Sometimes in life, you win some, you lose some and you lose a lot.
So I was wondering what to start the year with and this really interesting video by Guy Spier at Google Talks caught my attention.
He speak about an investment checklist which is not so much what you look out for in an investment but what are the common mistakes to avoid, which is very much in considering that if you protect the downside, the upside will take care of itself.
Here are my 15 lessons from 10 years of investing:
1. Not having a firm investment thesis and target price so that overvalued/speculated stocks may be sold
2. Blue chip companies are not foolproof. Highly leverage companies are slaughted when the liquidity dry up.
3. Speculations are really for the short term. Limit the resources (time/money/effort) spent on them.
4. Not all techniques (FA/TA) works on all shares. Ultimately, management track record matters in the long run.
5. Don't trade if you do not have a 'crystal ball ability'
6. Past dividends and M&A activities are no indicator of good stocks
7. A good stock can be severely overpriced
8. No turnaround story is guaranteed. Wait for signs of profitability before considering
9. A good stock can be slammed by the macro-environment. Management may be short-sighted/overly optimistic in the short term.
10. Don't buy a stock on a hot/friend/remiser's tip. Do your own homework.
11. An illiquid stock can suffer from negative price movement despite undervaluation.
12. Don't buy a stock with no moat/weak moat.
13. Speculative news (M&A) must be managed with care.
14. Don't sell at the wrong time. Buy back at the right time.
15. The stock market can mis-price stocks in the short term. See point 1 - Stick with the investment thesis and have a time frame.
Happy investing
TFG
2017
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