Investment Strategies 04 (Apr 19 - Nov 23)

[winston]

It's Not Supposed to Be Fair

by Vishal Khandelwal

Warren Buffett had high regards for David Sokol. Over the years Sokol established a reputation inside Berkshire Hathaway as Mr. Fixit.

Buffett often referred to Sokol as a terrific manager, a brilliant dealmaker and a huge asset to Berkshire.

In 2011, Sokol abruptly resigned. It was speculated that his resignation was because of insider trading allegations. For a second, put yourself in Buffett's shoes and imagine how you would feel when one of your most trusted business partners who has worked with you closely for decades behaves in a totally unexpected and undesired way? Like Sokol did.

When asked in one interview if he had felt betrayed by Sokol's behaviour, Munger replied -

It's not my nature … when you get little surprises as a result of human nature … to spend much time feeling betrayed. I always want to put my head down and adjust.

I don't allow myself to spend much time ever with any feelings of betrayal. If some flickering idea like that came to me, I'd get rid of it quickly. I don't like any feeling of being victimized.

I think that's a counterproductive way to think as a human being. I am not a victim. I am a survivor.

The world around us is largely a soup of random events loosely connected by a few broad patterns. And one of those patterns is that the universe doesn't care for any individual's personal agenda.

If your investment journey has thrown a few bad apples your way, if you feel that the world is not fair then be reminded that the world is not supposed to be fair. It's not supposed to be fair in your favour or in anyone's favour.

Source: Seeking Alpha

[winston]

Owning the highest-quality blue-chip names

When we take equity risk, we'll focus on owning the highest-quality blue-chip names.

That means we'll look for stocks with four common traits...

1. Durable franchises. We want businesses with staying power that we are comfortable owning for the next decade.

2. Above-market revenue growth. We want advantaged business models that will compound rapidly in a world otherwise starved for real growth.

3. Talented management teams. We want world-class, ethical leaders to captain our investments... leaders whose incentives align with their shareholders' interests.

4. High returns on invested capital. We only want to own companies that generate attractive returns on their core businesses – this is crucial for compounding your money over the long term.

These types of companies should do well in any market environment. But they should do particularly well – on a relative basis – when markets get choppier.

Their stocks may decline during a broad market sell-off but less so than other companies.

Source: Daily Wealth

[investar]

In this article, 20 tips for 2020 are given by 10 fund managers (of recently successful funds):

https://www.forbes.com/sites/sergeikleb ... d4a0404f27

I moved Costar Group, Ally Financial, IIVI, MYOK and EVBG to my "to check watchlist"

[winston]

Want To Pick Good Investments? 10 Questions to Ask Yourself Before Investing

by Jim Wang

For individual stocks, read recent earnings call transcripts and 10-K forms. Also take the time and compare your potential buy to its competitors. Some of the key details you may look at include:
· Recent insider buys or sells
· Pending lawsuits or settlements
· Current levels of debt
· Is the company profitable? If not, can they become profitable?
· Potential short-term business challenges
· Ongoing company initiatives to remain competitive
· Is the company share price at the top or bottom of its historical range?

Does This Investment Match My Risk Tolerance?

What are the Investment Fees?

Am I Trying to Time the Market?

Is My Portfolio Properly Allocated?

Can I Still Monitor Every Asset?

Why Am I Buying Today?

How Easily Can I Sell?

When Will I Sell?

Source: Forbes

https://www.forbes.com/sites/jimwang/20 ... 81d4a148fa

[winston]

Reduce Risk With the Kelly Criterion Investing Strategy

By Andy Snyder

Kelly % = W – [(1 – W) / R]

First, we need our win probability – the “W” in the equation above.

First, we gather the results of at least our last 25 to 50 trades – not the dollars made or the percentages lost, just whether they were gains or losses.

Simply divide the number of positive trades by the total number of trades.

“R”: That’s our win-loss ratio.

To get it, simply divide the average dollars gained on each winning trade by the average loss on each losing trade.

For example, if each win nets us an average of $500, while each loss costs us $1,000, our win-loss ratio (the “R” in our equation) is 0.5.

Source: Investment U

https://investmentu.com/reduce-risk-kel ... -strategy/

[winston]

Focus on Buying Stocks with These Five Traits

by Austin Root

To find the most capital-efficient companies, we look for the following criteria:
1. Companies that have reasonably large market capitalizations.
2. Companies with high returns on assets.
3. Companies that produce large amounts of free cash flow (“FCF”) in relation to the revenue they generate. FCF is the amount of cash left over after all operating expenses and business investments.
4. Companies that consistently reward shareholders with dividends and stock repurchases.
5. Companies that consistently grow their revenues, year after year.

Source: DailyWealth.com

https://dailytradealert.com/2020/03/27/ ... ve-traits/

[winston]

8 Best Investment Strategies During A Recession

by Wayne Duggan

1. Do Not Dump All Stocks
2. Reassess Your Holdings
3. Buy Consumer Staples
4. Raise Cash
5. Buy Dividend Stocks
6. Buy Utilities
7. Consider Your Investing Time Horizon
8. Have A Watch List

Source: Benzinga

https://finance.yahoo.com/news/8-best-i ... 19016.html

[winston]

Investing in turbulent times

By CECILIA KOK

CIMB recommends about an allocation of 45% of one’s portfolio in bonds, 30% in equities, 20% in gold and 5% in cash.

Among the five major economies in Asean, Singapore is expected to register the steepest slump, with a GDP contraction of 5.1%, this year, according to CSG-CIMB. Growth is expected to resume for the island city-state at 6.8% next year and 2% in 2022, it says.

Similarly, the group notes, the outlook for major economies this year is also weak, with the 19-member eurozone leading the contraction at an estimated rate of 7.5% in 2020.

In terms of regional equity markets, CIMB says Malaysia is least preferred for now.

CIMB’s preferred equity market is Hong Kong/China as they are ahead of the curve in the Covid-19 challenge.

Hong Kong’s Hang Seng Index (HSI) valuations appear attractive at 10.6 times the estimated earnings for 2020 PER and 0.98 times book value. The government’s policy stimulus could be a catalyst for HSI.

In March alone, total outflows from emerging markets stood at around US$83bil due to a combination of the global Covid-19 shock and a substantial drop in oil prices following the failure of Opec+ negotiations.

Since Jan 21, emerging markets have seen portfolio equity outflows of US$72bil and debt outflows of US$25bil, IIF’s high-frequency daily tracker shows.

Source: The Star

https://www.thestar.com.my/business/bus ... lent-times

[winston]

Can you be trained to be a Super Investor?

by Koon Yew Yin

About 5 years ago, I wrote an article namely “Super Investor’s Secret Recipe”. Since then I have learned something new and I would like to revise my article to benefit all my readers.

There are always more losers than winners in the stock market. Among the winners, there are only a few super investors. In fact, if you Google you can see that even institutional investors cannot beat the stock market index.

If 3 persons bought the same share at the same time and at the same price, yet each of them would have different result. One is a speculator, another is a short term investor and the last is a successfully long term investor.

The first 2 persons will not make much money but the last one should be more successful depending on the timing of his sale. Profit depends more on the best time to sell. There is a saying “it is not what share you bought but when you sell is more important”.

Super investors’ secret recipe is optimism, confidence and entrepreneur spirit.

Can one be trained to have these qualities?

Frankly, I am not sure that one can be trained or acquire these qualities by try and error in practice. Perhaps one must be gifted with these qualities and improve on them through regular practice. Whatever it is, one has to keep trying and learn from past mistakes to improve.


Optimism

If you are a pessimistic person, you will not go anywhere very far because this attitude will stop you from moving forward. But if you have a natural optimistic attitude, you can go to the moon.

All successful investors must be optimistic, like an entrepreneur always willing to venture and take a chance. He must develop some business sense so that he dares to buy when a good share is beaten down for no good reasons. In fact, investors can make a lot more money in such a situation than waiting to buy when it crosses the 200 day moving average.

Professional fund managers and chartists: Statistics show that almost all professional fund managers have very poor performance record. With no disrespect to them, they must examine their track record to see why they are not performing so well as they like their followers to believe. One reason is that they are not optimistic.

They will only buy when the price has gone higher crossing the 200 day moving average. They are not optimistic enough to buy when the price is at its pivoting or turning point of the trend reversal.

Super investors always have the entrepreneur spirit to take a calculated risk. The stock market is an adventure in business.


Confidence

If you always have no confidence, you will not go anywhere very far because this attitude will stop you from moving forward. But if you are a steady and confident person, you can achieve almost all the things you want in your life.

Super investors always have the confidence in understanding what they read between the lines of any financial report, bearing in mind that all analysts’ reports are usually buy recommendations.

Have you ever seen a sell recommendation before?

Super investors dare to make instant decision to buy or sell.

They always remember the stock market has a quick way to punish false confidence, arrogance and recklessness.


Critical thinking

Critical thinking is the ability to think clearly and rationally about what to do or believe. It includes the ability to engage in reflection and independent thinking. Critical thinking is absolutely necessary especially in share investment.

In this information age, everyone can suffer from information overload. Information will come to you through SMS, WhatsApp or email while you are asleep.

Every day I receive share recommendations from investment banks. Since I do not have unlimited funds to buy all of them, I have to examine their recommendations carefully and critically.

https://klse.i3investor.com/blogs/koony ... ew_Yin.jsp

[winston]

If You Built Up Cash, Now Is The Time To Go Shopping... Slowly: Here's How

by David H. Lerner

Summary

Buy low and sell high, how do you do that? You do it by buying when everyone is selling. I use a cash management discipline to make that possible.

It turns out I wasn't wrong, I was just early! I expected a sell-off last week, but we got it this week instead. I hope you kept your cash.

I hope you have a shopping list, because if you have to start thinking about what to buy, now it's too late. Always know what stocks you'd like to buy.

It almost doesn't matter what you buy if you buy right. Buy the ETFs QQQ, SMH, IBB. I think there might be panic selling into the close. Use aggressive pricing.

Source: Seeking Alpha

https://seekingalpha.com/article/434730 ... ent=link-0