Thursday 2 February 2017

A strategy as a retail investor

Note to self based on what I learned from Mr. Chua Soon Hock, an investor with remarkable consistent results;
Overcome and control basic human weaknesses (greed, fear, impatience, pride and laziness) when put to the test in an uncontrollable market. Pay detailed attention to the process of applying sound investing methods. Focus on time, size and price  management- all within our control. Shares will be at basement prices when bearish psychology is extreme and liquidity is tight. Be patient.

Strategy for retail investors by Chua Soon Hock (Asia Genesis Equity Fund);
Timing- For situations where share prices are low due to a weaker economic cycle... "based on my experience it is best to buy on the day following the national government's admission that the economy is in a recession and gives a negative GDP forecast for the rest of the year." 
For a market crash due to a special event "it is normally right to commit 50% of capital on the same day of the event and rest of the 50% within a week."

Type of shares to buy- "Buy the top two of the best-managed institutions from each of the key sectors of banking, media, telecommunications, healthcare and computer software."
My Watchlist:
Banking- DBS, OCBC
Media- SPH, MM2 Asia
Telecommunications- Singtel, Starhub
Healthcare- Raffles Medical, FIRST Reit, (Riverstone?)
Computer software- Silverlake Axis, ? 

When to take profits- "Shares bought resulting from a market crash due to special events (ie it is a one-off situation), one can take profits when profits are between 50% to 100% within a six months period. However, for shares bought as a result of an economic crisis or economic downturn one should keep them for years."

Frequency of participation in the market- "Assuming a 35-year investment life, one can expect to participate in three to four complete economic cycles, with each cycle of about eight to ten years, yielding returns of at least 200% over capital...in addition be rewarded with about five event market crashes, which should yield at least 50% for each event."

Source: SG Thumbtack Investor

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