Thursday, November 12, 2015

Investment Philosophy -- How it has changed for me

Since I first started on this journey years ago, my investment philosophy has changed quite a fair bit.

Back then, I was a greenhorn. I didn't know a lot of stuff. Especially for the first few purchases, it was based on hearsay. Hearsay from forums, from friends, from family. Honestly I didn't know better, and good $$ was lost. That was... in a way... "lesson fees".

Then, in my late twenties, I increase my focus on investing in sustainable businesses. The main focus was on monopolies, oligopolies, as well as "sustainable" REITs. I added inverted commas to the word sustainable before REITs because I may still be wrong in the long run. However, my model has served me well enough for the past few years.

Now, in my early thirties, having "sustained damages" from two of the three bombs, marriage and housing, my investment philosophy has changed a little more. Instead of just investing in sustainable businesses, I'm adopting a "Rise-And-Die-With-Singapore" investment mindset. Just what is this mindset about?

Basically, the mindset is about investing in businesses that are directly or indirectly related to Singapore. And if Singapore as a whole survives and do well, the businesses do well. If Singapore fails, the businesses may also fail together. In other words, rise and die together with Singapore.

But... It does not mean we should be investing in bad businesses.

I do not know how to fully explain this philosophy in words, so I will probably use some simple examples.

Investing in SGX
Apart from the usual way of analysing companies, one reason why I invest in SGX is simply because... for now, if SGX fails, the entire Singapore stock exchange fails. If SGX fails, no one can buy or sell any shares. No matter how much your share price has risen, not being able to cash it out at all would mean your shares are now worth an effective $0.

Granted, there might be other platforms in the future, or the government may do something for shares to be traded still, but investors confidence will likely be shaken hard.

So... SGX cannot afford to fail... And if it cannot afford to fail, it must succeed. And that's one reason I invest in SGX apart from it being a monopoly and other reasons.

*One other reason, in the event of market crashes where people dump stocks, SGX still earns from the trades.*

Investing in telecoms
If Singapore's population grows, our telecoms get more customers. Over the years, mobile phones and home broadbands have changed from being luxury items to being necessities. And most recently, mobile internet. Because the penetration rate for such items have been very high, I view it as the businesses will rise and die together with the affluence and growth of Singapore.

I doubt there will be hyper growth for the telecoms, but certainly, they will most like rise and die with Singapore.

The same probably applies for local banks, local property developers (not all), local office and industrial reits, as well as businesses in the defence sector (i.e. ST Engineering mainly)

Am I putting too many eggs into one basket?
i.e. the basket of Singapore?
How about overseas stock purchases?

Currently, overseas stock purchases for small frys like me have to be done through local brokerages who charge a custodian fee. They own the shares on behalf of us. Now... if the local brokerage goes kaput... bankrupt... because Singapore dies... I believe there's problem with "owning" or cashing out the overseas shares.

The question of investing then becomes simpler if all the eggs are in Singapore... Will Singapore survive in the foreseeable future? I think so. AND it will be easy to see when Singapore can't.

Maybe my philosophy is over-simplified, and unrealistic... But why make investing unnecessarily more complicated?

1 comment:

  1. Are you looking for a loan ?We help individuals and companies to obtain loan for business expansion and to setup a new business ranging any amount. Get a loan at affordable interest rate. Do you need this cash/loan for business and to clear your bills? Then send us an email now for more information contact us now via Email:allrisefinancial@gmail.com


Please Comment >>