Speculate VS Justify
Yesterday I was having my "dinner" at OLD TOWN White Coffee around 11pm with one of my close friend. We always talk about investment when we are out. We came across on discussing how is the share market investing atmosphere now, which is our favorite topic. As a newbie (if compared to him), I told him that the market is going to crumble soon, maybe in coming 2 to 3 years. He asked me whether I was able to justify my answers. I told him that it's was based on my feeling which tells me that market is going to fall. After that, he told me that I was just a mere speculator. I couldn't agree more with what he says, which is true.
However, there is a statement which I strongly believe -- "No body will ever know when or where the share market index has already reached the bottom line". My dad was the first person who told me that, and this close friend of mine was the second. So here comes the logic which I would like to share with everyone.
Statement 1: No body will ever know when or where the KLCI index has already reached the bottom line.
Statement 2: Based on my feeling, I think the market is already almost reaching its bottom line. (speculate)
Statement 3: Based on the past recession experience, a market recession will not drag for over a period of about 1 year and it's already one year since KLCI index has been dropping. So, the KLCI index has already almost reaching its bottom line. (justify)
Statement 1 is basically telling that no one can predict the future. If statement 1 is true, then statement 2 and 3 is false. The reason is when statement 1 is true, how is one able to tell market is near it's bottom line by feeling (statement 2). When statement 1 is true, why is someone still using market cycle chart to predict future market trend(statement 3)?
If we look back to the logic above, the speculative statement 2 and justifiable statement 3 will also be false as long as statement 1 is true. So, does it make any difference whether it's a speculative statement or justifiable statement? In my point of view, both of statement 2 and 3 are not much difference. The only difference is that statement 3 has a concrete proof to support it.
Now let's compare a prediction and a lie. If a person tells lie, the difference is whether he has or he does not has a solid proof to support his lying. Those who are listening to lies will be more likely to believe those lies that have solid proof.
Question to ponder: Warren Buffett says that "If a market goes down, it's more attractive than before". As statement 1 which I strongly believe tells us no one can knows when or where the market hits it's bottom line, how long could a person with RM10k - RM50K investment capital to tahan "attractive" investment atmosphere? Is he talking to you or is he talking to those millionaires? =)
However, there is a statement which I strongly believe -- "No body will ever know when or where the share market index has already reached the bottom line". My dad was the first person who told me that, and this close friend of mine was the second. So here comes the logic which I would like to share with everyone.
Statement 1: No body will ever know when or where the KLCI index has already reached the bottom line.
Statement 2: Based on my feeling, I think the market is already almost reaching its bottom line. (speculate)
Statement 3: Based on the past recession experience, a market recession will not drag for over a period of about 1 year and it's already one year since KLCI index has been dropping. So, the KLCI index has already almost reaching its bottom line. (justify)
Statement 1 is basically telling that no one can predict the future. If statement 1 is true, then statement 2 and 3 is false. The reason is when statement 1 is true, how is one able to tell market is near it's bottom line by feeling (statement 2). When statement 1 is true, why is someone still using market cycle chart to predict future market trend(statement 3)?
If we look back to the logic above, the speculative statement 2 and justifiable statement 3 will also be false as long as statement 1 is true. So, does it make any difference whether it's a speculative statement or justifiable statement? In my point of view, both of statement 2 and 3 are not much difference. The only difference is that statement 3 has a concrete proof to support it.
Now let's compare a prediction and a lie. If a person tells lie, the difference is whether he has or he does not has a solid proof to support his lying. Those who are listening to lies will be more likely to believe those lies that have solid proof.
Question to ponder: Warren Buffett says that "If a market goes down, it's more attractive than before". As statement 1 which I strongly believe tells us no one can knows when or where the market hits it's bottom line, how long could a person with RM10k - RM50K investment capital to tahan "attractive" investment atmosphere? Is he talking to you or is he talking to those millionaires? =)
Labels: Invest
posted by Jen at
6:16 PM
4 Comments
