Rolf’s investment philosophy (Part 1) – Building a character!

Most savvy investor readers here probably know more
about value investing, fundamental and technical analysis than I do. So while
FA and TA are extremely important tools for an investors, I shall not bored you
guys further with that. In the following first of the few series of Rolf’s
Ideologies for investment, I will try my best to include my philosophy that is
more unconventional and coupled with some of my personal experiences. Hopefully
it can add some Rolf spice!
Part 1 here will emphasize the importance of building the
intangible aspect of successful investing. It includes the character/mental strength building
and not just focusing on the analyzing skills, although the latter skills are
equally important.

Core values –
integrity
I am an engineer by training. Before a building is
built, you need construction piling. If the piles are not strong enough, the
building will eventually collapse. I believe human life should be built upon
the core foundations of integrity (right heart), passion (love), hardwork
(discipline & perseverance) etc. The same principles apply in investment.
With the core values drilled in right from the beginning is extremely
important. Then plus exceptional mental strength, you will do very well later
on.
Know and invest in
yourself
First criteria – Know yourself well. This is the underlying principle as my blogname
suggest; Rolf Suey, re-arranging means “Yourself”. Popular blogger SMOL also
reiterated this point
here. To me, stock
selection and what/when to buy/sell is even of secondary importance compare to knowing
“why and what” you are doing with regards to the “bigger picture and longer
term objective”. Not just knowing, but also continuously investing in yourself
– books, articles, courses, talking to people in the same circle.
Read :
Be patient and build
a long term vision
Having a long term vision for my portfolio is
important and it is slightly different from long term investing principle. It is
not just identify one stock, buy and hold for long term. Instead for me, it is to
build a Rolf’s equity portfolio with a well-mix of stocks that is robust and can
be sustainable over longterm. It is liken to building a business. During the
course of doing so, I will encounter many challenges and failures. It is fine
and I will come back stronger. It takes time to attain success. I will constantly
remind myself to be patient!
Be passionate and ask
yourself why you want to invest?
For most people, the main reason to start their
investment journey is to become financially freed achieving X amount, in Y
years, just like a NSF counting down his days to ORD! By all means, it is admirable
to start planning and working on your financial freedom early. But just to be
financially freed and retire early to relax and stop working, should not be the
underlying reason.
In my case, I ask myself “Why am I doing this and why is it so important? What is the mission?”
My answer: 1) Additional tap of income 2) To learn
more about different businesses. 3) To impart these skills to my children, people
around me and the community.
Today, investment has become a part of my life. I am
passionate and enjoy doing it!
Think Big
THINK BIG! So far when I do something passionately, I
like it to be really big. It is a trait that is within me since young. In
investment, I hope that one day, Rolf’s portfolio and my investment knowledge not
only can create a comfortable income for me and my family, but also help people
around me and the community. Perhaps even create jobs for this country and
beyond. I am not joking really. Wish me luck! If you are interested in Think
Big, there is a book by Donald Trump written around it.
Compete with
yourself to beat the market
I am competitive by nature and love wining since
young. With much humility, I did have several achievements at national levels
and also a successful career to speak of thus far. In spite of my earlier
successes, I LEARN SO LITTLE
. On the
contrary, I learnt the most when my life hit the trough. As I grow older, my
explosive nature becomes more placid and yet more focus! I reflected my life often
nowadays and start to think that winning over my peers is not so important
afterall. This energy of 
jealousy can be better channeled to focus on beating
myself. And to continue invest in myself to beat the stock market!
Right temperament
As like any novice investors, I initially thought that
just by mastering the analyzing skills of a stock, I can become very successful
in investing. This is a fallacy. You need to also have the RIGHT temperament
either to stomach the paper losses of the market or to be patient when the
market is in a bull rally.
“Temperament is more
important than IQ. You need reasonable intelligence, but you absolutely have to
have the right temperament. Otherwise, something will snap you.” – Warren
Buffett.
The personal experiences (crises) I gone through in
life had probably carved out quite well this quality in me. Now I just need
more stock market crisis to further build this up for me. Haha…. I am just
kidding!
Read biographies of
successful people and know the meaning of life
To have to right temperament, aside from my own
experiences, I often reinforced it by reading biographies of famous people. I
enjoy doing that. Ok… maybe I am also quite “Kay poh”. The life story of a
person can tell us a lot. Not necessary those successful ones, but those not
successful ones can also teach us a great deal. My career also allows me to
travel widely and meet many people of different backgrounds. By talking and learning
from those who are successful and have more life experiences than me, also help
to build a stronger me.      
Reinforce your philosophy
Once
a philosophy I think most suitable to me is ascertain, I like to consistently
remind myself. Either by writing it out, or constantly communicate the ideology
to people around me. It can be blogging, commenting on blogs or speaking to
family members, friends and colleagues. Over time, you will be so good that you
can explain so simply and systematically your winning ideology for others to
understand. For instance, you will realise how great investors always like to
be interviewed by journalists. During the interview, they always repeat the
same philosophies they believed in!
Failure is a must – one step back, two steps forward
Ok, you think
you will never make mistakes because you are cleverer and meticulous. You think
you can learn from other people mistakes or from books? I use to think like
that also. Think again, because even Warren Buffet who is known to be extremely
careful admitted his first big mistake is buying Berkshire because it is cheap
and call it “monumentally stupid decision.”
“Do not worry about mistakes in life. It is good to lose money and go
broke at least once, preferably twice. But does it early so that you are
talking about US$20k not US$20mil, which you still can come back. Losing
everything can be beneficial because it teaches you how much you do not know.
And if you can come back from a failure or two, chances are you are going to be
more successful in the long run.”  – Jim
Rogers.
Read
:
I
admit my mistakes and I think I have become a better investor!
Just know and understand is not
good enough
Cutting losses
Admit and knowing mistakes are not sufficient. You need
to take action to mitigate it. 
Do not hold on to your losers
One critical mistake an investor made is NOT selling their
losing stocks whose fundamentals have worsened. By fundamentals worsened, it
means company losing it’s economic moat, balance sheet deteriorates rapidly due
to unforeseen circumstances or getting implicated with fraud etc. It is not
always true that “what goes down is bound
to rise up again, as long as I wait.”
The sad truth is not all companies
will have their share prices bounce back to the levels of what you initially
bought! Yes, blue chips are not exclusive either! Just look at the fate of the
once dominant Kodak and Nokia!
Do not catch the falling knives
Learn to cut losses
No doubt, it is painful to sell at a realized loss
initially, but the pain can be alleviated later if the stocks plunged further. I did sell many stocks last year at losses after the stock
market start its decline in June and then later black Monday in August. Total
realized loss trades made were more than S$20k. Ok, it is peanuts compared to
many! But it is not a small sum either to sell at a realized loss! Ask
yourself, can you do it? While it was offset by realized gains elsewhere, it is
still painful.
I reflected this loss shortly later and strangely, I
was actually feeling very happy that it happened. Perhaps the loss was not
substantial enough to wipe me out or to cause me losing sleep. Hence I can come
back stronger. I also feel I had made a big step forward in my investment
journey, to be able to stomach losses. Fortunately those stocks that I sold off
have seen hitting even lower share prices today.
Read :
Stay
tuned to Part 2.

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6 thoughts on “Rolf’s investment philosophy (Part 1) – Building a character!

  1. Hi Rolf,
    I love your philosophy. It has all the right ingredients for sustainable success.

    Must bookmark this page, no, this blog for my kids to read when they embark on their money earning phase.

    Rolf, have you happened to read the book "The Magic of Thinking Big" by David J. Schwartz before? Might be a good alternative to Donald Trump's book 😉

    You are what you think you are …

    1. Hi Andy,

      Thanks for the compliment. It is my greatest honor that my blog can be supplement to your masterpiece for kids’ reference.

      Donald Trump is extremely smart and eloquent. I have been following USA Presidential debate. I like that he is direct and tell the truth albeit a bit crude with profanity. But he was never my favourite. He uses too much head than heart. Somehow the warmth is lacking.

      Thanks for the recommendation of David J. Schwartz. I am sure it will be better than Trump’s since Andy recommended it! I will check it out soonest. By the way, I still have a brand new book bought not read yet! 🙂

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