It has been more than two weeks since I last posted an entry. Apologies for anyone who has been waiting – it has been a long week for me and I couldn’t spare extra time to blog since I have a lot of back log to clear at work. Always so much to deliver, but with limited time on my hands.
As the end of 2017 draws to a close, I have started seeing other finance bloggers posting about their portfolio performance and how their investment journey has been. The market this year has been doing so well, and it is hard to find any red numbers. I would, of course, be doing a post on my own portfolio performance. If you would be patient enough to give me a few more days before Year 2018 starts, I promise that you will not be disappointed with that post.
So how long have I been an investor? It has been more than 6 months since I started this blog, and the first time I bought AA REIT was on the 12th of May. Very short journey for the long path ahead of me, but I have learned very much.
In fact, these 6 months has changed almost my entire perspective about what investing is really all about. I have read, and read, and read (more than 10 investment books already, about 2-3 books per month, and there’s still way more to read) and even created a blog when my most hated homework in school was to write compositions. I learned from the successful ones and the failed ones. From my own mistakes and others. I developed a slightly stable approach to investing, based on certain ground rules and developed patience and discipline – or so I have hoped so.
I must admit – I have grown a lot in 2017.
Thus, I have consolidated everything that I’ve learned this year into four lessons, and I hope that you can also take this into account when you are investing. Because boy, they sure make a hell lot of sense to me, and I believe that you can benefit from my personal experiences.
1) Investing is not about winning, it is about not losing.
You definitely know about Warren Buffett’s first two rules of investing, and I need not repeat once more. Many times, people lose money because of greed and the fear of losing out. If you only focus on the green, sometimes you can’t see the downside of everything else. And this is where you need to consider margin of safety. Investing is all about mitigating risk and minimizing losses. Because when you lose money in investing, your investment will need to work doubly hard to go back to your original capital.
2) There is a price to pay for the price you pay.
I learned about this when I paid a premium for ComfortDelgro stocks in July 2016. Back then, it had a book value of almost 2 and trading at P/E ratio of around 16. Currently, ComfortDelgro has dropped 15.06% (including dividends received) in my portfolio. Although the stock price now has presented an opportunity to accumulate more, if I had to be honest with myself, I bought it when it wasn’t attractively priced, and I am paying the “price” now. In this way, I’ve also broken some rules that were mentioned in Point 1. If I were presented with the same opportunity now, I would have been more patient and waited a little longer.
Since this was also the first stock that I’ve bought that has caused a 2-digit percentage point drop in my portfolio, I had to learn how to control my emotions and think rationally. First cut is always the deepest.
It was a good lesson indeed.
3) The market is there to serve you, and not to guide you.
In the beginning of my investment journey, I was very enthusiastic about the market and always constantly checking prices every hour or whenever I get the chance to. With endorphins constantly circulating my bloodstream, I was exposed to many “lost” money making opportunities (“Wa! This stock price dropped so much over the past year! I should buy it now if not later I lose out!”). When I did not buy these stocks and the prices went up, I felt pain in my heart.
Eventually, I told myself that opportunities will always be there, and I don’t have to grab every one that comes by. I need a good investment, and I am investing for the long term. Short term fluctuations should not influence me. I can now manage those feelings better after being more “seasoned”.
4) Put on a filter.
Since investing in the stock market has become a big part of my life now, it usually comes up in conversations that I have with my friends and colleagues. It is hard sometimes to explain what investing to me really means because not everyone can appreciate my approaches. And they wouldn’t know how to decipher annual reports and how to know how healthy a business actually is.
I remember an incident when I told a close colleague of mine that I’ve bought ComfortDelgro stocks and he laughed at me immediately, saying, “Why did you even buy that with Uber and Grab in the market?”
Last week, I updated him that ComfortDelgro and Uber have an alliance with one another. And he went “Congratulations!”. Okay okay, I know. Outdated post on the alliance. Will post my opinions about it in December portfolio updates.
So anyway, back to the point. What I’m trying to say is that now with information so easily accessible with the Internet and every one being free on giving their opinions (and yes, giving opinions is also free), you have to put on a filter and decide what’s best for you. If you did your homework and the fundamentals of the business is sound, trust yourself. Think independently.
And if you can’t trust yourself too much, just diversify, or don’t even try beating the market at all.
Like engineering, before a signal passes through for acquisition, we always design filters to ignore any transients or possible glitches, a.k.a noise. Same like investing, lor. :p
How was your investment journey so far in 2017? Did you learn anything new?