Saturday, January 28, 2017

Paper profit is meaningless

When you buy shares of a company at a dollar, and the share price is now two dollars, you definitely feel very happy.

Everyone wants to make money from investment.

The problem is that paper profit is meaningless.

You gain only when you sell.

There is no need to feel happy when you see the share price goes up, unless you want to sell it off immediately.

Paper profit is just a term to show that you can make money when you sell now.

If you hesitate, and the share price goes down to a dollar, you are not gaining or losing anything.  That is why no need to feel happy when you have paper profit.

You feel happy only when the money is safely in your bank.

Monday, January 2, 2017

My incident investment in USD

About 8 months ago, when USD to Singapore Dollar (my local currency) was about 1.33 to 1.35, I had an inkling of the direction of US dollar.  At that point, the exchange rate fell from 1.43 (in January) to 1.33 (in May).

At that time, I was not thinking about investing in currency at all.

I was thinking about locking in the exchange rate, so that I can travel to US (especially Alaska) for vacation within the next 2 years.

There is no doubt that US dollar is still getting stronger and stronger.  At the time of writing, the exchange rate is about 1.45.

My thought at that time was: No matter the outcome of the election, US economy would only get better.

I just did not foresee that USD strengthened so much after Trump won the election.

I happened to have the good luck to change a few thousand dollars of my saving to US dollar, and keep the money in cash.

As a result of my quick action, I am able to gain 9% profit if I sell the US dollar now.

Since British Pounds and Euro have fallen so much after the Brexit decision, I have decided not to go US after all.

I will hold the US dollar for a couple of months, and gradually convert to other currencies.

Sometimes, it is just dumb luck to make a gain from incidental investment.