30 Investing Tips & Tricks You Won’t Learn At School



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May 05 2014
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There’re basically two movies you should watch before you jump into the world of investment, especially the stock market. The two movies are “The Wolf of Wall Street” and “Inside Job”, released in 2013 and 2010 respectively. Sure, there’re tons of investing books in the market but frankly, you won’t learn as much from those books as from these awesome movies. Besides, it’s too time consuming reading books.

The Wolf of Wall Street
Inside Job - 2010

The Wolf of Wall Street was funded by Malaysia PM Najib Razak’s stepson, Riza Aziz. The film which starred “Titanic” hero Leonardo DiCaprio has achieved huge success with a worldwide gross of US$389.6 million, not bad for a US$100 million budget film. It also attracted criticisms as to how Riza managed to get such a huge funding, considering PM Najib administration corruption allegation.

 

With the exception of “569 fuck” words being used throughout the 179 minutes viewing, the film which is based on memoir of Jordan Belfort, a New York stock broker who conned his way to earning hundreds of millions in the 1990s, is pretty entertaining. Besides drugs, sex, prostitutes and whatnot, you should learn some (dirty) facts about wheelings and dealings in the real world of trading or investing in Wall Street.

The Wolf of Wall Street - Leonardo DiCaprio and Real Jordan Belfort

While “The Wolf of Wall Street” was “fucking entertaining”, documentary film “Inside Job” was quite boring. Split into five parts, this US$2 million budget film actually grossed over US$7 million and won Academy Awards for “Best Documentary Feature”. It revealed how the 2008 subprime crisis was caused primarily by corruption in the United States financial system.

 

That’s right, just when everyone was fighting tooth and nail trying to rub shoulders with Obama during his recent trip to Malaysia, the President of the United States was an equally good liar, just like PM Najib. Barack Obama got into office due to his highly effective “Change” campaign, during which the 2008 great recession hit the country. Obama promised that era of greed, accounting frauds, irresponsibilities and irregularities of Wall Street will be changed – a huge bull.

President Obama and PM Najib - Liars

Guess what, Obama administration’s so-called financial reforms have been not only weak but proves to be a mere marketing gimmick. To make things worse, the same set of people whom Obama criticised and blamed for causing the 2008 crisis during his campaign were appointed as top economic advisers into his own administration – scumbags like Timothy Geithner, William Dudley, Mark Patterson, Lewis Sachs, Rahm Emanuel, Feldstein, Larry Summers, Ben Bernanke and whatnot.

2008 Financial Crisis - Timothy Geithner - Ten Trillion Dollars

If the above are not enough to stimulate and awake you to the fact that Wall Street government is bigger than Obama government can chew, consider the following short facts that you won’t learn in any of the universities on planet Earth.

Inside Job - 2010 - Black and White poster

{ 1 }  Markets go through at least one big pull-back every year, and one massive one every decade. Get used to it. It’s just what they do in order to make money. And if you can’t stomach this, don’t lay a finger in the world of investing.

 

{ 2 }  The phrase “double-dip recession” was mentioned more than 10 million times in 2010 and 2011, according to Google. It never came. Surprisingly, there were virtually “no” mentions of “financial collapse” in 2006 and 2007, but it did come.

 

{ 3 }  There will be 7 to 10 recessions over the next 50 years. Now that we have told you this, don’t act surprised or dumb when they come. If you like, call this the SOP (standard operating procedure) of investing.

 

{ 4 }  The “Wisdom of Buffett” says: “First come the innovators, then come the imitators, then come the idiots.” Well, actually this does not only applies to stock investing, but also other businesses or scams, be it the Genneva Gold scams or Apple’s iPhone and iPad products.

 

{ 5 }  Warren Buffett’s best returns were achieved when markets were much less competitive decades ago. It’s very doubtful anyone will ever match his 50-year record. Basically, there won’t be another Warren Buffett so stop dreaming you can become one, even though your Chinese name is “Wah Ren Bu Fei” (*grin*).

Warren Buffett - Innovators Imitators Idiots

{ 6 }  Some “legendary” investors whom we worship have barely beaten an index fund over their careers, with a small exceptions. Since there’s no other Warren Buffett, you can go learn from people like Daim Zainuddin or Chua Ma Yu on how to become “The Wolf of KLSE”. There’re more Wolfs than Warren in markets.

 

{ 7 }  The more comfortable an investment feels, the more likely you are to be slaughtered. Remember the infamous Malaysian Genneva Gold and U.S. Bernard Madoff investments, which turn out to be nothing but ponzi scams?

 

{ 8 }  Saying “I’ll be greedy when others are fearful” is much easier than actually doing it. The fact is when others are fearful, you’re doubly as fearful, and vice versa. It’s extremely difficult to buy for your clients when stocks are plunging, let alone putting your own money during the bear market.

 

{ 9 }  Not a single person in the world knows what the market will do next – will it goes up, goes down or circles around. End of story. Watch “The Wolf of Wall Street” and listen how DiCaprio’s boss (Matthew McConaughey) advises him about making clients happy with profit on the paper while brokers make real money in commissions.

 

{ 10 }  Mark Twain (Nov 1835 – Apr 1910) says this about truth: “A lie can travel halfway around the world while truth is putting on its shoes.” Like it or not, (Wall Street) big boys talk about lies more than the truth, everyday.

Mark Twain - A lie can travel halfway around the world while truth is putting on its shoes

{ 11 }  More than 10 years ago General Motors was on top of the world and Apple was laughed at. Today, the reverse is true. A similar shift will occur over the next decade, but no one knows to what companies.

 

{ 12 }  Professional investors have latest information and faster computers than you do. You will never beat them short-term trading. Don’t even try. And if you manage to, that’s pure luck and chances are you will not be able to do it again.

 

{ 13 }  If you’ve grand plan of trading penny stocks, do yourself a favour – just light your money on fire. Same for leveraged ETFs and perhaps Malaysian Unit Trust. Watch “The Wolf of Wall Street” and you will understand why this is so.

 

{ 14 }  The analyst, fund manager or stock-broker who talks about his mistakes is the person you want to listen to. Avoid the person who doesn’t – his are much bigger.

 

{ 15 }  When someone mentions charts, moving averages, head-and-shoulders patterns, resistance levels or whatnot, walk away. Run if you can, forget about your shoes.

Investing Technical Analysis - Run Away

{ 16 }  The market doesn’t care how much you paid for a stock or what you think is a “fair” price. So, when stock brokers or investment banks publish analysis about “fair” price, you know what craps they are talking about. But that’s their job, so don’t blame them.

 

{ 17 }  What markets do day to day is driven by random chance. Again, nobody knows what the markets will do – up, down or flat. Talking about stock movement is like bitching about 4-D or 5-D or lottery numbers.

 

{ 18 }  The decline of trading costs is one of the worst things to happen to investors, because it made frequent trading possible. Do you know that Interactive Brokers only charges US$1 in commission for 100 shares or 1 stock option? Decades ago, high transaction costs used to cause people to think hard before they acted, and in the process save them from being slaughtered.

 

{ 19 }  Most of what is taught about investing in school is theoretical nonsense. Proofs are in abundance. There are very few rich professors. To earn good money, they do mercenaries work. Dean of Columbia University Graduate School of Business, Glenn Hubbard, was paid US$150,000 by insurance arm of the Investment Company Institute for his academic paper. He also earned US$785,000 by serving on three corporate boards.

 

{ 20 }  The best investors in the world have more of an edge in psychology than in finance. Ever wonder how small-time speculators or gamblers are being lured into stock market casino every day without fail by “big boys”? Go figure.

Investing Stock - Psychology Studies

[ Click to Enlarge ]

{ 21 }  How much experience a money manager or fund manager has doesn’t tell you much. They can underperform the market for an entire career. And many have, but they still keep their job, because their job was not to make money for their clients (read: that’s you, dude).

 

{ 22 }  However much money you think you’ll need for retirement, double it, or better still triple it. Now you’re closer to reality, if you’re lucky.

 

{ 23 }  Professional investing is one of the hardest careers to succeed at, but it has lowest entry requirement and requires zero credentials. Even fishmongers can become “stock specialists”. That creates battalions of so-called “experts” who have no idea what they are doing. People forget this because it doesn’t apply to many other fields.

 

{ 24 }  The next recession is never like the last one. That makes recession interesting, and opportunities for Wall Street alligators. If you still don’t understand why recession happens by now, don’t waste your time reading financial columns, anymore.

 

{ 25 }  The majority of market news is not only useless, but also harmful to your financial health. Despite the fact that you’ve access to information faster than it was 40 years ago, you still can’t become a fraction of Warren Buffett or beat the market makers, so go figure why.

Investing 101 - Financial News

{ 26 }  If you have credit card debt and are thinking about investing in anything, stop and think again. You will never beat 18% to 36% annual interest, some on daily or monthly compounding.

 

{ 27 }  The most boring companies – toothpaste, junk food, milk powder, toiletries – can make some of the best long-term investments. That makes you think twice about getting MBA in investing, no?

 

{ 28 }  Stop thinking that your government, Central Bank, Federal Reserve, politicians and whatnot will solve your financial problems. They’ve bigger things to do – how to solve their economic mismanagement (quietly). It’s easier for you to focus more on your own well being instead of screwing it up, hoping and waiting for the government to step in to help you. And when government suddenly tells you the country’s fundamental is strong and urges you to trust them, you should start selling like crazy (*grin*).

 

{ 29 }  Trust no one who screams buy or sell, whether they are from CNBC or innovative stock trading software. When they tell you to buy, chances are “fucking high” they want to unload desperately. And when they tell you to sell, they want to buy every single shares that you’ve got. Plain and simple.

Investing 101 - Buy Sell

{ 30 }  Don’t fall in love with companies you invest. Companies die and new ones emerge. Treat them as prostitute or gigolo whom you’re interested to get orgasm, nothing more than that.

 

There you have it – 30 simple but effective facts about investing, that could help you from being slaughtered on the trading floor. You may not like it but you’re on your own in the world of investing markets.

 

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Comments

An excellent write-up !

As to fact 30th , may be not 100 % desirable.
It is said that if you had invested in 1000 Genting shares in the 60s and keep until now without ever selling any share, the total return ie all dividends, right issues, bonus issues received plus the market value of your shares in hand are worth more than a million ringgit.

Aha kkk … but can Genting, or even Public Bank for that matter, continues to perform in such way for the next 30-40 years moving forward??

Just like Warren’s achievement decades ago, Genting / Public Bank’s golden age may be history …

Assuming you’re taking point {30} as long-term investment, then point {27} takes precedence …

Thanx for commenting …

Cheers …

Very nice reading. Thanks alot.

Thanks dude. I m thinking of those investors in ASB. Now the scheme is ASB 2 and ASB Loan.

Hmmm tempting.

Enlightening.Good laugh as well.

A good write up, friend.
But with 30 points to digest!!!! I forgot the first five when I went to the 15, 16, 18…..
Never mind, I’ll come back and read them again.
Hopefully, I will be able to get some inspiration.
But with so many stocks now,any tip on which are the ones to invest in?
Thanks.

Bro like your write up.

so as all your are writing about is the being prudence, so

what do is your trading style or suggestion, because it is easy to criticise and blame. everyone can do it. ( in fact doing crisis everyone is doing it).

but can your share you invesment plan and style , there would be a complement write up.

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