How the GPAP model works in our lives (IMPORTANT, PLEASE READ !)

19 mars 2020

GP = Gain pleasure
AP = Avoid pain

According to Anthony Robbins, many of life decisions are based on this model. We work to gain pleasure (social connection, achievement, etc) or avoid pain (get away from past hurt, problems at home, lack of income, etc).

And of the two, which one do we act on more? It is avoiding pain , really. We will go to great length to avoid pain than to gain pleasure.

Such is the extreme we are facing today in the stock market. Despite the trillions of dollars that various countries are pumping into the respective markets, nothing seems to jolt the stock market upwards. At most, it is a dead cat bounce only to benefit the short sellers to add more positions.

But wait, why is Gold , surpassingly a safe haven asset also suffering the same retribution ? Well, people are so afraid and unsure what the hell is happening that they rather sell everything including GOLD to keep CASH at home. Yes, despite banks are giving ultra low to negative interest rate.

Not enough ? How about bonds ? Isn't the FAs advising us to have an allocation of bond in our portfolio ? What happened to it now ? Read here

This is a rare situation that warrants attention and care. With new cases recorded each day, I am thinking will US impose a mandatory city shutdown like China ? And will the citizens who aspire freedom so much obeyed the rules or go against it ? See this article

And our hopeful President Trump is expecting Covid-19 to go away in April when the summer is here with its higher temperature. Of course, if he is right and things return to normalcy, we should all pop our champagne and celebrate as we regain our freedom. But what if , he is wrong and Covid-19 drags on for another 3-6 months more ?

Maybe the students like it , studying online at home and playing video games and chatting with their friends. Parents , many have to get accustomed to working from home (if they still have a job) while others fear going on unpaid leave, retrenchment or job loss as businesses are unable to cope anymore. Lowering interest rates means little to the business owners who are not able to attract any customers to come to his shop or the city is lockdown. Rental rebates - if lucky landlord offers you 1 month or 2 maximum. They cannot be doing it for extended period of time.

So, costs stays while there is little to zero revenue. Would you like to do such business and how many months of cashflow do you have to withstand this covid-19 storm ?

Remember 2008, US government has to bail out AIG and many other banks due to credit defaults ? This time, the defaults or those in debts are the millions of individuals who lost jobs or facing no income due to Covid-19. How many can the respective countries government bail out ?

There is a limit , I am sure and the rest is up to the individual to sort it out . And mind you, this poor individual could be you and me, trying to make some passive income through trading but only to see his hard earned profits turn to deep losses.

Shutting down the stock market is one possible way. But it has to be more than 15 minutes like the past 3 circuit breakers. We knew what happened. Maybe 2-4 weeks to buy time for this storm to be more settled.

Strict compliance to city shutdown like what China did. They suffered for the first 3-4 weeks , enduring the inconvenience but look at what happened now. Shops are reopened, schools are slowly getting students back, restaurants are filled up like before again and the subways though filled with masked men and women are busy once more. Things are returning to normalcy, ie. consumers are spending again. That oils the economy as money is circulated.

The rich must be altruistic at this time of need. Like Jack Ma who reach out to this countries. More must be done to help contain Covid-19 collectively.

I cannot say if you should sell partial or all of your stocks as everyone has a different risk appetite and view of the market. What if the market suddenly U-turn and rebound? Oh please, I want to have peaceful sleep than to be haunted by you guys for offering wrong suggestions.

To long or short, you must have your own trading strategy as well. Due to volatility of market now, may be good to concentrate on a few ,rather than a buffet spread so that you can react fast should something drastic happen.

I rather be long winded to emphasize again and again the use and need for using STOP LOSS. Reduce your position size and not the other way. Do not attempt to take revenge because of your paper or actual losses. Control your emotions as rage, anger and frustrations will cloud your judgement and make you do irrational things. And don't bet on luck !

Stay safe, exercise, watch Netflix, play with your kids, enjoy family time. And most important, keep on praying for everyone like I pray for all of you . May the Lord's blessing continue to rain down on every trader/investor, take away their fear, anxiety and stress and replace it with peace, harmony and joy. Strengthen their immunity , expand their love circle , sweeten the words that come out from their mouth so that it edify someone they meet and pass on the abundance blessing to one another.

Shalom everyone !

22 mars 2020

Note

we have learnt previously from many charts , notably the NGAS where it breaks out , went up a little and came down tumbling and went below the bearish trend line again. Such phenomenon seems to be getting more often now in the market.

With such volatility in the market, once has to adjust own expectations of profits target and time frame as well. we see from above chart that the upswing is short lived and if one awaits and not take profit soon, he will be disappointed at end of day with profits turning into losses. Manage your expectations.