July 30, 2021

20 thoughts on “Rolf’s investment philosophy (Part 3) – Building a Portfolio!

  1. Not just on building a portfolio.

    We should learn to look beyond single stock performance and look at our investment portfolio performance and level of annual cash flow generated over number of decades till the day we stop this investment game. That is the final measure of our investment performance.

    1. Hi CW,

      Yes thanks for the advice.

      There are so many things and not all is listed definitely. Risk, how to track your returns, outside equity portfolio etc.

      Indeed I do track my portfolio performance. I also have many excel sheets tracking my portfolio, but I did not list here.

      But unlike u, there isn't as many wonderful charts as I reckon bcos I am still a newbie in this area, having only started investing in 2010 compare to yourself who started decades ago.

      Still got lots to learn from all u guys!

  2. Rolf,

    Investing's portfolio management is another word for risk management.

    Which is another word for money management.

    And in trading, money management always comes up as a key ingredient as part of the 3 Ms 😉

    It took me sometime before I finally understood when they say,

    "If we take care of the downside risks, the upsides will take care of themselves."

    Hence my recent part 1 and 2 posts 😉

    1. Hi Jared,

      As I mentioned in your posts, I like it a lot about WB 1st and 2nd rules. U definitely hit the nail on the head!

      Therefore risk and capital preservation are something I really take note nowadays more than ever before!

      For trading, I am still so new… Hope to have time to learn more maybe one day. However for a full timer in day job, I suspect it is very difficult for me and hence I will still stick mostly with Long term investing.

      By the way, what is 3Ms?

    2. Rolf,

      It's:

      Method – Fundamental, technical, rojak?

      Money – Money or risk management.

      Mind – Trading psychology; and this one cannot train or teach. It's like the X factor if we dream for a career in showbiz 😉

      It came from one of the "holy bibles" of trading:

      "Trading for a Living" by Dr Alexander Elder.

    3. Hi Jared,
      Thanks for the 3M approach decipher!
      X factor is crucial since it cannot be learnt that easily! Or at least u ll not have X factor just by parroting out WB or Peter Lynch investment theories!
      I also heard some seminar speaker mentioned 3R, Right biz model, right mgmt, right valuation n price!
      Any cat who can find food for itself is ok?

  3. Whatever.
    At the end of the game of investing (not only in stocks) still the CAGR you achieve counts.
    Not now.
    Not even 10 or 20 years time (if GOD permits).
    You got your whole life in front of you to 70, 80, 90…

    So try not to lose money first is more important then trying to keep up or beat the yearly inflation.
    So beware of scammers too.
    (i believe no one is immune because of our "HUA HEE TO HO")

    If can't even protect or preserve Capital, what investment then?
    It seems i say it this way because of my age.
    But don't forget i was from youth too, once.
    And don't subscribe to the belief you can afford to take higher risks (losing money) as you are still fairly having a lot of HC.
    Why want to try higher chance of losing money because you are young?
    Can make more money meh?

    Actually hoh in short what i say is what SMOL said lah.
    "Take care of your downsides, and the upsides will take care of by itself"

    1. Hi temperament,

      I am still new in investing. So I am taking one step at a time to learn as much as I can while still only part time.

      It's a long journey for me! And for most of the things I venture into, I always prefer to build a very strong foundation. So I have been reading and writing and trial and error in the investing of stocks a lot in the last few years.

      I think so far, for part 1 & 2 which I mentioned building character and human capital, I did somewhat had already strengthened due to my life and work experiences. For part 3 which is portfolio n execution, still long way to go.

      As Andy pointed out before, I truly understand that the number of hours spent in investment is not as relevant as the number of decades of experiences seeing the ups/downs in stock market.

      So I understand what u mention about the whole life in front of us! I still have lots to learn from all u Qian Beis!

      That is why I written before that I am happy to see the bear recently and to experience the pain of seeing my stocks decline now actually. Losing smaller money now is good for learning!

      Yes definitely like you said, it does not mean we should be taking more risks and have more losses. At least what I am saying is with unexpected events, at least I am still resilient and can comeback even stronger!

      "Take care of your downsides, and the upsides will take care of by itself"

      Thanks for all the advices! Appreciate it!

  4. Two questions came to my mind when reading your investment philosophy:
    1) Invest in stocks that I know well -> Would that limit your diversification possibilities?
    2) Diversified across countries -> Only Singapore, ASEAN and China. Aren't they highly correlated? Also highly correlated to your own income? What about other regions of the world to reduce the correlation in your portfolio? The knowledge / familiarity gap could be easily closed via Country-ETFs.

    1. i have thought of diversification by investing in Country-ETFs.
      But i am worry about our Strong SING $.
      Any remedy or counter measure.

    2. Hi Andy,

      My philosophy is only as good as my "green" experience now! So I appreciate all the comments to point out "anything amiss" more than just me being proud of the articles!

      Country ETFs I am new, will take a look definitely if you provide advice?

      To be honest, I use to prefer wide diversifications, but as I evolved, I realise that I tend to do better in stocks I know very well or at least comfortable with. The same principles have been true for me since young age!

      While I am still new in my journey, and to mitigate risks because of my inexperience, I still diversify to reduce risk, but do have inclination over certain sectors and countries as I mentioned. For the countries diversification, I am NOT only looking at Singapore, Asean or China now. But what I already mentioned earlier is I am bullish on these regions and will have a higher percentage towards it. If my gut proven more and more right, then I will rebalance with even more weightage as time passes!

      There are so many investment possibilities in the world now, but since I am still pretty new in this journey, I prefer to stick with areas that is nearer/ familiar to me first, while having open minds to learning outside this comfort zone!

      I believe in strengthening the core, and then spread it outwards slowly step by step!

      That said, I do note the movements in tandem when concentration is in Sg, Asean, China! Still, I am damn bullish about these places where i m familiar now and over longer term n do not mind the short term volatility.

    3. Hi temperament,
      Worry is never good 😉
      Worrying is what we do to avoid taking action—it's our habit. But it never gets us anywhere. Just saying.
      I don't really have a remedy against currency fluctuations other than seeing part of my portfolio denominated in other currencies as a crucial component of diversification.
      Your comment triggered me to have a look at how the SGD performed vs. other currencies over the last two years (just a random time frame).
      Investing, say, 10,000 SGD in a broad based US country ETF would have delivered a currency gain of about 11% (only currency gain, I ignore any capital appreciation).
      The same 10,000 SGD invested in a Euro ETF would have resulted in a currency loss of about 9%.
      And invested in CNY denominated ETF a gain of about 7%.
      I guess, the beauty of the SGD is that it is always hovering somewhere in between the other major currencies. Not too bad. Whether it will continue to do so, nobody knows.

    4. Hi Rolf,
      Your philosophy does make lots of sense too. At least you have thought it through and considered all the angles.

      It is always beneficial to know where and how large our circle of competence/comfort is.

      Everything outside the circle represents something that challenges our existing truth.

      Where is the greatest amount of learning for us? Inside or outside the circle?

      Let's keep on learning.

  5. Hi Andy,

    Thanks for the article. By the way, where can we buy all these ETFs from? Fund supermart or just local banks? Or any good platform to recommend?

    The world is so connected now!

    Maybe should buy Russia, North Korea and Mynamar! Perhaps they have lesser if not least correlation with the world now.

    1. Hi Rolf,

      The ETFs listed under SGX can be bought via local banks. The choices are a bit limited.

      I do procure most of my ETFs via my brokerage account with TD Ameritrade in the USA or my local bank in Germany (for those European based ETFs).

      I don't think that there is any ETF on North Korea, haha. Myanmar can be bought only indirectly. I have a Tracker Fund that tracks the Solactive Myanmar-Focused Asia Index and contains 15 companies with a strong focus on Myanmar (eg Yoma Strategic Holdings, but currently 50% weightage on Thai listed companies). The mgt. fees for such exotic ETFs are quite high though 1.2% p.a. in this case. But I believe in Myanmar!

    2. Hi Andy,

      Thanks for the recommendation! I did check out the solactive myanmar focused asia fund and it is interesting. I also see it's more oil and bank at the moment. Will have a bite when the time is riped for me.

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