Is stock Investment - a game of "survivor of the fittest" ??

I believe there are many ways to make money from the stock market - speculating on rumuors, trading based on technical analysis, value investing based on fundamental analysis, etc.
I know all I need to do is just find the approach that I am comfortable with and continue to practice it, I do not have a strong heart so I would rather take a slower and smaller step and still achieve what I wanted.


I have started investing since my Uni days when I was introduced to it by a friend who always skipped lecture. I got attracted by it as I can make "easy" money by just calling the remisier to buy and sell some stocks that I didn't even know what business they were doing.  It gave a lot of excitement as well as anxiety to me back then. I didn't know I was speculating and trading then and guess what, I just listened to tips from nowhere to verify...Well, I thank Mr Market for giving me some good lessons during the 1997 Asia Financial Crisis and fortunately my capital was small then, but still very painful because it was my hard earned money. I knew during that time, many people got badly burned and some of my relatives did not touch stock anymore.


Then I switched my strategy to only buy big and profitable companies, often after they have announced some good results and once a while still speculate on stocks with "hot" news. After a while, I realised that I did not really make money as did not see much increase in net worth, so I did not bother to track my record. I thought I have learnt smarter but still did not see reasonable return. Again, with the excuse of too busy with work, I did not pay much attention and continued the same way I invested.


Later on, I came across "Cold Eye"'s article on Nanyang and he regularly highlighted some good stocks  which were not big cap stock. It triggered my interest to track the performance of these stocks and I realised they performed relatively much better than big cap. I began to read more about stock investment and learnt the importance of looking at financial reports. Guess what, my investment return did improve but still far from satisfactory. I then realised I kind of know when and what to buy, but most of the time I sold too early.


Hence, it is time to do more study and reading, I even signed up for investment courses. The more I read and learnt about value investing, the more I have confidence in making the buy and sell call. Hence, I started to perform my own analysis before I buy and have a indicative Intrinsic Value to trigger a sell call. I did a review on whether my return improves as an ordinary investor (shown in my last write up), I am totally happy with it though there is no where near the Super Investors' return.  I happily shared the value investing approach with some friends, including my corporate finance lecturer in Uni. To my surprise, many of them said they did not invest in stocks anymore after they got burnt previously.


How I wish Value Investing was taught in school or Uni instead of Efficient Market Hypothesis. Though there are still many who do not believe in financial analysis and numbers crunching, but then how do we measure when is it undervalued or overvalued? I believe qualitative factors are important too, but I will only consider that after the financials look all right. Of course I will also avoid companies that have good financials but may have integrity concern. Hence, I always avoid red chips listed on Bursa.


To many people, stock investment is really a game of survivor of the fittest and many gave up and some did not survive after huge losses. I believe value investing will minimise your chance of big loss ( as always, nothing is guaranteed in investment). To me, it is a game of survivor of the fittest but you can survive well and continue to be stronger  -   if  you continue to educate yourself to be fit for the game and minimise your chances of huge losses!!


Learning is a life long journey - especially in the world of investment and I am still learning to keep improving on my returns ..............




Some books you may find interesting:-


Intelligent Investor - Benjamin Graham
One up on Wall Street - Peter Lynch
The Most Important Things - Howard Marks 
The Little Book that Beats The Market - Joel Greenblatt
Margin of Safety - Seth Klarman
More Than You Know: Finding Financial Wisdom in Unconventional Places - Michael Mouboussin