Saturday, 31 March 2018

Watchlist: ThaiBev Y92 (2)

Previous post: http://rainbowcoin.blogspot.com/2018/02/watchlist-thaibev-y92.html

Not wanting to catch a falling knife, I shall wait for the plunge to end and consolidation to set in before entering.



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Side notes:

Maybank is now running a promotion for fresh funds fixed deposit at 1.65%. Finally increased.

If you are not looking to touch your emergency money for a number of years, then SSB is an attractive option. It is giving 1.65% payout too on the first year.

Wednesday, 28 March 2018

Book review: Momentum - how to build it, keep it or get it back

This is a big concept book by Michael Mcqueen. It brought me through the equation of Momentum with brilliant explanations on each part of the formula and a number of case studies on famous companies like Sony, Lego, Facebook and Kodak. You will find the equation at the end of this blog post - after snippets of wisdom which I have lifted from the book (they are in italic, whereas my inputs are in non-italic).

The momentum concept covered is not just for individuals (who are turning into couch potato or in status quo like myself), it is also useful for leaders who are looking to veer their sluggish companies in new directions (turnaround).


Getting into momentum...

You can't steer a parked car. When a car is stationary, you can turn the steering wheel as much as you like but it will have no effect/ However, when a car is in motion, even if it is going slowly or even in the completely wrong direction, you can always steer.

While it is great to be inspired, don't make inspiration a prerequisite for getting started.

Clear enough, the gist is - get your arse moving!
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Vision - why we need it...

I would encourage you to reflect on what it is that helps you to refocus on a vision for the future. Discover those activities that keep you forward-looking, inspired and passionate - rather than merely productive.

My takeaway is vision helps us to keep our eyes on the goal. Why would we waste energy on purposely activity?

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"Never confuse action with activity." Benjamin Franklin


Put things into perspective when we embark to do something...

"When you change the way you look at things, the things you look at change." - Dr Wayne Dyer

Before setting about a course of action, ensure that there is alignment between what you are looking to do and your core values. Innovation without integrity leads to chaos.

My takeaway is -
Work towards your vision and work alongside your core values.


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Focus and saying no are important to achieve what we desire...

Many of us have a well-developed messiah complex where we unconsciously believe that things will fall apart if we are not involved. Added to this, we must be wary of the fact that it can feel good to be busy - even when this busyness robs us of effectiveness.

By setting clear boundaries around how you invest your time, others will begin to value your time and input more.


"If you chase two rabbits, you will catch neither one."

"Always do one things less than you think you can."


The author also talked about this concept on Pruning (like pruning the plants) when he finished talking about the importance of focus...

Pruning serves to confer vitality, strategy and symmetry to an organisation.

You can read the book for more details about what each of those means.

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Diversification or Diworsification?

History is replete with misguided initiatives that failed the 'sensible test' - an assessment of whether something is the right course of action, at the right time, in the right way.

"Entering markets where a company lacks skill or expertise is a key factor in as many as 75 per cent of business failures."

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Consistency

Why consistency is so difficult to maintain - we overestimate the impact of our decisions in the short term but grossly underestimate their impact in the long term.

We need to persevere and not simply give up after a short try. If we stay consistent in our activity, we will gradually achieve momentum.

Not forgetting that we got to keep ourselves motivated along the way...

Tangibly celebrating even insignificant progress can be incredibly motivating.

No matter how successful you are or how high you have risen, you will inevitably lose speed and altitude unless you take deliberate steps to counteract the forces of gravity and entropy.

Remember...  Law of inertia - it takes far less energy to keep doing something once you've started.



And ultimately aim for autopilot.

"All our life is but a mass of small habits." - William James

In the case of quitting smoking, studies found that people who don't smoke in the first week after they have decided to quit are nine times more likely to follow through and able to actually stop smoking permanently. Never underestimate the power of getting momentum early in the process.

When you have successfully made what you set out to do a habitual thing, it will be much easier, as though on autopilot.


And there you go, the magic equation:

Momentum = (Activity + Focus) Consistency


To apply the concept of momentum in investing, it is the same. You need to be clear and focus in your execution, sticking to your investing principles and be consistent.

If your plan is to start investing, do it. Go pick up a book on stock investing, open a brokerage account, find a stock that meets your criteria. If you are already into investing and your plan is to review and re-balance your portfolio every quarterly, do it.

Am I right to say the only way to invest with no momentum is Buy-and-Hold?

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Monday, 12 March 2018

Old lessons - facing a 'new worse'

With reference to an old post: A new worse - STI Aug 2011, two more lessons added on:

Lesson Five - Be nimble. Be impatient to the weeds. Slowly rake in the gems when they are on sale and be very patient with the gems.

Lesson Six - if chance permits, short those stocks that fuel the Bear. (Be careful not to short too late. As we can see over the years, major down trends lasted shorter than major up trends.)


STI 10 years - plunge points

Market downturn will always repeat itself again. Triggers may be different but learning points are the same.


How ready are we to face a 'new worse'?

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Sunday, 11 March 2018

What swimming taught me about investing

  • Investing is pretty much like taking a plunge. Swim or sink.
  • I could rely on others to keep me afloat, for a while, but not forever.
  • People can set different goals and pace for themselves (I don't need to be like everyone else).
  • The end of a lap always seems very far away (as I am short-sighted, I can hardly see it) when I started out. With consistency and perseverance, I will eventually reach the other end.
  • I swim in the style I am most comfortable and adept in. It may not be the fastest stroke but it should definitely be one that keeps me afloat and moving. Yeah, it's very much each to his own.
  • Strength and stamina will determine how fast and how I you can go. Just like in investing, 3Ms is my strength and account size is my stamina.
  • Lots of time and practice are needed to build both strength and stamina.
  • Conserve energy if I want to do more laps.
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We can choose to swim in a peaceful swimming pool, we can choose to swim in the sea. We can choose to invest in boring, constant return instruments or we can choose high volatility ones that could potentially generate high returns.

Wherever it is, stay afloat and keep progressing. :)

Sunday, 4 March 2018

Opportunity costs in stocks market

When we speak of making profits through stocks investing and trying not to lose money according to Buffet's rule, there is a part of the processes which we may overlook. That is - are we able to minimize opportunity costs throughout our investment journey? (In another words, mitigate risks and identify market opportunities.)

Here are some ways in which one may incur opportunity costs (from my retrospective checks as I evaluated my current portfolio performance):


1) Sitting on too much cash in a bull market or waiting for a crash

This is a total opposite of FOMO (fear of missing out). I can think of two possible reasons for sitting on cash - one predicts that a bear may strike soon (fear of losing) or one is not sure which stocks to buy.

These cash on hand sort of erode away in value with inflation (ooh the scary term) as the bull market charges, losing out on capital gains and dividend yields. War chest under-utilised...

Not to mention those friends in the DCA (dollar-cost-averaging) and passive investing faction would probably go like "See, I told you!" with a smirk.

Read also this article by Teh Hooi Ling.

However, we must also bear in mind money management rules as illustrated by famous trader Jesse Livermore's words:

"Remember, you do not have to be in the market all the time. The desire to always be in the game is one of the speculator’s greatest hazards. When playing the stock market, there are times when your money should be waiting on the sidelines in cash.. .waiting to come into play. Time is not money — time is time, and money is money. Often money that is just sitting can later be moved into the right situation at the right time and make a fast fortune. Patience is the key to success, not speed. Time is a cunning speculator’s best friend if it is used wisely."


2) Letting go of 'touchstones' and holding on to 'weeds'

Touchstone refers to a stock that keeps climbing in price (despite retracements) beyond which you bought it for. Inspired and borrowed with pride from Uncle8888's story.

How many touchstones have you picked up in your x-years of investing? Did you pick and throw them back into the sea?

Do you hold on to those stone-turned-useless weeds and watch them rot away?



3) Not following the macro economic news and being unaware of market's trend

I was absolutely guilty of that when I did not read the market reports broadly and diligently for the last 2 years. As such, I have missed dearly the rise of the Semi-conductor sector. I do read reports now and then, however my angle of view was narrow - I only read certain headlines which drew my interest and on those companies which I have vested interest in. With that, the bandwagon passes me by without my realizing!

Just to sidetrack a little... being able to identify value / projected good-earning stocks is one thing, identifying ignited value stocks is another. Watch the ignited ones rocket and hold on tight.
(Creative tech just ignited like fireworks. However, I am not quite sure how sustainable is the 3D audio frenzy.)

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Besides having an astute mind in stock buying / selling and good money management techniques, knowing when opportunity knocks is just as important to succeed. Opportunities are only for the prepared.

Read also Time in the market beats timing the market?

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