I know this is a little early, but I’m pretty excited. August has been a fantastic month. AMD, Amazon, and Nvidia have been crazy. I have broken the $200,000 barrier on my gains.
This feels so good because its the culmination of years of wandering around struggling how to make money in the markets. I started from the age of 16, but never made serious gains till now. Something finally clicked in 2020.
I got my $700,000 in late 2017. I didn’t plow that all into the US market right away, and a lot of it was in cash till I figured out what to do.
I did my best to read and prepare myself. I bought a Wall Street Journal subscription, read the investment classics like the Intelligent Investor, One Up on Wall Street, How to make money in stocks, and many more. Most books have all sorts of systems and rules. What is the P/E ratio to buy, raising EPS, stay away from cyclical stocks, etc. But it didn’t work.
More often than not, after inputting all the “approved” values, the stock screener would throw out the names of unknown losers. After decades of horrible investing, I come to a realisation. All the work doing valuation, reading annual reports, and following charts and price targets was completely useless and a waste of time.
I couldn’t have come to this conclusion while I was working. There was no time to think about how I was investing. I concentrated on my career, and put my savings in “gems” such as Keppel, Singtel, and Golden Agri. My life savings were held in these absolute losers that analysts were praising, often because they point out valuations were cheap. The cheap anchoring bias is a huge drag on returns, and still going on today in the local Singapore market now.
A Shift in Thinking
If I had continued that line of thinking, I would be in the red by now. Like most other SGX investors, I would be frustrated and angry.
But I discarded all of the rules and simply bought what I used and like. I dropped the idea of profit-taking, which is just stupid. I stopped listening to the news and analysts with their price targets.
It’s amazing to me that a lazy and forgetful strategy works. All you literally need to do is keep buying into the S&P ETF or stocks you like, and forget that you have it. By being lazy, you automatically put funds in. Forgetfulness is invaluable because panic selling won’t affect you.
The results are $200,000 from a start of $358,000. A gain of 56%, which the vast majority was made in the past 6 months. There is more because I don’t count the unrealised gains and bond returns, which should reach another $100,000.
Warren Buffett Isn’t a Value Investor
I do worry if I’m getting overconfident. The tech bull run can’t run forever, and there will inevitably be bumps on the road. But even then, I can adjust. There ‘s something I noticed about Warren Buffett. He isn’t a value investor. He bought Apple and gold, both investments he used to shun before, and are by no means cheap. However, he was willing to change and didn’t cling to the nonsense of value investing. And he is doing better. Berkshire had underperformed the S&P 500 for 10 years. That should change because Apple was a big winner for him. I’m willing to do the same and shift depending on how the environment calls for it.
And right now the environment is saying to hang on for the ride.