Rogue One: Is Demo/Paper Trading a Mistake?

Imagine yourself being the manager of an airline company.

Would you allow a junior flight school student to fly a real plane for you, even though this student may have read and understood the theories on how to operate a plane?

By now, you may be thinking:

“Ridiculous, of course no!”

Hey, I figured the same too.

I’d throw this fella into multiple flight simulations and make sure that this flight school student is able to follow standards & procedures for a flight.

More importantly, I’d not want this soon-to-be pilot crashing my real planes if he/she can’t even handle landing the plane safely in a simulated environment.

Make sense, right?

I hope I have made my point of this article by now, but if not, here it goes:

Putting a junior flight school student into simulations is exactly the same as you going through the demo or paper trading phase when you first started investing or trading.

Essentially, you are doing yourself a HUGE favor by making sure that you can follow the rules and strategies consistently in a risk-free environment.

Here’s the thing:

At the beginning of your investing or trading journey, it’s not about making a lot of money. It’s not even about having a ‘feel’ with putting in real money into the market.

It’s about you having the discipline to follow the rules and processes and learn the foundation properly without additional emotional baggage.

Honestly, if you can’t land a plane safely in a simulated environment, what makes you think that you can land a real plane in reality – before crashing a few costly planes and hurting yourself (and others) badly in between?

I believe I’ve made my point clear.


p.s. Related Read: Here's What I’d Do if I Had to Start My Investing Journey All Over Again

Rogue One is a new weekly 1-min article series where I share my random thoughts and ideas.


How I 5x My Investing/Trading Experience with Every Trade I Take

Huge Warning: If you are here thinking of looking for a shortcut to milk money out of the market, this article is NOT for you.

However, if you are looking for mini-routine hacks to help deepen and internalize your learning, I think you will find this post surprisingly helpful.


Regardless if you want to improve as a long-term investor or a short-term trader, it will require skill development. Skill development though, demand for our time and experience. 

For most investors and traders, one trade* typically transpires into a single moment of experience.

What if there is a way for you to turn a single trade into 5 times worth the experience. Interested?

*The verb ‘trade’ is used in this article to reflect a position that you take in the market, regardless if you are investing for the long-term, or trading for the short-term.


You will be surprised that there is no secret recipe here. 

The key to amplifying your experience from every single trade you take is through a systematic post-trade learning routine, all of which I will share with you below:


You did your pre-trade preparation and took a trade – that was 1x experience.

As a long-term investor, you placed a trade after doing your overall research on the fundamentals of a company.

As a short-term trade, you spotted this breakout pattern and placed the trade.

Either way, these transpired into ONE experience.

For most people, their journey ended right there – time to go and enjoy a good movie time, right?

What else is there for you to do?

There's more to do after you take your first trade.

Make detailed notes in your journal – that’s 2x experience

For me, I will write down WHY I took a particular trade.

As an investor, what are the characteristics and risks involved in the company that I’ve just invested in?

As a trader, what is the if-then context and price action setup that made me took that trade?

Putting my trades down into a journal makes doubled my experience with that particular trade.

You'd be surprised to find that there's a lot that you can learn from yourself through journaling.

Discuss trades with like-minded people/community – that’s 3x experience 

One thing that I like doing is to discuss the trades that I took with like-minded traders and investors.

These are the people and communities that, to a certain extent, understand how I make trading/investing decisions.

As an example, they might notice a certain part of the company’s fundamentals that I’ve missed out on in a financial report.

As a result, I can receive feedback on what I’ve missed or maybe a certain perspective that I’ve not considered in that trade – which is extremely helpful.

Discussing your trades with a like-minded community is super helpful in your growth as an investor/trader. (pic: My mini REIT income investing community - let me know if you are curious to know more!)

Visualize your trades – that’s 4x

I can’t emphasize how powerful this routine is to your experience accumulation.

Replaying a particular trade in my mind – what happened, what went right and what could’ve been done better, contributed to my growth tremendously.

Visualization helps in reinforcing the right habit & execution in my subconscious. 

In return, this will make my execution better if there are any similar opportunities in the future.

Visualization helps in reinforcing good trade executions and habits.

End-Of-Month Review – that’s 5x

Many investors and traders have the impression that once a trade is taken then there’s nothing left to learn for the trade.

However, that’s clearly not the case.

For me, reviewing my past trades every end of the month/quarter has been extremely beneficial. 

Reason being, it helped me to again reinforce the good trades that I’ve executed and how I can do better moving forward. 

Now, I know what I can do better with my breakout trades.

Monthly + Quarterly review is a must.

No Money Lah’s Verdict – Multiply Your Growth with Systematic & Mindful Learning Routine  

Now, I want to end this conversation by pointing out the obvious:

Investing and trading are not easy to master. More often than not, it involves a deep learning curve that’ll take time to develop.

Hence, you will need all the feedback from the market to help you deepen your learning experience.

Good or bad, winning or losing, every trade is a learning opportunity. 

In fact, every trade can be more than ONE learning opportunity. Using the methods above, and you can 5x your experience for every trade you take. 

All you need to do is to just tweak your routine a little. For a 5x growth of experience per trade, I’d say the effort is pretty worth it. 


Part of this article is inspired by the book One Good Trade by Mike Bellafiore. Bella is the founder of SMB Capital, a proprietary trading firm in New York. 

He is one of my favorite trading coaches that I follow online which has been giving back tremendous value to the online trading community.

I found that some of his approaches to trading improvement, which has inspired me to implement and write this article, are equally useful in one’s investing journey as well.

 

StashAway Simple Review: The Fixed Deposit (FD) Killer?

After it’s launch in Singapore in late November last year (2019), StashAway has finally launched StashAway Simple to all Malaysian users today!

Now, if you have read my StashAway in-depth review earlier this year, you would know that my minor rant about the robo-advisor is not getting StashAway Simple readied to all Malaysian users back then.

So, what exactly is StashAway Simple?

Simply put, StashAway Simple is the company’s alternative to conventional financial vehicles like the Fixed Deposit (FD).


What Makes StashAway Simple so Special?

In my opinion, there are a few things that make StashAway Simple stands out among conventional financial vehicles like FD:

  1. Earn a projected return of 2.4% per year. (p.s. Maybank 12-month FD rate is at 2.10%)

     

  2. No minimum balance required – you can start using StashAway Simple at any amount, anytime you want (this is really StashAway’s trump card).

     

  3. No lock-in period like FD – deposit & withdraw anytime you want.

     

  4. Zero service + platform fee! The only cost involved is a (very) minimal fee of approximately 0.165% charged by the underlying unit trust manager.

    p.s. the fee is already been taken account in the 2.4%/year projected return, so don’t worry about the fee affecting the return. :)

     

  5. Shariah Compliant.

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StashAway Simple has just been launched in Malaysia


Where Does Your Money Go When You Invest Your Cash in StashAway Simple?

When you put your money into StashAway Simple, they are essentially invested in money market instruments that are extremely low risk.

If you are curious, the underlying money market fund of StashAway Simple is the Eastspring Investments Islamic Income Fund.


Is StashAway Simple Risky?

Every investment comes with its own risk.

That said, StashAway Simple is rated 1.8% under the StashAway Risk Index.

In other words, investing in StashAway Simple is just as risky as putting your money into FD – which is extremely low risk.


Should You Use StashAway Simple?

You should definitely consider using StashAway Simple if:

(1) You are looking for a better Fixed Deposit (FD) alternative for your savings.

Hate the high barrier of entry of FD? Dislike the long lock-in of FD?

I think you will love StashAway Simple.

(2) You are building up your emergency fund.

Looking to start building your emergency fund where you can have quick access to your money?

StashAway Simple is a great choice for you!

(3) You are looking for a place to park your cash while waiting for an investment opportunity.

If you are an investor that is currently parking your assets in cash, waiting for an investment opportunity, StashAway Simple is a solid place for you to place your cash.


Competitors

StashAway Simple solves a crucial headache of high-barrier of entry & long lock-down period of the conventional Fixed Deposit offered in the market.

To be honest, if StashAway Simple was to be released in Malaysia earlier this year, it would be a no-brainer for me to recommend this straightaway to people.

However, in the highly competitive space of financial technology and innovation, a 6-months period can change a lot of things.

A rise of new competitors in the space is one of them.

Introduced in April this year, BIMB’s Best Invest app allows investors to invest in its BIMB Dana Al-Fakhim money market fund from as low as RM10.

Since the underlying asset of both StashAway Simple and BIMB Dana Al-Fakhim fund are equally money market instruments AND both provide almost similar flexibility (low barrier of entry), they are without a doubt the closest and best solution for people looking for an FD alternative now.

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The BIMB Dana Al-Fakhim Fund via BEST Invest stands head-to-head with StashAway Simple

No Money Lah’s Verdict: Simple is the New Breakthrough

With the rise innovations in the financial solution space, it is refreshing to keep seeing new, innovative products from robo-advisor platforms like StashAway.

In many ways, in the financial services industry, simple is indeed the new breakthrough that the consumers need.

Personally, I have always enjoy using StashAway to complement my investment style and I have long waited for StashAway Simple to be introduced in Malaysia.

Now that it is finally here, I am super excited to give it a try and I highly suggest you to check it out too!


Related: Read my full review on StashAway HERE


This is What I’d Do if I Had to Start My Investing Journey All Over Again

I started to expose myself to the world of investing as a university student 5 to 6 years ago.

Well, my ultimate masterplan back then was to crush the market like peanuts and make hell lot of money with it.

(p.s. Obviously, that intention did not end up well for me.)

It took me a long, long time before I eventually discover my sweet spot and investing style (more on this in future articles).

Looking back, I always wonder if I could have been much better with investing (and with money) if I were to put every piece of the puzzle in the right place – one by one, step by step.

Depending on how you look at it, this article can be more like hindsight, or more of a reflection.

But my goal for this article is simple:

If you are totally new and are thinking about getting started, I hope this post will be of great guidance & insight for you.

With that, this is what I would do if I were to start over my investing journey from zero:


Step 1: First, I'd learn about personal finance & build a strong habit around money

New investors be like:

Harr… but I just want to find the best stocks to buy wor…

Yes, boring, I know.

But this is exactly what I would do FIRST if I were to start over my journey, because honestly:

Who cares if you can spot the best stocks to invest in when you have no savings to invest?

Who cares if you have attended the best investing course when you still struggle to pay off your credit card debt every month?

Looking back, instead of splurging on food & entertainment in university, I would start tracking my finances and have a more consistent savings habit (regardless of how little it could be).

I’d also build a stronger foundation & understanding around money (ie. Financial independence, compounding effect, asset & liability) by reading more personal finance (not purely investing) related books.

With all these financial knowledge and habits in place, I am sure that I’d be in a better position to start learning how to invest at the age 21 years old.

Strong financial habits are CRUCIAL to sustainable investing.

Step 2: Instead of asking “What Stocks to Buy?”, ask “What Skills Do I Need?”

“Which company should I invest during this crisis ah?”

“Is now the right time to buy into the shares of XXX yaa?”

These are without a doubt the most asked questions by investors on investing forums, telegram chat & FB groups.

Looking back, I wasted my fair share of time indulging in discussions like these.

If I were to start again, I’d definitely spend NONE of my time consuming any content like this.

Instead, after building a sound financial habit, the next thing I’d do is to learn the skills needed for me to build a solid foundation in investing – be it from books or a mentor/coach.

Some crucial fundamental skills include, but not limited to:

  • How to extract important data and information from a financial report?
  • How to develop a set of investment rules on when to buy & sell?
  • How to construct a decision-making framework & thought process?
  • How to make independent investment decisions without succumbing to headlines and unnecessary news & content?

Can you see how these skills above, once mastered, will be able to answer your ‘What stocks to buy’ question?

Nowadays, most new investors yearn for shortcuts and/or the easy way to make money from the ‘exciting’ stock market – all without considering putting effort into building their foundational skills.

But hey, I get it. That was me once upon a time too.

Just telling you that, if you are new, you might really wanna consider building a solid foundation first before risking your hard-earned money.

The only short cut in sustainable and successful investing is effort and hardwork.

Focus on the skills that you need before even thinking about the returns - read books, get a mentor and get hands on.

Step 3: Setting my initial vision with investing

If I were to start my journey from zero again, I’d want to spend some time constructing a vision for my investing journey: a sort of picture-like vision of the outcome of investing in my life.

This is the stage where I would learn more about different financial stages in life (eg. financial independence, abundance) and set a vision to motivate me to keep honing my skills.

Now, you may disagree with me, but I would not set a fixed goal at this stage (eg. Financial independence by 30 years old).

Reason being, as a university student, there is simply no way for me to know what kind of circumstances I would be upon graduation. Hence, any form of fixed estimation is really inaccurate at best.

That said, as a start, having a conceptual understanding of what’s possible (eg. vision towards financial independence) is important and should not be overlooked.

However, it should also be noted that our lives will change as we move on to different stages in life – hence it is essential to be flexible with the vision and ultimately discovering our goal along the way.

Setting an initial vision of what's possible with investing is crucial in our investing journey.

Step 4: Hone my skills in a simulated environment

Learning the fundamental investment skills & knowledge is a thing, but it doesn’t mean that it is the end of the journey.

In fact, it is only the beginning of the journey.

So, what I would do is I will set up a simulated investing account via platforms like Bursa Marketplace so I can test what I’ve learned in a risk-free environment.

Now, this could be a very boring stage for many. I used to do it (and gave up) too back then as there is no fun at all buying stocks in a simulated environment.

But if I were to start again, I would spend at least 6 months to a year in a simulated environment so I am sure that I can follow my entry and exit rules consistently whenever needed.

No fun, I know. But I’d cut short a lot of my learning curve if I persisted with the practice 5 years ago.

Grow and practice in a simulated environment before using your hard-earned savings & money.

Step 5: Opening a Live Account (Finally!)

Now’s the time to finally worry about which brokerage account to open!

Or better, time to make some big money! *wink* *wink*

But is it so?

In the hindsight, what I would do as a beginner (regardless of my initial capital) is to set my intention right when opening a live account.

Instead of treating my initial few hundred bucks account as my immediate runway to become a millionaire, I would work on my ability to execute my plan/rules consistently without worrying about the returns as much.

By doing so in a small live account, it would build a very solid psychology foundation for me to handle my live account as it grows in the future.

Simply put, I would take my initial years of live investing journey to make mistakes and gain experience – not so much on making huge gains.

Honestly, what brokerage account to open is your least concerning issue when you first started.

Step 6: Continuous Reflection & Self-Discovery + Receive feedback

Remember that I talked about setting an initial vision in Step 3?

Now, with more experience in the market (and assuming I already graduated and started my career), I’d start to find a more solid goal and focus in investing.

This is because, by this stage, I would be more familiar with my financial commitment. Hence, it is easier to calculate and come out with a proper financial goal and action plan.

It is also time for me to start reflecting and discovering my own investing style to accommodate my other commitments in life.

At this stage, joining a community of like-minded investors (not a general Facebook/Telegram group) is hugely beneficial. It serves as a great & efficient way to leverage on great investors' insights and receive feedback to accelerate learning.

At the start, focus on the process of learning, not the outcome.

No Money Lah’s Verdict

As I write this article, I am fully aware of my own investing style – income investing (article coming soon).

That said, I honestly think that if I were to follow the above steps diligently when I first started investing, I’d be discovering my preferred style much sooner.

But the journey of investing doesn’t end at Step 6.

As both life and market are dynamic, it is a must for me to keep refining my skills and goals as I continue in my investing journey.

Anyone that says that they’ve known and learned everything is just another egomaniac with little time left in the market.

Ultimately, while I may not be able to time-travel to change my journey, there is one thing that I can do:

Focus on the right mindset, strive to keep improving, and most importantly, stay humble.


Rogue One: Being Right in The Market

I used to have a bad tendency of wanting to be right in life. Sometimes, I still do.

In a debate, I want to prove my point right – and someone else’s opinion wrong.

In the stock market, I want to be right in the market direction so badly – that being right made me happier than making returns.

But here’s the thing:

This can work both ways.

Whenever I'm proved wrong in a debate, I felt ashamed.

Whenever the market doesn’t go in my favor, I felt frustrated.

The emotional baggage that I carried from trying to prove myself right is suffocating.

Here’s a lesson that I learned the hard way:

We live in a world that makes up of different personalities & agendas.

We invest in a market that makes up of different perspectives & emotions.

In the market, your opinion doesn’t matter. The market moves however it wants. The market is always right.

The key here is not trying to be right all the time. Rather, it’s having the humility to accept the lessons from different outcomes that’ll ultimately benefit you in the long run.

Be open with being right, AND be equally open on being wrong. There is more money to be made when you embrace both sides of the coin.


Rogue One is a new weekly 1-min article series where I share my random thoughts and ideas.


Rogue One: Why You'll Not Make Money From that Hot Headline Stock?

Excited about the latest & hottest stock in town that everyone is talking about on Facebook groups, investing forums, and live webinars?

“Argh! I could’ve made 15% if I bought into that stock a few weeks ago when it was at RM1.00!”

Then, you either have a good whole day of self-blaming for not buying into that stock ‘a few weeks ago’ OR you rush in to chase the price in hope that you can catch the remaining up move of the stock.

Isn’t this familiar, kind of like a Déjà vu?

Because you have likely experienced it last week, and even the previous month too – how did that turn out for you?

Stocks or news that make it to the headline & social media, well, takes time to appear on the headline.

By then:

Skilled day-traders that know how to read price action & order flow have taken advantage of the move.

Experienced investors with foresight about the value of the stock have already secured their positions months before this headline.

When everyone in town is crazy and talking about a stock, you are probably too late - timing, mindset and skill-wise -  into the party. 


Rogue One is a new weekly 1-min article series where I share my random thoughts and ideas.


2020 Massive Selldown: Hold or Cut Loss?

So we are here. This is indeed a massive sell-down.

In 3 weeks’ time, the massive sell-down managed to wipe out all 2019 gains of the Dow Jones Index. At home, our dear KLCI index has also dropped close to 20% since the start of the year.

To give you a perspective of how strong the magnitude of this sell-down is, picture this:

It just took 16 days of move in our current S&P 500 sell-down to reach what the 2008/09 Global Financial Crisis managed to achieve in 200+ days.

The Key Question Now: To Hold on to Your Investments, or to Cut Your Loss?

Now, this is a tricky question to answer.

First of all, for the whole context of this article, I am assuming that you are facing a paper/unrealized loss from your current positions.

In my opinion, this question needs more than an irresponsible short ‘Hold lah the market will recover’ or ‘Just cut loss lah’ respond like most content and posts you are seeing out there on social media.

It is also extremely irresponsible to sugarcoat the question and be overoptimistic at this moment.

Instead, it deserves a more comprehensive writing that includes multiple perspectives of different investors’ contexts.

This is what this article is all about, and this is the least I can contribute to the investing community as a creator (and a developing investor & trader) at times like this.

A quick disclaimer beforehand: This is by no means an absolute Buy/Sell/Hold advice. This is just an article from a random dude so please seek a professional financial planner’s opinion before making any decision.

With that, let’s start.

Which of these Descriptions Suit You Better?

Context 1: The Legit Long-Term Investor

It has already been part of your plan to hold your investment (single stocks/the whole portfolio) through this market climate from start – way before you enter this trade.

You feel minimal mental pressure and anxiety seeing your investments tumble more than 20-30%, or even 50% as it is in your game plan to hold through times like this.

These people are the group of legit long-term investors that really know what they are doing and have total confidence with their plan. If you are in this group of long-term investors, there is no reason at all for you to cut loss because holding through this market climate is part of the plan.

For the others though, it is common to think that you belong to this small group of legit long-term investors. If that’s the case, I want to challenge you to ask yourself:

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    1. Did you decide to go ‘long-term’ on this investment BEFORE you enter this trade, or AFTER you experience this crash?
    2. If this sell-down is not a sign for you to exit, then WHAT is your exit plan?

You SHOULD have an exit plan, and it should not take longer than a minute for you to figure this out because your exit plan is already been set before you enter a trade.

    1. More importantly, can you sleep peacefully knowing you are down 20-30%, or even 50% on your investments?

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If you felt any sense of doubt or uncertainties in while answering my questions, you are NOT in this group of legit long-term investors.

Context 2: The 99% That Need to Cut Loss

Now, if your ego is not in the way and you are humble enough to admit that you have never really thought about an EXIT PLAN for your current investments, stopping the bleeding and cut loss is the way to go.

Now, let me elaborate a little on this 99% of people that need to cut loss:

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  1. Your Pre-set/Mental Stop Loss level memang Got Triggered Already from this Sell-Down.
  1. You DID NOT have an exit plan in place BEFORE you buy into this particular investment/share.

An exit plan could be something like ‘If the price drops below X, I will cut loss”, or “If fundamental shows a decline in profit for X quarters, I will exit.”.

  1. You got into this investment after watching or reading a video/post from a stock investment Facebook page.

Actually, you are kind of still waiting for these Facebook forums/pages to tell you whether to continue holding or to sell.

  1. You cannot handle the mental stress of a 20-30% move going against you.

Which is absolutely normal because we all are humans, and everyone has a very different risk tolerance.

To be Clear, It Takes (a lot of) Courage to Cut Loss

You have my full respect already if you are still reading till this part as most people would have gone into a full denial mode after experiencing such paper loss – I salute your courage.

Remember, unlike what most content and posts are saying out there, there is nothing wrong at all to cut loss if your Stop Loss is long triggered AND/OR you realized that you have been doing this whole investment thingy wrong from the start.

Better to take in this lesson and start afresh with a more proper mindset, right?

Read: How to Recover from a Slump?

Why Cut Loss/Sell?

Having been through the mental challenge to Cut Loss, I understand that “Just hold on lah the market will recover long term” is the most soothing sentence that one seeks to hear at times of paper/unrealized loss.

However, I feel there is a need for me to break the false hope and tell you why ‘Holding On’ may not be the best action for most everyday investors:

(1) Psychology and Mental Stress

If you never have proper prior experience with the market and never knew what you have been doing all this while, it will be very hard or you to hold through this downturn.

By now, it should be clear that this sell down is NOT a normal pullback/correction. The magnitude of this global sell down is at its historical record.

The downturn and sell down like what we are facing now challenge the mental state and psychology of even the most experienced and prepared players in the market.

It is easy to say ‘Hold through the downturn and wait for the recovery’ but how many people, especially those who’ve been in the market without prior knowledge and experience can handle the emotional and financial pain from holding a sharp falling knife?

Fastest S&P 500 correction in history. (source: 2nd Skies Trading)

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(2) ‘This Company is Too Big to Fail’ Myth

To clarify, most market (at least the index) does recover and trend higher after a recession, no doubt about that (just look at the S&P 500 and our very own KLCI).

However, it is foolish to say that any company will survive and recover from a massive selldown/recession.

If there is anything that the world has learned from the global financial crisis, it is that even giants fall.

And even if they do not fall, some may not be lucky enough to recover from the crisis (picture below).

Not all companies can survive and recover from a recession.

(3) The Silver Lining: Cutting Loss is actually Preparing You for the Long Term (Opportunity Cost)

If you have been ‘investing’ without proper knowledge and processes, or via Facebook social media tips for the past years, you are not actually ‘investing’.

You have been gambling all these while.

“But man, I made money!”

Well, to be honest, anyone can easily make quick bucks in the longest bull run in history.

That said, a bearish sell-down requires a whole lot of psychology and different skillsets from an investor. Market movement and price action in a bear market are fundamentally different compared to a bull market.

Hence, in scenario like what we are facing right now, cutting loss might actually be a good thing for you in the long term. Consider this:

You are now holding a portfolio/share value worth RM50,000 with an RM20,000 unrealized loss – and you’ve built this portfolio up based on tips from some investing and Facebook forums, alongside some vague understanding towards the market.

Instead of holding on to a mistake, why not cut your loss then and there and make use of what’s left of your capital to learn the proper way to invest?

Invest a few hundred or thousand ringgit and equip yourself with proper investing knowledge and processes and store your remaining bullets (cash).

If you can survive this sell down and learn the proper method, you can (AND WILL) be able to live to fight (invest) another day.

Read: Why You Shouldn’t Care About What Stock Investment ‘Influencers’ are Buying on Social Media (Especially Right Now!)

No Money Lah Verdict

To be clear, as the market develops, I am also learning and picking up new lessons and skills as well.

That said, as I am writing this, I have come across many close friends that have approached me for opinions and thoughts.

This made me realized that many people have, in fact, been ‘investing’ in the market without proper mindset, knowledge and fundamental skills, which motivated me to write this article:

There is nothing wrong to HOLD, IF that’s your game plan.

And unlike what most content and post are suggesting on social media, there is ALSO nothing wrong to CUT LOSS if your stop-loss levels are triggered. (or if you memang do not know what to do all these while and was just blindly following tips on social media)

The point is to protect your mental confidence and what’s left of your capital.

The market DOES NOT care about your EGO.

The market DOES NOT care about your need to be RIGHT.

Again, as long as you can protect your capital and confidence, you can always live to fight (invest) another day.



The Cheetah and How a Struggling Trader/Investor can Learn from It

 

Many people that traded and invested in the stock market (or any market, in this case) experienced great volatility for the past few weeks.

Some made a kill, nailing their yearly return goal in a week. For many, though, it was an overwhelming time filled with emotions and anxiousness.

You are (were) probably in the red. You are (were) probably underperforming. You are (were) probably beating up at yourself for this outcome.

The reality is, this is a path that every investor and trader MUST experience in his/her journey. The difference is how one handles this hurdle that makes up to an amateur and a consistent investor/trader.

 


 

How to Climb Back Up from a Slump?

To be clear, it is NOT EASY to recover from a slump. Mathematically, it is hard (eg. a 50% drawdown will take a 100% gain to breakeven). Emotionally, it is even tougher to get back on track.

In times like these, it is crucial for one to go back to the BASICS.

Stop looking around Facebook groups and investing/trading forums for tips for the NEXT big opportunity.

Quit those groups if needed – these are noises that hardly contribute to your recovery anyway.

The point is, stop making investing/trading so complicated and difficult.

 


 

Back to the Basics

What are the trades that work the best for you? Make a list and focus on only taking these trades for time being – with smaller size.

If you are a long-term investor that has just dumped your holdings due to panic and fear, look into your investing process – have you followed your entry & exit strategy? Do you have one? Work on them one by one.

The point is NOT to remake your losses immediately. Rather, it is for you to rebuild the mental confidence towards yourself FIRST.

 


 

The Cheetah

 

 

“The cheetah, while the fastest animal on the African plain and can outrun any of the prey it feasts upon, always chooses to go for the young, weak or sick.

Once identified, it attacks with laser-guided focus and effectiveness. It is only then that the kill is most likely. That is the epitome of a professional trader.”

This is one the of most resonating trading analogy that I’ve come across lately in an article by Mike Bellafiore of SMB Capital (one of my favorite role models in trading).

As extraordinary as a cheetah is, it still focuses on the most basic kills which are also the most effective ones.

Likewise, the goal for us as an investor/trader is not to try to be smart and predict whether the market is bottoming. Rather, it is to understand our strength and take the best opportunity with probability in our favor.

Know your strength. Go back to the basics. Be a cheetah.



StashAway 2020 Review: A Solid Robo-Advisor that You Can Depend On.

About a year ago, I was introduced to the term ‘robo-advisor’ and ‘robo-investing’ via an app called StashAway.

During that time, StashAway has just expanded to Malaysia (they are based in Singapore), and the idea of investing your money with an algorithm-run money management platform (instead of conventional mutual funds) was still very fresh among fellow Malaysians (and no worries, they are regulated by the Securities Commission of Malaysia).

Along the year, similar competitors like Wahed and MyTheo (reviews coming soon!) were also launched into this exciting space – offering more options to fellow Malaysians that are interested to invest passively.

Fast forward to 2020, let’s look into how StashAway has fared in 2019, and while it is the first robo-investing platform, does it still provide the best offerings to fellow Malaysians?

Read: Introduction to StashAway – How Does it Work?


Quick Recap: What is a Robo-Advisor?

Essentially, robo-advisory platforms like StashAway, Wahed, and MyTheo help to invest your money according to your risk preferences and goals through algorithms instead of typical fund managers.

I like to think of these platforms as a mutual fund alternative that offers a cheaper and more affordable way to invest passively (more about fees below).


My StashAway Returns in 2019 & How I am using it in 2020?

One of the most fun ways to start a review about an investment solution is, of course, to talk about the returns.

To be honest, I’ve only funded my StashAway account once to really test out the platform in 2019, and totally put it behind my mind since then (that’s the whole point of passive investing, right?).

To my surprise, my StashAway portfolio has performed decently in 2019. Combined, both my aggressive portfolios (30% & 36% risk index) returned a very respectable ~11.6% return in 2019.

Looking back, this should not come as a surprise at all. This is because a majority of the fund allocation of the aggressive portfolios goes to U.S. sectoral equities – and the U.S. market has been crushing it in 2019. (Kudos to StashAway’s algorithms for catching the trend!)

As a whole, I am quite happy with how StashAway has been managing my money.

From 2020 onwards, I have started to save on StashAway via a recurring monthly deposit to 2 moderate-risk portfolios (10% & 14% risk index).

A large portion of the allocation in my aggressive portfolio is invested in the US market.

Fees Comparison: The most competitive & versatile fees across the Robo-Investing space

One huge advantage that robo-investing services have over conventional mutual funds is its fees.

In general, while typical mutual funds have an average fee of 3-5% per year, robo-investing services charge only a fraction of the fee (<1%).

This is significant, as a few percentage differences in fee could mean a lot to your return. Here is a simple calculation to give you an idea:

 RM100,000 at 5% fee per year = RM5,000 on fees.

RM100,000 at 1% fee per year = RM1,000 on fees (and no, robo-investing services offer lower fee than 1% at RM100,000).

The question now is, how are StashAway’s annual fees compared to the other presently available robo-investing platforms – Wahed and MyTheo?

Now, every robo-investing platform has its own tiers of pricing. Hence, to make my life (and yours) easier, I am comparing the fee in terms of the category of fund amount.

Full fees details: StashAway, Wahed, MyTheo

As you can see, StashAway’s fee is highly competitive, and it gets even better as you invest more with them.

In terms of fees, StashAway definitely nailed it among all the competitors – a perfect representation of ‘the more you invest, the less you pay’.

DON’T MISS THIS: Click HERE to Get an EXCLUSIVE 50% OFF Your (already low) StashAway Fees today!


Customer Service: Still Solid?

At this point in the article, I would like to point out that while lower fees are important, it is not everything. A lower fee that compromises the overall customer experience is a NO-NO.

What’s the point if a company has a low fee but no one is attending to customers’ issues properly?

If any, StashAway held pride in their customer service. In a 2019 year-end email to customers, StashAway boasted an 8-seconds average response time for calls during office hours.

To test out StashAway’s customer service in 2020, I sent out inquiries to all 3 channels of customer support available: Email, Phone & WhatsApp, all during office hours. Is StashAway’s claim about their customer service legit?

As you can see below, StashAway’s customer service is pretty solid. In short, they get the job done.

Solid Response Time from StashAway CS team (Standard as per my personal expectation).

What I Like about StashAway (2020)

There is a lot to like about StashAway as an innovative solution for passive investing, and here are 5 things that I like about StashAway:

(1) Ideology/Investing Philosophy

Since the technology and strategies employed by robo-advisor platforms are proprietary, there is no way for us to backtest the strategies’ effectiveness on our own.

In this case, knowing the ideology behind the people that creates these proprietary strategies is crucial. This gives us a good idea about the approach and mindset of a robo-advisory platform towards the market.

As such, I like StashAway’s CIO Freddy Lim’s ideology in making risk a primary consideration while delivering returns and value to the users:

The ultimate goal is to deliver competitive returns at the appropriate level of risk and at a fraction of the cost incurred by traditional strategies.

(2) Competitive and versatile fees

As compared in the section above, StashAway stands out as the robo-investing platform that offers the most competitive and versatile fees for customers of all financial capabilities.

Big thumbs up on that.

(3) Customer service

In my first write-up about StashAway last year, I mentioned that I liked StashAway’s customer service and the point is still solid this year. 

Also, do you know that StashAway is presently (at the time of writing), THE only robo-advisor that offers the convenience of funds transfer between your portfolios? (eg. You can transfer funds from your aggressive portfolio to moderate ones)

(4) Large range of asset classes

In August of 2019, StashAway introduced 13 new asset classes into their already huge asset selections, making up to 32 asset classes that StashAway can use to better optimize customers’ risk and returns.

In other words, this means that StashAway has more flexibility and versatility to best preserve and invest customers’ funds in the face of increasing market uncertainties.

(5) Community & Value Driven

Over the past year, one thing that I really respect the StashAway team is their effort in adding value to the community (while building their brand awareness, of course).

I like how StashAway has been actively organizing talks on the theme of financial planning and investing for the community. These are little things that add value to the people, but requires huge time and effort – kudos to the team again.

Don’t Miss This: Click HERE to Get an EXCLUSIVE 50% OFF Your (already low) StashAway Fees today!


What Could be Better? (2020)

(1) Bring more innovative financial solutions to Malaysia

One of the things from StashAway that really made me excited last year was the release of StashAway Simple.

StashAway Simple is the company’s answer to Fixed Deposit (FD) and FD-alternatives like the conventional Money Market Fund – hence with a low-risk index of around 2.4% with no lock-up period (unlike FD).

I was excited about StashAway Simple, until I noticed that it was only available in Singapore.

What I would love to see from StashAway in 2020 is the release of StashAway Simple in Malaysia, as I am sick of the manual form-filling process of our local financial services already. (be fair to the Malaysian customers maaa…)

[Update 15/6/2020: After a long wait, StashAway Simple is finally launched in Malaysia! Click HERE to check out my review on StashAway Simple!]

(2) Bi-annual or Annual Portfolio Round-Up

As a user, there will be times where I wonder if there is any progress or changes made on my portfolio. 

As a suggestion to help improve the overall user experience, it would be great if StashAway could do a bi-annual or annual portfolio round-up so I have an idea of what was going on with my portfolios. (refer: Spotify 2019 Year in Review).


No Money Lah’s Verdict – A Comfortable Recommendation for Passive Investing

One of the biggest conveniences that technologies have brought to us is the innovation in financial solutions & services, and robo-advisors are definitely one of them.

Given StashAway’s smart fund management, a diverse range of asset classes, competitive fees, and solid customer service, it is a no brainer for people that are looking to start investing and/or diversify their investment portfolio – while not burning a hole in their passive investments paying expensive yearly fees.

Personally, I am a happy customer, that’s for sure.

If you find this review on StashAway useful, my suggestion is to get on board right now: The best time to invest is 20 years ago, the second-best time is NOW.


Read: 

  1. Wahed 2020 Review
  2. MyTheo 2020 Review (coming soon!)


Disclaimers:

  1. Past return is not indicative of future performance. (just like your mom may not be angry at you today doesn’t mean she will not get angry with you tomorrow)
  2. This post may contain affiliate links that afford No Money Lah a small amount of commission should you sign up through the links.

 


Is Now (or anytime) a Good Time to buy Gold?

If you are considering to start buying gold or to add on to your current gold holdings, this article is for you.

The second half of 2019 has been an interesting time for gold.

Gold went from the year’s low of around $1270/ounce to a 5-year high of $1565/ounce – a huge 23% run, before settling for $1555/ounce to end the year.

This is an interesting time because I started to see a lot of ‘Buy Gold’ or ‘Gold is the Safe Haven’ related articles and contents sprouting around social media.

Clearly, people’s interest in gold has been rising especially with increasing uncertainties around global geopolitical issues.

With a simple price action analysis, let’s explore whether it is now a good time to buy gold? If now’s not a good time, then when’s the best time to do so?

TLDR –

In my opinion, gold would likely see its next bullish run if it is able to find a stable footing above the $1525 – $1610/ounce resistance zone (~RM215 – RM227/gram*).



*USD 1.00 = RM4.00 for ease of calculation


First thing first – Where does Gold Price stand now?

Again, gold is in an interesting phase right now.

From the gold’s 10-year weekly chart below, it can be seen the price of gold has finally broken away from a 6-year large corrective structure since the 2nd quarter of 2019.

This is significant, as the bulls (or the buyers) are finally taking over the overall trend after a 6-year tug-of-war against the bears (or the sellers).

In short, it can be said that the market is becoming more bullish towards gold for now.  

10-year weekly chart for gold. (Get your chart HERE)

That said, is it the right time now to buy gold?

As of now, the price of gold stands at a unique point.

Referring to the 10-year weekly chart below, the price zone between $1525 – $1610/ounce has been a key interaction point between the Bulls (Buyers) and the Bears (Sellers) over the past decade.

As an example, the first point of contact was in April 2011, when the Bears defended the zone from the Bulls for the first time.

Thereafter, the Bulls have defended the zone 3 times between 2011 – 2012. This showed the conviction of the buyers to defend the zone from being further pushed downward.

However, it was also in the same zone that the Bears actually took control in March 2013 and pushed the price below the zone – which started a 6-years long corrective phase.

At this moment, the buyers have been testing the zone twice since late 2019. That said, the Bears are clearly still holding the fortress firmly against the buying pressure.

In short, $1525 - $1610 is a key price zone that the Bulls (buyers) must overcome should we want to see a more significant bull run in 2020.

$1525 - 1610 is an important price zone with many interactions between Bulls & Bears over the past 10 years.

What if… the Bulls (buyers) manage to break above the zone?

Now, if the Bulls break the Bears’ defense on the key $1525 - $1610/ounce zone (RM215 – 227/gram), chances are this would trigger the Stop Loss orders of the Bears on the other side of the zone.

This would stop some key sellers out, and would likely lead to a change in the overall market bias to be even more bullish.

Should that happen, I am anticipating a more aggressive buying pressure from the market.

This upside would likely be going to continue until the next key resistance level of $1800/ounce (~RM254/gram) – a 12% potential upside from the $1610 level.

In short, I will be more bullish towards gold should price manage to overcome and find a stable footing above the key $1525 – 1610 resistance zone.

$1800 is the next key resistance should price breaks above the $1525 - 1610 price zone.

What if… the Bears (sellers) manage to defend their position at the $1525 – 1610/ounce zone?

We cannot say with 100% certainty that Bulls will take over the trend – what if the otherwise happens?

Let’s say the Bears (sellers) manage to defend the $1525 – 1610/ounce zone, chances are the price of gold will be pushed downwards away from the zone.

With that in mind, the next key price zone where the Bulls (buyers) would likely be active again would be the zone between $1365 – 1465/ounce. (RM 193 – 207/gram)

On that note, the gold price could either make a bullish rebound (green arrow) if the $1365 – 1465/ounce zone is well defended by the bulls. Otherwise, a further bearish momentum could continue if price breaks below the zone (red arrow).

$1365 - 1445 is the next key support zone should price is not able to make it above the current zone.

Good to Know – China has been buying gold at an increasing rate**

In my previous article, there is a mention of how China’s gold holding makes up less than 8% of the country’s total reserve.

However, global geopolitical issues, especially the US-China trade war which started in the second half of 2018 have made an impact on the rate of China’s gold reserve.

Since the 3rd quarter of 2018, China has been buying gold at an increasing rate (4Q2018: 0.5%, 1Q2019: 1.8% and 2Q2019: 2.2%).

On that note, geopolitical uncertainties are definitely part of the reason why gold price has been increasing in 2019.

China's Gold Reserve (in tonnes) (3Q 2016 - 2Q 2019) [Source: World Gold Council]

No Money Lah’s Verdict

I have always enjoyed reading and studying about gold.

Gold’s unique characteristic from an economic and cultural perspective makes it one of the most interesting and valuable commodities in the world.

However, since gold is a volatile (and to some extent, speculative) commodity, I am more inclined to have the thoughts that people should approach gold in a well-researched manner.

To summarize from today’s article, I will be more bullish on gold should price breaks above the key $1525 - $1610/ounce zone as this will follow with a 12% potential upside (towards $1800/ounce).

Hope you enjoyed this read! 😊






Thinking about opening a gold investment account? Definitely check out the link below to get started!


Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.

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**Credit: Part of this article is made possible with the help of my friend, Mr. Varian Soong.

Mr. Varian Soong is an Economics graduate from University of Malaya. Being one of the brightest of his batch, he came in as the 1st runner-up in the 2017 CFA Institute Research Challenge. 

Also, he has completed CFA Level 2 professional paper and he is now pursuing his professional career as a Credit Analyst in Public Mutual Bhd. 

Connect with him on LinkedIn HERE.