Subscribe to RSS feed My investment strategy

Updated: 26 Jun 2016 By evankoh posted on 15 Mar 2015  -  5,469 views

I generally prefer a buy and hold approach. It is because I view shares of companies as entitlement to profits, and profits of good companies would only increase over time even if their short-term share price fluctuates. Also, capital gain is not recurring income whereas dividend gain is, and the latter is important to me since I am investing to retire.

Of course, the question would be how to differentiate "good" companies from "bad" companies. Here, I would like to hypothesize that in a capitalist economy, a company with strong capital can attract good talent, invest in better technology, etc. would statistically have a better chance of being a "good" company. For any statistics to work, it would need sufficient samples. That is, investing a little in numerous potentially "good" companies is statistically better than investing a lot in a few potentially "good" companies.

Having a portfolio that consists of many companies across many industries in different countries is also great for reducing systematic risk. I use Beta to measure the systematic risk my portfolio has. I try to keep the Beta of my portfolio close to 0. In the short term, a portfolio with Beta close to 0 is less sensitive to market movement and hence has smaller portfolio value fluctuation.

In summary, my strategy is simple. Build a portfolio of Beta close to 0 consisting of well-capitalized companies across industries and countries. I prefer to buy stocks when their RSI indicator is low (close to 35) because it is an indication that they are currently undervalued. I rarely sell stocks after I buy them. I also have a tendency to purchase stocks that are paying good dividends now because that is an indication of good cash flow.

What about you? Care to share your investment approach?


Next Article > < Previous Article
How "unlucky" can you get from ... How to use SGXcafe?

List All Articles Other articles by evankoh

Invisible Updates
On average, I spend one to two hours a day working on SGXcafe. Sometimes, the features added are large and obvious. At other times, they are essentially invisible to most users. Today, I would like to share a few "invisible" feature updates that have been made recently. 1) Desktop view on mobile phones As mobile phone screens become larger, there have been requests to view the standard desktop view ...

The Great Migration to StocksCafe
The migration of SGXcafe to StocksCafe will happen this weekend! This is more than simply the changing of domain names. When I first started SGXcafe, it was meant for myself hence I simply dumped everything onto a single server. That was easy and convenient, but certainly not robust nor scalable. I have spent the last few days designing and configuring a brand new multi-server infrastructure and now ...

MemCached For A Faster StocksCafe
Since the drastic move to re-architecture StocksCafe and adding support for two new markets at the same time in April, StocksCafe website have became slower. I am aware of that and have been taking significant amount of time trying to improve it. To be very honest, I am not 100% sure what is the true cause although I am inclined to think that it is due to a summation of reasons such as poor database ...