Investment as a part timer

I am not a full time trader and thus, this should not be taken as financial advice and do not apply to the full time professionals.

I have been meddling with investment since 2019. Started this as a newbie, I made many mistakes - pressed sell when it was meant to buy, using excessive leverage, investing in stocks without proper research, allowing my emotions to take over my entry and exit plan … … all these are necessary “school fees” that we pay so that we can be more successful overtime. (And I am still paying some of these recurring fees)

It is important not to spend money meant for neccessities and essentials on trading. We should have a property and have enough for the monthly family needs.  Previously, I was spending late nights to trade the US market. It was affecting my family relationship, sleep and day job over time. I set aside my “monthly savings” to start trading. I found myself immensing myself into hours of youtube and books. No wealth will ever more important than family and health. Eventually, I was wondering if I need to look into a longer timeframe for my trades.

I could not maintain this lifestyle and lack of sleep. If any of our positions is causing you to lose your sleep, then, the amount is too big for our current risk threshold. I enjoy the process to build up my “stomach” to take on bigger deals over time. Most of us generate bulk of our wealth from property and thus, I treat equities as a supplement source till my trading strategies fair better. Personally, I have set a goal to do better than 4% per year. If my trading could not deliver a much better result than the 4%, it is better that I park the cash into my retirement funds (also known as CPF in Singapore). Let us not forget that Singapore averaged inflation between 1 to 2%.

This is where I found value investing looking at gurus such like Warren Buffett, Charlie Munger, Benjamin Graham, Li Lu, Mohnish Pabrai, Guy Spier and Peter Lynch. With this approach, I can afford to spend lesser time on the market. In fact, the preparations will take much longer - checking the fundamentals of the company, going through their financial reports. Execution to buy/sell becomes easy - a no brainer.

Some of the items I look out for include:

1. Growing Revenue, Net Income and EPS. The more details, the better it is for us and I always look out for development of new products and services and try to estimate their total addressable market size. It is good to look at their competitors for cross reference.
2. Balance Sheet - assets, liabilities and equities composition. I will look out for companies with low long term liabilities and that the current assets are more than current liabilities. for manufacturers, I will look like their inventories to ensure that the inventories are low - meaning, implying that their products are received by the market.
3. Cash flow - in the end, the cash flow must be positive. without which, the company is not “making money”.

As a (shameless) cloner, I will follow the portfolios of the investment gurus for reference of stocks and started my research based on their purchases and sales as a start. I will set aside some money every month and invest them into stocks that interest me. For example, I have been following a particular stock for weeks and yet to take up any positions as it has yet to reached my “target buying range”. This do not require me to monitor the market every few minutes, freeing up my time. As I plan to hold these stocks for years and thus, short term “peaks or drops” do not affect me too much. As I have done my research, black swan events became good chance for me to add to my position.

If you have time, I will like to recommend the following books for your reading:

The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness

Book by Morgan Housel, &

One Up on Wall Street

Book by John Rothchild and Peter Lynch

Here is wishing you happy investing ahead.