Wealth Management is an important subject

Wealth management is a very important skill and it is a life long learning journey. Wealth management involves learning value investing, financial planning and wealth creation. Especially, we are at the crossroad where there are alot of disruptions because of high technology. Just look at how Amazon is slowing affecting the business of Kroger and Alibaba’s ecommerce causing headwinds for traditional retail business.

We need to constantly increase our financial knowledge to keep up with time. There are a lot frauds and hypes out there, we need to be able to discern the gems from the dirt. You will come across news which mentioned that even traditional investment will have instances where millions of fortune are lost overnight. Why will even these wealthy guys trip and fall? Shouldn’t they be more privileged with better information than us commoners?

I see that the common problem is we will spend more time on wealth creation and neglect wealth management. The end result is money in and money out. This is highly prevalent in the media, the actors and actresses, singers, sports superstars, etc. They look brilliant on stage but debt ridden in reality. 

In China, there are a lot of speculators (including me at times) for shares and properties. We should learn how to differentiate between speculating and investing. Speculating is gambling, it will be almost equivalent to playing at the casino. My dad always think that I am gambling with stocks. Sometimes but not all the time.

The real value investors must be prepared to walk the lonely path, it is not based on luck as luck will only bring this far, value investors are willing to take the right bat (not bet) at the right time and stay with their decisions for many years until proven right or wrong.

Investors are categorized to the following few:
1. “I know nothing” – some of the retail investors will just listen to tips, have the herd mentality, not interested in fundamental of the business, worship the buy low sell high to profit. Very often, they tend to buy high and sell out at low in panic. 80% of this category investors lose money.

2. Slightly Brighter than the earlier – short term trader type, he tends to stick to the screen everyday , will get excited with a small price movement (+3-4% will get excited, yes, I fall under this category most of the time).  He will do some homework on the companies but not in depth. Sometimes when he is lucky, he will strike a small homerun.

3. The clever type – Medium to long term investor – will hold the shares for more than one year and make himself available for shareholders’ meeting aka AGM.

4. The absolutely brilliant type – Understand the in and out of the business and industry, investing on the potential future returns of the business.

5. The sage – can differentiate between the great and the wannabe, has a portfolio management and investment strategy, once invested, he will wait years to reap his reward.

Most of the retail investors belong to 1st to 3rd category. There will be more pitfalls in investing and we will bound to experience a market downturn sooner or later. We need to continue to read:

1) investment books
2) business books
3) financial reports
4) biographies of great businessmen 

(If you don’t like to read, listen to audio books, or watch videos)

After reading, we need to learn and put them to good use to become our own knowledge. We should be thirsty for knowledge and continuously seek to better ourselves, excel in both wealth management and wealth creation. 



      

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