Thursday, April 9, 2020

Abstracts From Fundamental Scorecard Telegram Group

Since the start of Fundamental Scorecard Telegram Group, I have been more active on the group than anywhere else. This is because it is really easier to bring my thoughts across and simply, it is easier to type on the go. No spell check too.

Anyway I feel that I had some short write up that I like to share.

Please enjoy!

1. One of the member asked. "Actually do you do mostly trading for tech stocks or do you hold and take profit after you gain let’s say 50% to 100% etc"?

TUB: 
"OK. These are my thoughts after a short walk to the hawker to clear my mind.

Firstly I am no guru. So these are just my opinions.

1. Previously I use to have "The theory of buying and selling". Basically it is a theory of buying core + excess positions. Then you trade around those excess position to reduce your average price. This theory is still in place but it is followed by these other 3 factors.

1a. Your awareness as an investor. Being a fund manager, I tend to be an active investors. But some people prefer hold for the long term. So it really depends on your objectives.

1b. Your resources. During this crisis, 1 main issue that made me regret is that I do not have enough resources. So theory of buying and selling ensures somehow you have some resources. But if you have a big warchest, what is there to be afraid? Or rather if you are an inactive investor, just invest in great companies.

1c. The excess positions is like options and derivatives. It's a gamble and a bet nonetheless. The fact you still hold a core positions means you are long and believe the share price will recover again. In times of volatility, this works. But if you sold too early, you tend to be like me, have anchoring bias.

2. At the end of the day, you have to determine the value of the Company. So it all goes back to buying great companies at fair prices. Once you sell. Don't look back

Just remember buying is science and selling is art."

2. Another Member asked "I’m just starting to invest in US market last night, just 1 company first. just wondering what are your thoughts with the timing of my entry (not TA but more of economy’s debt cycle and high unemployment)?"

TUB:
It will be volatile. Markets recovering but we all know Q1, Q2 will be bad. Retail will be the hardest hit.

Then again, it will go back to Fundamentals:

1. Focus on your company. Determined how much you know about the company.

2. Determine each company intrinsic value. Don't worry if its subjective. At least understand why you determine the value and why you used the value.

3. Determine margin of safety. If the amount is less than 30% or rather 50%, rethink if you should invest now. Because market will be volatile, it could rise back 20%, then Q1, Q2 will drop maybe 5% or even 60%. Thus, the fact is point 1 is the most relevant.

4. Go in in phases, batches.

Always remember when you invest, you must be certain and comfortable and have conviction on your investment.

3. I commented that I intend to re-review my portfolio and was thinking of a way to fit my companies into my portfolio.
A soccer team structure

TUB:

I was just thinking of how to fit my portfolio into a structure I know and understand.

Having played numerous football manager, I decided maybe I should go back to basics. I use to write about how to use a soccer team and structure your portfolio.

So now I am back looking at it.

V = value (can be deep value, value in terms of intrinsic value, etc) = more defensive

G = Growth (mostly into growing revenue, market share etc) = more attacking

So anyway I realise I tend to be a bit more defensive in all my strategies..

I guess for those who wants to review can follow this structure.

U can go 4-4-2, 1-0-10, etc.

Depending on your self awareness as an investor.

Anyway just to be upfront, my total portfolio at the start was between 100k to 200k. So I am looking at about max 16 companies.

But if u only got 50k or below, you should probably not try to hold so many companies.

4. I was asked to share my portfolio.

TUB:
I can share my portfolio. But pls pls do not just buy.

Update:
1. A local bank.
2. Big idea 8
3. Big idea 13
4. Carrier supplier
5. Festive walk
6. My ex Gf
7. Gardenia bread
8. Online US, Australia, Canada SME lender
9. Mickey mouse
10. WhatsApp and Instagram
11. Sephora competitor (SOLD)
12. Cyber security for healthcare
13. Enhanced file transfer
14. Home insurance in florida
15. HK stocks + rubbish I cannot sell
16. Biggest 3rd party SAP + Oracle maintenance firm

5. A conversation between a member on why market is acting like the virus is gone.

TUB:
What i mean was that "although market has act like the virus is gone, but you must also note that the world is giving out stimulus like never before." People will spent and spent, the economy might recover fast than we think

Think about it. In 2008, money was given to the rich thru QE exercise.

The idea was for the rich to create business etc and pass the money to the workers, etc...

If you remember 2017, there was a sudden BOOM. It just rise and rise. People was having 90+% gain then.

In my opinion, MAYBE the money took about 9 years to flow towards everyone.

BUT in this day and age, FREE MONEY is giving to every tom dick and harry to spent. Just look at our stimulus and US stimulus...

Everyone (not business) is suddenly better off in a certain way.

Once the lockdown is over, you and I can guess what everyone will do. We will probably spent, maybe cautious, but still spent it.

For example, it is hard for 10 million to be pass down around. But it is easier if u spread the 10 million across 1000 pax, there is a higher chance people will spend the money.

In my personal opinion, that is why this time round, the stimulus is different.

We need to get the "engine" to allow the money supply to continue to work.

Just some of my thoughts.

If you are interested to read more or asked questions, feel free to join my Fundamental Scorecard Telegram group.

We talk about everything under the sun about investing with a focus on US, HK (slightly lesser) and SG companies.

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