School of Hard Knocks 02 (Jan 10 - Jan 13)

[winston]

'Underage' investor sues unit of Credit Suisse for $900k loss

Title: 'Underage' investor sues unit of Credit Suisse for $900k loss
Source: Straits Times
Author: Jonathan Kwok & Anita Gabriel

A FATHER and son are suing a unit of Swiss banking giant Credit Suisse over major trading losses incurred by the son when, they say, he was still a minor and legally too young to trade.

Mr Ow Weng Fye and his son Ian Ow Tuc Yun are claiming $896,871.18 from Clariden Leu, a private banking unit of Credit Suisse.

In a High Court suit filed last October, they say the bank, including their former relationship manager Aaron Chwee Toh Yee, the second defendant, should not have let the son carry out trades and should now return the sum he lost.

The Ows argue that Clariden was fully aware, through Mr Chwee, that Mr Ian Ow was a minor in 2007 when, aged 20, he traded in MSCI Singapore Free Index (SiMSCI) futures contracts, which bet on the future direction of the SiMSCI stock index.

They say the trades were carried out at the 'instigation' of Mr Chwee without consulting the elder Mr Ow, who did not know about or approve the trades.

The elder Mr Ow was an executive director of a stockbroking firm, Millenium Securities. He left after it was sold to Hong Leong Finance in 1990.

In Singapore, the legal age for entering into contracts, such as trading shares, was 21 until 2009, when it was amended to 18 for most contracts. Since then, those 18 and older may trade shares.

http://www.singaporelawwatch.sg/remweb/ ... howClose=y

[iam802]

I wonder if they will return the profits if the trades were in their favour.

[winston]

TOL:-

1. From millionairemind, I learnt the importance of being with the Market Direction

2. From 802, I learnt the importance of being patient and to wait for the set-up.

3. From kennynah, I learnt to remain flexible and to have a Stops in place.

Who said, "old dogs cannot learn new tricks ?".


Thanks,
Winston

[kennynah]

and from Winston, i learnt :

bet big when the stars are all aligned..

old monkeys who are young at heart and mind do learn new tricks

[winston]

How I Avoided the Investment Mistakes That Crippled My Friends and Colleagues By Mark Ford

http://www.palmbeachletter.com/CigarBar/GetCigarBar/56

[winston]

TOL:-

During the end of the last few bull runs, I switched from "Momentum Investing" to "Value Investing", to protect myself.

I thought that the "Margin of Safety", "Dividends" and "Low PE", would provide me with the buffer, to survive any Bear Market.

I was dead wrong.

When the market drops, everything drops at the same time including Value stocks, Yield plays, low PE stocks etc. This could be due to Outflows, Deleveraging, Margin Calls etc.

The RNAV discount that I had, became much wider.

The low PE became lower. And it became higher when the "E" disappeared.

The dividend yield either disappeared or was reduced substantially.


Lessons Learnt:
1. Move to cash at the end of a bull run.
2. Dont try to take shelter in Yields, RNAV Discount, Low PE etc.
3. In your life span, you can only go thru a few business cycles. Screw up one cycle and you have to wait a decade to make up for it. How many business cycles have you screwed up already?
4. Are we now at the end of this bull run ?

[winston]

AAR

1. What did you do right over the past 4 months, during the biggest rally in a while ?

2. What did you do wrong, over the past 4 months, during the biggest rally in a while ?

[kennynah]

very long term investing must be on NON-leveraged products and has utilize a capital sum that is locked down...if the investing horizon timeframe is 10 years, then look at it as a 10 year fixed term deposit... don;t touch it, no withdrawal any earlier...and at the end, surprise yourself... it's either gone to $0 or you get handsomely rewarded or something in between.

what is uncertain is this...very long term investments NEVER EVER guarantee profits.

so, it begs the question...why do people invest in such a long timeframe?

[winston]

“I learned a long time ago to focus on what I can control and not on what I can’t control”

– Tim Tebow

[winston]

8 INVESTMENT LESSONS FROM BRUCE BERKOWITZ

Another nice “lessons” list here from Bruce Berkowitz of Fairholme (via Market Folly):


1. You always have to have cash, especially when no one else has it. (John Burbank of Passport Capital has said the same: “Cash is most valuable when others don’t have it.” )

2. No free lunch- it’s not free, or it’s not lunch.

3. You can’t change people! You can change yourself, but not others.

4. You only see reality under extreme stress- you want to get to know someone, you need to see them under extreme stress. (MF note: Completely baseless guess, but does anyone else think he’s possibly referencing the situation where Fernandez left FairholmeCap here?)

5. Volatility is not risk!

6. Always assume you will have bad luck.

7. Few variables to win. Once you have to think about more than 3 variables, your odds of winning are low.

8. If you have to use more than 6th grade math, you’re in trouble.

http://pragcap.com/8-investment-lessons ... -berkowitz