Month: February 2017
First blog post! I shall speak a little bit about myself. This will also be used in the about me page.
Like many people, I got interested in investing after working for a few years and started to think about what to do with my savings. As the title of my blog goes, my full-time job is as a locum optometrist travelling around Australia, a job which I love. I studied a Master of Business after my Bachelor of Optometry and upon completion, I went to a seminar about entrepreneurship and investing in the sharemarket. While I went there for the entrepreneurship part, I actually became intrigued by the investing talk as the speaker talked about fundamental analysis. I grew up in an environment where I was told that the sharemarket is like a casino and basically just buying pieces of paper. I was told to be cautious to stay away. After learning that there is much more to the sharemarket and company analysis, I embarked on my own journey to reading as much as I can about investing.
The internet is a great thing with many resources but it can also be confusing. The more I read, the more confused I became as the topics were broad from momentum based investing, growth investing, value investing, arbitrage etc. All this to a beginner was overwhelming and took a lot of time to understand. The books that I initially started reading were all about growth investing, PEG ratios, quality, EPS growth, revenue growth and I got enticed to research more as I read about the 10, 20, 50, 100-baggers. While I never fully understood the whole idea, I began tracking a few companies that I thought matched what was being described in the books as great investments. It was very exciting to see the stock chart as it kept going up and up and after a while, I thought I was ready to do it with my own money. Lucky for me, before I put in the cash, some of the stocks I tracked went down in value by 30-50%. As I looked back, I realised that many of those stocks had high expectations of their growth and earnings already built into the price that when reality didn’t meet those expectations or when things turn south, not only does the earnings drop but so does the P/E.
During that same time, I started reading some research articles about value vs growth and I decided to read some books on value investing. Being a bargain lover and only buy things that are on sale, the ideas naturally made more sense to me. At this point, I should probably clarify that by the term value investing, I am probably meaning contrarian strategies, as most will argue that all investing is value investing (i.e. buying a company at a price that is lower than its intrinsic value). So that means looking for companies that are unloved, out of favour or in a depressed cycle. I liked the idea that these companies are so unloved that all the bad expectations are built into the price, and if I happen to stumble upon a company where things are not actually that bad, then good things may happen when the cycle turns. I like the idea that we look on the downside first before thinking about the upside. So I started monitoring such companies. Maybe because of the experience with the growth stocks that dropped 50%, I was slow and scared to get involved and missed many opportunities with companies that survived a down cycle and recovered.
Currently, I humbly say I am just at the early stages of my learning curve as a value investor and hope to use this blog as a platform to post some ideas that I been looking at. I definitely still have much to learn, so please comment my posts to correct me if I am wrong. The journey has been bumpy as I invested in companies ranging from ones that went into administration to some net net’s that went up 200%. I will mainly be looking at the small cap space of the ASX as that’s where I believe will have the most opportunities due to lack of media and research. I am also of a tiny enough net worth to take advantage of the benefits of investing in small caps.