19 June 2013

ESBI - Rethink of ESBI

When I was in my early 20s, I was always focused on shares investment. I learnt a lot of financial term in forum which I actively participated was "ROE", "CAGR", "DY", "PE" and so on. I still remembered that my ex-gf gave me a book titled "Intelligent Investor" as my birthday gift. I learnt more from there, such as "Margin of Safety", "Mr. Market" etc. And I have to admit that Mr. Benjamin Graham and Mr. Warren Buffett as well as Mr. Phillip Fisher influenced me a lot in searching a stock that can be multi-bagger. I was quite fortunate to reach six digit in my early 20s and I have great confidence that I can be millionaire in my 30s and multi-millionaire in my 60s.

I believe the hunger of chasing after money had lead me to be very focused in it and that is why I took the self study on CFA and become CFA charter holder eventually. To be frank, in "I" quadrant, you need to spend a lot of time to learn about the jargons used by the investment professionals and to master it, you have to be in real war, after learn from those experts. It's all about how you let your money earn hard for you, after you have earned hard for your money.

I just went to Serangoon Library and have some glance on Robert's book again. I believe that to be really rich in investment or in business, what you have to do is only one thing:

"Buy Good Counters in Low Price"

This is the first step in determine whether you have a good investment return. There is little wrong if you manage to buy a dollar asset with 60c. Of course you can argue that there is no free lunch in the world. So you must be doing more homework to figure out what makes the price low and what are the catalysts to allow the company back to its intrinsic value. You can estimate the terminal value and your holding period and discount it back to present value with your desired return rate. An important ratio - PEG (PE To Growth) Ratio can be used for checking whether the stock price is undervalued or not. After all, you also have to have a checklist to check through whether the company is worth to hold for a long period.

When I am managing my own fund, I always look at the longer term, that I can ignore the short term stock price volatility and fully focused on the long term prospects of the business in the company that I hold. I gotta make sure I can fully understand what drives the revenue and the cost as well as how the company can manage the debt level effectively so that they can balance the risk & growth in long run.

To stay profitability in long run, I believe the self discipline and hard work in finding good counters in low price is important for us. There is no hurry for us to chasing after "Hot" stocks. And we should bet big for a "sure" thing.

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