5 checklist to assess if you are doing value investing correctly:
If your score is 3 and below, you need to re-examine how you can better positioned yourself as a value investor.
1) Mr Value
Honestly, under what circumstances, you identify yourself as a value investor?
Scenario - You bought a stock, sometime later it depreciated by about 20%, you said to yourself: “It is alright, it is a good stock anyway… I am a value investor.”
The work of a mature value investor starts before the investment is being purchased, and not after.
If you have that similar experience and most of your current and past holdings are mostly underperforming regardless of the market cycle, your score is 0.
2) Mr Excitable
After making an investment, you spent most of the time thinking about your profits than asking this more important question: “What if I am wrong, what’s next? To continue to invest or to hold or to cut?”
If you spend more time projecting or dreaming on your profits than working on a contingent plan, your score is 0
3) Mr Micro Analysis
You only focus on micro analysis and do not know how to include macro development into your investment, for example you do not quite understand how the interest rate or the world development is going to impact your investment. You have this “Typical Thinking” syndrome: “This is a good stock (good management, PE, BV & etc.), over time, it will surely go up, isn’t it?”
If you have this “Typical Thinking” syndrome, your score is 0
4) Mr Doubter
You are quite good and you did all your homework on value investing. However, when there is a market crisis and it possibly hits the trough, you become fearful and doubt yourself, you either did nothing at all or you have seriously under invested.
If this is quite true, your score is 0
5) Mr Rush
After identifying those value stocks, instead of waiting for an opportunity to buy on a dip, you tend to rush into an investment. You mostly regretted on this action of buying on impulse and the “I should have…” is always in your investment vocabulary. You have not much patient and no idea on how to time your investment.
If you have a lot of “I should have…” in your investment vocabulary where you can be sharp with your investment entries and decisions, your score is 0
By Kon How from Weipedia
19th May 2016
A retail investor from SGX Academy
Like to inform you that I learn a lot from you from the precision entry and short term trading strategies classes. Your class is very interesting as well.
The point so far that leaves the deepest impression to me is you mention at the point of entry, you got to be sure are we trading or investing. I started adopting this approach and I realise I became more confident in my trades and I am able to fine tune my approach as the approach to investing and trading is very different. I like your point on taking risk in investment but not in trading as well.
I believe not many people at the point of entry have an exit plan in the event that we are wrong. I do not have an exit plan as well previously. Then looking back when things don't go my way, I tend to panic or console myself when a trade don't go well that I am "a long term investor".
After adopting the above 2 points, I realise that I am confident in my trades and have more courage to execute a trade.
Even though both of your courses are more geared towards trading, I realise it can be applied to investing as well. For example, previously I used to just average down on a good stock along the way instead of looking for possible bottom before executing a trade. After attending the precision entry course, I am able to fine tune my entry point.
For short term trading strategies, I realise your first lesson was on understanding your profile and trade according to your lifestyle. Previously I tried to trade intra-day while working and realise I just could not cope and end up losing money. Looking back, if I knew this earlier then I can adjust accordingly.
You are able to explain clearly the strategies for intra-day as well as for longer term positions. The approach is very structured. You also share with us your views on the market and back it up with the charts. I appreciate the point on the inverse relationship between US and Asia market as well as how you read into the "herd mentality".
Will strongly recommend people to attend your classes.
Heng Hou, Professional Accountant
(Singapore) - 4th Jul 2016