My Stock Investment Strategies

I started speculating stocks after my junior college in 1993. But that is pure speculating (or gambling) and I buy and sell without knowing why. I remember I made a bit of money but I did not keep track of my performance then.

In 1999, I read about the effect of inflations and taxes on wealth accumlation in my study on financial planning. I made up my mind then that I will study stock investments seriously and started reading books on or by Benjamin Graham, Warren Buffet and Philip Fisher etc. The usual suspects.My stock investment goal is to beat the market to avoid the “duck in the rising pond” view towards my investments. So I benchmark my performance regularly against S&P and NASDAQ indexes. And I am glad to say I have managed to achieve this goal since I began investment despite losing some money in 2002.

I pick stocks using tactics taught by Warren Buffet and Philip Fisher, looking at fundamental values. I tried applying some technical analysis taught by Peter Lynch but doesn’t like it as a long term stock picking strategy. But I use Peter’s tactics in my other investments.

I don’t believe diversification as a portfolio management strategy. If you don’t know how to pick stocks, then diversification is a useful strategy to spread your risk but prepared to get only average returns. To beat the market, I have to focus on what I know best as taught by Warren Buffet. For me, it is mainly technologies stocks so don’t be surprised to see only a handful of technology stocks in my portfolio.

Surprisingly, a cheesy-titled book called “How I made one million dollars in stock market” (or something like that) influenced how I managed my stock portfolio most. The book teaches how to make a million dollars over 10 years with an initial investment of ten thousand dollars using a portfolio management technique. So, despite the title, it is not a get-rick-quick book but really a long-term investment book. A few years later, I learnt that Benjamin Graham also advocate a similar portfolio management strategy. The strategy has served me well so far.

I also have other investments such as properties and unit trusts but I keep track of them separately. They are in a different risk category in my overall financial plan and I have different goals from those investments.

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