Sunday, 31 January 2016

Be it in life or investment – Just "know and understand" is NOT good enough!

In life

One of the commonly heard phrases "I know, I understand....."


Yet, when it comes to making decision and taking action, we are often 口是心非!(translated: affirm on lips but deny in heart!)

"Errr.. but because... of this and that Bla Bla Bla... “

Or

"This time is different!"

How many times in life have you feel that you know and understand the situation and yet, when you compel to respond and take action, you shy away!

Then when the outcome turns out otherwise, you will say "I already know and tried." Somehow, the result is always the same or worst without any improvement.

Or you keep repeating the same mistakes, even though you already know and understand?

Why?

Ask yourself:

How important is "what you know and understand" to you?
Did you really try with your heartfelt effort? Is your heart right?
Did you have the discipline to implement what you know, or just finding excuses each time?   
Do you admit the mistake, accept the responsibility and become better the next time?

Investment

"Be Fearful When Others Are Greedy and Greedy When Others Are Fearful!" - Warren Buffett.

Do you feel that you understand entirely above phrase, even blog about it and wear it on your lips and often proclaim that you are value investor?

Then how come, for some reasons when the stock market is high (E.g. STI hit 5 year high on Apr 2015), you still feel "itchy" and continue to buy.

And when stock market or STI index already approaching to 5 year low now, you reckon it will drop further and now is not the right time to buy yet? And advocates hold on to your cash!

Hmmm.... Do I chicken out when but it comes to the real battle?

Is knowledge really power?

Napoleon Hill wrote in his bestseller book "Think and Grow Rich" there are two kinds of knowledge;

1.General and 2.Specialized. General knowledge no matters how great in quantity or variety it may be, is of but little use in the accumulation of money or success. Knowledge will attract money or success only if it is organized, and intelligently directed, through practical plans of action to the definite end of accumulation of success.

Many people thought "knowledge is power". It is nothing of that sort! "Knowledge is only potential power" it only becomes power once it is organized into definite plans of action and directed to a definite end!


Rolf's thoughts

In order not to commit to the mistake of "understanding only" and no result to speak of, I impose the below three steps to myself, be it in life, in career or in investing.

Step 1: Learn
Have the passion and discipline to read, understand and acquire as much knowledge as possible.

Step 2: Remind and Relate
Consistently remind myself either by writing it out, or constantly communicate the philosophy/theory to people around you. It can be blogging, commenting on blogs or speaking to family members, friends and colleagues to share/exchange philosophies. Over time, you will be so good that you can explain so simply the philosophies/theories for others to understand. 

For instance, you will realise how great investors always like to be interviewed by journalists. During the interview, they always repeat the same philosophies they believed in!

Step 3: Implement, Fail and Learn
Practise what you know by devising a plan way ahead. Be sensitive and anticipates. Next, layout timeframes and set criteria for the execution of the plan. Do not “show-hand” during the first round! Preferably to fail early "small stake" and still can come back stronger and better in the many rounds ahead. You need to expose and have many experiences the real battle before you can really become good.

Do not worry about mistakes in life. It is good to lose money and go broke at least once, preferably twice. But does it early so that you are talking about US$20k not US$20mil, which you still can come back.”  - Jim Rogers


Over time you will realize, not only you know and understand, but now you can truly implement what you know to achieve a set of positive results!



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18 comments:

  1. Hi Rolf,
    We all know what this man said.
    Many of us (especially me most of the time) just can not conquer inner selves.
    Not even some geniuses.

    "If to do were as easy as to know what were good to do, chapels had been churches, and poor men's cottage princes' palaces."

    William Shakespeare.

    ReplyDelete
  2. Rolf,

    Steps 1 and 2 are still talk talk. Most people just end here - the dreamers, NATO generals, chariot cannons (车大炮).

    Step 3 is where rubber meets the road. We sama sama here :)

    I prefer the military analogy:

    First send in the scouts to recce.

    Safe then send in the advance party.

    Then the main body.

    Scaling into a core position is not the same as averaging down ;)

    ReplyDelete
    Replies
    1. Ha! Ha!

      "Scaling into a core position is not the same as averaging down ;"

      i like it but almost the same to me leh!

      i'm not sure you are talking about trading or you talking about long term investment.
      For me long term investment is also a form of trading.
      Now who only buys & never sells?
      None.

      Delete
    2. Sorry Rolf,
      If i have ururped your blog by "talking" to SMOL, i will never do it again.

      Delete
    3. temperament,

      Rolf is a lot more like us lah! His background makes him one of us who started out as "bo rui kia" ;)

      Only difference he got a degree and we don't ;)

      If he minds, I would have failed as a judge of character :(


      Qian bei,

      I hope you are not my battalion commander in times of war.

      Try sending in main body first, then advance party, then scouts last.

      The scaling in concept works them same in trading and in investing :)

      I've learnt in Shanghai that to make fried rice, frying the egg first then add rice is way much better than fry the rice then add egg ;)

      Delete
    4. Ya!
      Once confirm must buy or must war, It's a matter of pyramid down or pyramid up.
      Aka the scout first or the main body first.
      Both can be logical because it depends on time factor and situation.
      In short when you buy is more important then what you buy.
      It's the same for when you sell is more important than what you sell.
      Ha! Ha!
      Do i sound like a trader?
      A day trader?
      Maybe i am a trader.
      But the long-term kind.
      Actually i think the best is not only you know when to buy and sell, you also know what to buy and what not to buy.
      That is the ideal we are all striving for.
      Don't bluff if you say you are different!
      Ha! Ha!

      Delete
    5. temperament,

      You think why you and I so "num key"?

      You're a trader lah!

      A 10 years trade is still a trade mah!

      Hello! WHAT to buy comes first (fundamental), then WHEN to buy comes next (technical). I fly with 2 wings remember?

      I wonder who has been saying trading and investing not that much different? Oh, its me! I where got say I different? LOL!

      Those who don't care WHAT they are trading are those voodoo chartist fanatics. I keep my distance ;)


      If you have said pyramid up and pyramid down, I can't disagree with you.

      But with my military analogy, can't agree with you. You can't be a military buff ;)

      Can sacrifice my scouts and advance party, if need be. I still can retreat and withdraw with my balance 80% battalion. Live to fight another day!

      If I lose 80% of my men in the first engagement, pray tell how to recover with only 20% of my troops left?

      Delete
    6. "Aka the scout first or the main body first.
      Both can be logical because it depends on time factor and situation."
      Analogy:-(Borrow history of China ancient wars)

      Suppose you are the commander of an army trying to capture a wall city of China.
      Which strategy will you use?

      Patience, patience, patience.
      Finally (base on your calculation) you are quite sure your enemy has run out food and water.
      It's time for you to attack.
      Will you Pyramid down or Pyramid Up?
      Is it necessary to send in the scout and advance party, now?
      You may have send in the scouts (actually the citizens of the walled city) all along until you know so much you can seize the city when the time is ripe.
      Will you Pyramid down or Pyramid up?

      Delete
    7. temperament,

      I'll still AWOL if you are my Army Commander ;)

      How will I capture a walled city?

      Plan A
      -------
      I'll surround and starve the city out.

      Now that's the patience strategy ;)


      Plan B
      -------
      If time is the essence as in the walled city have reinforcement coming to its rescue, I'll soften the city defenders with:

      a) Slave troops (peasants what?)

      b) Surrendered troops from my defeated enemies (can't trust them 100% right?)

      c) My own officers and troops whom I suspect are after my job (dangle fame and glory as bait)


      If they make an opening in the city's defences, only then will I send in my personal crack troops whom I trust.

      If not, I better give up my siege and beat a hasty retreat least I get surrounded myself by the city's reinforcement at my rear!



      绿水长流,青山依旧

      Delete
    8. http://singaporemanofleisure.blogspot.sg/2016/01/blog-post_25.html

      Delete
    9. Ha! Ha!
      Anything is possible.
      We are only "Zi San Tam Ping"
      (Until you enter the city with your main body then you will be sure)
      Ha! Ha!
      "All is fair & square in Love or War"

      Delete
  3. Hi Two Qian Beis,

    Having fun when I am not at home! LOL!
    Not only I dun mind, I always like to be 热闹 !
    Thanks for creating the atmosphere! "Gam Siah, Gam Siah!" kudos to Jared's has good judgement.

    From investment to poets, to military, to cooking... so so creative!

    @Jared: I rem wat usaid, ok to born" bo rui kia but cannot die bo rui Kia" :-)

    @Jared:!Aiyo.. the degree or MBA or PHD is really not that important. Imagine if you just stop learning the day u received ur cert. The motivation and ability to learn is the most important!

    @temperament: Your inner self enemy is your greatest enemy! So so true! I remember last time there is a Hollywood movie by Jason Scott Lee on Bruce Lee Story where in the end Bruce Lee is actually fighting himself before he lost n died.

    @temperament : Agree that long term investment is a form of trading unless u own a big part of the company which boast a remarkably great business and have a major say in it. That is the difference between WB and many who does not know the true meaning of "favorite holding position is forever!"

    @Jared : Agree. difference between "scaling into a core position" n "averaging down" is that the
    - former started with a strategy, cruise with control and perform in a calm manner throughout.
    - latter started with over optimism, before losing control and attempt to solve problems in a panic manner.

    @Jared : You absolutely right that it is precisely the reason why we have Recce/Scouts and Advance party in army. Likewise for exploration of offshore oil, u first send a survey ship and not an oil rig.

    So stop NATO and start cooking some egg fried rice!

    Can you cook for me? Haha

    ReplyDelete
    Replies
    1. You wear skirt and look like Lin Chi-Lin I cook for you ;)

      I still remember the first time I tried to make fried rice on my own. Pour the egg over my rice and wonder where the egg went!?

      LOL!

      Learn by doing can be hilarious looking back ;)

      Delete
    2. By just reading about your experience of cooking fried rice, i think i understand why some hawker chef don't mind cooking the "ma fund" way.
      That's what the Cantonese call "Wok Hei" in the fried rice or fried "Ho Fun".
      But now a days, you can hardly see them (chefs in hawker centre) do it the traditional way to give you the "Wok Hei" fried "Ho Fun"
      Why because, they can get away with their short cut cooking and still many of us patronised them.
      i think some younger generation may not understand or bother so much with their food.
      Give me a "Big Mac", O. K. liu.
      Can we do that with investing?

      Delete
    3. temperament,

      Does 5 minutes a day ring a bell?

      How's that for fast food investing?

      LOL!

      Delete
    4. @Jared: Even when I wear skirt and use 易容术 to look like LCL, I still dun have what she has physically. Hehe... But nvm, at least can con a plate of specially prepared SMOL fried rice.

      @Temperament : Big Mac... not nice. The best is to go Msia and eat the those traditional coffee shop or restaurant shophouses.

      Even fast food 5 min, u still need to look at the history behind which is an arduous task.

      Delete
  4. Hi Rolf,

    Talk is cheap and easy... action is important but as usual, I am wary of the falling dagger.

    Anyway, any impact to your job from the falling oil market? Hope you are spared from any massacre!

    ReplyDelete
    Replies
    1. Hi Jes,

      Yes, catching a falling knife for untrained is dangerous.

      But if you are well-trained just like those performing in the circus, a falling dagger is nothing! What appear dangerous for one may not necessary is the same to another.

      Thanks for asking. I am spared the big axe! If not, I will produce an article a day. haha...

      I will write an article about me often doing relatively better during crisis! Fingers cross though since in this volatile market things are unpredictable.

      Delete