The Truth

Remember the First Post of this blog, "The Beginning", published on 29 September 2008?

I'd mentioned in that Post, I FIRST warned others about the Coming CRASH back in June 2007 through the post, "The Secrets of Losing Millions" in the www.baby-kingdom.com website. (Please refer to "The Beginning" for the link)

I'd subsequently sent the Part 2-5 of the "Secrets of Losing Millions" to some selected parents.
The following is the Part 2 - now share with you.

THE FOLLOWING WAS SENT TO SOME PARENTS IN AUGUST 2007 (YES, NOT 2008)

There are a few things many Financial Advisers have got Very Wrong, which could just be a
Honest Mistake due to their Incompetence and Laziness, but could also simply be a Misleading with Intent for their Own Gains ( i.e . Commission or Fees)

***Investment with a Long Term View but with Short Time Strategies NOT = Investment is for the Long Term***


INCOMPETENT/INCONSIDERATE FINANCIAL ADVISERS
Do you know WHY most if not all Financial Advisers keep "Brain-Washing" you with this SEEMS to be Perfectly Logical Concept of,

Investment is for Long Term?

Because First, they DON'T want you to keep ringing them if the Shares keep dropping every day/week.
Because these "Experts" remind you IN ADVANCE,
"Don't worry about the Short Term Movements, Shares will Rise in the Long Term."

Because Second, in the Short Term, these "Experts'" will move to another post either in his own firm or to another firm!
Because these "Experts" enjoy changing job like any other workers in HK every 2-3 years!
So, it is highly likely these "Experts" will NOT actually be working for you for the Long Term!

Because Third, and most importantly, these "Experts" are basically ONLY "Salespersons".
Because these "Experts" earn UPFRONT Commission when you buy their recommended products, and earn More if you stay for Long Term!

These "Experts" mostly are either Incompetent or DON'T really care about you - they care about their and NOT your Earnings!!

Do a little experiment yourself.
Get the Business Card of the Bank Officer did your mortgage 2-3 years ago, see if she still works in the SAME office/branch, or even in the SAME bank!! (do the same for the person selling you an investment)

OVERSEA EXPERIENCE
When I was in Britain, I visited at least 5 so called "Independent Advisers".
They were not that Impressive at all.
They were NOT Independent from the start, as they would receive Commission from the Firm when a client acted on their recommendation!

I told one of them I would pay for his fee (rather than letting the Bank/Firm paying him).
He then told me he would now be More Comfortable and More Willingly to make True recommendation.

He also advised me for every 100 Sterling Pound a client invested for his recommendation, he would get between 2-5 Sterling pounds (i.e. 2-5%) during the WHOLE period that a client HAVING the Investment - this is another MAJOR reason for them to persuade you to Investing for Long Term!!

In Britain, there had been a BIG Mis-selling of several Investment Products during late 80s and 90s.
One of them was the "Endowment Policy" - a product combining a Life Insurance Policy & Investment Policy together.
Clients had NEVER been informed the CHARGE was so GREAT.
And, if a client had to sell the Policy WITHIN the first 7 Years of taking the Policy, they would still lose out!!!

In NZ, a 90-year-old Elderly was recommended by an "Expert" to take up a Financial Product that could NOT be cashed in for the First 5 Years! The Authority had condemned the Misleading "Expert"!

SO NEVER TRUST ANYONE THAT HAS AN ACTUAL/POTENTIAL CONFLICT OF INTERESTS.

INVESTING WITH DISCIPLINE & VISION
So, what is this,

"Investing with a Long Term View but with Short Term Strategies"?

This simply means,

"Be Patient first.
Then, DON'T be TOO Greedy and Have Discipline - Set & Stick to your Targets."

This means DON'T expect Price is to Rise/Fall within days or months.
It could take up to TEN Years for an Event to happen or to reach your Targeted Price/Return.

But remember, we are now living in a much more Complicated World.

Dramatic things Happen More Often and More Quickly (like Asian Crisis, 911, SARS), as well as our Own Circumstances are More Likely to Change and Change More Often these days (like sorry to say having a Divorce - 1 in 2 couples are having it anywhere in this world! A Serious Health Issue, an Unwanted legal Issue etc. etc..)

So, even investing with a Long Term View, one therefore has to prepare you MAY have to sell your Investment SOONER than you first expected - and at a LESS Favourable Price.

As such, NEVER BUY anything with a BAD Return from a Start or anything TOO Expansive, in the hope that in the Long Term, it will Rise or Rise Further!!

Also, if a Long Term Target is reached in Short Term - DON'T Wait - just cash in! As shares do up and down all the times!
For example, the Peregine (Pak Fu Cun).
Even it rose by more than 60% in two years, I didn't sell it, in the hope that it would rise further in the Long Run!
And in the end, Peregine gone bust and my shares became wall paper in 1998!!

I had made a Serious Mistake in this incident.
I never had a Target Price to sell from the start.
So, I just thought if the price rose by 60% in 2 years, this means it would rise by 150% in 5 years and 300% in 10 years!!!

Unfortunately there is NO Logic in Investment!

Set Realistic Targets
I now set a Target Return for share investment.
I aim to have a 100% return in about 5 years.
But, rather than waiting for the WHOLE 5 years before cashing in, I will cash in if the share SUDDENLY DOUBLE the rate I expect in a year, i.e. 40% within a year period (100% divided by 5 years = 20% a year)

Assuming I bought the share $10 last year on 31 Dec 2006.
And once the share price reaches $14 I will IMMEDIATELY SELL, regardless if SUCH price is reached tomorrow, next week or next month or by the end of this year. (i.e. WITHIN a year)

One Bird Actually in Hand NOW is Much Better than two Birds that MAY be in Bush 10 years LATER!

Hope you lot have got the Message.

Next Sunday, we'll move onto the Part 3,

"The Best Time to buy NOT= Trying to Time the Bottom of a market"

Cheers
Fate
Outstanding Education comes from YOURSELF - Your Ability to learn from Your Mistakes

REMEMBER THE ABOVE WAS SENT OUT IN AUG 2007 (YES, NOT 2008!)

Fate
Learn from Past, Plan for Future