Trap for Investors (6) - The Best Trading System in the World for Sales

For anyone who has spent some time in the stock market, he/she must has come across some advertisements on selling of outstanding profitable trading system, courses, stock pick, etc. that promise to have your return of investment multiplied a couple of times in short period of time.

Now before we discuss on such advertisements, let me bring out a true story that happened in Niagara Falls:-

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Back on June 30, 1859, a man by the name of Charles Blondin accomplished an amazing feat. He crossed Niagara Falls on a tightrope. About 5,000 people had turned out to see his performance as he had ran an ad in the New York Times earlier on.

The rope stretched 1,100 feet (nearly the length of 4 football fields) across the falls at a height of 160 feet (about 16 stories high).

Before Charles began his first attempt to cross the falls, he asked the crowd a question. “How many of you believe I can cross the falls on that tightrope?” The crowd just applauded and cheered to encourage him to start the performance. Charles not only safely made across and back on the tightrope, but also increased the difficult of the performance each time by pushing a wheelbarrow, on stilts and blindfolded.

As the crowd was so amazed with his skill, he then asked “How many of you believe that I can cross the Falls with somebody on my back?” The crowd applauded and cheered this man that they now believe in his ability to do so. Then Charles asked for a volunteer, “Who will volunteer?” The crowd was silent. He then pointed out one man standing nearby, “How about you?” The man replied, ”Hardly, you don’t think I am going to risk my life like that, do you?” and he turn away.

Next Charles pointed out another man, “And what about you?” The man replied, “I believe. In fact, I have no doubt at all.” The man then proceeded to climb on the back of Charles Blondin and they headed across the falls. The crowd waited breathlessly while they crossed and roared their approval once they completed the crossing. What they didn't know was that the man who crossed on Blondin's back was Harry Colcord, his manager.

You see Harry Colcord knew how good Charles Blondin was and fully trusted him. His faith was secure, as the object of his faith, Charles Blondin, was trustworthy and had proven himself so over the years.

Reference: An Illustration of Faith

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Yes. This story is about the "Faith" that we have on "some one" or "some thing". And, let come back to think about "The Best Trading System in the World for Sales"...

If those people, who are selling their Best Trading System, have Faith in their own system that can Multiply on the users' investment in short period of time, why do they just want to sell it for a couple of hundreds or thousands dollar????

One should be aware that for any good system, when it become public, it loses its effectiveness.(<- click here for some back testing results for many popular indicators that are used by the public.) The profits from the stock market are not unlimited. The profits have to tie to the transacted volume. Take for example, some penny stocks can get double, triple or even more in a short time. But if one take into the consideration of actual transacted volume.... He will see that it is only able to feed some speculators, not the major public. That is when a big pool of people want to take the profits, they have to sell the stocks, which would lead to excess supply... and the profits may suddenly vanish if not become negative. :-)

So, are you going to be the volunteer to use the system that the designers themselves do not have the full faith on it?

Well, one will never find peace of mind by letting the financial market to erode their hard-earned money, nor allowing others to determine their job stability in a compnay. And yet one can not simply buy a good trading system to depend on... So, is there any solution to escape the rat race? What about develop your own? If it is to big of a task for one person, why not workout a Master Mind Team to handle a bigger task?

"Whatever the mind of man can conceive and believe,

the mind of man can achieve."

- Napoleon Hill

Trap for Investors (5) - Derivatives Market

A friend had forwarded me a very interesting story that illustrates how the derivative markets created the bubbles. (I was told the author is an accountant, but don't know the author's name.)

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Explanation of Derivative Markets

Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers' loans). Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in Detroit.

By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi's gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets.

Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.

Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community. The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi's bar.

Now do you understand?

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And, one more IMPORTANT QUESTION is that:-

Is this was an Accident by mistake or an Intention by design?

There are other effects that the derivative markets have actually affected the traditional stock market operation. Such as:

1) Insiders Buying/Selling information used to be an excellent guide for predicting the short to mid-term price movement. By law, insiders must report their activities for buying or selling stocks. But, with derivatives, insiders can now using put or call options to make profits which need not to be reported. And not to forget that many derivatives such as options are higly leveraged. Therefore, Insiders Buying/Selling information is not so much useful as compare to the past.

2) As people are now able to use puts and calls to profit from the market, the classical Tape Reading Technique is no more as accurate as the past.

In real life, many of those who lack of money are not because that they don't know how to make money. They are lacking of money mainly because they don't spend their money wisely and more critically is that they do wrong investment with their money.

"The state of being rich is not how much money you had already

earned in the past, but how fast you can have it grown

against the inflation in the future."

-KH Tang

Personal Finance (2) : Retirement Fund Excel Tool

Continue from Part 1:<-

As human perspective tends to focus on the short term events and, to most people, retirement seems to be something that is very far away. As the time keep passing by... and when it come close to their "official age" of retirement, most will get a shock that they are not ready for it.

Click to Zoom In

Another reason for people to ignore the retirement fund issue is as what Dr. Albert A. Bartlett had said:"The Greatest Shortcoming of the Human Race is our Inability to Understand The Exponential Function." That is most people cannot easily imagine in their mind that how big the number would get into with the compound inflation rate (and it now climbing proportional to the rate of Money Supply.)


To over come this challenge, here is a tool, Excel Worksheets, that was designed to help in putting all these figures down on paper. It can help individual to figure out how much it would require for him/her to be financial independent/freedom at a target date.


In the worksheet 1: just need to fill in the following data:


In the worksheet 2: one would need to fill in the details of expenses in various categories into the various fields as circled in the following diagram. It will then compute the ultimate retirement found figures with compound interest/inflation rate.




In the worksheet 3: Well, lot of people like to buy lottery and hope to retire now. This worksheet will tell you EXACTLY HOW MUCH you need to set the figure for achieving your goal -- that is the amount of money that you need to have in order to retire immediately. :-)


When someone is prepared early, this will not be his scenario:-



Here is link for the downloadable Tool in Scribd:->
Personal Finanical Tool:Retirement Fund Calculation

By the way, just some points for ponder....

* Why is there an "Official Retirement Age", and why many people follow? Are you plan to follow this "rule"?

* If making enough money can retire early, why many politicians and businessmen do not retire early and choose to work till the last day in their life?

"If you continue to think like what you always thought,

you continue to get what you always got."

- ?

Personal Finance (1) : Retirement Fund

Recently, I had come across two articles on the subject of personal finance regarding retirement fund. Both articles are trying to project the amount of money that would be required for retirement with the goal of financial independent in mind. The first article is from the US and the second is from China.

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The first article was a summary from a survey with 226 registered investment advisors, and attached Table is the findings: Source URL Link :-> $1 Million Doesn't Cut It for Retirement

The second article is from a Professor, Prof. Zhong, in Financial Research Center, Beijing Pedagogical Academy, China, stated that: “For those who, stay in the first-line cities (such as Beijing, Shanghai, & ShenZhen), are going to retire in 2027, having a sum of 10 million (RMB) might not be enough.”

“北师大金融研究中心一教授钟伟在《英才》杂志发表文章，称一线大城市的居民，2027年退休的话，预备1000万元养老恐怕也不够。”

Source URL Link:-> 白领存款1000万未必够养老

The article by Prof. Zhong had created a series of criticism in the web and media, as far majority of the people do not believe that they stand a chance to make 10,000,000RMB in their entire life. While Prof. Zhong defended himself by commenting that this would be the end result of continuous growth in Money Supply (or better known for the term as keep printing more money).

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I think that these articles are of good intention to alert people in starting to plan for their retirement early. And, the following will add some mathematical charts to demonstrate why these article make perfect sense...

Albert Einstein had said:

“The most powerful force in the universe is compound interest”

And, this has proven been true as Warren Buffett made himself one of the richest man by compounding his fund - Berkshire Hathaway - with an average of 20 over percent over the last few decades. The following Chart (click on the chart to ZOOM) illustrate how money can growth in an exponential form want one learnt how to use the wonder of Compound Interest...

But, this is a double-edge sword. If one does not know how to invest and when the inflation rate keep climbing up directly proportional to the money supply grow. Then the Value of the Cash on hand will depreciate accordingly. The following is the chart to illustrate how fast the value (buying power) would evaporate over the years...

So, with both chart above, it clearly show that if one were to retire with the peace of mind... He/she really need to has a skill to earn more to cover both the expense plus capital depreciation due to inflation. Or else, at the age of 65, he/she will become the 95% of the people show in this diagram. :-> "What's Preventing Most People from Financial Freedom".

(...to be continue...)

"The Greatest Shortcoming of the Human Race

is our Inability to Understand

The Exponential Function." -

Dr. Albert A. Bartlett


"Some people spend more time planning a two-week
vacation than they do retirement planning."
~ Anonymous

Link to more relevant articles<:-


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Self Development idea (8) - DO IT ANYWAY.

Here are two short stories, a poem, and a song to illustrate the point:- DO IT ANYWAY.

I. Story 1: The Freshmen

In the first day of an engineering course in a university, a freshman was excited and went to the classroom early. On the way, he met an old man, who carried the same text books walking towards the same classroom. So, he walked closer and greeted him.

“Good morning, Professor.”

The old man replied, “ Good morning, my friend. I am just like you – a freshman.”

The young man was surprised and asked, “Oh, I see. By the way, how old are you?”

The Old man said,” I am 61 years old.”

The young man asked, ”So, when you finish the course, you will be 65 years old by then?!”

The old man smiled and replied, “Yes, my friend. I will be 65 years old anyway in 4 years time, regardless I take the course or not.”

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II. Story 2: Star Fish

Original Version (public domain)
As the old man walked down a Spanish beach at dawn, he saw ahead of him what he thought to be a dancer. The young man was running across the sand, rhythmically bending down to pick up a stranded starfish and throw it far into the sea.

The old man gazed in wonder as the young soul again and again threw the small starfish from the sand into the water. The old man approached him and asked why he spent so much energy doing what seemed a waste of time. The young man explained that the stranded starfish would die if left until the morning sun.

"But there are thousands of miles of beach, and miles and miles of starfish. How can your effort make any difference?"

The young man looked down at the small starfish in his hand, and as he threw it to safety in the sea, said, "It makes a difference to this one!"

Anonymous

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III. Poem - Do It Anyway

DO IT ANYWAY

By a spiritual teacher

People are often unreasonable, illogical, and self-centered;

Forgive them anyway.

If you are kind, People may accuse you of selfish, ulterior motives;

Be kind anyway.

If you are successful, you will win some false friends and some true enemies;

Succeed anyway.

If you are honest and frank, people may cheat you;

Be honest and frank anyway.

What you spend years building, someone could destroy overnight;

Build anyway.

If you find serenity and happiness, they may be jealous;

Be happy anyway.

The good you do today, people will often forget tomorrow;

Do good anyway.

Give the world the best you have, and it may never be enough;

Give the world the best you've got anyway.

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IV. Song - Anyway

Note: Click on the Link below to play in YouTube  (Not click on the picture)

Martina McBride - Anyway (Official Video)

https://www.youtube.com/watch?v=6uLtyzRgmyI

Lyrics

You can spend your whole life building
Something from nothin'
One storm can come and blow it all away
Build it anyway

You can chase a dream
That seems so out of reach
And you know it might not never come your way
Dream it anyway

God is great
But sometimes life ain't good
And when I pray
It doesn't always turn out like I think it should
But I do it anyway
I do it anyway

This world's gone crazy
It's hard to believe
That tomorrow will be better than today
Believe it anyway

You can love someone with all your heart
For all the right reasons
In a moment they can choose to walk away
Love 'em anyway

God is great
But sometimes life ain't good
And when I pray
It doesn't always turn out like I think it should
But I do it anyway
I do it anyway

You can pour your soul out singing
A song you believe in
That tomorrow they'll forget you ever sang
Sing it anyway
Yeah, sing it anyway

I sing
I dream
I love
Anyway

.

"Don't die with your music still inside you.

Listen to your intuitive inner voice and

find what passion stirs your soul."

- Wayne Dyer

Stock Market Tools (8) - Global Trading System(GTS)

1) Is all about Data Processing and Organized it into a User Friendly Charts...

( YouTube Link <- A friend told me that the video does not appear on her browser... If so, click on the link.)

Above is an amazing video presentation by Professor Hans Rosling, a statistics guru, in many topics on global level. Such as global child mortality rate, fertility rate, etc...

For the first four minutes, it shows that most of the public are making choice/decision based on wrong pre-conceived ideas, as many of them are out dated.

After that, when the data starts moving... We can be amazed by how fast things are changing in this world! He basically transforms boring data into lively stories.

2) Is all about where the talent is applied on...

Here is a famous story by Zhuang Zi (庄子) on the power of applying the right talent in the right field...

In Song, there was a family who was skilled at making a kind of ointment (a highly viscous or semisolid substance used on the skin as medicament) which could prevent the skin from cracking.

CLICK on the diagram to Enlarge->

With this medication, this family, for generations, had been making a living by bleaching cloths in the river all year round.

On day, a traveller heard about the ointment and offered to buy the secret formula with very attractive price.

The traveller then offered the secret formula to King Wu and explained its usefulness when apply correctly in the military affairs.

King Wu took the proposal and started a naval battle during a winter against King Yue.

With the secret formula to produce and apply the ointment, the troops of Wu state were spared from catching chilblain (an inflammation followed by itchy irritation on the skins resulting from exposure to moist cold). While the Yue Soldiers suffered from skin disease and were defeated.

After the war, a portion of the conquered territory was awarded to the traveller as a fief, and he become rich main and his status was elevated.

Note: Cartoons scanned from the book "Zhuangzi Speak" by Chih-chung Ts'ai.

The moral of the story is that, though it was the same medical formula. One can use it to make a living and the other can use it to make big profit when he see the value and know where to apply it.

3) Global Trading System

This is self-explanatory...

(If the document does not appear on your browser, click on the link.)

A Top-Down Engineering Approach to Profit From the Global Market

Example

"We come this way but once. We can either tiptoe through life

and hope we get to death without being too badly bruised

or we can live a full complete life realizing

our WIDEST DREAMS."

- Bob Proctor

Self Development idea (7) - The Art of Letting Go

A great spiritual teacher had told us that:-

"Holding on to anger is like grasping

a hot coal with the intent of throwing it at

someone else; you are the one who gets burned."

So, if someone can not think that he can love his enemy... At least think in terms of "Forgive and Let Go". Let go the hot coal in the hand.

Or we can look at the matter from another perspective:

That's Dr. Daniel Amen's 18/40/60 Rule

At 18 years old - You worry about what everybody is thinking about you.

At 40 years old - You don't give a damn what anybody is thinks of you.

At 60 years old - You realize nobody was thinking about you at all.

Any Surprise? Since other people spend most of their time worry about their own "busy-ness", and not spending time thinking about you. Then what is the point of wasting any time to hate others which would be harmful to your own health?

So, the logical answer is still to "Forgive and Let Go". :-)

And, there are some simple exercises to experience the art of letting go:

Exercise 1:

Step 1. Take a piece of paper and scrunch it up to become a small paper ball.

Step 2. Use the stronger hand to grasp on the paper ball. Take a deep breath and then start to apply force to squeeze it as hard as possible... Hold the breath.... Squeeze harder... Continue to hold the breath, and continue to apply more force to squeeze harder.... continue to do so, until...

Step 3. Until that one can not take it any more. Then, release the ball, with the hand face down, and let it drop... and start to have normal breathing.

Step 4. Feel the sensation of "letting go" in your hand. Doesn't it feel good?

Exercise 2: Sedona Method.

Step 1. The first step is to identify the feeling that one wants to let go.

Step 2. Then ask oneself the following three questions:

Q1. Could I let it go?

Q2. Would I let it go?

Q3. When?

Yes. These steps and questions look very simple. And if one seriously asking the questions and think carefully. One will find that the choice lay within himself. The answers would then be: Yes, Yes, and Now.

As scientists have estimated that the average human has 60,000 thoughts a day. This may be sound interesting as human mind do not stop imagining/thinking all day long.

And, something more interesting is that, according to Dr. Deepak Chopra, 90% of the thoughts you have today are the one you had yesterday!

Therefore, it is a very Important task for every individual to make sure that his dominant thoughts are of good intention and a happy one, or else, like it or not, it will has HIGH chances to come back tomorrow.

"Every event that baffles you today had its seed

in an intention yesterday."

- Deepak Chopra

"Never let yesterday use up too much of today."
— Will Rogers: Humorist

"Let go of the past and the past will let go of you."

- unknown

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Added on 14 Dec 2012 - A relevant Picture found in facebook:

Happiness is a state-of-mind. 

It is a personal choice.

It is an in-side job! 

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