Four Thoughts

Over time, investing in the stock market and my discipline in saving makes me kinda odd in certain ways.

Then there is my attempt in seeking alternative means to grow my income (P2P, startups, do some sidelines etc).

1) The lower it gets, the better it becomes.

One particular eccentricity is my attention to market declines. Well, on extreme days, when market declines are harsh and markets are in general (for lack of a better word) extremely ‘shitty’ – I might find myself thinking like Vin Diesel.

I start surfing (the internet) hard for bargains (from Singapore markets to Hong Kong markets to US markets). In a warp sense I may even welcome the low prices so I can load up more of my favourite stocks.

I do observe that there seems to be less blog posts when markets are really bad.

I try not to add another new company to my portfolio because I can only monitor so many companies… but often opportunities appear in companies outside my portfolio. I would like to just buy these and sell them later in a short while, but it is just not my style – I prefer to hold stocks for the long term.

“The key organ for investing is the stomach, not the brain.” Peter Lynch

I think the concept of buying during market declines is pervasive in the investing blogsphere here. Some bloggers call themselves Ugly Ducklings etc because of the frugalness and focus on achieving financial independence.

2) When in doubt, tune in later.

Take a walk, and if after it you still think it is good, it is worth dipping into it.
Now this is where the emotional part about investing comes into play.

I am never in a hurry to buy. Yes I could be missing a great opportunity.

In retrospect, I have missed a LOT of opportunities. Life is full of opportunities! But one must make an effort to find them. Mr Market is totally unpredictable – I have been under his mood swings for more than a decade.

Investing is often a solo activity. So it just me, myself and Mr Market.

Once I found a company (XYZ), it is often a process of self debating:

Am I biased towards XYZ just because I’ve spent days and weeks researching it?
Am I getting over-confident with my analysis?
Am I affected by what I have read, and what others have said?
Am I impressed by just the company’s recent performance?
Do I like the stock just because it has fallen in price?

My stock portfolio still sports a negative overall loss, however the hemorrhage is noticeably getting lesser. The paper loss is fading off.

During this time I have been slowly reading the quarterly / half yearly / yearly earning reports from the companies in my portfolio. So far most the companies have reported better earnings (but fewer companies as compared to last quarter though). In general the future outlook by most companies are cautious. Some companoes have been starting to show sign of improvement after many quarters of disappointment.

I am like an ever optimist, studying the past performance, comparing them to the recent quarters to find any clue of improvements (for the under performing companies). Always waiting patiently for things to be better and prices to go up.

“Patience is bitter, but its fruit is sweet.”
– Jean-Jacques Rousseau

3) Life beyond stocks and bonds

Yes, ever since I started working and earning money, I have invested in various ‘vehicles’. From unit trusts (via bank & Fundsupermart), ILP (investment linked products) sold by insurance companies, stocks (in the Singapore, Hong Kong, US markets), P2P Loans…

Then there was the idea of investing in startups, and doing a sideline venture.

There was this startup I initially wanted to invest. However I am not familiar with the product and I did not get to know the 2 founders well. Then there is this valuation of SGD 2 million put forth by one of the founder, for a Pte Ltd company that was newly formed with no revenue / profits. The burn rate was approx. $10k per month. With help from staffs in China, and launching of the product in Philippines (not Singapore).

So Yes, with all these, I couldn’t take the leap of faith. On one hand I can’t see beyond and understand how the future prospect could validate the 2 million valuation, while I guess the founders felt that their 3 years worth of effort and future plans validated that.

They still occasionally drop me an email, to update me on their funding progress. They recently secured a $100k seed funding with valuation exceeding US1 mil.

Then there was another startup whereby the implementation was put on hold as all the founders had proper full time jobs. Some of them, as employees (and as stated in their employment contract) are not allowed to start their own private business.

The issue of liability should the company fail is an issue. Thought of their names being blacklisted by MAS was mentioned.
To create a private limited company would mean annual accounts that need to be filed by accountants.

Then there is the issue that most of them are non-Singaporean, and ACRA require at least one director to be Singaporean (for registration of a company).

Many ideas were thrown up: they felt that securing proper funding is required to hire qualified people. One founder stated that going via the MBA route is traditionally the best way – as it would be easy to get funding during and after the MBA course (and with more contacts). Another idea is to procure a working programme from China, alter it and use it to source funding from investors stating that we have MVP.

But … often the leap of faith, and opportunity cost (of leaving a secure job) is too great. The stage from idea to implementation is hard to cross.

I am still in contact with another co-founder and we have planned to meet each other in mid March. He dropped me a msg to wish me happy CNY recently.

Financially, I don’t think I have benefited in any ways (nor have I invested in any of these private companies / startups). Often my endeavors lead to nowhere :p (guess I could be better off just watching TV at home).

However, sitting at my desk everyday at work (and when I am not that busy), I just can’t help wondering what I can do after work (beside having a full time job, and being a family man). What if one day I lose my job, and can’t get another job? Well, having a job is not really the only way of earning a living…

I don’t really go with the intention of investing passively in the first place. I think investing in private companies is different (from investing in listed companies). For a start, sometimes founders just need help in other ways beside cash infusion. And it is more about the people and trust.To the founders, there is always a place for smart money by non assholes. If I had the choice, I would choose to trade my efforts in building up the company for equity.

4) My blog (and people who dropped by)

My blog: Beside acting as my investing note book to record down my thoughts, for analysis of the companies which I am interested in (or invested in)…… I realized that it is through my blog that I am occassionally contacted by complete strangers, whom are often anonymous.