Saturday, April 21, 2018

The Dilemma

Since I have been such a supporter of  M1 Ltd in my previous posts, I suppose I should announce that I have sold all my holdings in the company. Nevertheless, due to this action, I had friends questioning if I had become a trader? So HAVE I?

Today, I managed to converse with a trader and an investor. They gave me 2 different perspectives that is the exact opposite of each other. Do note that both of them are making money currently.

Picture taken from Quora

Trader's comment:

I have a small capital. Thus, trading is the way for me. Contra trade do not need capital. I only trade blue chips or REITs, and I place a stop loss and target price for every trade, so I wouldn't hold any trade.

I do invest, as well, for mid term (2 to 3 months) and long term (6 to 8 months). Usually I try not to hold a share for too long, unless I feel it has the potential to be a multibagger.

The market is very volatile right now, most people will take profits and protect profits. There's a saying, "if you don't take your profits, the market will take it back from you".

I feel that this is the mindset of most people who are in the stock market. Sayings such as 'letting your winners run' doesn't apply anymore.

Investor's comment:

An investment operation is one which, on thorough analysis, promises safety of principal and a satisfactory return. - Benjamin Graham.

I believe "no matter what size your capital is, this is the rule of investing".

Switching to a trading mindset to earn a higher percentage is a flawed thinking. It's because of small capital that preservation and proper investing is critical.

Furthermore, compounded interest need time to work. You have to know that you are buying a company and it need time to work and earn money to become a multibagger.

If market offer you the convenience of being able to get a quote on company you own, don't turn this into a disadvantage being influence by the nonsensical quotes of the market. Use it to your advantage, buy when a good company is cheap.

*Do note these are real quotes I have taken from our conversation and are amended to be more smooth-flowing.

In Short

A trader focus on price and profit, while an investor focus on company, value and capital. I still stand by, maybe including my bias, more towards an investor mindset.

I believe in finding out the value of the company. I do not draw any lines on the company's share price chart. Rather, I really like to look into a company's financials and understand how a company make its money.

However, on holding period, I also have this view that when an investor buys a company, he has to have a long term view. A long term view will allow you to not make rash decision and hold on to your beliefs and view if the share price falls.

But if the company's share price suddenly rise too much, then I think you can still sell it even if you only held on it for a few months.

Regardless, I sold M1 mainly because I want to focus more cash into companies that pass Fundamental Scorecard. My portfolio has been heavily supported by companies that pass Fundamental Scorecard currently. Thus, I intend to put more capital into this area.

With that, I like to have a final word on today's post - any method that makes money is a good method, including any trading methods. 

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now! Only about 3 plates of chicken rice per month (One of my subscriber told me to say this)!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

9 comments:

  1. Isn't it interesting that while you are promoting your scorecards and yet your stock holdings are not following the scorecard you promote ?

    ReplyDelete
    Replies
    1. Hi Anonymous,

      Thank for reading and commenting.

      It will be great if we get to meet, so I can explain to you in person.

      Regards,
      TUB

      Delete
  2. yea agree, feel he is going in and out in and out slowly deviating from the grand plan

    ReplyDelete
    Replies
    1. Hi 2nd Anonymous,

      Thank for reading and commenting.

      It will be great if we get to meet, so I can explain to you in person.

      Regards,
      TUB

      Delete
    2. Hi Anonymous,

      May I ask what is the "grand plan" that you speak of?

      Firstly, I do not believe any investor has a fixed grand plan like the one you are hinting at, including people such as Warren Buffett. If WB have not met charlie munger and tried buying great businesses at fair price, he wouldn't be where he is today. As investors, all of us have to keep learning and tweaking our mindset.

      Secondly and most importantly, where is the improvement in the scorecard going to come from if TUB only sticks with what he is doing right now? Unless you are happy experimenting with your own money, I'm glad that TUB is doing so and sharing with us what mistakes he have made.

      TUB has been doing a wonderful job of sharing with us reader his experience and thoughts on investing. Many, including me have benefited. Please stop making useless messages if they are not going to be constructive.

      Thank you (from the rest of us).

      Delete
    3. Hi Anonymous (The Rest of Us),

      Thank you for your support.

      Regards,
      TUB

      Delete
  3. there is nothing wrong in being a trader.

    ReplyDelete
    Replies
    1. Hi Anonymous,

      Yup. That is true. At the end of the day, any method that make money is a good method.

      Regards,
      TUB

      Delete