Key Learning from Millennial Money

I find this an undervalue book and thank God it pops up in front of me in the bookstore.

Once you have set the investing strategy, stay with it. Don’t switch to a new one just because the original one has not work for the last year or two.

Value over Growth: Low EV to FCF, low Price to Cash Flow, Low Price to Earnings, Low Price to Sales, low EV to EBITDA

Quality over Junk: High ROIC, high ROA, high ROE, high Interest coverage

Follow the Trend: High six month momentum, high nine month momentum, low volatility

Follow the Leaders: High stakeholder yield, high shareholder yield, high dividend yield, high buybacks

In the book, it teaches you the right mindset which is to have a long term investing strategy. Do not let emotions dictate you during the both market extremes of Greed and Fear. Stay invested in all circumstances. I have managed to invest during the Greece crisis and Chinese stock crisis but I failed to continue my average down of OCBC. I was buying OCBC in large amount during 2015 (if I recall correctly) from $9 to around $10.4+. When the trend turn, I did not exit but continue to buy more at $8+. However, I did not buy more when it dropped to $7+. I switched out when the price recovered to $9+ and in 2017 July is $10+. Sometimes, it is better not to do anything. During the oil crisis, I was too terrified by Swiber and Ezra, I failed to buy McDermott when it dropped to $4. All these are real fear, you do not know when is the lowest and you are afraid to throw good money at the bad ones.  

Apart from rules based investment strategy, you need to evaluate the business model and whether the business has Moats. I was discussing Foot Locker with my mentor and he felt that this company does not have economic moat and it is like a distributor business model. He will rather buy Hour Glass, at least the assets are ROLEX and other branded watches. Hence, I will recommend to use Moats, SWOT analysis and understand business positioning other than looking at the financial numbers.

Investing is fun and it requires a holistic approach to acquire strong businesses for your better future! 

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