Hello Tigers~
I'm bringing you a new column: Investment Tips.
This new column will help you find the most powerful and experienced players in the Tiger community, inviting them to sort out and summarize their investment insights and experiences for Tigers.
These experts have emerged as outstanding performers from real trading competitions and are by no means "theoretical." I will reveal their investment "secrets" one by one for everyone to learn and reference.
In the first issue, I will introduce the team of " @谋定后动 （Bill）" to you. Among hundreds of teams in the real trading competition, they consistently enter the top 10 every month, demonstrating their strength!
Bill based in Singapore, a senior IT professional currently serving as an executive in the largest online travel service company in Southeast Asia. With 20 years of experience in IT, he has a unique fondness for tech stocks.
Next, I'll share the "exclusive investment tips" from Bill:
I. Recent Trades and Operations
Bill has recently（updated in October 2023）reduced holdings in Tesla and Microsoft, increased holdings in long-term government bonds (TLT), and Goldman Sachs, and opened a new position in Netflix.
The reasons for reducing Tesla are mainly twofold: firstly, there was already some profit in Tesla, and secondly, Tesla's recent price reduction operations led him to believe that Tesla's profit margin would continue to decline. So, he decided to take profits and reduced the position by 2%.
Microsoft, as the cornerstone of Bill, also had its holdings reduced. Although the faith in Microsoft is high, he didn't seem to mention the specific reason for reducing the position. I speculate it might be due to the recent high stock prices, and he timely made profits.
Bill is exceptionally skilled at judging macro news. For example, he believes that after the Federal Reserve rekindles expectations of interest rate cuts, macro data becomes a variable affecting company profits.
Therefore, you can see that he increased holdings in long-term government bonds and Goldman Sachs. Besides adding fixed-income assets to the investment portfolio, he also positioned for interest rate cuts, hedging against tech stocks.
Additionally, from the table above, it can be seen that Bill, besides regular stock trading, is also adept at options trading. Strategies like Sell Put, Covered Call, and other basic options strategies are part of his routine operations.
Ⅱ.Practical Trading Methods
1.How to Select Stocks
Bill employs four main techniques in stock selection:
A. Different Metrics for Different Companies: For instance, when considering Tesla, the focus is on delivery metrics since the demand for Tesla cars is high. In an economic downturn, besides production capacity, inventory, and profit margins are also crucial.
B. High Media Visibility: Stocks with high media attention provide a wealth of information from various sources, presenting both crises and opportunities.
C. Observation Period of Over 6 Months: Stock selection involves observing stocks for a period of at least six months, collecting data and studying fundamental information.
D. Investing in Stocks with the Strongest Certainty: Bill advises putting investments into stocks with the highest level of certainty.
Using Tesla and Rivian as examples, he explains that Tesla's established position and recognition in the electric vehicle industry make it a more certain investment compared to Rivian, which seems to be catching up.
2.Investment strategy
Bill primarily uses the wheel strategy for investment, earning the time value of options.
In simple terms, this strategy involves incorporating options into stock investments. This allows for earning time value during periods of stock stagnation and buying stocks at a lower cost during declines, thus reducing overall costs.
While not delving into the details here, Bill highly recommends learning about this strategy. He has dedicated an entire article to it, and readers can learn about it by clicking here: Using the wheel strategy to become a time arbitrageur.
3.Portfolio Management
For a successful investor, portfolio management is crucial. Bill has his own principles regarding this aspect.
A. Planned Position Allocation: For instance, during weekends, it's essential to plan the percentage of stocks to be invested in, such as 20% or 10%, and allocate it in advance. This isn't trading time, so there's plenty of time for thoughtful consideration.
Once decided, use an Excel spreadsheet to list the stocks and calculate the number of shares based on the percentage. After calculation, execute the trades according to the plan. Bill believes that adhering to these trading plans often yields positive results.
B. Control the Number of Positions: The total number of positions should not exceed 10. Having too many stocks leaves insufficient time to track their financial reports and fundamentals. Therefore, it's necessary to close one position to open a new one.
Of course, if the logic behind a stock investment changes, such as a shift in fundamentals or a financial report shock, the position will be closed. Moreover, in principle, re-entry at a low stock price is avoided.
4.How to Deal with Stock Crises
Even seasoned investors like Bill have faced stock crises. He once bought Meta at its peak and sold when it plummeted, a move considered cutting losses.
In dealing with such stock crises, Bill is resolute: "Remove the mindset of luck; stocks require decision-making and immediate action."
5.How to Read Financial Reports
Bill employs a two-step method for reading financial reports:
A. Smart Use of Tiger Trade app: Tiger Ttrade app neatly organizes financial information of many listed companies. Bill checks Tesla's financial report interface for data like delivery volume, profit margins, and inventory.
B. Download the Complete Financial Report: For crucial financial reports, he personally downloads the complete reports and occasionally watches relevant YouTube videos to understand other investors' viewpoints.
If you're not adept at reading financial reports, you can click on US Stock Financial Statements for Beginners
6.Managing Investment Emotions
Possibly due to his long IT background, Bill is highly rational and adept at handling investment emotions. He believes, "Using spare money for investment is a good approach."
Too much attention brings chaos, and the more the funds, the greater the stress. High stress leads to more mistakes. This is true not only for ordinary individuals but also for experts and geniuses.
Without this pressure, you can make sound judgments. Even if you face significant losses in investment, it won't impact next month's mortgage or your child's living expenses.
You can view investment as a hobby, but it's advised not to place all your life's hopes on it.
III. Advice for Beginners
Speaking of advice for novice investors, I've organized the viewpoints of Bill into the following three parts:
1.Start with Low-Risk Investments
Bill suggests that beginners can begin with broad market ETFs or Reits. The volatility and risks of these assets are relatively low. After gaining experience and understanding of these investments, one can then venture into higher-risk investments, increasing the chances of success.
2.Options are the "Seasoning" of US Stock Investment
Bill sees options as the "seasoning" of US stock investment. Just a sprinkle can significantly alter the taste of the entire soup. Many experts in the Tiger community excel not only in stocks but also in options.
It has to be said that mastering some basic option strategies indeed makes your investment portfolio more diverse.
For Tigers who are not yet familiar with options, you can click on the official course to learn, and within a short time, you can catch up with the experts: Tiger Options Tour For Beginners
3.Investment turns knowledge into profit
For novice investors, elevating awareness is more important than hastily entering the investment arena. After all, it's challenging to earn money beyond what you know.
When investing in international markets, distinguishing the investment logic of different markets and establishing an understanding of each market is crucial. For instance, Bill believes that the investment logic of US stocks is different from that of A-shares and Hong Kong stocks.
In US stocks, the key lies in fundamentals and macroeconomics, while A-shares and Hong Kong stocks are more influenced by policy factors, making it impossible to quantify with numbers. This has given rise to technical analysis. With more institutional investors in US stocks and fewer retail investors, Bill advises novice investors in US stocks to avoid spending too much time on technical analysis, as it can easily lead astray.
IV. Recommended Investment Books
I'm sharing with you some book recommendations from Bill. Tigers interested in these can buy and read them:
Wu Jun: "Pattern," "Attitude," "Persistence"
Li Xiaolai: "Financial Freedom"
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