The past week has been a bad week, with the US market drop.
I finally made some major decisions after struggle. I would like to share that with you.
Here is another update on my transactions in the past week.
Capital injection: ~40KSGD
1.YALLA Group:
The price dropped 40% in the matter of 3 days. So we added positions twice during the week, one too early and one too late, perfectly missing the bottom.
The newly injected capital is at 20%+ loss now.
2.RLX Tech:
This is the leader in e-vapor products. With people caring more about health, there is potential. Also, they also have potential to increase sales by focusing on more online retails once the demand is there.
3.DADA Nexus:
This is a delivery business closely associated with JD. And JD logistics, though still losing money by itself, has been showing improvements.
Following my exit of Singtel and Keppel Infrastructure Trust last week, I have finally made the decision to exit the SG index as well.
I entered the market at the absolute peak and am still in the very RED after 3 years. There is no sign for it to recover to its highs.
I have planned to just hold for the long term. At least the dividends will keep coming. However, with the change of investing approach, my war-chest is empty.
So after a few weeks of struggle, I sold all my positions purchased with cash.
This puts a close to the SG index investment and all in all, it is a very bad investment for me. The realized losses, combined with the opportunity cost during the past 3 years is significant.
Part of the freed-up cash has been deployed into the market as above capital inflow, and I was immediately hit by the US market drop, suffering 10%-20% losses on paper.
Haha, maybe this portion of my money is bound to be invested at the time of peaks….If this happens a few more times, I will give an early warning, so that you guys can avoid what I am about to buy.
It is quite common that people still make bad decisions because they cannot let go of “Sunk costs”.
I am the living example. I still feel very very bad due to my career set back this year. Sometimes, the feeling was so strong that it shows on my face and affects my efficiency in getting things done.
Another well-known scenario is as follows: if you bought a movie ticket to a bad movie, will you just leave half way?
I do not know about you, but I probably won’t…haha
So the problem here is why we just cannot let go of the “Sunk Costs” and move on, even though we know we should logically.
It would be lazy to just say “Knowing is oceans apart from doing” (I will do an entry on that later).
So I really thought about the “why”. And I now think there might be two reasons that are deeply linked to our nature as a human being.
1. Fear of losses
Compared to the same amount of gains, the emotions triggered by losses are twice as much.
That means the joy we get from gaining 1000 dollars is only half of the suffering we get from losing the same amount of money.
So people hate and fear losses.
“Sunk costs” are gone by definition.
But if we turn away from it, it would mean that it is really “lost” and becomes actual “losses”. This is obviously just some mental games. It is lost already.
2. Fear of being proven wrong
I struggled a bit between “Fear of being proven wrong” and “Fear of being wrong”.
I decided to use the former.
Maybe people are ok to be wrong and preferably correct themselves “quietly”. “Quietly” means that they do not even realize it themselves. This way, no explicit emotions are triggered.
However, “being proven wrong” represents a logical and conscious conclusion, which will trigger emotions.
So people are more afraid of “being proven wrong”.
And making a conscious decision to give up the “Sunk Costs” proves people wrong, even if that is the right decision to make for themselves.
These two “fears” are closely and deeply linked to our human nature. They are hard to defy and thus “Sunk Costs” are hard to let go.
However, there are ways in which we can increase our chances of success.
