Friday, March 26, 2010

Reflections On Stock Picking: Circumstances more than Choice

Nothing much happening this week. The stock market has been rather muted. According to one journalist, most people here were interested more in the property market. In fact some of the celebrities who were here for a charity show, bought a few units worth millions.

The portfolio performed alright, with Biosensors in a continued down trend due to fears that the China market might not be lucrative. Action Asia touched the $0.20 marked while GMG Global saw huge amounts of shares changed hand and climbed back to $0.155 in trading today. Stratech on the other has been struggling to keep me interested. Let's hope that the story will get better when its financial results are announced.

The Problem With Some Investors
The problem with some investors is that they are very focused on getting multi-baggers. Most of the blogs that do catch my attention are those with an obscure stock that you never thought existed on the Singapore Stock Exchange. That applies to some of the stocks in my portfolio as well - Elite KSB. Ha.

However, the chances of nabbing that wonderful stock is close to one out of thousands to the power of a number of years. As one wit put it, it is easier to strike lottery. Do you really think you can get the next Noble Group, Raffles Education Group or Cosco Corp on better days?

At this point of time, there is probably one stock that I think that can conjure up that same magic, namely Etika International Holdings. Not only is it a good company, it has made several good acquisitions and has a low number of stock outstanding to sweeten the deal. Enough already.

While I enjoy stock picking, I would have to say that I am a small cap investor largely due to circumstance than slant. If I had the money, I would have bought more blue chips as they provide a constant flow of income. The returns from dividends for a long term investor will trump capital appreciation. While studies have shown that small caps generate historically higher returns than the broader market, this comes often and a higher level of risk.

Nonetheless, I admit that the past year in my investing journey has been very kind on me as my small cap picks are showing promising. If you want to know, I invest mainly based on a general feeling of the company and the industry it is in. More importantly valuations matter alot to me. I always try to see if earnings growth matches PE, PB, etc.

Going Forwards, Not Backwards
Going forward, I intend to look for a more direction with regards to my working life.I have been caught up with changes at the workplace and improving my qualifications. Once those courses are completed in the middle of year regardless of outcome, I think I should be working on building some of my language and technical skills.
It has been close to two years since I left the university and I am beginning to see a gap in terms of my income, no matter how hard my money has worked for me, or how much I enjoy my work. When I meet people I know from the  university course, it really feels like yesterday but I hope I am not lost in time. I am beginning to worry how I might get pigeon holed or float just aimlessly for the rest of my life while not realizing the dreams I once had as a boy. I must move forward. Carpe Diem.

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