Are you a Trained Fireman?

In response to a thread on a Singapore Value Investing forum, i posted this piece:

-----------------------------
Trading is akin to fighting fire. How are firemen different from the rest of us folks? They are highly-trained, well-protected & well-equipped. They have a strategy - a map of the building - even before they head in, and an exit plan. And perhaps most importantly, they are very brave. Even then, some perish. They know who they are, and they chose this path in life. They take calculated risks to save other peoples lives.

I will not bore you with the comparison to trading, it is pretty obvious. Now consider a civilian in his silk suit rushing into a smouldering building with no idea & no game plan? The only trait he shares with the fireman is... he is very brave, and some might say foolish. He may get lucky, but chances are he may add to the evening news count.

Contra/Margin or any leveraged trading is akin to a civilian(with the silk suit) dousing oneself with a bit of petrol, and running into that building. I exaggerate, but you get the idea!

However, before we paint trading as a mortal sin & as someone who trades frequently, allow me to share my philosophy. I consider all investing a form of trading , and thus a risk/gamble(no risk/no gain). What separates them all is the duration. Some use Fundamental data, others Technical. Both have their pluses and minuses. And then, there're also the valued techniques of gut-feel and rumours, among others.

But it takes real hard work and patience to pick solid fundamental companies in the right growth areas at the right price, just as it takes effort to pick the best chart setups, and formulate an entry and exit.

1. Do you know who you are in a crisis? Did you liquidate during the recent crash, when you thought you were a long lerm investor?
2. Have you trained yourself? Have you researched enough? Studied the risks involved?
3. Have you protected yourself? Holding power, Spare cash, Insurance, etc
4. Have you a plan before the trigger? What's a good price, a good setup? When do i stop-loss/take profits?

In short: There is a serious blaze in there. Are you a trained fireman?
---------------------------------------------
Comments?

Russell Has a Kit Kat!

"Take a break, have a Kit-Kat!" Russell did.

Good support here in the 760-765 range followed by 740. The wave structure does not look complete to me. May see sideways action for a while between 765 to 807 - to get away from the upper trendline - and possibly another marginal new high around 835-850 in a couple of months time (also the all-time high).

It sure is a crack in the wall. Not taking any action.

Shenzhen Composite: Make or Break

Shenzhen Composite is sitting on support at 1230. To continue the uptrend, we need a bounce here, and a break above the descending trendline. On the other hand, a break below support will be bearish, with initial support around 1130, followed by 1070. Volume cues seem to suggest that this is a bull flag, which might resolve itself to the upside, after further sideways action. My last post on the Shanghai Composite called for downside, and we have seen it unfold. Watch this more bullish brother (Shenzhen) for clues to future action.

All the best!