Reflections of My Investing Journey

While the legendary investor Warren Buffett may make investing sounds simple, very few could achieve exceptional investment returns over the long term as he has. The following sets out some of my reflections for my investing journey for the year.

My reflections are organised into four main topics: Finding suitable stock investments, minimising risk, letting my investments work and the temperament to learn from mistakes. While the topics are not exhaustive, each day has moments of learning.

1. Finding suitable stock investments
Investing in a stock portfolio of quality businesses at reasonable prices tends to produce better outcomes and is more reliable over the long term. Having a portfolio of fundamentally strong companies can help in times of market downturn as it reduces the risk of huge capital loss. Often the best investment ideas are more obvious that what we think. While many may have the idea that outstanding returns can only be gained by uncovering hidden gems, in reality, some of the best long term investments are just hiding in plain sight. They are usually market leading companies $Alphabet-A (GOOGL.US)$, $Amazon (AMZN.US)$, $Apple (AAPL.US)$, $Bank of America (BAC.US)$, $Meta Platforms (FB.US)$, $Microsoft (MSFT.US)$, $Netflix (NFLX.US)$, $NVIDIA (NVDA.US)$, $Tesla (TSLA.US)$ that have superior returns on capital, sustainable economic moats and great long term growth prospects. I find that in considering a new investment opportunity, it may be better to buy more of what I already understand than buy the next hot investment trend. I have often revisited old investment ideas and reinvested in them.

2. Minimising risk
I believe that prudent portfolio construction is important for minimisng risk. In my portfolio construction process, I have incorporated a margin of safety by not buying, at least knowingly, overvalued stocks. I believe in holding a meaningful amount of investments in companies that is resilient in times of economic downturn. I would also limit my position size in any one particular stock $Alibaba (BABA.US)$ no matter how undervalued it appears. The lesson I learn is not to put all my eggs in one basket and avoid the temptation of buying more and more stocks that match my favourite idea.

3. Letting my investments work
I believe in holding long term investments in solid companies that have favourable characteristics in compounding capital at attractive rates. These characteristics include strong returns on capital, favourable growth prospects and sustainable competitive advantages. As far as possible, I have avoided the temptation of discarding investments frequently and trying to find opportunities that might deliver higher short term returns. It is even good to do nothing and let compounding works its magic. The nature of compounding interest is that it takes time. My investment style of patience and compounding ensures that the turnover of stocks in my portfolio is limited. The nature of my approach is that I make decisions infrequently as I believe that I am more likely to get rewarded for patience than for activity.

4. The temperament to learn from mistakes
The market frequently provides us with great investment opportunities to buy and sell at prices very different from our assessment of the fair value of underlying businesses. I learn that it is important not to become emotional about movements in stock prices. The unpredictable nature of the stock market indexes $Dow Jones Industrial Average (.DJI.US)$, $Nasdaq Composite Index (.IXIC.US)$, $S&P 500 Index (.SPX.US)$ and wide fluctuation in prices should not affect my investment decisions. As an investor, making mistakes is unvoidable. No one can become a successful investor without making some terrible mistakes along the way. More importantly, it is necessary to adopt the right mindset to learn from mistakes, correct the mistakes if possible and not repeat the same mistakes. By doing so, it will help me to be a better investor.
$Advanced Micro Devices (AMD.US)$
$American Express (AXP.US)$
$Block (SQ.US)$
$Etsy Inc (ETSY.US)$
$Ford Motor (F.US)$
$General Motors (GM.US)$
$Micron Technology (MU.US)$
$Nike (NKE.US)$
$Pfizer (PFE.US)$
$Salesforce (CRM.US)$
$Shopify (SHOP.US)$
$Snowflake (SNOW.US)$
$Visa (V.US)$
$Walmart (WMT.US)$
$Zoom Communications (ZM.US)$

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不理不理左不理 : Decisions made for selected stocks should be left to grow if you feel there’s room for growth. Often more than oft, decisions to hold takes a lot of courage. Don’t sell on impulse based on market behavior. Hold due to higher growth aspects and you’ll reap more in time to come.

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HuatLady : You have an organised approach to your investment journey which is a winning factor. Stephen Hawking says, "Without Imperfection, you or I would not exist". Hence, I agree that it is alright to make mistakes as long as we learnt from them and do not repeat them again.
Wish you and all Mooers a Blessed Christmas 2021.

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HuatEver : Thank you for the quality sharing of your investments ‘ journey. I believe that that you are a person who follow your dreams and embrace life wholeheartedly without fear.
Good luck and all the Best for 2022.

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HopeAlways OP 不理不理左不理 : That's good advice for long term investing of quality stocks. Patience will reward.

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HopeAlways OP HuatLady : Thanks for your kind compliments and well wishes. May you have a fantastic festive celebration and a great year ahead.

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HopeAlways OP HuatEver : Appreciate your positive feedback and nice wishes. Best of luck for the rest of the year and beyond.

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GratefulPanda : Thanks so much for so generously as always, sharing your wise insights and approach. We could all learn so much from you as to how to approach the markets calmly and rationally, with a solid portfolio construction that will surely yield amazing rewards not only now but undoubtedly in the future as well. Merry Christmas and Happy Holidays!

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HopeAlways OP GratefulPanda : Great to have your support and appreciation as always. Thankfully, I have also learnt very much from all your amazing posts and comments. Wishing you a Merry Christmas and wonderful year for 2022.

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101767718 : It's always good to make some deep reflections like yours to make us better investors

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GratefulPanda HopeAlways OP : Thanks so much for your kind words, I really appreciate. It has really been a incredible privilege to be part of this amazing community with you and everyone else here. Happy holidays and yes! Here's to a Santa rally and a fantastic 2022 too!

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HopeAlways

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Be Hopeful when others are Fearful

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