I am a fan of Star Wars (mentioned in my previous post). Ok, not the hard core type who wear the costumes and watch the opening previews. Nevertheless, I was fascinated by the movies (Episode IV, V and VI) when I was young. Yes, the force is strong.
Just in case you are wondering, my son likes Star Wars too, and I have booked tickets for the show (Star Wars: The Force Awakens) for my family.
And of course I am into investing.
Guess this will be a fun post. Let’s think of the quotes we can find in the Star Wars films that relate to investing.
a) “If there’s a bright centre to the universe, you’re on the planet that it’s farthest from.” – Luke Skywalker
Yes, it can be daunting investing in the stock market. Nothing seems to go your way.
That was how I felt when I first started investing. However, keep learning and be patient.
b) “Your focus determines your reality.” – Qui-Gon Jinn
There are many people worried about the next recession, big crash. Without doubt, I am too. However, I always felt that my focus should be on the fundamentals of companies, be it those of the companies I have invested in, or on companies which I am researching.
My colleague who trades more often than me and who does technical analysis, has already liquidated most of his holdings and is primarily in cash. He has mentioned that most of his friends have warned him that in 2016 there would be a major crash.
On the other hand, I have read an article by another blogger stating that there is a trend of bad markets every 4 years eg. 2007, 2011, 2015.. so next year things will get better.
Frankly I can’t predict the volatility of the market, and would like to hold more cash. So in the near future, I would be buying less (build up my war chest), but will focus on studying companies.
c) “Do. Or do not. There is no try.” – Yoda
When I first learn about investing, I did not have a virtual list of portfolio. I literally plunge into the market, and bought my first stock using the money which I have earned.
I don’t really recall making any money then, and yes I did pay for some expensive lessons. What I do recall is the anxiety when I lost money and didn’t know what I was investing in.
However, when you have some ‘skin’ in the game, you will do all you can to study as much as you can about investing, and the company you are invested in. There is literally no try for me.
d) “In my experience there is no such thing as luck.” – Obi-Wan Kenobi
Some might consider the stock market as the biggest casino in the world. However, I do not view it that way. Yes, it is not pure science (as much as I like it to be), part science, part art.
However, I do not believe that picking any stocks at random (or flipping coins, reading tea leaves, judging the length of skirts in fashion etc) will lead one to great wealth. It takes a clear mind, extreme patience and rationality to go against the crowd to succeed.
e) “I find your lack of faith disturbing.” – Darth Vader
When I invest, I do want to hold to the stock for a period of time. eg. 3 to 5 years. I don’t really enjoy darting in and out of the stock market, and have a trading mentality. I neither have the time to constantly think about the stock prices nor track the trends.
I like to have faith in the company which I am vested in, and give the company time to validate my thesis. Yes, it may turn out to be unfruitful, but frankly, a company’s fortune cannot change in a matter of minutes, hours, days, weeks or months. It take years for them to grow.
f) “I’ve got a bad feeling about this.” – basically everyone
I like to look at stocks whose prices are at the 52 weeks low. And then look at why they are at the lows. Often, it is because their fundamentals have deteriorated and I can’t reasonably foresee a turn-around (well not in the near future). This also applies to the stocks I am holding as well. eg. Sarine Tech.
I will not add to these positions or buy these stocks if I have a bad feeling about the narrative of the company.
g) “Your eyes can deceive you. Don’t trust them.” – Obi-Wan Kenobi
Many a times, we get confused by the volatility of the stock prices. When the screen is full of red, and when the media is screaming doom everywhere, we tend to be caught up in the doomsday mentality and sell our holdings.
Sometimes, it is better to just stay away from the news or the dropping stock prices and just focus on the fundamentals of the companies itself, and ask yourself if the company is doing ok. Just follow your own gut feeling and your calm rationality.
h) “Never tell me the odds.” – Han Solo
It is my dream to achieve financial freedom, though to many it may seem impossible.
Heck, the idea of making any returns in the stock market is difficult. Many people have not even attempted to invest in stocks. If even experienced fund managers fail to consistently beat the market, what chances do we, retail investors have?
I have never ponder much about the odds… (refer to item (b) “Do. Or do not. There is no try.” – Yoda).
i) “Great, kid. Don’t get cocky.” – Han Solo
Never get too sure about your ability in doing well in stocks. The market has a way of teaching us humility. Just when we thought we got it all sorted out (looking at our 2-baggers, 10-baggers etc) and thinking about our first million, the market crash and wipe out all our paper gains.