Friday, 6 January 2017

Lessons learned

A pal messaged me that she discovered that I am actively investing after chancing upon my posts in G+ community. The message prompted me to look back at my earlier posts a decade earlier. One of the posts are my reflection from various decisions made. As I read through them, I think they are still quite relevant now. So I have decided to re-post them here.

  1. When the price shoots up too far from its fundamental without any news, release it.
  2. Do homework before investing.
  3. Familiar brand does not mean a thing.  
  4. Do no rely on others’ analysis.
  5. When fundamental of company is not doing well, look hard into the cause and divest the shares instead of hoping for turn-around if there are no such signs.
  6. Believe in your own analysis!
  7. If valuation is reasonable with sustainable high growth rate, don’t rush into selling.
  8. Valuation is not everything.
Reading the above 8 points, I would say points 2, 4 and 6 are similar which is really important. Due diligent is definitely one of the factors that contribute to success in investing. Good decision is made when one has a good knowledge of the company.

Points 3, 5, 7 and 8 have stuck with me for some time and I will continue to remember them.

Point 1 seldom happens but if it happens now, I know what I will do.

2017 Goal and Strategies

In March 2015, I set out to achieve at least 8% CAGR with a review at the end of 2019. My full year return in 2015 was -10% and in 2016 was 41%. This results is a CAGR is 20% over the past 2 years.

So what will my return be for 2017? I do not know.

Anything can happen. It could be a bad year as media has reported or performed much better than surprise. There are too many factors that affect the world economy and human sentiment will continue to drive the stock market direction.  However, one thing that will remain unchanged is that a company with strong fundamental will survive. With strong balance sheet and cash flow, it will be able to sustain its dividend payout and might even grow.

Will the market crash? I do not know.

If yes, then it's time for shopping. Again, company with strong fundamental will bounce back.

My target remains to achieve CAGR of at least 8% and strategies remained unchanged.

  • To learn about the companies that I am vested in.
  • To search for strong companies or hidden GEM to invest in.
  • To divest from a company when fundamentals changes or when better opportunity is avail.
  • To keep to my portfolio allocation.
Wishing all a fruitful year ahead.