Sun Tze Chapter 1 Laying Plans explained 1/3 (detailed planning)
March 22nd, 2007 by ALVIN SOONG
My ideas are heavily based on Chow Hou Wee’s Book on Sun Tze War and Management. Personally I have adopted some of the methods and made quite good profits for my clients, some as much as 52% within a year during bumper year. Of course not everyone earns that amount and we have to be realistic as it depends all several factors. Timing for one is a big factor. I like to share the ideas along the way, using Chow’s foundation explanations to be used for investments planning.
——————–
First line states that it is vital for detailed planning.Good planning wins hundred victories in hundred battles, as denoted by Sun Tze to attack an enemy’s strategy and subduing the enemy without fighting. This also known by Sun Tze as knowing oneself and others and your victory will not be threatened. This applied to investment planning, is to know your personal SWOT analysis (Strength, Weakness, Opportunities, Threats), and knowing the funds’ profiles and the companies it supports. When we mention SWOT, that will depends on your timeframe (either your strength or weakness).
While most would say that the longer the time, the more confident your funds your grow. It really depends on timing. That’s where opportunies and threats come into place. Chinese use the word wei-ji (meaning opportunities in danger) in great depth. During the crisis of Technology Bubble Burst in 2001, a lot of people lost a lot of money or didn’t dare to go into technology funds. Within 2-3 years, there were those who had put in and made over 50% profits with us, this is a classic example of seeing opportunities in threats.
The slight recorrection factor from 1st march 2007 is another example.
Do you see the temporary drop in US market and STI as a good opportunity?
Lets discuss. Feel Free to drop me an email at alvinsch@singnet.com.sg
My next article on Sun Tze Chapter 1 will focus on pre-requisites of investment planning.
5 fundamental factors: moral influence / climate / terrain / generalship / doctrine
7 dimensions: ruler moral influence / ability of general / execution of laws / troop strength / number of strength / training / administration of rewards and punishments.
How does this comes into investment planning? Look out in next blog article….
Hi
I saw your website after reading Mr Tan Kin Lian blog.
Your article on Sun Tze mention about importance of timing. I am a firm believer of timing - buying into weakness and selling into strength. But most of my insurance adviser felt that i shd invest regularly to reap the benefit of dollar cost averaging. Hence 2/3 of my cash are invested in a regular plan and the balance cash are at my disposal to take advantage of any market movements. My insurance adviser felt that i am speculating but i don’t think so since i am willing to wait for couple of years for market to rebound. And your article provide another perspective on timing. Tks.
Their advice isn’t all wrong. However we do like to point out that higher regular premiums do also mean higher commission for the insurance advisors and that would also mean higher charges paid by the policyholders.
Im saying this even though I am a financial planner myself, and I rather to be honest with you on this aspect. However there are still many advantages to dollar cost averaging. The advice I give to my clients are a couple of strategies.
The advantages of regular investment it uses dollar cost averaging so it is safer than to put in one single premium.
The advantages of single investment is that it times the market so when one enters the right time, it maximises the returns when price of funds move up. Risk for this is higher.
Speculation is only if investors place their funds for very short period of time hoping to earn maximal returns over short period of time (say in less than a year). We don’t recommend this.
Most of my clients who are risk adverse takes up dollar cost averaging regular premium. The more adventourous take up single premium, to maximise their returns, even though they were told about the risks involved.
I recommend to everyone of my clients to adopt both strategies using what I understand from Sun Tze’s point of view. Single premiums to be used based on short term, based on current market situations (capitalising on wei-ji). And dollar cost averaging to be used as long term basis.
With the sales charges, the few who adopted my strategies have break even their funds within a year and continue to make their profits in last 3-5 years more than 100% profits.
Many of those who didn’t and still prefered to use dollar cost averaging regular sum investing also still make up to 52% or more profits within 3 years. The reasons most of them give is the fear of not able to make the profits for those single sum investments they put in.
Actually if research is done properly and there is longer time horizon even for short term investments(>1 yr or so), the fear is unfounded. One should have short term and long term investment to give himself the best returns profits. Your strategy is correct, neither are your financial advisors wrong. It is matter of perspective, risk tolerance, time horizon and how much you are willing to set aside in terms of single premium (which I would suggest need not to be a lot).
Personally I too have adopted this strategy. My regular investment is $200 per month. And I put in $15K as single premium is 2004. In 2005 I have break even (after all the sales charges deducted) and 2006 I have made profits of $21K (from the original $15K), of which I have used to put in deposits on my new house now. My regular premiums continue and I can put my mind at rest that I have long break even my funds and earning positive returns every year.
There are some of my clients who had put in more amount (both regular and single amount) and earned much more than me as well.
Hi SPCher
For more info, we would invite you to our Economic Outlook 2007 at NTUC INCOME centre on 31st March 2007 (2-5pm)
Talk given by Economist Dr Tan and Anthony Chia - Public Talk is free. Just let us know and we book a seat for you to find out more for yourself.
Zero obligations. Feel free to explore.