Beginner’s Guide To Investing
CAN I BE A VALUE INVESTOR?
Value Investing is not for everyone. However, it is a learnable skill. Here are the things you need to become a great value investor.
What Skills Do I Need?
Before you even start the learning process, you would need to master these 4 areas:
- Basic Maths
- Have patience
Investment can take a long time to realize its return. Investors need to be patience enough to wait out the return rather than constantly looking for the next big idea. It took Tencent Holdings 13 years to return more than 31,500% to its shareholders but the share price can drop more than 10% in any given year.
- Control your emotions
You have to learn to keep your emotion out of the equation when investing. Market can stay irrational for a long time and it is important we focus on the fundamentals of our investment rather than the sentiment of the market.
How To Get Started?
The first step in becoming a good investor is not to start checking out stock prices. Instead, it is to get to know more about businesses. After all, we are investing in companies and the future of these businesses. Therefore, it is important for us to have a good sense of what makes a good or bad business and how to find great entrepreneurs to invest in.
Here are some of the places we can learn more about businesses.
- Business Magazine
- Podcast: For a list of great business podcast – Click here
- Masters of Scale with Reid Hoffman
- HBR IdeaCast
- TEDTalks Business
- The Tim Ferriss Show
What NOT To Do
Before you have a good gasp of what a good business is like, you should rush out to:
- Rush to check the price of a stock
- Follow stock market News
- Rush to buy your first stock
- Get tips from friends
Hunting For Your First Stock
Once you feel that you understand the basics of business, you are ready to start hunting for your first stock.
However, you do not need to go look at companies where you are so unfamiliar with that you have never heard of its name before. Instead, you can easily find listed companies from your personal surrounding. Some of my best returns from investments are from stocks that provides good and services that I used personally everyday. So the first step is to just open your eyes and start observing more. This is an example of my typical day and you will see just how many listed companies I encounter daily.
- Wake up by my Samsung phone.
- Took my Farmhouse brand milk from my LG refrigerator.
- Eat it with my Kellong cereal.
- Prepare Milo drinks for my kids.
- Maybe add a cup of Old Town White Coffee.
- Either take my car (Nissan) to work or take the MRT.
- During my commute, I will check my Facebook, my Gmail and maybe my Linkedin.
- During lunchtime I might grab a cup of Starbucks Coffee.
- Maybe I might end the day with a meal at Din Tai Fung restaurants with friends, drinking a pint of Carlsberg Beer before going home.
So just from the short one day event, how many listed companies have I encounter? The answer is EIGHTEEN!
- Samsung Phone: Samsung Electronics Co. Ltd (KRX:005930)
- Farmhouse Milk: Fraser & Neave Holdings Bhd (KLSE:F&N) or
- Fraser and Neave Limited (SGX: F99)
- Kellong Cereal: Kellogg Company (NYSE:K)
- LG Refrigerator: LG Electronics
- Milo: Nestle (Malaysia) Bhd (KLSE:NESTLE) or
- Nestle SA (VTX:NESN)
- Old Town White Coffee: OldTown Bhd (KLSE:OLDTOWN)
- Nissan: Nissan Motor Co. Ltd (TYO:7201) or
- Tan Chong Motor Holdings Bhd (KLSE:TCHONG)
- MRT: SBS Transit Ltd (SGX:S61)
- Facebook: Facebook Inc (NASDAQ:FB)
- Gmail: Alphabet Inc (NASDAQ:GOOGL)
- Linkedin: Microsoft Corporation (NASDAQ:MSFT)
- Starbucks Coffee: Starbucks Corporation (NASDAQ:SBUX)
- Din Tai Fung Restaurant: BreadTalk Group Limited (SGX:5DA)
- Carlsberg Beer: Carlsberg Brewery Malaysia Bhd (KLSE:CARLSBG) or
- Carlsberg A/S (CPH:CARL-A)
That is just from a short recollection of a normal day at work. So there are many possible investments surrounding us. All we need to do is to open our eyes to the products and services that you are already using.
All these companies that you are already familiar with is a great place to start. The next start now is to create a Watch List. This is a list of companies that you might be interested to look into.
The list can be noted down either on a physical book or just on your computer. As you come across companies you find interesting, instead of jumping straight into buying them, you add them into your Watch List. Then you work you way down the list to investigate and research on each of them.
Some of the main things to include inside your Watch List are:
- Company name
- Where is it listed
- What is the business?
- Why do you find them interesting?
Congratulation, you have just created your first Watch List, you are all set to start researching and find your first investment.
Now Available On Book Depository
Our Course is created based on some of the materials discussed within the book. Our book will take you through a more detailed study into how to apply value investing concepts in Asia.
“The book is a great contribution to the investing society. Stanley and Mun Hong have been able to put together the valuable experiences and wisdom of many Asian outstanding fund managers!”
“This is not just a book about value investing. Instead, it is a manual for value investing with an Asian twist that investors with an eye on the fastest-growing region in the world will reach for whenever they have questions that need answers.”
“Stanley Lim and Mun Hong have skillfully weaved three things together in this book for the Asian investor: the key principles of value investing, where to identify the investment opportunities and the mine fields to side step in Asia. With these skills, the investor can start investing in Asia.”