04.01.06
What I learn about investment
I first started investing seriously about 6 years ago. I started with subscribing to IPO. I tried internet day-trading which was quite a nightmare. I realized from quite early that unless you are using a direct terminal, it is quite impossible to day trade successfully using internet. I always thought that if I buy technology shares, I would be at an advantage because of my technical skills. It was later that I realized that technology business is more business than technology and Asia-Pacific technology is even more business than technology.
After 6 years or so, my greatest “wins” have the following characteristics
- Sure-win investment are typically not a regular investment. Like company shares which are discounted
- Lucky and ignorant about potential risks
- Well-run companies in a non-sexy industry. But these companies should exhibit high profit growth.
- Buying good company (esp with government backing) when they are low
My on par performance come from the following categories
- Large established index stocks
- Well-run company with a so-so business but not showing good profit growth.
My poorest performance comes from the following categories
- Company with no profit and most likely have not establish its viable model
- Company with profits but do not have trading volume and revenue growth. Healthy balance sheets are insufficient (in fact, it is still my greatest loss!)
Interestingly, I learn that
- One must always be able to bet heavy on right bets to win. I bet heavy on wrong investment. Also, it pays to switch even at loss if you realize things are wrong. And it is easier to switch earlier on than later on.
- Trying to exploit little known characteristics of a stock exchange has not work well in general.
- Established index funds company should be acquired during down periods. They should come back up. If you invest regularly on a good company (meaning sustainable healthy balance sheet), you tend to be gain when the market swing up.
- Profitability is not enough. Growth must be present (especially for very tech-related company).
- A commodity value chain can have high value at some parts of the chain
- Good companies tend to continue to grow and I must learn to have guts to buy them at a high. (The only problem is that you tend to buy them at a high and have to wait for them to hold steady or drop before peaking again.)
- If there’s a genuinely good deal, you must be willing to bet heavy. And you should not wait because you always find ten thousand reasons why this is not genuinely a good deal.
- The way down takes a while before it bottoms. There is no need to hurry.
- After 6 years, I realized my investment is more based on luck than skill. This leads me to understand that it takes a long time before a skillful person would be better than his lucky counterpart consistently. (Though I haven’t invest since about 4 years or so back)