Lessons Learnt in 2014

(27-12-2014, 01:48 PM)CY09 Wrote: Agree with MW point 3, investment goes beyond numbers. One particular lesson I have learnt is the importance of judging businesses beyond the numbers they present. As VB member, Specuvestor has pointed out, one has to analyse other layers of the business such as the structure. It is important to see how the “cash” is managed and also if the structure is benefiting the majority shareholders and prevents Minorities from getting a sizable share of the company's value.

Another lesson learnt is how our market seems to operate. From the various companies of Valuetronics & China Sshine, while these companies were indeed undervalued and talked about in VB, it was only in mid 2014 that their value proposition were realized. One of the main reasons was due to the sudden surge of analyst reports and their visit to the respective company's mgmt. These episodes serves to highlight the need to be patient with our investments too. After all, we are only small shareholders and its only when the market recognizes its value would we be rewarded. The market/company does not bother if we own a stake in an undervalued company

I hope if anything my contribution to this forum is the 3layered framework so that forumers dont have to spend the same 10 years in the desert as I had. Like many forumers one of the question that I had was why similar numbers are viewed differently by Mr market, from s-chips to cyclicals to deep value. There are valid reasons.

Hedge fund taught me the value of catalysts rather than just look at numbers. Perceived credible analysts' coverage is one of the catalyst, whether you agree with them or not. That said if one changes a report's date to 5 years ago and it's still the same, then one has to think carefully what has changed

The best risk management tool is understanding the business and management and what they are trying to do. Then you know what to do if certain events happen. 90% of value investors' time is mostly spend on stuff that we don't take action on. We only see Buffett striking deal on the back of the envelope but we forgot the tons of stuff and years he gone through beforehand. 台上十分钟 台下十年功

Just like if you are proficient in your job, you will be proficient when problems cropped up. The human value is actually in coming out with solutions when unknown problems cropped up, otherwise it can all be automated. It is irrelevant to forecast unknowns. We and the company's mgt can only adjust to what is actually happening and the trend its going. Thats why for a long term holder like Buffett he doesn't even look at unforseen macros because the mgt track record and MOS should speak for themselves over a cycle

My main personal lesson learnt all over again is how much a stock can go up beyond what u believe possible, and how much a stock can crash beyond what you believe is reasonable. Markets are never perfect or efficient though it is the best we've got. Therefore dont do binary trades and stagger your risk because otherwise our psychology and ego will do us in. Execution and asset allocation is half of the battle.

My 2 cents worth:

Valuation is dynamics, correlated to negative news.

U might think that y price is a great price with MOS.

U can wait all u want but when y price comes, it is with a reason. That's why pure numbers valuation won't work.

The OandG sector is a case in point. A year ago, will u get Keppel and Sembcorp at $8 $4?

U most probable would, or think it offer some MOS. Need when it's $8, u want more MOS to account for the bleak outlook.

It might not be a good example, but i think u can get my point.

Just find solid business, know the price you would pay over the long term, and have confident to accumulate as it go lower.

Hi All,

Conviction

I've learnt to believe in my own investment analysis regardless of the naysayers. However, I feel that there is a thin line between foolhardily holding onto a stock that is crashing to god knows where and having the conviction to hold onto a stock that is still sound fundamentally. I hope I have chosen the latter In any case, can learn if I'm wrong lah..

Discipline

Having the discipline to stick to your investing style and portfolio is vital. O&G sector is in the doldrums but I didn't add more stocks as my portfolio doesn't allow that.

Just some reflections on my part, happy new year in advance!

How you invest, i think it must be in "syn" with your education/training, psyche and most important your temperament.

i think one must have guts(instinct), patience, consistency, discipline, common to "uncommon-sense", money management(deep pocket), longevity, resilience (ability to take pain), willing to keep on learning (admit mistakes and moves on), willing to stick out like a sore thumb in a group if you have to be, expect anything is possible in the market, and many more than you can think off. Not to leave out GOD's Blessings or Lady Luck or Nature (for Non-Believers) or maybe you believe only in yourself. i always like to bring out this because nobody really can control the outcomes of their investments, no matter what you do, regardless of what you think or who you are. Unless you rig the investment.
Despite all these, can you sleep well at night? If you can't, you better try to find out why and do something about it.
And,
Have you ever read or come across a person who is famous as a super short-term trader & long-term investor? May be there is. Is G. Soros counted as one?

Every year a new batch comes in & some older players gives up........some make a ton & and some loss money

In the end, happiness is still most important!!!

Cya all next year =)

I am yet to conclude my 2014, and the corresponding review, but would like to share one of the small thoughts in 2014. I like Q&A style, thus I present it as a series of Q&As

Value investors know well a phase, "Focus On The Downside, And Let The Upside Take Care Of Itself". A couple of questions arises. Knowing their existence, will not automatically take care of the downsides. So what are the available means to "take care" of them?

There are many means, and the most important one is MOS. It is a well-known concept by most buddies here.

Should the MOS be the same for all stocks? The answer should be NO. Since the downsides are different between stocks, thus the MOS should be used differently on them. A unique MOS is derived after reasonably considered all the downsides of a stock.

Should the MOS take care of Mr. Market psychotic mood swings? The answer should be NO. It is difficult, if not impossible to "take care" of it. I often hear that no MOS is able to offset a crash of price. The statement is right, and MOS isn't suppose to do that either. MOS is a margin of safety for value, in case you are wrong on its valuation

Agree with the concept of MOS ( margin of safety).

Price is subject to mood, perception, supply & demand

Valuation is subject to potential ( up or down )

Both play into each other.


But some other questions:

Why be a value investor, trader ?
What is the overall goal, objective?

How much is enough?

If I am able to have a nett worth of $5 million, that would be more than enough for me!
And maintain it till death.

Beyond that amount, it gets quiet meaningless... what in the world would I want more of?

Another Lamborghini, another residence in Argentina? another jet? Get invited to World Economic Forum?

But I believe that greed plays a very big part and the other part is ego.. the ultimate human motivation.

but it's not about the amount of money you can make, it's about knowing yourself and learning how to invest with yourself to achieve your life goals..

i want to think that greed cannot be the ultimate human motivation, i propose the compassionate love for mankind, using investment to generate money as a common tool to help as many people as possible.. starting from yourself, your families, relatives... elderly, kids, etc...

For a normal person, good health, basic shelter, nutritious food, good family relationship and plenty of mental/knowledge brain challenges!!, this keeps that normal person very much alive, positive and motivated!

A 60K to 100K COE + flashy car, hardly excites me...
But the ability to make that kind of money, and channelling them towards charity funds, elderly support, child-care & education buildings speaks a lot...

We are, after all, just human, we try to live our life well, and if we do, then we can/should help others to live their life well too!

We are lucky to live in singapore, more lucky than others, so help!

(29-12-2014, 12:30 PM)brattzz Wrote: but it's not about the amount of money you can make, it's about knowing yourself and learning how to invest with yourself to achieve your life goals..

i want to think that greed cannot be the ultimate human motivation, i propose the compassionate love for mankind, using investment to generate money as a common tool to help as many people as possible.. starting from yourself, your families, relatives... elderly, kids, etc...

For a normal person, good health, basic shelter, nutritious food, good family relationship and plenty of mental/knowledge brain challenges!!, this keeps that normal person very much alive, positive and motivated!

A 60K to 100K COE + flashy car, hardly excites me...
But the ability to make that kind of money, and channelling them towards charity funds, elderly support, child-care & education buildings speaks a lot...

We are, after all, just human, we try to live our life well, and if we do, then we can/should help others to live their life well too!

We are lucky to live in singapore, more lucky than others, so help!

Well spoken

(29-12-2014, 12:30 PM)brattzz Wrote: but it's not about the amount of money you can make, it's about knowing yourself and learning how to invest with yourself to achieve your life goals..

i want to think that greed cannot be the ultimate human motivation, i propose the compassionate love for mankind, using investment to generate money as a common tool to help as many people as possible.. starting from yourself, your families, relatives... elderly, kids, etc...

For a normal person, good health, basic shelter, nutritious food, good family relationship and plenty of mental/knowledge brain challenges!!, this keeps that normal person very much alive, positive and motivated!

A 60K to 100K COE + flashy car, hardly excites me...
But the ability to make that kind of money, and channelling them towards charity funds, elderly support, child-care & education buildings speaks a lot...

We are, after all, just human, we try to live our life well, and if we do, then we can/should help others to live their life well too!

We are lucky to live in singapore, more lucky than others, so help!

If everyone thinks like you, the world will be a better place.