Friday, August 5, 2016

Random thoughts: overcoming the urge to "buy"

Regular readers would have know that I kaisi and sold quite a bit of shares immediately after Brexit. Cash is now about 30% of my investible fund. Usually, I would be "dying" to replenish my portfolio to maximize dividends.

Surprising, my Emergency fund and my investible fund is both at my "historical" high, I would usually have a hard time keeping my hand off trigger, but this time now, I am really quite restrained given that I am looking at several counters that I have researched on earlier. 

So what cause the change? 

Laugh, it's because I have been reading SunTze War Strategies, both Sun Tze and Sun Bin's work. 

Ok, this is a random thought series, move on now if u are Into financial stuff. 

Despite my hectic work schedule, I have been reading 2 books on and off. The first is "Alibaba" and second, Sun Tze War Strategies.

Initially, I read just the online PDF version, it didn't give me the kick. So I borrowed the book version where Sun Bin's version of the "science" of war is also included. It is more specific and elaborated. 

It was a very engaging read as compared to when I was reading it during college days, because i saw a different dimension to the theories. I keep trying to find parallel with the investment world. 

Even when I was reading how Alibaba killed off eBay because of its "complacency", I can relate to its concepts of war. The fund raising strategies etc, keep ringing parallel, it's like reading 2 books at the same time.

I used to think of money as "soldiers" and counters as "territories" that offer dividends or capital gains. 

Slowly, I began to feel that money are soldiers but counters are "generals"

That go hand in hand. 

The tactics, the overall strength, the wealth etc... 

Everything I feel like buying now, I got this nagging feeling, 孤军无援。No reinforcement. 知己,I realize my annual injection of capital to this investible fund is really small, maybe just 10K a year. How do I hold and defend my territories, how can I support my "generals"? 

Also, I keep asking myself, how confident am I in making money out of this? I am no longer so gung ho. 

Also, I start to question how much I might "win" if my assumption is right, and how much I am willing to "lose", the win lose profile do not seem very favorable except for 1 counter. 

It seems very silly on hindsight that I am willing to take 20-30% profits with also 20-30 possible loss. Where is the meat to risk the "troops"

I also look at business at another angle. I see the management as really part of the business, and begin to really appreciate that business even with the low profits at the wrong cycle. 

I start to look at the elements of victory, such as timing, terrains, formation, etc and I felt very inadequate that all I have is perhaps using "timing" and "terrains"

I do not have with me the tools of "mass destruction" aka fire of leverage, my formation is perhaps only 1 type, but I do have my empire behind me. (My wife did not oppose to my investments)

So I decide to be very selective in my battle. 

Sitting on cash used to be very bo Liao, as there is nothing to blog about, but now, I keep thinking of "养兵千日,用在一时” (same as Buffett's swing hard once for home run)

The irony is, I also felt less motivated to share what I think of an business, of course I know how I feel does not "move"
Market, but I somewhat feel that the least people talk about certain angle of a business, the better, at least before I buy the company. 

Ok, enough bullshit. Thanks for reading.




42 comments:

  1. Hi SI

    The world is round.

    You never know that 30% might just come in handy. Retreat once move forward twice.

    ReplyDelete
    Replies
    1. Hi B,

      I was waiting and almost go Zzzz

      But given my slow "reinforcement rate" ...

      Think no choice... Dun want to lose my "empire" due o the many losses in battles and war

      Delete
  2. Hi SI,

    I prefer guerilla warfare. Go in, attack a few, then come back and hide. At the same time, my reinforcement keeps on building month by month. I have about 50+% of my soldiers back at HQ waiting to launch guerilla attack. This was from about 30% soldiers at HQ a few months ago.

    I think the time to attack with substantial force to occupy a territory for good is not here yet. In fact, the enemy soldiers are quite motivated and sweeping through the terrain now. Better hide first LOL When the enemy is exhausted from sweeping across the land and fighting, I'll counter attack and occupy their territory for good.

    ReplyDelete
    Replies
    1. Hi LP,

      I did think of the same tactics. But I am
      Not sure which "generals" to recruit or "territories" to do hit and run.

      But I am still relatively happy about the generals I had. One salt fish most flipped ...

      Btw, if I visit u during winter, u willing to be my "advisor" LOL

      Delete
    2. I also agree that the"high" of the market recent is the enemies being active.

      There are many 疑兵.(bait soldiers) I rather not take out the 疑兵successfulLy with small gain but risk being hamtam by the 正兵.main brunt of the enemy

      Delete
  3. Sillyinvestor,

    There's hope for you yet ;)

    ReplyDelete
    Replies
    1. Huh SMOL,

      Like that ... Mean I hopeless before this ... Sobz sobz ... Pass me a tissue paper will ya?

      Delete
    2. LOL!

      When you wrote you told your wife that her portfolio is under water, but after dividends its breakeven...

      Where got people invest just to breakeven?

      Its never good to use language of denial...


      At least now you start to express your doubts - you won't have 30% cash if you are full of conviction in your generals ;)

      Delete
    3. Smol!!

      Not fair lei. That is one counter, after water, and cut loss. She one fat chicken for all the profits taken lor...

      She take profits never count only count loss...

      Like that can meh.

      peterlynch say win 6 out of 10'is good Lei.

      Who win everytime...

      Angry!! Where got denial!!

      Pass me that tissue again !! Pui pui

      Delete
  4. SMOL,

    I still searching for my Zhugeliang...

    U interested. Free drinks every visit?? Onz?

    Huh? Not interested ??

    Sobz sobz??

    Huh? Up to my awakening?

    *wailing ...

    Please,save my empire!'?

    Huh we must find our own path?

    Sobz... I dying Liao...

    Oops Liu Bei style doesn't work, u not bleeding ...

    Profits sharing?? Lol

    ReplyDelete
  5. Well, I am going to start investing in property.
    Buying a shophouse in Malaysia soon. Wish me luck.

    ReplyDelete
    Replies
    1. Cool... Your hi thinterland..
      Good luck yeh

      Delete
    2. Not wise to depend on luck for such large investment in one asset like property with leverage some more.

      Delete
    3. Yeh has home ground advantage...

      I wish her luck, but hope she dun need it ;)

      Delete
  6. Hi Sillyinvestor,
    Nobody know what will happen next,, cash in hand may turn out to be good if market suddenly turn his mood ,,cheers !!

    ReplyDelete
    Replies
    1. Hi STE,

      Waiting for durian picking season is a no brainer among investors...

      But it is not as easy as it seem, especially when you say market rallying ... I am not talking about the recent months.

      Delete
    2. Hi Sillyinvestor,
      Yes, it will be very emotional to see the market rallying while sitting with lot of cash. .tough decisions though. .

      Delete
    3. STE,

      Just saw your 3T and 3M and the supposedly Chinese translation ... Many similarities with Sun Zi

      Happy blogging !! Your book list is long lol

      Delete
    4. Hi! Yah! 老子,孙子,孔子,孟子。。all having great minds n wisdom! !!Thanks for visiting my blog..cheers. .

      Delete
    5. Hi! Yah! 老子,孙子,孔子,孟子。。all having great minds n wisdom! !!Thanks for visiting my blog..cheers. .

      Delete
  7. Hahaha. No luck la.
    All depend on Sister property knowledge leh. She invested in kl and Jb property. This time she jio me a shoplot in a shopping mall.

    So I am thinking to get a unit lo. Still dunno good or bad

    ReplyDelete
  8. Hi Mike,

    I feel 30% cash is quite comfortable. No real need to pour it into market yet. I am about 40% cash.

    In fact, i plan in such a way, i only use the last 25% of my cash when STI index is really in crisis, below 2500 onward.

    In my early day of investing few yrs back, i have some really bad counters. So these day, i have set my margin of safety much higher, if nothing to buy, also never mind.

    August, lots of company reporting results, can pay attention and update watch list accordingly.

    ReplyDelete
    Replies
    1. Solace,

      Thanks. Your words have a calming effect.

      I have kinda of not look at STI to determine "crisis"

      It seems like banks are the most closely correlated to STI. Some of the counters are at " 52 weeks high" because of hunger for yield but STI is .... I wonder why the hunger for yield only now? Bubble? Low interest rate is around for so long ...

      I decided to value company based on clarity of growth drivers translating on yield and management track records ...

      But August thus far did not seem angry .... Companies are seem to be doing well...

      Of course they are crisis "crisis" where STI just tank and tank and will drag every cat and dogs.... That is the scary part

      Delete
    2. Hunger for yield, all the more should be alert now.

      If we see price rises and yield being compressed closer to 5 - 5.5 % for Reits, do you still pour money into them?

      If yield instruments are getting closed to risk free rate of 4% (CPF SA), perhaps it's a sign we should stay clear of them. Just my opinion.

      Delete
    3. Hunger for yield, all the more should be alert now.

      If we see price rises and yield being compressed closer to 5 - 5.5 % for Reits, do you still pour money into them?

      If yield instruments are getting closed to risk free rate of 4% (CPF SA), perhaps it's a sign we should stay clear of them. Just my opinion.

      Delete
    4. Indeed, solace

      I am thinking of whether to sell some
      Of my reits? But I think I can hold
      On to them. Defintely not buying ... Doesn't make sense when operating numbers are weakening and prices are increasing ....

      they are having a dose of reality now ...

      Delete
    5. Indeed.

      With the ongoing low oil price, we see Technic Oil and Gas unable to continue to pay rent to Soilbuild. Will Swiber offices at international buisness park do the same too?

      After bexit, many people seems to forget about the increase in industry and office supply that will hit in 2016.

      Delete
    6. Hi solace,

      But different reit manage downturns differently. I am not going to name the "cursed" industrial reit, but for MITand A-rest, I think the growth drivers should help offset weaknesses if any

      Delete
  9. Hi SI,

    For a moment, I was thinking if my more than bearish views or articles for awhile now, did have any impact?

    Nah... it was Sun Tze and Alibaba! Just kidding. :-)

    Was actually quite surprised that both yourself and B who were pretty much "staying invested" types are changing mindsets. 30 and 60% cash now!

    Wow wow!

    - Not afraid of cash is rotting anymore?

    - How to have enough passive income when keeping so much cash?

    - No more Buffett's value investing?

    - Perhaps diehard readers following are also confused with frequent changing strategies and mindsets.

    End of the day, who cares? we have morphed. That is great!

    ReplyDelete
    Replies
    1. Btw, I never concerned about diehard readers.

      I dun have a big base, so I believed those who come here already a mind of their own and perhaps come here to have a laugh??

      Next, there are plenty of alternatives, some of which are "celebrity" status, hence no stress over that.

      Of course, I always remind myself to say what's on my mind accurately and truthfully.

      Anyway, better to create "confusion" than confirmation bias

      Delete
  10. Rolf,

    Your doomsday articles does have an impact... LOL. But Sun Zi frame it better. Lol

    Warren buffett has a high cash pile to deploy anytime lei.

    Actually, there are 3 types of cash hoarders.

    One type is market forever going lower tomorrow.

    The other type, when market go lower, nimble

    Third type, market go lower, hoot.

    I belong to the third type, trying to become 2nd type.

    But as I told Solace, I dun really look at STI anymore. I prefer to look at company at the respective sector.

    STI is like 20-25% off the peak? At its recent worst is 30%?

    Some counters at its recent worst is 70% off it peak and one could have made an Imaginery ( 50% gain) bottom fishing. Lol

    Irony of the market. 兵者,诡道也

    ReplyDelete
  11. Hi SI,

    Agree with u that we should look at companies sometimes n not just STi!

    WB consistently have huge position of cash throughout. He does not have one moment huge cash position and next moment varied 90, 80, or 70% invested. Throughout all his interviews he is consistent during good and bad times.

    Never mind the difference in investment opinions, styles, consistency is one factor we can look out to spot for veteran and experienced investors which novice do not have.

    Now look at our own investment styles? I myself is guilty of changing styles as I progressed. No problem we learn. I love admitting mistakes openly also if I really did.

    But the most impt difference is where one acknowledged the "Truth" after learning or when one is trying to cover/escape with reasons trying hard to justify himself because of egos or because he/she is very popular or artificially deemed "superior" and it will be "lose face" to admit the truth.

    Kudos to u, as since the day I read ur blog, I know u r one who often even openly admit ur mistakes! That is why I m here! :-)

    ReplyDelete
    Replies
    1. Hi Rolf,

      Thanks for the compliment. Didn't know B is 60% cash LoL ...

      I then I read below Siew mun is 70% cash. I just attract all the hunters all...

      Weird, that before this post, the feel I have among the bloggersphere is buy buy buy LOL...

      Delete
  12. There's no shame in holding cash. The difference is whether you are holding it strategically mindlessly.

    ReplyDelete
    Replies
    1. Hi EH,

      Most hold cash because they are "hunters"

      I wonder which is worse? Know more or less what to do but not enough cash or enough cash but not sure what to do?

      Delete
    2. Rich idiot vs poor guru.

      Delete
  13. I am holding 70% cash now which I have exited from reits. Cheap money is going after dearer equities with yields decreasing. But nothing is fundamentally changed over a few weeks.

    ReplyDelete
    Replies
    1. SM,

      I dun think I will be exiting my Reits, if they go below my purchase price, I will suck my thumb and perhaps buy a bit more.

      The 2 reits have growth drivers. The one that I might sell if it continues to go north is LMiR

      Delete
    2. U r right SI.

      Just not long ago, bloggers are advocate buy buy buy, now everyone is talking about Cash Cash cash.

      Speaking of analysts keep adjusting their buy, hold, sell call?

      So professional analysts or bloggers analyst - who is the pot or who is the kettle.

      This is the reason why I stop doing all the company analysis since awhile ago and focus on what the fundamental problems of the world today.

      Me just an average Joe, for a moment, I wish we can stop talking about how much money we must earn from stock market, or how much we must hunt, or when we can retire...

      Not sage, but just showing some concern to the world that I live in. that's all!


      Delete
    3. If u think it did make some sense, hope u can pass this message to ur students that they should at least show some concerns of the world they live in today, and at least show some love to the person around. :-)

      Delete
    4. Rolf,

      Of course, it made sense. But I have realized values can be caught but not really taught.

      It must be taught, so that we know. But after that, it's all about the heart and the action which no amount of male chicken can do.

      There is too much focus on cognitive awareness of values but too little of touching the heart of pupils.

      There is sometime that window of opportunity for us to put down all our KPI and show concern and hope what we do or say rub on on them.

      Delete