My Weekly Goal for 2017

As we welcome the year of 2017 and say good bye to 2016, it is important to do some reflections while planning for the future at the same time.

As we continue to sharpen our skill plus knowledge in dividend and REITs investment, we might want to have a personal growth plan for 2017. As Jack Welch said, You Gotta Have Growth!

For 2017, my personal growth plan to enhance practical know how on equity investment include the following weekly goals:

1) Read The Edge Malaysia to sharpen knowledge on economics and corporate development of listed companies and REITs in Malaysia.

2) Read The Edge Singapore to understand corporate development of listed companies and REITs in Singapore.

3) Read Busy Weekly, Malaysia's first Chinese economic and investment weekly to enhance knowledge on Malaysian corporates and sharpen linguistic skill.

4) Read at least one book a week in the areas of equity, REITs and economics. Many great books such as the one written by Greg IP on economics and investing in REITs by the late Ralph Block are worth to re-read.

5) Learn one listed companies or REIT in Malaysia or Singapore on a weekly basis.

I would also consider to attend or sign up for any good online course to widen knowledge towards Singapore REITs or dividend stocks.

Most importantly, I would also love to speak more like-minded investor in 2017 to learn from their experiences and wisdoms.

That said, the weekly goals will amount to nothing in the absence of focus and action. While we build our knowledge domain, it will be great if we can harness the know how to generate more positive returns to enhance our networth too.

Lastly, wishing everyone a year of growth in 2017!

Is REIT a Risk-Free Investment?

Is REIT a Risk-Free Investment?

The answer is NO.

REIT might be a lower risk investment relative to other investment options. But it does carry certain layer of risk factors. Let's talk about price risk which refers to the fluctuation in REIT's market prices.

Imagine if you have bought into IGB REIT in May 2013 at around RM1.45, the price nose-dived into RM1.15 level in early 2014, translating into capital loss of 20%, investors who thought REIT is a risk-free investment, will be in for a rude awakening during that period of time!

Source: Bursa Malaysia

The decline in prices between May 2013 to early 2014 shows that REIT is not immune to external noises. What happen back then was due to US Central Bank’s announcement to gradually remove the money printing policy. Recalled that US has embarked on “money printing” measure after Subprime Crisis in order to spur US economic growth. The money printing measure has eventually "ended".

One of the Possible Factors that Cause the Plunge in REIT's Prices

Investors were worried that when US Central Bank remove the money printing measures gradually, it may signal that US is confident of its economic recovery, hence capital may flow out from Emerging Market (EM) to US as stronger economy would lead to stronger USD and higher interest rate which would make it attractive for foreign investors to move its capital from EM to US. Hence, it may cause domestic REITs to be less attractive unless the prices decline to a level that market deem attractive again.

Hence, fluctuation in REIT's prices is something that investor should anticipate.

The purpose of this sharing is to articulate that as long as the underlying properties that form the REIT continue to do well i.e. rising rental income and distributable profit. The market price of the REIT would eventually reflect the earning power of the REIT. 

Yes, it is not a risk-free investment, but investor who invests into good REIT at good price would have improved the chances of winning.

Despite the plunge in IGB REIT’s prices as discussed above, Mid Valley and Gardens Mall continue to perform well and distribute rising amount of dividends. People still went to the malls and SHOP!

The End Result?

Rising profitability will increase the value of the REIT and eventually, translate into higher market price in the long run.

Not forgetting, IGB REIT’s prices scaled new high in 2H 2016.

Note: The REIT mentioned above is for illustration purposes only.

Learning from Dividend Quotes

“A stock dividend is something tangible- it is not an earnings projections; it is something solid, in hand. A stock dividend is a true return on investment. Everything else is hope and speculation".

–Richard Russell

 “The very attention we place on rising dividends puts us squarely in the position of ‘owners’ of a company, of true investors who understand that a satisfying and reasonable return from a stock investment isn’t a gift of the market or luck or the consequence of listening to some market maven, but it is the logical and inevitable result of investing in a company that is actually doing well enough, in the real world, to both pay dividends and to increase them on a regular basis”.

– Lowell Miller

“The good thing about the dividend-paying stocks is, first of all you have stocks, which are real assets if we have some inflation. I think we’re going to have 2%, 3% maybe 4%. That’s a sweet spot for stocks. Corporations do well with that. It gives them pricing power. Their assets move up with prices. I’m not fearful of that inflation.

– Jeremy Siegel

 “At the end of the day, look for dividends that are safe, sustainable and steadily growing, these dividend-paying stocks would carry our networth to a greater height”


– Dividend Growth

The Little Prince and Equity Investment

When I read The Little Prince by Antoine De Saint-Exupery, it taught me a lot of important life lessons. I believe we will learn something new when we read The Little Prince at different life stage.

Little prince was first published in 1943 and the fourth most translated book in the world! The book also make several observations about human and life which I found interesting!

One of the Key Lessons that We Could Learn from the Story?

During the Little Prince's adventure to explore planets around him, he came across a geographer who refuses to explore his own world because he is too busy in conducting geographical research. The Little Prince asked him whether there are mountains or oceans on his planet, the geographer has no idea. 

Geographer told the Little Prince that he is a geographer, but not an explorer. He will only talk to explorers and record what they say!

Sometimes, we might fall into the trap of doing analysis on places, but without exploring the places. Sometimes, we might invest into companies' equities based on financial report analysis without exploring the company's product or services.

This part of the story taught me an important lesson.

While financial analysis or number crunching is important to aid our equity investment decision. The following is very important too so that we could explore and understand the company further.

1) Dutch Lady - be the consumer and explore products of Dutch Lady to gauge if the products are up to par or even better than competitors.

2) Lonpac Insurance- be the policyholder of Lonpac Insurance and gauge the quality of its customer services or claim process etc.

3) Old Town- breakfast or lunch or just try out Old Town's food and beverages and gauge if you think their businesses will prosper in the long run.

4) Retail REIT- go shopping at the malls parked under selected REIT and form an opinion if you think the malls will prosper in long run.

5) Hospitality REIT- Let say YTL REIT owns resorts such as Pangkor Laut and more. You can make a trip Pangkor Laut Resort as well and gauge if the resort is doing well.

6) Padini Holdings- buy Padini's shirts, pants or shoes and gauge the comfort and quality of its wear to form an opinion if you think Padini can continue to prosper.

7) Berjaya Food- visit Starbucks or Kenny Roger and gauge if these divisions will perform well in the long term since Starbucks and Kenny Roger form a big chunk of its revenue. You might also want to study the competition threat from Nando's!

The moral of the story: 

Be an explorer and geographer at the same time! Be a business analyst!

Note: The companies mentioned above are merely for illustration purposes.

Are You a Stock or Bond?

A friend of mine spoke to me last week on the losses he has incurred by investing into Oil & Gas (O&G) related stocks. Needless to say, O&G sector has been disappointing with companies registering losses or weakening profitability as a result of the plunge in oil prices. Big player such as Bumi Armada has also been suffering.

Upon further "investigation" into his rationale behind the O&G stocks’ investments, he shared with me a finance theory that he has learnt from an investment course.

I will elaborate slightly more for ease of understanding.

Are You a Stock or Bond?

If Mr.X derives salary from a job with stable employment prospect, he can be considered more “bond-like”, a safe job that resembles a high quality bond. A bond is simply a borrowing instrument issued by borrower and in exchange for the borrowing sum; the lenders will be paid a fixed interest return in most instances. The stable salary received could be similar to the regular interest income received by the lender.

According to the theory, Mr.X can invest more in stocks and take more risk in his investment portfolio to balance the conservative nature of his job.

On the other hand, Mr.Y is working on commission-based job and his income can be ‘volatile’, hence Mr.Y is considered to be more “equity-like”. In this case, he might want to invest more into low-risk bond investment or holding more liquid assets.

What about My Friend?

My friend is a “bond” since he is receiving stable salary. Armed with the finance theory, he invested into equity to optimise his wealth position and hopefully, equity could deliver more and “faster” return to complement his salary.

Although the theory makes sense to certain extent, my friend should not have hastily invested into O&G stocks during the bullish period of O&G sector for the sake of optimising his wealth position.

Until today, he is not happy with his portfolio performance as I suspect the O&G stocks that he hold would have given him NEGATIVE returns. Instead of building wealth, the equity position might have reduced his networth.

Moral of the Story?

Always make investment decision based on a sound framework and objective. 

If my friend had invested into good company in a growing industry, perhaps the financial capital or POSITIVE return generated would have complemented his quest towards wealth building!

Is Interest Rate Cut Positive to REITs?

Bank Negara Malaysia cut Overnight Policy Rate (OPR) by 25 basis points (0.25%) from 3.25% to 3.00% on 13 July 2016.

I could recall selected REITs’ prices moved up significantly after the OPR cut was being announced. 

To illustrate the above, IGB REIT was trading at RM1.61 per share on 1 July 2016 and the price rose to RM1.69 following the rate cut, this translate into 5% capital gain in less than 2 weeks’ time.

IGB REIT settled lower at RM1.58 as of 30 November 2016. The excitement and increase in the share price following rate cut seems to be short-lived.

So, is interest rate cut positive to REITs at the end of the day?

The following are some theoretical permutations and they are not meant to be exhaustive and the points below can also be discussed from various perspective.

Interest rate direction	Impact on share price	Impact on dividend
Decline	Likely to increase in short term	Inconclusive due to various moving factors to be elaborated below.
Increase	Likely to decrease in short term

Why would REITs’ prices increase when interest rate is being cut?

1)     Cost of borrowing becomes cheaper, but if the REIT’s borrowings are majority in fixed rate as opposed to floating rate, it may not benefit the REIT immediately in terms of lower borrowing cost. But there is feel good factor due to cheaper interest rate environment.

2)  Lower cost of borrowing may allow the REIT to incur more debts to acquire other income producing properties to be injected into the REIT.

3)  Fixed Deposit (FD) rate would also be revised lower, lower FD rate could increase the attractiveness of yield instrument such as REIT.

4)  In the short term, share price can fluctuate widely. But, share price should reflect the fundamentals of the REITs in the long run. If there is interest rate cut and the REIT’s fundamentals are poor, I doubt it will create much shareholder value in the long term.

Is cut in interest rate positive to REIT’s dividend payout?

1)      If borrowing cost becomes cheaper and the REIT has a lot of floating rate loans, there could be some interest savings which could be passed through to unit holders in terms of higher dividends. BUT….

2)   Why would Bank Negara cut rate at the first place? It is usually to support and stimulate the economy during weak economic growth environment. If Malaysia’s economy slow down further coupled with decline in consumer spending, this would affect retails sales and profitability of tenants, which in turn may impact their ability to even pay rental, hence impacting the REIT’s dividend payout in the extreme case. Currently, if a retail REIT could secure mid-single digit rental revision rate, a REIT's shareholders should feel happy.

3)    Hence, If the interest rate is being cut aggressively to stimulate economic growth, although REIT prices may increase in short term, if the tenants go out of business or unable to absorb higher rental payment if economy continues to be weak, the rate cut is unlikely to boost the REIT’s rental income significantly.

4)      Hence, if you invest in retail REIT, do continue to monitor the performance of its properties.

So far, Aeon Jusco, the Store and Parkson have not been doing well in terms of its retailing division; hence it will be important to monitor our retail REITs.

Is rate cut a definite positive to REIT? It depends J

Happy reading!

Have You Set Your Dividend Income Target?

Napoleon Hill said- Thoughts are things and powerful things when they are mixed with definiteness of purpose, persistence, and a burning desire. Before we begin our dividend investing journey, we should visualize success as an investor instead of failure (begin with the end in mind).

I opined that equity investment should not be associated with numbers alone, the mindset of the investor plays a critical role too. Imagine that if we invest without a direction or goal? how could we track our investment progress?  

A dividend income target is a MUST and the dividend target serves as a compass or GPS for income investor in order to track the progress in creating our dividend income. Always think in terms of clarity as clarity is a substantial part of our goals. Think of how much yearly dividend income do we want to create in the next few years or 10 years time.

The dividend target will keep us motivated and excited! Print out the dividend target and paste it somewhere you could see!

An income investor could set the following goal as an example:

2016- RM3K dividend income

2017-RM6K dividend income

2018-RM9k dividend income

2019-RM12k dividend income

Once we have set our dividend goals, remember to record each dividend payment that we receive and compare against our dividend target on a monthly or quarterly basis to track our progress. If you hit your dividend income goal, I am sure you will be very excited! keep the burning desire and then set for higher dividend goal in the following year.

Once our dividend portfolio is constructed, do monitor the performance of our dividend paying companies or REITs from time to time. A company or REIT can only continue to pay us stable or increasing amount of dividends if they are fundamentally sound or better still, growing stronger!

As we enter the last month of 2016, do take some time to compute how much dividend income have you received so far? how much more do you want to achieve by end of next year? is it necessary to tweak your dividend portfolio? have you reinvest all the dividends that you have received?

With a clearly defined dividend goal, we will be able to chart our pathway towards VICTORY!

Do not rely heavily on yourselves to achieve the dividend goals, you can always read book or talk to mentors and learn from other people's experience (shorten the learning curve).

According to Gordon D'angelo in his book called 'Vision', he said that it is easier to incorporate multifaceted masses of energy all around to help us achieve our goals or visions efficiently and effectively. Do read equity investment or dividend related book and learn more from other income investor, I am sure these learning experiences will add value to you!

Happy setting your dividend goals for 2017! 

Beware of Dividend Yield Trap in REIT!

Recently, a friend of mine highlighted the trap of investing into REIT with high dividend yield. He cited that investing into REIT should not be based on dividend yield of the REIT alone and investors should also take the following factors into consideration:

a)      Fundamentals of the properties

b)      Stability of income from the properties

c)      Occupancy rates and more.

For example, Tower REIT (TWREIT) owns 2 buildings, namely Menara HLA in Jalan Kia Peng and HP Tower in Bukit Damansara. TWREIT used to own Menara ING sited in Jalan Raja Chulan but it was sold some years ago.

Both Menara HLA and HP Tower are prime commercial office buildings in Klang Valley.  However, the performance of both buildings has not been encouraging due to decline in occupancy rates.

Menara HLA is 69% occupied as at end-2015 (2012: 99%) whereas HP Tower is 73% occupied as at end-2015 (2012:80%). Persistent decline in occupancy rates is not a good sign to REIT investors. 

Moreover, the outlook of office sector in Klang Valley has been challenging due to rising supply of offices, hence tenants will have better bargaining power and this will not bode well to TWREIT.

Average dividend yield of TWREIT stood at 7% in 2013, an investor who is attracted to the high yield and bought into TWREIT in 2013, is likely to have an under-performing investment by end-2015 due to the following:

a)  Decline in distribution per unit from 10.70 sen per unit in 2013 to 6.93 sen per unit in 2015 partly due to the loss of income from Menara ING following the disposal. Average yearly dividend yield was around 5.3% from 2013 to 2015. Although average yield was 7% in 2013, the yield declined subsequently due to lower distribution per unit.

b) Decline in TWREIT’s unit price from the average price of RM1.53 in 2013 to RM1.23 in 2015, translating into 19.6% unrealized capital loss assuming the purchase cost is RM1.53 per unit.

c) Although investor would have earned approximately 16% dividend return over 3 years, the 16% dividend return will be easily wiped off by 19.6% unrealized capital loss, leaving investor with negative 3.6% total return for 3-year investment period.

d) If an investor consistently makes negative return, it will be damaging to the wealth accumulation process.

If a REIT offers high dividend yield, always find out the reasons behind the high yield because the high yield could just reflect high investment risk in some instances!

To avoid being trapped, buy good REIT at an attractive price level. Good REIT does not mean the share price will not drop, sometimes it may drop due to market sentiment and so long it is not due to fundamental issue, I believe the REIT’s price will eventually recover or scale new high!

Have You Hedged Against Longevity Risk?

Premature death occurs if a person passes away when he or she is still in productive age or worst still, die at a young age. One of the common tools deployed to protect our families in the event of breadwinner's demise is via insurance products which is a risk management tool.

Buying insurance does not necessarily means it is the only way to hedge risk of premature death. I do know someone who doesn’t buy insurance product to protect his family, he basically self-insure because his assets are be able to provide enough buffer and support to his family if he is no longer around. 

On the other hand, what if a person lives much longer? Life expectancy is longer nowadays due to medical advancement and other factors. If a person lives much longer without sufficient support of financial resources, this could also result in a big problem (“money finish but still alive”). We call this longevity risk.

There are many ways to avoid the dire situation of “money finish but still alive” and to make things worse, the children might not be able to provide support due to whatever reasons.

We could explore annuities products from insurance companies, reverse mortgage (if any), business income and more. We need to find the method that we are comfortable to start with.

An example of workable idea could be:

Dividend Income + Rental Income + Other Passive Income > Living Expenses.

Think of how much dividend income, rental income and other passive income that we need to build over time in order to strengthen our financial buffer against longevity risk.

These are the income generated from our ASSETS that we could rely on, but beware of consuming the ASSETS unnecessarily as we aim to consume the income generated from the asset base while leaving the principal intact.

Read books!

Think of how to acquire the right knowledge to earn the above types of income. Start with reading books and apply the knowledge learnt if it makes sense to us. MPH, Kinokuniya, Popular, Times, Borders and online bookstore, I am sure we can find tonnes of good books to help us get started! (proactive & action).

Think of how to connect to people who have done it successfully (success leaves clue).

Once you have successfully generated income from the above, don’t stop learning (sharpen your saw).

Celebrate each milestone achieved in our investment journeys with loved ones (think win-win).

The above equation is also a constant reminder that while we work hard to achieve our financial goals, we must also enjoy life and take care of the ‘things’ that money cannot buy i.e. self-worth, good reputation, respect, health, love etc.

Happy Investing!

Donald Trump's Impact on SUNREIT Dividend Capture Strategy

Wow, tomorrow is the cut-off date for a REIT’s dividend entitlement and let’s invest into the REIT now to qualify for the dividend! Some may perceive this method as a way to earn risk-free money from the share market. But is this really risk-free?

The above scenario is very common among retail investors and this method is known as dividend capture strategy. Basically, an investor may buy into the REIT one day prior to the cut-off date in order to earn the dividend that has been declared.

Is This a Risk-Free Strategy?

To illustrate based on Sunway REIT’s data, the cut-off date of recently declared quarterly distribution per share of RM0.0227 was on 10 November 2016.  The payment date is on 29 November 2016.

SUNREIT announced the dividend on 27 October and its share price stood at RM1.77 per unit at closing and subsequently, it hit all-time high of RM1.84 in early November. Perhaps some investors might be chasing to invest into SUNREIT before cut-off date on 10 November, hence pushing up the share price of SUNREIT. 

If an investor buys SUNREIT at the high of RM1.84 per unit, RM0.0227 quarterly gross dividend will yield income return of 1.23%. But, if you compare the purchase price of RM1.84 against market price on 14 November of RM1.68, the investor would have an unrealised capital loss of 8.7%.

Is the Total Return still Positive?

Total Return= Income Return + Capital Gain / Loss

Although the income return is a positive 1.23%, the unrealised capital loss of 8.7% will cause the total return to be NEGATIVE!

Investors who are not well-prepared might face a rude shock when a REIT which is a “safe” instrument, delivered a negative total return in such a short span of time.

What Are the Possible Factors that Contribute to the Decline in SUNREIT’s Price?

~Recent plunge in Ringgit Malaysia.

~Recent plunge in Malaysia government bonds’ prices.

~Knee-jerk sentiment following the victory of Donald Trump.

Would Trump’s victory result in less visitor footfalls to Sunway Pyramid Mall? Sunway Carnival Mall? Sunway Medical Centre and many more assets parked under SUNREIT?

Does the decline in share price reflect just noises or fundamental issues?

I will be concerned if the decline in REIT’s prices is attributable to the deterioration in the earning power of the assets under a REIT. If the fundamentals remain solid, there is not much to worry about.

That said, buying at RM1.84 per share may not be a good entry level as it reflects valuation level which is way above past 5-year average valuation.

The key to earning a positive return from REIT is to buy good REIT at an attractive price level. Hopefully, total return will be a positive number in the long run!

Important Wisdom on Equity Investment That I learnt Today

One of the GREAT role models that i look up to when it comes to equity investment is none other than a Malaysian investor by the nickname of 'cold eye' or Fung Shi Ling ( hope i spell his name correctly).

He was born in Perak on 1939. He used to be a senior employee at Nanyang Siang Pau with solid equity investment knowledge & extensive investment experience of about 50 years (Yes, 5 decades). He has conducted numerous rounds of investment talks to share his investment philosophy. He is definitely an authority when it comes to building wealth through equity investment based on fundamental analysis.

I attended his Investment talk today and would love to share the following wisdom that i learnt from the session.  The wisdom shared is useful for investor who wants to build SERIOUS wealth from equity investment.

Note: His 'old' book which contains tonnes of wisdom, You can check out his new book that talks about Sun Tzu principles in equity investment for those who likes to read mandarin book.

Wisdom that I Learnt 

1) Investing into a company's shares means you are participating in the company's business. Your investment will do well if the company generates higher profit and cashflow. Hence, stock picking skill is very important. If the company that you invest into is a loss-making company without recovery prospect, your capital could even vanish.

2) Do not fall into the trap of complicated analysis. He believed that complicated investment methods can be 'transformed' into a simpler method. If the simple method works, repeat the process. 

3) Make more correct decisions and commit lesser mistakes. In other words, if you win more than you lose, you are likely to generate wealth in the long run. He mentioned a 7-2-1 observation, out of 10 investors, 7 lose money, 2 break even and only 1 investor gain profit from equity investment, only 10% is making money!

4) To be a successful investor, we must learn and be good in both TECHNICAL and SOFT skill. He came across some investors who are highly educated with sound investment knowledge, but still unable to generate serious wealth and some even lose money! This due to lack of SOFT skill.

5) Technical skill refers to one's knowledge in analyzing a company's financials and the underlying business. Soft skill is something which an investor need to internalize such as independent thinking, patience and good emotion management. 

6) Investor should invest into companies with earnings GROWTH ( the golden rule in investment). The company must be able to grow its profits and cashflow, then only it could generate higher value to shareholders in the forms of increase in share price and increasing amount of dividends! 

7) No Profit GROWTH= Don't BUY 

8) If there is GROWTH= You can BUY

9) If the company can grow for a LONG period of time, you can hold on to your investment for a LONGER period of time. The longer you hold, the wealthier you are. If the company can only grow for SHORTER period of time, it is better for you to hold on to your investment for a SHORTER period of time only.

10) Invest into the company only if you think you can win! The company needs to be a strong company and you need to buy at an attractive or reasonable price level. Move only if you can win.

10) Before you invest into a company, key question to ask is : does the company have a bright prospect? 

11) If a company's fundamentals deteriorates, investor must know when to change course i.e SELL. Be flexible, be like WATER.

12) Do not be concerned with decline in share price. If a company's business is growing with solid fundamentals, its share price is likely to rise over a long period of time.

13) Do not speculate in stock market. 

14) If  a company has high debt level, it does not mean it is a badly managed company. We need to assess the company's cashflow, if the cashflow is more than enough to pay the obligation and grow its business, it can be a good company.

15) Five golden rules in equity investment i.e growth, return on equity (ROE), dividends, PE (price earnings ratio) and positive free cashflow (FCF).

I will elaborate on the 5 golden rules based on my own interpretation:

Growth

A company must be able to grow its profit, then only it can make more money to shareholders i.e increase in share price and increase in dividends. GROWTH, GROWTH, GROWTH!

ROE

It measures how much profit is generated from shareholder funds. The higher and sustainable it is, the better. If you put in RM1k into a business and it generates RM100 net profit in a year, your ROE is 10%. Make sure you assess the ROE of the company that you intend to invest into.

Dividends

My favorite return from equity investment is none other than dividends. Dividends are real cash paid by the company to reward shareholder, but dividend is not FREE MONEY. We need to risk our capital in order to earn the dividends provided the company is making money and willing to share the profit with shareholders. 

Company that pays consistent dividends is likely to be a solid company. Solid company reduces risk to shareholders.

P/E 

PE refers to to payback period. If you invest RM1k into a business and it generates RM100 profit every year, you will be able to recoup your capital in 10 years time provided all the profits are given back to you as dividends. The lower the PE, the better it is generally speaking.

There is no universal PE range, always check the company's current PE versus historical PE as a gauge. Cold eye might prefer to invest into company with PE of 10x and below, but he is fine with up to 20x PE for a stock with strong growth. 

In my view, PE is not carved in a stone and always evaluate PE on case to case basis.

Free Cashflow (FCF)

A company needs to generate positive operating cashflow. If a company make RM1k operating cash flow, after minus off RM400 to upgrade equipment, you will have RM 600 left which could be paid out as dividends or retained in the company. RM600 is the FREE cash flow. 

Operating cashflow is important, imagine you sell a product for RM1k to a customer and the customer did not pay up, operating cashflow is ZERO. Hence, always check if the company that you invest into is able to collect money from its customers. 

Company that generate sustainable positive FCF is likely to be a solid company!

Happy investing and any discussion is welcome.

4 Secrets of Successful Investors!

Over the years, I realized that as we embark on any investment journey, it is best to have the following in order or to be continuously in order so that we could boost our chances of becoming successful investors.

The sharing below is not meant to be exhaustive, but it encapsulates my general observations.

Good Career or Business

A good career in a growing industry or running a successful business.  

I will share some perspectives on career since I am an employee.

A good career does not guarantee future success. We have to manoeuvre the corporate jungle well in order to achieve work satisfaction and climbing the corporate ladder at the same time.

I have seen people with strong technical skill but going nowhere in terms of career position, those that climb up fast are basically people with strong technical and good soft skill. 

Both technical skill and soft skill can definitely be enhanced over time. Taking up extra course even if it is at our own expenses and read articles on the industry or work that we are involved in. The more we read, the more we learn, the more resourceful we become and the more value we could add to our employers.

Soft skill such as presentation and interpersonal skill could be enhanced over time.

What is an employee’s ultimate objective then?

A well-rounded employee that is promotable to the next level, promotion comes with higher remuneration and more ‘bullets’ to deploy for investment!

Good Life

Good life means a discipline life instead of a messy one.

I do have friends who are not well-organised and their daily routines are unpredictable. They abuse alcohol and sleep late. These routines are perfectly legal, but it might affect the optimal functioning of one’s brain and thought process.

Inadequate sleep might lead to bad investment decision.

A well-organised life should propel us to greater height in the long run!

Good Relationship with Friends and Family

I observed that some of the successful investors are likely to be the one that have cultivated good relationship with people around him or her.

This lead to happiness and happy investors are likely to achieve success!

Good Emotion

I have observed that some of the successful investors that I know seem to have good emotion management. They don’t simply shout and go berserk. They are composed, calm and steady person.

I do know someone who always go berserk and guess what?

She has been losing money on her equity investment and she tend to complain when the share price drop. Unstable emotion could cloud an investor’s judgment.

Ultimately, do build a good career, maintain a discipline life, cultivate good relationship and aim for good emotion management. These 4 factors are likely propel us to greater height!