Investment philosophy

Basic Assumptions behind my Investments

1) I believe that investment decisions and strategy must be based on the temperament and the characteristics of the person. Forcing a  investment strategy that is not aligned with the investor's core beliefs, will lead to the person making irrational bad decisions when in periods of stress. In periods of Purchase, Holding, or even worse Selling.
http://www.investopedia.com/articles/professionaleducation/09/risk-tolerance-personality-typing.asp
http://www.investopedia.com/articles/basics/10/how-to-avoid-emotional-investing.asp
http://www.psychonomics.com/research/a&s/profiling.htm

2) Based on a book I have read which relates emotions to investment decisions,I would describe myself as a Fundamental analysis, long term hold investors, with tenancies of contrarian beliefs. My Personality according to Myers–Briggs is that I am a INTJ. Successful investors that are aligned to my personality are Warren Buffet and John Maynard Keynes. I plan to study their philosophy of trading and replicate their strategy. I cannot hope to beat them or replicate their success, but somewhere close will be fine.

3) Blindly following Buffet and Keynes investment news will be suicide. Buffet buys and sells companies (not just stocks) and the trades he made or news he released will reach me too late. I cannot replicate his investment portfolio or I will be only chasing losing trades. Keynes strategy is interesting but his ideas might not be fully replicable in my present day and circumstances.

4) Good investing is seldom exciting but boring.  Do your homework and have trust and faith in your decisions before any decision. Make sure you make the best decision given the limited time and resources you have. You cannot hope to win every trade. Just make sure you have an overall winning ratio and overall cash profit and win rate. Market forces overwrites rationality.

5) Cash is king and always keep sufficient to prey on the weak and undervalued. Those whom have to sell in periods of stress. Never put in money that you cannot afford to lose.

6) Stay away from penny stocks. Volatility is too high and like a casino. I cannot actively monitor my trades on a minute basis. Philips has high transaction costs and more suitable for a bit and hold rather than active buying and selling.

7) For a starting up investor, it is too taxing to monitor my portfolio of 'well balanced 30 stocks portfolio '. Instead, I choose passive investing (dollar cost averaging) as a start-up. I plan to put a portion of monthly salary  into Singapore STI ETF to replicate the general performance of the economy, and a smaller amount into a stock I feel that has good fundamentals.

8) After I am familiar with the trading platforms and rules of the game, I will dive into more active investing.  I plan to add on SGD stocks (capital gain and dividend yield) or ETFS (mainly dividend gain) that has good fundamentals and build my portfolio from thereon.

I will not invest in foreign stocks and Financial instruments for the time being until I know enough. There is large political risks, legal risks, hidden costs and maybe legal issues that will eat into the marginal profit I have gained.

If I were to look overseas, I will look into developing economies.
Brazil
Russia
India
China
South Africa

9) I will leverage on the investment analysis techniques based on my university assignments, as well as other investment valuation reports and recreate a spreadsheet to track my portfolio, My broker has very details and good information feeds and it is far easier to use their data than to track everything from scratch.

10) target price in buy / sell decisions to incorporate fundamental analysis on intrinsic value.  Use technical analysis, identify support lines / resistance lines /membranes.  Avoid round numbers, 50 and 100. Support levels turns into resistance levels once breached

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