It's a good reminder to not get caught in the rat race. It's also a sad news knowing that most people are slaves to themselves without evening knowing.
Thursday, June 2, 2011
Singaporeans turning into workaholics - Channel NewsAsia
Singaporeans turning into workaholics - Channel NewsAsia
Wednesday, March 23, 2011
Inactivity strikes us as intelligent behavior
I have family members visiting us this week. They trade in the equities market and use charts to determine whether to buy or sell. Accordingly, I have a week of hearing phases like 'sentiments make up majority of market activities', 'trend is my friend', 'market depth' etc.
But the one question that linger in my head is 'Did you trade today?'
Most of the time my answer is 'No'. But I realised that I spent the same amount of time (if not more) in front of the computer screen as they did. So what's the difference?
Traders spend most of their time looking at price actions, market depth, volume. They uses charts to assist them, and they execute a lot of trades. Such activities give people a sense that they are actively 'doing something'.
Value investors, on the other hand, spend most of their time reading/studying company announcements, stock reports, industry news/reports, view and opinions from experts. They monitor share prices (though not as often as Traders) of their selected stocks with the objective of finding bargains. Accordingly, Value Investors do not trade very often, but they are not 'doing nothing'.
Warren Buffett suggest that 'inactivity strikes us as intelligent behavior'. Buffett also explains that the art of investing is to acquire, at a sensible price, a business with excellent economics and able, honest management. He is searching for businesses that he believe are virtually certain to possess enormous competitive strength ten or twenty years from now.
My personal experience is searching for such a business that ticks all the boxes is very difficult. Even when I actually found one, I still have to wait for the share price to be sensible. Hence, I am 'doing lots of things, just not trading'.
But the one question that linger in my head is 'Did you trade today?'
Most of the time my answer is 'No'. But I realised that I spent the same amount of time (if not more) in front of the computer screen as they did. So what's the difference?
Traders spend most of their time looking at price actions, market depth, volume. They uses charts to assist them, and they execute a lot of trades. Such activities give people a sense that they are actively 'doing something'.
Value investors, on the other hand, spend most of their time reading/studying company announcements, stock reports, industry news/reports, view and opinions from experts. They monitor share prices (though not as often as Traders) of their selected stocks with the objective of finding bargains. Accordingly, Value Investors do not trade very often, but they are not 'doing nothing'.
Warren Buffett suggest that 'inactivity strikes us as intelligent behavior'. Buffett also explains that the art of investing is to acquire, at a sensible price, a business with excellent economics and able, honest management. He is searching for businesses that he believe are virtually certain to possess enormous competitive strength ten or twenty years from now.
My personal experience is searching for such a business that ticks all the boxes is very difficult. Even when I actually found one, I still have to wait for the share price to be sensible. Hence, I am 'doing lots of things, just not trading'.
Monday, March 21, 2011
Don't put all your eggs in one basket
Having gone through a week of dramatic events around the world. I thought it would be a good time to 'turn the market off' and refresh myself with the first principles of Value Investing.
So I started reading the Essays of Warren Buffett again. The following series of post will be a refresher to myself which hopefully you may benefit from it.
Modern portfolio theory is an advocate of holding a diversified portfolio. It suggests that you are better of "randomly selecting a group of stocks by throwing darts at the stock tables than thinking about whether individual investment opportunities make sense". As the saying goes, "don't put all your eggs in one basket". Of course, the finance world uses words like "Beta" to convince everyone (including themselves) that it's a sophisticated process. Sounds good on paper, but the problem is it implies that it is a waste of time to study and understand the business you are investing.
I have a strong conviction that to be good at something, you have to work hard for it. Accordingly, I would put all my eggs in one basket. Because I would have done so much work studying about the basket: how strong is the basket (its fundamentals); what's the chances of it going wrong; and what's the prospect and earning potential. Additionally, I would be watching this basket carefully and constantly (or tracking any changes to the fundamentals).
It's a lot of work. But I can sleep better at night knowing the basket can withstand the test of time.
PS: my basket has less than 10 stocks, compared to a 'diversified portfolio basket' of 20-100 stocks.
So I started reading the Essays of Warren Buffett again. The following series of post will be a refresher to myself which hopefully you may benefit from it.
Modern portfolio theory is an advocate of holding a diversified portfolio. It suggests that you are better of "randomly selecting a group of stocks by throwing darts at the stock tables than thinking about whether individual investment opportunities make sense". As the saying goes, "don't put all your eggs in one basket". Of course, the finance world uses words like "Beta" to convince everyone (including themselves) that it's a sophisticated process. Sounds good on paper, but the problem is it implies that it is a waste of time to study and understand the business you are investing.
I have a strong conviction that to be good at something, you have to work hard for it. Accordingly, I would put all my eggs in one basket. Because I would have done so much work studying about the basket: how strong is the basket (its fundamentals); what's the chances of it going wrong; and what's the prospect and earning potential. Additionally, I would be watching this basket carefully and constantly (or tracking any changes to the fundamentals).
It's a lot of work. But I can sleep better at night knowing the basket can withstand the test of time.
PS: my basket has less than 10 stocks, compared to a 'diversified portfolio basket' of 20-100 stocks.
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