Wednesday, April 12, 2017

An Interview With "BULLytheBEAR"

The next person appearing on my interview series is "BULLytheBEAR", as he is known within the blogosphere and InvestingNote platform.

He has been in the finance blogsphere long before I started my blog. Despite being so much more famous/popular than me, whenever I chatted with him on any of the platforms, he is always ready to help.

My initial impression of him is that he is a FA investor (maybe because he is a tutor?). But after learning more about him, I realised he is actually more of a TA investor. However, if you read his blog, you will seldom find any trances of TA on his blog (maybe only in his older posts).

His blog posts also always tend to be are quite deep and, in my opinion, a deep person always tend to be more FA. But he proved me wrong.

Anyway, his new role as a father will definitely keep him busy for a while (Congratulations!) and I am just glad he agreed to my interview!

Without further ado, let's get straight to the interview questions and "BULLytheBEAR" answers!

1. Pardon my ignorance...but why is it a picture of a Cat? And how did you come up with such an interesting nick, BULLytheBEAR?

BULLytheBEAR: I like cats...a lot. They represent the best that I want to strive for - calm, zen, independent and stoic. Even my tuition site (I'm a private tutor) has a cat somewhere in the name : www.kungfucatsacademy.sg LOL! Why bullythebear? I really don't know because it had been around for more than 10 years. It has a certain ring to it and I really like the play on words. Is 'bully' a verb , as in "They bully him", or is 'bully' a noun, as in "Can you call Bully to come in please?" I really like the ambiguity of it all.

2. Tell us more about yourself. 

BULLytheBEAR: I'm a private tutor, but I majored in civil engineering. I always say that the world loses a great engineer but gains a great teacher in return lol! I don't think anyone has a childhood dream of being a tutor. You can say it happened onto me. I was waiting for my then gf to go overseas to further my studies, so in the meantime I was doing some tutoring to earn a living. I grew to like it so much that I decided this is what I wanted to do. I was offered a pHd scholarship locally but I rejected it in favour of this less trodden path. Everyone was against it, including my parents, who until recently finally got used to the idea that I'm never going to hold a 'proper' job.

I'm a pretty introverted person, but I strive in the online environment well because I have the time to consider and think through my responses. I'm much more quiet in person. Everyone thinks that as an engineer, I'll be more left brained. But I really love doing arts and craft and design work. I made a handicraft for my wife before our wedding (link) and also did a fair bit of drawing.

3. Do you see yourself as a trader or investor?

BULLytheBEAR: I see both as the same thing. They are just names. But if you put a gun to my head and ask me to choose, I'll choose 'trader'. Specifically a counter trend trader, which is a rare thing in InvestingNote (and almost everywhere I ask). Usually traders are trend followers (buy high sell higher), but not me. I find that this divergence style fits my personality a lot, maybe because my life is also about not following the path of others and acting independently. In the past, I was like trying to find the holy grail in trading/investing, thinking that if I find that magic ratio or magic indicator, I'll be able to earn more money. How foolish and naive lol.

4. What is your thought process when it comes to stock-picking?

BULLytheBEAR: I have four watchlist:

1. General watchlist
2. Bullish divergence
3. Bearish divergence
4. Close monitoring

The first watchlist (General watchlist) is a collection of companies that I've heard about and is interesting to me at that point in time. Usually this consists of roughly about 2 pages worth of various companies from different industries. If I hear or read about anything interesting, this is the watchlist that the company first get stored under.

The second watchlist (Bullish divergence) belongs to a collection of companies that I think will have a potential to go up. Because I'm looking at daily, weekly and monthly timeframe, sometimes the signal might take a while before it happens, so this is a place where I will check on the chart every weekend. During market extremes (usually a fierce market selldown or euphoria), I might even check it every end of the day.

The third watchlist (Bearish divergence) belongs to a collection of companies that I think will have a potential to go down. This is simply the opposite direction of the second watchlist.

The last watchlist (close monitoring) is the one where immediate action needs to be taken in the next trading week (within 5 days). This is where I will check intraday (the charts from InvestingNote are live intraday!) and also end of each trading day. Queue orders will be submitted if I think a trading signal is satisfied.

Having a watchlist is not the end point. The key thing is that after every round of homework towards the end of each trading day or trading week, I'll shift them around the four watchlist. Sometimes counters in the general watchlist get shifted to the bullish divergence one, and after some time, they get 'upgraded' to the close monitoring for further action.

The way I do my divergence is detailed out in this post here.

I also do a very quick check on the financial statements of the company. I confess I'm not the best in looking at the statements so I play according to my strengths. I'll check on the ROE and using dupont analysis to break up into the 3 components. From it, I will check the ratios across the years and try to construct a story to explain why it went up or down. I can buy a company based on price action alone, but never on the FA alone, that's my rule.

5. What is your best investment and worst investment since you started investing/trading?

BULLytheBEAR: Worst should be longcheer. I was in my 'value investor' phase and I thought it was a value buy. I bought, the price went down, I average down a total of 3 times, and eventually cashed out at a huge loss. I knew it was bad because I went into a depression because of the amount of money that I lost. Life is strange; you thought that was the worst mistake, but on hindsight, it corrected a major flaw in me. If this did not occur when I was younger and poorer, I might have made a catastrophic mistake in the future when I'm richer but none the wiser.

It's cliche, but the best investment was in myself .That came about because of another mistake - I over committed on a whole life insurance plan and it felt wrong in my guts but I didn't know why. I was determined to find out and became reading a sorts of finance books. Eventually it became a goal to read 52 books a year. The amount of things I learnt from that mistake spilled to different parts of my life, forming my current philosophy towards life. Truly nothing was ever a mistake.

In trading, you either make money or learn something or both. I realised life is also the same.

6. How many stocks do you think one should hold for diversification?

BULLytheBEAR: The level of diversification should be inversely proportional to the amount of knowledge you have. The more you know, the less you should diversify and the less you know, the more you should diversify. I also think that the more money you have, the more you should diversify too. The thing about diversification is this - the more diversified your portfolio, the lower your returns but the more robust it gets.

7. Any view of how long do you think this bullish trend will last?

BULLytheBEAR: I'm short term bearish, mid term bullish, long term bearish and very long term bullish, LOL! As long as there are no reports of students quitting school or stop going to work and starts trading for a living, I think we'll still have some time to go before the party ends for the night.

8. What are your advice for those that are worried about the possible-but-may-never-come crisis?

BULLytheBEAR: Holding cash is also a position, but holding too much will drag your performance. There are so many corrections along the way, and if you've never pulled the trigger before in such minor corrections, chances are that you will never pull the trigger when a real bear attack strikes. You need to practice pulling the trigger in small gummy bear attacks to prepare yourself when the real big mother bear comes. Less thinking and more investing/trading!

9. Able to reveal which stocks are currently on your watchlist?

BULLytheBEAR: To sell: comfort delgro, isoteam, kepdcreit, vicom. To buy: none. As you can see, I'm in a selling mode now.

10. Finally, any advice for newbie interested to get into investing/trading?

BULLytheBEAR:

1. Ask yourself if you should even be in the market. Have you saved 30 to 50k? Have you settled your insurance? Have you invested in yourself in your career? Have you settled your emergency cash? If you're looking to earn enough from the market to fund your next holiday trip, you might end up losing enough money to NOT go overseas for the next few years.

2. Once you settled (1), read all you can read, then start small. Track conscientiously and reflect relentlessly, and keep a journal. If you earn consistently, then increase your portfolio. If you lose consistently, stop for a while, reduce your position size until you earn consistently. Never leverage.

3. Don't think that after reading a book on TA or attending a course on FA, suddenly the world is your oyster. "The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth" - Dr Alexander Elder. Always remember that.

4. Read wellhandy's ultimate resource for newbies: https://www.investingnote.com/posts/47950. It should have all the things you need to begin. May the odds ever be in your favour.

Hope you like this interview series and please do remember to like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

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