Showing posts with label Asset Protection. Show all posts
Showing posts with label Asset Protection. Show all posts
Sunday, August 30, 2009
Trust Fund Babies Are So Lucky...
Jealousies aside, trust fund babies must be the luckiest people on earth.
I wasn't born a trust fund baby - far from that. However, I have been strategising on how I can one day start having real financial freedom.
To me, freedom means having enough assets that will generate enough perpetual cash flow to cover all my living expenses for the rest of my years. I wouldn't owe anyone anything. I would be able to essentially do whatever, whenever by essentially resting on my laurels. LOL.
Depending on what sort of lifestyle you're actually aiming for, financial freedom could probably be achieved by most people.
As much as I enjoy working for my boss when he's in a good mood, I've been daydreaming about The London Luxury Lifestyle for a while now and since I don't want to be all talk and no action, I've been thinking about concrete ways to implement this over the next few years. My London Luxury Lifestyle would not only involve lots of Hermes, but also housing in a fashionable area of London, whatever I feel like eating, taxi rides everywhere, a good spa visit whenever I feel like it, and a holiday every two months if I wanted - basically a very OTT + diva type of lifestyle. Suffice to say, if everyone spent like me, we wouldn't ever be in a recession.
The good news is that I wouldn't need millions in my Freedom Fund in order to get to this lifestyle. If I increase my annual ROI target, a mid to high six figure sum would be sufficient. However, the key is to ensure that your ROI target remains consistent and achievable. In addition, it also involves intelligent use of leverage.
I feel adamantly about not using leverage if you are still learning the market. Leverage should only be used if you actually know what you're doing because it is very much a double edged sword. However, I'm admittedly conservative.
In addition, discipline plays such a key role. Remaining rational is so critical to success. So far, I've been taking time off from the markets whenever I want because I can. If I had to trade full time, would it be so easy to step away from the market?
Since I'm not getting any younger, the pressure's decidedly on.
Thursday, July 2, 2009
Ultimately, We Are Responsible... AIG Holds First Shareholder Meeting Since Collapse
Oh, this story is just so heartwrenching. I finally understand the mistake I've made in purchasing AIG shares.
Rather than contending with institutional shareholders on what's considered fair to all shareholders of the company on any future issues, individual shareholders will need to battle the complacent U.S. government - far worse, in my opinion. As individual shareholders, our voice is only 20% of votes - which is a no-win situation. Even if all 20% of us agree, we're still only a minority. No wonder that horrendous reverse split scenario was approved.
One of the shareholders at the AIG meeting asked a very poignant question: "We don't see anybody being held accountable. Who's responsible? And who is going to be held accountable?"
The short answer is: ultimately, we as individual shareholders are the ones responsible. No one else will ever be able to safeguard our portfolios better than we will. So, we've got to be the ones doing the due diligence and creating a contingency plan.
Right now, I've only got a very small amount of money to invest, but I've got to maximise the effectiveness of this capital on all future trades. To start with, I recently created an asset allocation plan to determine the amount of capital I would invest every year in each market that I trade, including equities, forex, corporate bonds, and cash reserves. As my knowledge on investing expands, I plan to add other investment vehicles to my overall asset allocation plan. I intend to evaluate the performance of each investment vehicle on a bi-annual basis to determine if I need to rebalance my portfolio. By adhering to this plan, I will continue to ensure that my portfolio is well-diversified. I will also be able to quickly take action in case there's a once-in-a-lifetime opportunity presenting itself in Market A relative to Market B. Opportunity costs are often overlooked in my portfolio planning, so I've got to account for this in the future.
Secondly, I also created a portfolio targeting plan for my equities. This is basically a scenario analysis that enables me to forecast potential profit on positions by targeting the 52 week high and the all-time high. Other potential price targets could be 50% of 52 week high or 50% of all-time high, depending on your time horizon. The really good thing about this scenario analysis is that I started plugging in different numbers of shares - essentially playing around with the position sizes to see how that would affect P/L. This is very enlightening. On some positions, if you add more shares, you get a much better profit. Obviously, it's better to do the scenario analysis prior to buying any shares. Right now, I've done the opposite, which is buying the shares prior to the analysis. In the future, this will change. I will not only do this scenario analysis, but will also look at it from an OTT view - that is, I'll compare a few different stocks at once and choose the one that yields the best reward with the least risk.
Finally, I've got to make up for lost time. I've been financially irresponsible in the past, so now I've got to be much more careful and diligent. Rather than jumping in head first, I've got to first test the water a bit. After all, ultimately, we are the ones responsible.
Rather than contending with institutional shareholders on what's considered fair to all shareholders of the company on any future issues, individual shareholders will need to battle the complacent U.S. government - far worse, in my opinion. As individual shareholders, our voice is only 20% of votes - which is a no-win situation. Even if all 20% of us agree, we're still only a minority. No wonder that horrendous reverse split scenario was approved.
One of the shareholders at the AIG meeting asked a very poignant question: "We don't see anybody being held accountable. Who's responsible? And who is going to be held accountable?"
The short answer is: ultimately, we as individual shareholders are the ones responsible. No one else will ever be able to safeguard our portfolios better than we will. So, we've got to be the ones doing the due diligence and creating a contingency plan.
Right now, I've only got a very small amount of money to invest, but I've got to maximise the effectiveness of this capital on all future trades. To start with, I recently created an asset allocation plan to determine the amount of capital I would invest every year in each market that I trade, including equities, forex, corporate bonds, and cash reserves. As my knowledge on investing expands, I plan to add other investment vehicles to my overall asset allocation plan. I intend to evaluate the performance of each investment vehicle on a bi-annual basis to determine if I need to rebalance my portfolio. By adhering to this plan, I will continue to ensure that my portfolio is well-diversified. I will also be able to quickly take action in case there's a once-in-a-lifetime opportunity presenting itself in Market A relative to Market B. Opportunity costs are often overlooked in my portfolio planning, so I've got to account for this in the future.
Secondly, I also created a portfolio targeting plan for my equities. This is basically a scenario analysis that enables me to forecast potential profit on positions by targeting the 52 week high and the all-time high. Other potential price targets could be 50% of 52 week high or 50% of all-time high, depending on your time horizon. The really good thing about this scenario analysis is that I started plugging in different numbers of shares - essentially playing around with the position sizes to see how that would affect P/L. This is very enlightening. On some positions, if you add more shares, you get a much better profit. Obviously, it's better to do the scenario analysis prior to buying any shares. Right now, I've done the opposite, which is buying the shares prior to the analysis. In the future, this will change. I will not only do this scenario analysis, but will also look at it from an OTT view - that is, I'll compare a few different stocks at once and choose the one that yields the best reward with the least risk.
Finally, I've got to make up for lost time. I've been financially irresponsible in the past, so now I've got to be much more careful and diligent. Rather than jumping in head first, I've got to first test the water a bit. After all, ultimately, we are the ones responsible.
Sunday, June 7, 2009
The Proverbial Sweeping of Things Under the Persian Rug
Warning: Rambling Ahead
Ever since I saw my first episode of The F Word, Gordon Ramsay has held a certain appeal for me. In that episode, Gordon and his family adopted a baby pig, which he was going to later prepare into a signature dish. He wanted to ensure that the baby pig was properly fed and cared for. His whole family was involved in caring for the baby pig. And yet, when it came time for him to actually go ahead with the task at hand, it was really, really hard for him emotionally. The whole thing was so inhumane, yet Gordon Ramsay turned it into a very human and emotional experience. It made me realise this guy sees things from a totally different vantage point.
So when Gordon Ramsay published his autobiography “Humble Pie” and shared with the world his incredible ordeal of overcoming a childhood defined by horrific domestic violence and poverty and how he subsequently turned his childhood challenges into the amazing success story he’s become, I was even more inspired to say the least.
Still, anyone following Gordon Ramsay lately cannot help but notice he’s taken some wrong turns. The alleged affair with a woman who calls herself “a professional mistress” was not only highly distasteful, but his business has also been adversely affected by his overly ambitious expansion plans.
It totally got me thinking. Gordon Ramsay would be considered a success by anyone’s standards. Yet, on some level, it’s quite conceivable that his recent behaviour is a result of self-sabotage. After reading his story, it’s highly likely that on some deeper level, he feels he doesn’t deserve success and happiness. Rather than dealing with his issues, he did the very clever but proverbial sweeping of things under the rug trick.
And why does it have to do with trading then?
In fact, thinking in even broader terms, it not only has a lot to do with trading, but also with asset protection in general.
As traders and as individuals, we cannot do the proverbial sweeping of things under the Persian rug and expect sustainable success. We have to deal with our issues on a deeper level and ensure these issues do not control us or our future.
So, I’m going to ask myself today: What am I sweeping under the rug? I know what’s right – why don’t I just do it? Why am I afraid of making changes? What am I afraid of finding out? Am I afraid of making progress?
Trading could be the scariest thing in the world sometimes. But if we are not brutally honest with ourselves, we will only end up limiting ourselves – and this will ultimately show up in our account balance.
Ever since I saw my first episode of The F Word, Gordon Ramsay has held a certain appeal for me. In that episode, Gordon and his family adopted a baby pig, which he was going to later prepare into a signature dish. He wanted to ensure that the baby pig was properly fed and cared for. His whole family was involved in caring for the baby pig. And yet, when it came time for him to actually go ahead with the task at hand, it was really, really hard for him emotionally. The whole thing was so inhumane, yet Gordon Ramsay turned it into a very human and emotional experience. It made me realise this guy sees things from a totally different vantage point.
So when Gordon Ramsay published his autobiography “Humble Pie” and shared with the world his incredible ordeal of overcoming a childhood defined by horrific domestic violence and poverty and how he subsequently turned his childhood challenges into the amazing success story he’s become, I was even more inspired to say the least.
Still, anyone following Gordon Ramsay lately cannot help but notice he’s taken some wrong turns. The alleged affair with a woman who calls herself “a professional mistress” was not only highly distasteful, but his business has also been adversely affected by his overly ambitious expansion plans.
It totally got me thinking. Gordon Ramsay would be considered a success by anyone’s standards. Yet, on some level, it’s quite conceivable that his recent behaviour is a result of self-sabotage. After reading his story, it’s highly likely that on some deeper level, he feels he doesn’t deserve success and happiness. Rather than dealing with his issues, he did the very clever but proverbial sweeping of things under the rug trick.
And why does it have to do with trading then?
In fact, thinking in even broader terms, it not only has a lot to do with trading, but also with asset protection in general.
As traders and as individuals, we cannot do the proverbial sweeping of things under the Persian rug and expect sustainable success. We have to deal with our issues on a deeper level and ensure these issues do not control us or our future.
So, I’m going to ask myself today: What am I sweeping under the rug? I know what’s right – why don’t I just do it? Why am I afraid of making changes? What am I afraid of finding out? Am I afraid of making progress?
Trading could be the scariest thing in the world sometimes. But if we are not brutally honest with ourselves, we will only end up limiting ourselves – and this will ultimately show up in our account balance.
Subscribe to:
Posts (Atom)