … a little. If it does not, one may not have properly enjoyed the good tidings when the tide was high, making the whole exercise superfluous. You are wrong about losing because you have not lost … yet.
Losing does at least change the mindset somewhat. There is bound to be some degree of regret, and some promise of repentance; the stories of loss are more common and thus not so interesting, and, of course, the future would appear less brilliant.
Losing is more manageable if you have as great a sense for fun as I do, which you seem to, making losing simply funny. Two pals and I lost everything we staked back in late 1989 to early 1991, and we partied all the way to the hilarious end, learning all the four letter words used by the bankers, and even cleared out the petty cash box for one last horrendous hurray before the lights were turned off literally. Judging by my photo albums, the experience from start to finish was one of the best I have ever had, but better to be had earlier on in life. As usual, I did not stake everything, but one pal did (on a by and by basis as we made rapid progress speculating in buildings in Manila), unwilling to listen to the other one and I.
Losing “everything” is defined at the time as US$ 7mm, 70 times my then active income and 140 times my active savings rate immediately before the adventure. Luckily, the starting stake was only US$ 100k, so, as MeDroogies would say, only “house money” was on the table. I distinctly remember feeling that it was my money that was lost. The losing occurred while I was living here part time over an 18-months period …
fridaysboracay.com
… renovating this resort (owned by Aussie pal who taught me much about money) and speculating on an 80-hectare piece on the north side of the island, along with a empty piece of height restriction-ed land a block away from the Peninsula Hotel in Manila.
A series of un-natural events struck our effort to develop the northern end of the island (1/6th of the whole island) … coup attempts, mudslides in Manila, typhoon and volcano blowing, 45% interest rate, Saddam invading Kuwait, 500k Filipinos return from the middle east without jobs, oil price rise, tourism stoppage. I should mention that listening to the local news each day was thrilling, and in your language, not boring. The lesson I took away from the experience is succinct: news matter.
We lost, and name brand resorts won, walked over our dead corporate shell, picking off the good bits, leaving us laughing, but getting on the plane back for Hong Kong. I still have copies of very pretty investor brochures, and my writing introducing the same …
Message 15774372
The readers will perhaps notice that I have not changed too much in the past 10 years, if at all. I am still full of fun, and probably somewhat attributable to my boring prudence and inane caution.
My experience is simple to relate. Making money is fun, do not hurry, and do not punt too often, just as chasing a girl is not to be hurried. The process matter as much as the goal, else we may run out of chips and goals, do not get to process as much, and miss half the joy.
<<12.5% … is boring >>
Gad, there is that word again. But, hey, I agree, relative to plus 125%, but really exciting relative to minus 50%. The idea that one needs to get a thrill from money management occurred to me as well, but the music has got to be right.
<<diversification.....This doesn't sound like much fun to me>>
But being able to continue the game hopefully does attract you. I do not give advice often, and so will simply agree with the others that have responded to your post, and concur that taking some chips off the table is not a bad idea.
<<New Bull, new leaders>>
Precisely!!! And what do you think they are?
<<Gold?,Platinum?... Why is it different now than a year ago, two or three years ago? ... Still don't see it ... Maybe someday.>>
Well, I remember what you stated you were holding, and the same question applies. We can discuss this matter … if you promise to not label me as a platinum worm or gold bug, boring or otherwise ...
Message 15774373
In attempting to take a stabbing guess at the answers to these questions, we are then in tune with what this thread is actually about. The thread is not blanketed by pessimism and fogged-in by gloom. The thread in fact is full of optimism, anticipation, glee, playfulness, disguised as responsible caution and thoughtful prudence, sagely delivered or gamely discussed. The thread has no restrictions on asset class, horizon distance, national borders, currency denominations, and is only about the game, and how to continue the game.
On gold and platinum, maybe a better idea would be to convert the off-table chips derived from speculation into a contra-speculation asset, such as platinum or gold. The idea that one can start all over again from a starting stake of a few boxes of imperishable metal appeals to my sense of safety, fun, and yes, even romance. My Chinese wife accuses me of being too Latin, and so I combine the best of the two cultures in this trade (safety + romance = fun).
<<it has been fairly stimulating ......OK,OK.... It's given me reason to live>>
You mentioned something about trout, fishing and river. Check the island links on my profile and there are a few more reasons possible, and you do remember the part about family and friends. Do not forget to take parents on vacation at least once per year, every year.
Worst comes to worst, one day after you get engaged to be married, long before age 37, take another girl you also adore, who will get married to somebody else soon, from where she lives in Alaska, in the winter, to Boracay. I promise you will find the experience thrilling, and worth any 12.5%. We must focus on fewer sins. Gambling should be an easy one to drop.
BTW, I have started to work on a post that starts off so …
“I started working on this note on May 6th, 2001. The bulls are thundering down the alley now, believing that they will arrive in early retirement pasture, but in fact to the already bloodied slaughter ground, urged on by the Maestro, driven by greed, blinded by CNBC, cheered by Abby Jo.
…
It is now too late for permission from family, and regret from self. It is not too late for apology from the Maestro, but there is only silence, accompanying the rise of specie.
…”
I am saving the more delicious posts’ links of this period from the stock specific threads to eventually spice up the writing. The good folks on this thread can help as everyone peruses SI daily. I may never get to post this very optimistic note, promising riches to those who are still in shape to pick over the fallen corporate warriors, because, yes, I may be wrong.
Chugs, Jay
P.S. I regularly disclose my updated allocation, keeping the links as an on-line journal, and my Microsoft Money program now shows my position to be as follows …
39% Cash (86% US$, 14% Euros) in the form of staggered fix-term deposits;
25% Bonds (mostly US$ denominated, some Euro denominated, collectively yielding above 10% on cost);
25% Industrial real estate (yielding 7% on cost, no debt);
7% Equity comprised of AAPTY, AMGN, AOL, AU, CHL, CMCSK, IMPAY, MSFT, NEM, SNE, SWC, and some residual round lots left over from past positions just to encourage me to read the news; I have some HK shares like Hongkong & Shanghai Bank and Pacific Century (HK$ 4.8 entry price, now HK$ 2.xx, because I guessed wrong!), and China shares traded in HK such as PetroChina, Sinopec, Phoenix TV, Citic Pacific; I have no option positions outstanding now.
4% Metals (72% platinum, 28% gold); I am adding gold, holding on the platinum, and am happy to have this allocation to go as high as 5%, but no higher.
Embedded in above, 4 SUVs and 1 platinum watch worth of Yen debt.
NAV increased 4.49% since January 1st, 2001. Target increase for the year of 11% is still highly visible. Current year savings does not impact NAV calculation on a month-to-month basis, as my active income is blotchy, spotty, irregular, hand-to-mouth, and mouth to other destinations, and in some sense just as uncertain as portfolio income, so I move current year savings into the NAV at each year’s end, and start each year’s game on a fully and newly accounted for “starting state”.
Intending to allocate more cash to Euro by and by, and raise metals allocation to 5%, mostly of the gold variety, and will add to metals equities on pull-back or via put option. Wife is keen on buying investment real estate, but I am not, because once some women gets their hand on real estate, it becomes a religion and matter of principle, as opposed to a trade.
Reference to previous MS Money update …
Message 15505751 |
