Sunday, January 29, 2017

Review of 2016 and on to 2017

I haves meant to put this post out at the start of 2017, but was delayed by the birth of my princess and preparations for CNY.

I have not really been reviewing my portfolio and stuff since 2014. Looking back, re-reviewing myself, and writing on the blog, actually holds me accountable for my own progress, as well as being a chronicle of my past decision making, be it good or bad.

I wanted to restart this blog with a different focus, but haven’t had the time to do it. Procrastination had set in, along with a myriad of excuses (Which shouldn’t be there in the first place).

First thing, I realised recently that this blog had been extremely useful for myself to track my past purchases, and the reasons for it. What I know today and what I know then is very different, and I cringed at some of the purchases I made in the past.

Next, while I have grew very little in terms of portfolio value over the last 2 years, upon reflection, I realised my cash had gone significantly into
1) Wedding preparations.
2) Housing
3) Shared portion of car loan and misc expenses
4) Baby preparations
5) Purchases of various wants (this amounted to quite a fair bit)

I have also put cash into
1) Books (lots, but haven’t really read all)
2) Businesses (talk about it later)
3) Attending marketing/business courses (partly sponsored)

In terms of wants, due to my over-spending, I think I have bought many of my wants already. This was primarily possible because of the China taobao :p
The wants are however mainly in terms of electronics to boost productivity (such as the ipad bluetooth keyboard that I’m using to type this post), baby stuff and furniture.

In books, I have bought a fair number of business related books, although I have not read everything yet. I must make sure I finish reading these books before end 2017.

I have $5k into a start up before calling it quits end 2016. I learned that startups are super risky to invest in because not only do they not have a proven business/revenue model, the people behind it may also only be good salesperson but not good business people. For this particular startup, I was sold by the CEO. I contributed many ideas that I believed would set it apart from the rest of the businesses, and came up with a sustainable revenue model (or so I think) which the rest of the shareholders were agreeable with.

Then the CEO lost focus and went ahead with projects that were totally unrelated to the original planned model. His confidence came from having presented, and awarded government fundings, and soon refused to bother about minority shareholders. His firm believe was that the government agencies can't be stupid enough to award him $$ if his model will not work. Apart from that, his financial management was horrifying. Government funds were spent on food which he declared as entertainment expenses as he need to talk to other businesses. The totally unrelated projects that he embarked on, all received little to zero revenue.

Sad to say, it didn't work out. All the other shareholders gave up too. The lessons learned have been quite profound in my future approach to investing, especially in the stock market. It reminded me of the time I invested in Aztech. At that time, Aztech has a proven business model, but it is investing funds heavily into unrelated segments. This is almost the same as investing in a startup. I was advised by good people that Aztech was on the path of diworsification, and may not do well. I didn't understand back then, now I understand.

Which means to say, for margin of safety in investing, a sustainable and proven business model must exist. It isn’t just the financial numbers, it isn’t just how well the CEO is selling his company and ideas, but the rather subjective judgment of the business model. A bad business model, would bring a company down to its knees.

So instead of investing in another person’s startup, I started my own books publishing firm. The amount of work to even get a first book out was tremendous, and the returns… pitiful. However, it is the overall strategy that matters. Books have the impact of raising my personal profile, so I can get more students, on top of helping more students that decided to self study.

2017 and onwards
2017 onwards, I expect my expenses to go even higher, especially with the birth of my baby daughter. Enough lazing around, I must be even more prudent with the investments, take on more students, while developing the tuition centre as a business instead of being “just another tutor”.

The second edition of my first 2 books, and 2 more new books should be out by the mid of the year. The “Explain That!” Series of books which I sincerely hope will benefit many more students in their exams.

This is also the year where I will be watching out for opportunities to change my portfolio. Current average monthly dividends stand at around $1.6k, but I am expecting this to drop as I sell certain counters to bring cash out. Will see how.

With a family member comes greater responsibilities, so must really work harder now. No more lazing.

1 comment:

  1. What i do not understood is if truth be told how you’re not actually much more smartly-appreciated than you might be right now. You are very intelligent.


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