Investment Journey – A Summary

Most reader would be curious to know how I arrived at my value investing philosophy which I firmly believe in now and which I also currently advocate to all readers, be they of my blog or on local share forums. Admittedly, it was a road which was bumpy and full of potholes but the learning I received was invaluable. I have been documenting my investing mistakes up till now and will continue to do so for the foreseeable future. Readers, however, should see how I have built up my investment philosophy based on my experiences, and decide if value investing is right for you. Remember that it is more than just about careful research, extensive reading and thoughtful analysis. Temperament and the ability to control emotions is also a key aspect of successful value investing.

Here is a summary and rundown of my investing journey (note the mistakes along the way and how my state of mind evolves to incorporate what I have learnt). Note that mistakes subsequent to MIIF (mistake no. 4) will be reviewed in detail in future posts (this is just the summary).

a) December 1, 2004 – Purchased my first stock called Suntec REIT at IPO, added more at S$1.11 later. This was to become my first and only yield play, bringing in 2 cents/share dividend every quarter. State of mind: Buy Companies

b) February 22, 2005 – Purchased MCL Land because of attractive dividend and committed mistake no. 1. Sold at a loss on May 12, 2005. State of mind: Buy companies with good prospects

c) May 4, 2005 – Purchased Yellow Pages and then sold on May 27, 2005 because of historical trend analysis (the stock had reached a historical high and retraced downwards), and committed investment mistake no. 2 by failing to consider the business aspects of the company. State of mind: Buy companies with good prospects and good earnings growth

d) July 22, 2005 – Purchased Keppel T&T and sold on July 26, 2005 on a whim and tried to contra for a quick gain but instead, lost out about 5.2% of my investment amount. State of mind: Buy companies with good prospects, good earnings growth and do NOT contra.

e) May 27, 2005 – Purchased MIIF and sold at a loss on Dec 15, 2005 after attending the company’s EGM (explained in investment mistakes part 4). State of mind: Buy companies with good prospects, good earnings and good Management. Do not contra.

f) March 29, 2005 – Purchased Asiapharm and sold at a loss on June 9, 2005 by blindly following gurus and buying at too high a PER. State of mind: Buy companies with good prospects, earnings and management at a reasonable price. Do not blindly follow gurus and do not contra.

g) January 9, 2006 – Purchased Trek 2000 and sold on Nov 13, 2006 because of inability to maintain a sustainable competitive advantage and also because of technological obsolescence. State of mind: Buy companies with good prospects, earnings, fundamentals, management and sustainable competitive advantage at a reasonable price. Do not follow gurus and avoid contra.

h) February 26, 2007 – Purchased C&O Pharmaceutical and sold at a loss on November 9, 2006 due to industry changes and Chinese government intervention. State of mind: Buy companies with good prospects, earnings, fundamentals, management and which have a durable competitive advantage in a growing industry at a reasonable price below intrinsic value. Do not follow gurus, avoid contra and margin.

i) June 9, 2007 – Purchased UTAC and sold at a profit on February 23, 2007 due to unfamiliarity with the industry. State of mind: add “circle of competence” to the previous statement.

As one could have guessed, I had already caught on to value investing concepts close to the early part of 2006, and proceeded to read up more on it by buying books, surfing value investing websites and visiting Berkshire Hathaway’s (Warren Buffett’s holding company) website. My last “speculative” stock purchase was actually made on Feb 26, 2006 for C&O Pharmaceutical; subsequent purchases were UTAC in June, Boustead in Sep and Nov 2006 (averaged down) and Swiber in Feb 2007. You can see that for the past 1 year from July 2006 till June 2007, I had only purchased two companies and made a total of 3 transactions ! As my value investing philosophy began to solidify in my head, I realized that it was beginning to get more and more difficult to find companies to buy.

So dear readers, this is what I had to go through in order to learn my lessons on value investing. For those who think it has been a breeze, I would say definitely not ! I had my share of bad losses and cut all my speculative counters to the point where I currently have no speculative, under-performing companies.

Perhaps those punters out there have to learn the hard way too before they embark on their own value investing journey of discovery !