Friday, 13 November 2015

6 personal quirks I have as an investor

Everyone has their own style when it comes to investing, but beyond that there are some personal rules/beliefs/behaviors/quirks that people do that is vastly different from others. Here are some of mine, which follows mostly follows the theme of 'try not to screw yourself up'

1. I don't make big macro or market predictions.

Although its fun to-do as it requires little hard work like digging up an analyzing data. All you need is to paint a picture, throw in some buzz words you read in some article and captivate an audience. For example:

'The recent US rally is not going to last, with P/E multiples still expensive, interest rates hike coming in, china gdp slowdown and the stronger dollar hurting profits. Blah blah support level 17k, up on weak volume, blah blah blah'

The problem is that this would cause biasness to creep into my strategy when i don't buy a stock even though it hit my target price, because I read news about 'market slowdown, next recession' and get scared into not buying.

2. I don't purposely do asset allocation.

Many people like to state the fact that asset allocation makes up 90% of all investment gains (even though this is found to be not true). Its reasonable when you are planning for your retirement or have goals such as receiving a steady stream of income, but don't do it to sound cool and go all 'financial savvy' like 'I see a great rotation in the bond market and shifted a % of my portfolio away from equities to tide out the recent volatility' Like shut up, especially if you manage like 20k, how much can you actually allocate lol.

My main beef is that asset allocation requires you to have a macro view, like where interest rates/gold/market sentiment are going, which in my honest opinion, everyone gets it wrong.  (see point 1)

Even if you somehow have an uncanny habit of 'sensing where the trends are going' wasting so much time on predicting big trends and limiting your investments in a certain asset class just because of the line 'market sentiment is looking weak doesn't appeal to me'

My asset allocation method is quite simple and automatic, if i find stocks that provide me with a fair amount of return, I buy. If I don't I don't buy. So far this worked out pretty well as in a downturn (think STI at 2.8k) i can find plenty of stocks, and in a expensive market (STI 3.3k) i have 50% cash because i cant find anything cheap enough to buy. Same applies for bonds.

3. Once I buy a stock I delete it from my watchlist

I think i repeated it loads of times, that before buying a stock I always have a target selling price. Once I buy the stock i delete it off my watchlist and add a stock alert when it hits my target price. This is so I don't get tempted to sell and cash in quick gainz, or panic and sell at a loss. (I'm weak that way). If you ask me hows my stock doing now, my answer should be 'I don't know'

4. I don't buy bank/property stocks

I really really really don't know how to value them, maybe one day I'll know, but till then I'll stick to easy to understand stocks like SGX or raffles med.

5.  I try to update my portfolio performance irregularly 

I still haven't mastered my emotions while investing, which is why I try NOT to look at my performance. I tend to be more risk adverse when I'm making money (Eh take the money and run lah) and be more risk adverse when I'm losing money (Eh shit, losing money liao). I think I'm still up 13.5%. Shit I'm still weak. Kudos to those that can update monthly and still keep their emotions in check.

6.  Never liked share re-investment schemes

All of these letters go directly into the thrash. Never liked odd lots

Anyone else with other personal quirks to share?

1 comment:

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