Investment for a living

[Choon]

Full time investing required minimum capital. At least 1-2 million.
If not, the opportunity cost of losing salary is higher than the returns
you can actually get.

If those with good paying jobs, better to follow a play safe investment strategy
to supplement your income. Until can cross the minimum capital threshold. Unlikely
will get rich.

Just pondering .... perhaps full time investing is better suited for one residing in a place with a lower cost of living ?

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'What they told me kind of shocked me': Singaporean compares fresh-grad salaries with Taiwan's
https://www.asiaone.com/lifestyle/what-t...es-taiwans
".....While the starting salary is low, Zac also pointed out that the cost of living in Taiwan is low as well....."

I think another important consideration (and perhaps this is the most important consideration) other than capital size and location is whether will one have sufficient quality companies to discover and study so that one finds his time meaningfully well-spent from 8am to 5pm.

Am reading the compilation of Peter Lynch's writings shared in this forum recently. Quite inspired by his cheerful, interesting and insightful stories. But I also wonder are there as many interesting opportunities now as in his time - where internet is not as prevalent and quality companies are still small and under the radar. 

Hope to have VBs arguing vehemently against me on my assertion above as it is also my wish/dream to be a fulltime investor.

[Behappyalways]

I think one of the most important things to do is not to play when you don't see a fat pitch" (…) I've always thought that the way to build a long-term track record is when you really see the ball, swing really big and when you don't see the ball, don't swing.
Stanley Druckenmiller.


You need to have savings to sustain your lifestyle while you wait for a fat pitch....and when it appears, you need to have the money to swing big ...


And to add...one also needs to be able to recognise what is a fat pitch.

To many , they cannot even differentiate between a horse and a donkey...not to say fat pitch

[specuvestor]

As standard of living improves markedly the past 150 years, every generation seems tougher than the previous one, or the proceeding one has a good life. Depends which angle you look at

In my opinion the rise of index fund is actually giving more opportunities to the value investors. But more important is whether this effect will cause the bigger becomes bigger and the smaller will be pressured... somewhat like an aristocratic market capitalisation outcome. So far we see private equity/ credit / funding still serving this niche but not sure what's the end game or it will be separate development track etc

asset allocation for cashflow rather than just capital gains will become important if investing for a living

Full time investing required minimum capital. At least 1-2 million.
If not, the opportunity cost of losing salary is higher than the returns
you can actually get.

If those with good paying jobs, better to follow a play safe investment strategy
to supplement your income. Until can cross the minimum capital threshold. Unlikely
will get rich.

Just pondering .... perhaps full time investing is better suited for one residing in a place with a lower cost of living ?

--------

'What they told me kind of shocked me': Singaporean compares fresh-grad salaries with Taiwan's
https://www.asiaone.com/lifestyle/what-t...es-taiwans
".....While the starting salary is low, Zac also pointed out that the cost of living in Taiwan is low as well....."

I think another important consideration (and perhaps this is the most important consideration) other than capital size and location is whether will one have sufficient quality companies to discover and study so that one finds his time meaningfully well-spent from 8am to 5pm.

Am reading the compilation of Peter Lynch's writings shared in this forum recently. Quite inspired by his cheerful, interesting and insightful stories. But I also wonder are there as many interesting opportunities now as in his time - where internet is not as prevalent and quality companies are still small and under the radar. 

Hope to have VBs arguing vehemently against me on my assertion above as it is also my wish/dream to be a fulltime investor.

[weijian]

I think another important consideration (and perhaps this is the most important consideration) other than capital size and location is whether will one have sufficient quality companies to discover and study so that one finds his time meaningfully well-spent from 8am to 5pm.

Am reading the compilation of Peter Lynch's writings shared in this forum recently. Quite inspired by his cheerful, interesting and insightful stories. But I also wonder are there as many interesting opportunities now as in his time - where internet is not as prevalent and quality companies are still small and under the radar. 

Hope to have VBs arguing vehemently against me on my assertion above as it is also my wish/dream to be a fulltime investor.

Hi Choon,

There are 850 listings on SGX. Looking at our neighbours, Msia has 1000, Indonesia and Thailand each has close to 800. Stretching a little bit further, HK has about 2700 listed companies, that is another Msia+Indonesia+Thailand combined.

If we simply assumed and take away the top 40% and bottom 40% out, then there are still 0.2*6200 = 1240 companies to research. If one company takes 0.5hr of screening and an indepth company takes 5hrs --> assume out of 10 companies, only 1 passes the initial screen and goes indepth (that is my own experience), that will take:

0.1*1240*5 + 0.9*1240*0.5 = 620 + 558 = 1178 hours (or 148 8-hour days). If you are only 80% efficient in your 8hour day (distracted by macro news on interest rates or your fav book), it will be 184days, or half a year.

So you are done, you can now move towards the US (~6000 companies on NYSE/Nasdaq) and EU (6000-8000 companies) and repeat...

I think the "worry" for the OPMI is whether he has the temperament and gut to repeat the grind, rather than whether there are "enough companies".

Of course, there is also the worry of whether one is competent enough. Then, I am reminded of the scene in Karate Kid where Jacky Chan (The Master) asks Jaden Smith (the karate kid) to "wash laundry with his hands" repeatedly....

[donmihaihai]

I would be surprise if one does what you wrote, Weijian. It would be a path less travel for anyone from Singapore. The normal path would be from Singapore jump straight out to US and or maybe HK. Some would even totally ignore Singapore.

With the animal spirits, most investors love competition.

5 hrs for an in depth look. I am not sure how to develop knowledge and understand a company with 5 hrs.

[dreamybear]

Learning from the experiences of fellow retail investors (not forgetting CG's Tesla super achievement/ladyyoucanbefree's Apple achievement), it does seem putting meaningful amounts into winning stocks makes a difference ....

E.g. below, the difference between the returned amounts can mean a car vs a HDB  

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<closed thread "Full-time Investor" so cannot new post>
https://www.valuebuddies.com/thread-7678...#pid131356
"1) RafflesEdu&Midas 30k=> 200k
2) Yoma 200k => 500k
3) Vibrant&Penguin 500k => 900k"

[Choon]

I think another important consideration (and perhaps this is the most important consideration) other than capital size and location is whether will one have sufficient quality companies to discover and study so that one finds his time meaningfully well-spent from 8am to 5pm.

Am reading the compilation of Peter Lynch's writings shared in this forum recently. Quite inspired by his cheerful, interesting and insightful stories. But I also wonder are there as many interesting opportunities now as in his time - where internet is not as prevalent and quality companies are still small and under the radar. 

Hope to have VBs arguing vehemently against me on my assertion above as it is also my wish/dream to be a fulltime investor.

Hi Choon,

There are 850 listings on SGX. Looking at our neighbours, Msia has 1000, Indonesia and Thailand each has close to 800. Stretching a little bit further, HK has about 2700 listed companies, that is another Msia+Indonesia+Thailand combined.

If we simply assumed and take away the top 40% and bottom 40% out, then there are still 0.2*6200 = 1240 companies to research. If one company takes 0.5hr of screening and an indepth company takes 5hrs --> assume out of 10 companies, only 1 passes the initial screen and goes indepth (that is my own experience), that will take:

0.1*1240*5 + 0.9*1240*0.5 = 620 + 558 = 1178 hours (or 148 8-hour days). If you are only 80% efficient in your 8hour day (distracted by macro news on interest rates or your fav book), it will be 184days, or half a year.

So you are done, you can now move towards the US (~6000 companies on NYSE/Nasdaq) and EU (6000-8000 companies) and repeat...

I think the "worry" for the OPMI is whether he has the temperament and gut to repeat the grind, rather than whether there are "enough companies".

Of course, there is also the worry of whether one is competent enough. Then, I am reminded of the scene in Karate Kid where Jacky Chan (The Master) asks Jaden Smith (the karate kid) to "wash laundry with his hands" repeatedly....

Thank you Weijian.

I will be distracted at least 50% a day and my mental processing and internalisation is slow (so maybe 1 month for 1 stock). 

But I find that it is difficult for my interest to be piqued. So don't think I will even have 1200 regional companies to start with.

I am being lazy here but can I ask Weijian (or any VB) what are 5 names that have passed your first screen or you are invested in.

I can share mine too if anyone is interested.

[ghchua]

asset allocation for cashflow rather than just capital gains will become important if investing for a living

This is an interesting comment which I wish to elaborate further. For me personally, I don't purposely asset allocate a stock for cash flow or capital gain when making my investment decision. Ultimately, capital gains (whether voluntary or involuntary) can become cash flow when it is being realized.

For example, I bought a stock when I deemed its undervalued. Then, a takeover offer came from the offeror. Involuntary, this investment becomes a sudden cash inflow as the company was taken out.

Though one might say takeover offer is not consistent cash flows like dividends, it had become more frequent recently, especially on SGX.

[CY09]

Think of it as an adverse scenario.

You can allocate X amount for a good company in an industry, but a downturn occurs. The company decides to do equity raising to defend itself or to do acquistion of a bankrupt rival, in such case, you will also need to allocate some idle resources for equity raising or risk yourself being diluted and losing returns when an upside resumes

[weijian]

@donmihaihai,
The 5hour is obviously just a ballpark figure. Those of us who done the work, will know that once something gets interesting beyond that committed 5hr, much more time has to be dedicated for further understanding. As a matter of fact, the study never stops, isn't it? (with business and competitors evolving, and also our ideas/concepts/biases getting knocked off/corrected over time). The good news is that as one practises and absorbs more knowledge, it just gets a little easier., not in fast spurts, but slugging it out 1 inch at a time. Step by step one build discipline and at the end of the day, if you live long enough, you will master it.

@dreamybear,
I haven't dwell into the details of the 2 mentioned personalities' process of getting their success, so I can't comment much. Many years ago, I followed someone's blog who detailed his averaging down into Noble that eventually became 80% of his portfolio. No prizes for guessing what happened to him and I don't remember he continued blogging. So one still needs to have the skill of driving a Ferrari, to ensure he doesn't crash the Ferrari. IMHO, it is always good to put the focus on the process than the result itself. Or better, invert as CM always says - All I want to know where I am going to die so that I will never go there!

@Choon,
If you read and think enough on VB, you should know. Maybe your assertion isn't the problem. Wishes and dreams, stay on as wishes and dreams, without interest and diligence.