A master investor.

I read this from Channelnewsasia forum, and decided to reproduce it here. Although I've never read it before, I actually do follow most of the rules already.


A master investor:

1. Believes the first priority is preservation of capital.

I would not hesitate to take an immediate loss on an investment if I felt I had made the wrong decision.

2. As a result, is risk-averse.

A lot of my time is spent on research and analysis before making an investment because I want to reduce the risk.

3. Has developed his own investment philosophy, which is an expression of his personality. As a result, no two highly successful investors have the same approach.

There are many different methods to valuating a stock, but I firmly believe in my own method and follow it religiously.

4. Has developed his own personal system for selecting, buying and selling investments.

For example, although I know enough about TA to do short term trading, I rarely do it because my brain is not wired up that way.

5. Believes diversification is for the birds.

I don't think it's useless, but look at my stock portfolio and you know which side I'm leaning towards.

6. Hates to pay taxes, and arranges his affairs to legally minimise his tax bill.

I hate unnecessary expenses. Actually, I hate any expenses haha.

7. Only invests in what he understands.

Recently, I decided never to touch tech stocks for their small economic moat. I also have not ventured into currencies at all becuase I simply can't understand how it works. Maybe next time.

8. Refuses to make investments that do not meet his criteria. Can effortlessly say 'no'.

Although I monitor almost 300 - 400 stocks weekly, I've only bought less than 20, so indeed, I say "no" much more often than "yes".

9. Is continually searching for new investment opportunities that meet his criteria and actively engages in his own research.

Definitely. I'm personally blessed with a good mathematical brain and am good at calculating probability. So if there is a high probability an investment (not just equities) will pay off, I'm in!

10. Has the patience to wait until he finds the right investment.

I only take action 10% of the time. Otherwise, the other 90% of the time I'm either holding or waiting.

11. Acts instantly when he has made a decision.

It usually only only takes me seconds to decide to buy or sell, which is why I prefer stocks to unit trusts for their immediacy.

12. Holds a winning investment until a pre-determined reason to exit arrives.

I do not believe in holding forever, and I do have an exit strategy in place for all of my stocks.

13. Follows his own system religiously.

Of course.

14. Is aware of his own fallibility. Corrects mistakes the moment they arise.

If I'm wrong, I sell. No hesitation.

15. Always treats mistakes as learning experiences.

This is the big reason I have this blog. To record my investing decisions so I can learn from my successes and failures.

16. As his experience increases, so do his returns.

So far so good. Let's hope it continues!

17. Almost never talks to anyone about what he's doing. Not interested in what others think of his investment decisions.

In my real life, only a very small handful of my family nor friends know that I'm into stocks. Even then, all of them have no idea just how involved I am. I've a very private person and I hate bragging about my successes.

18. Has successfully delegated most, if not all, of his responsibilities to others.

This is one of the rules I have not abided by. All responsibilities are currently shouldered by me, and it seems to be working thus far. As I get more experienced, I also find that I have to spend less and less time with my investments.

19. Lives far below his means.

Admittedly, I do not live life like a pauper. I like to pamper myself and my loved ones and do it quite frequently.

However, I do have zero debt so I guess this rule holds true.

20. Does what he does for stimulation and self-fulfilment - not for money.

It's true that money is not the only motivation for my investing. I do like it enough for it to be something like a hobby. That said, money IS definitely one of the main motivations.

21. Is emotionally involved with the process of investing; but can walk away from any individual investment.

I do not fall in love with any stock. If you're good, I will buy you, but once you've served your purpose, I will sell you.

22. Lives and breathes investing, 24 hours a day.

Not exactly, but it is a big part of my life. I guess the answer is no by literal definition but yes by metaphorical definition.

23. Puts his money where his mouth is. For example, Warren Buffet has 99 per cent of his net worth in shares of Berkshire Hathaway; George Soros, similarly, keeps most of his money in his Quantum Fund. For both, the destiny of their personal wealth is identical to that of the people who have entrusted money to their management.

Yes and no. Yes, I entrust myself to manage my stock portfolio myself, but no, I do not invest every single cent into stocks yet, because I believe I have a lot more to learn. As such, I still feel more comfortable holding quite a fair bit of cash always.

And last but not least, here's some tips from the master himself.