14 investing learnings to invest better.
How We Beat Wall Street and You Can, Too!
1 | In long-term investing, it is not just sufficient to be a good business analyst, knowing how to find and identify great durable growing and profitable compounders to own for a long time, and also realise what are the true drivers of long-term stock market returns.
2 | It is just as important to know that it is almost never a one way smooth and upwards journey, there will be cycles of strengths and challenges through time, with constant ups and downs.
3 | As a result there could be multiple selloffs with large stock price drawdowns when that happens, and often markets tend to overreact on the downside, and the upside too.
4 | Mr Market will throw his tantrums. He will be excited and overly optimistic, then swing to being upset and overly pessimistic, and these cycles keep repeating like a pendulum.
5 | It is important to put your emotions aside and any price anchoring biases, and focus on the business. Writing helps to clarify, write factually and make logical conclusions. Be a fundamental business analyst, not a technical price analyst.
6 | It is key to differentiate if the businesses can continue to endure through it all and eventually prevail, which determines if you can continue to hold it through, or perhaps even add more to it during periods of price/business weaknesses, when others are frantically running for the exits.
7 | Be aware that power laws exist in investing, even in publicly-listed stocks, similar to venture capital. A very small minority of companies, the multi-baggers, will account for the majority of returns generated by the stock market in aggregate. The vast majority will provide negative to little returns.
8 | Realise that majority of companies are not worth investing in, and truly only a few are. Less than 100+ of the over 15,000+ companies are in our watchlist. You will be saying no a lot, learn how to, get used to it. Set your bar very high to say yes. Aim for the skies, and at least you might get the stars.
9 | Initial allocations matter, subsequent allocations over time too matter as well. Water your flowers, not the weeds. Add to your winners, not double down on your loses. Don’t trim your winners to add to your losers, let them run, high, unless they become too big for your comfort.
10 | Avoid extreme concentration (<10), diversify sufficiently (>20) but not overly diversify (>100) so as to not be wiped out, or significantly impaired. Let concentration be an outcome rather than the process. Never play Russian Roulette with margin/leverage, short-selling, and selling of options, you might do well initially, but there is a very chance you might be wiped out permanently.
11 | Price matters, what you pay for a businesses versus its growth and profitability, determines your eventual returns. Try to pay cheaper for great businesses, but often you might not get the chance, and it is okay to overpay, but don’t grossly overpay. And never underpay for poor businesses, eventually it has to be one fool selling to another eventual fool. To do well in investing, you have to be different, and right.
12 | Luck will play a large role initially but less eventually. If you do it right, your skill should translate into more asymmetric returns over time, i.e. no better than a coin toss. Your alpha and outperformance becomes more sustained, and it becomes clearer.
13 | The power of compounding then takes it to a whole new level you never see, especially over years and decades. Only then you realise that investing well is the best skill that you ought to learn, and the time and money spent is well worth it, and you should have done it as early and as well as you could initially.
14 | Learn from someone who is an actual practitioner and has a lot of his own skin in the game doing it, and has the results thus far to show, rather than from someone who is making money solely from teaching, with little skin in the game, and no results to show.
Bringing back Vision Investing
Due to a strong waitlist of students, I decided to bring back the second cohort of Vision Investing course where I teach live in person via Zoom over six 2.5 hour sessions over 2.5 weeks from 20 Nov 2023 - 5 Dec 2023, how to invest better in single stocks.
You will get to learn together with your peers over intense sessions, and do a final company presentation to put your learnings into practice, and get real-time feedback.
This is only for the committed, the ones who will be attending every single class, and playing with their hearts out 110% each time. You will learn everything you can about investing from me, from over 300+ hours of time to create over 700+ presentation slides of teaching materials just for you.
50% of the net proceeds will be investing in a Giving Back Fund, and of which 20% of the annual gains will be donated to worthy philanthropic causes. You get to learn and are able to give back as well at the same time.
For more information, you can find out more here. You can apply a limited time-only 15% discount code “VISION15” at checkout limited to the first 20 sign-ups.
17 Sep 2023 | Eugene Ng | Vision Capital Fund | eugene.ng@visioncapitalfund.co
Find out more about Vision Capital Fund.
You can read my prior Annual Letters for Vision Capital here. If you like to learn more about my new journey with Vision Capital Fund, please email me.
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Check out our book on Investing, “Vision Investing: How We Beat Wall Street & You Can, Too”. We truly believe the individual investor can beat the market over the long run. The book chronicles our entire investment approach. It explains why we invest the way we do, how we invest, what we look out for in the companies, where we find them, and when we invest in them. It is available for purchase via Amazon, currently available in two formats: Paperback and eBook.
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