Managing Risk

The understanding that if one take

higher risk, the greater is the return

would be. Well that does not really hold true, it maybe totally the reverse

the higher risk, the greater loss

would be.

Risk management would entail one to identifying and assessing (the downside) risk, crafting out strategies to manage such risk while maximising the returns (upside potential).

Downside Risk

By managing the downside risk, one would “prudently” manage the major adverse brings along with the investment.

1. Invest with funds that you do not need in near term.
2. Don’t buy from news, sell on rumours
3. Diversify your portfolio, plan out riskier industries (Tech companies) Vs risk adverse (Consumer Staple companies). This would cushion against market volatility.
4. Don’t put all your eggs in one basket. Arguably depends on which angle are you looking at. If the portfolio that you have are able to capitalised the current market trends, why not? However, bear in mind that market changes according to news, rumours and all kind of information.
5. Invest base on facts and not emotions
6. Buy business that you understand and not follow the herd mentality
7. Greed is the ultimate biases over your sound judgement. Don’t let the devil overtake your angel.
8. Don’t listen to market analyst without doing your own research. Getting information from market analyst is one thing, making sure that you do your own due diligent and ensuring that you invest in has a better chance of survival as well as growth would set you for life.

Dos of Investing

1. Start early in your investment career. Its a good way of accumulating passive wealth
2. Know what are you investing in, understand the business model. If its too good to be true, it's probably is
3. Start small, good way of learning up the investing skillset as well as making mistake and be wisely (with less poorer) along the way
4. Only trigger the Buy button when the value is at the fair price. Throughout the period, you maybe a “sleeping beauty”, upon fair price reached, its time to be awaken.
5. Always look at the key management team as they are the one behind every business decision, hence the aftermath of its financial results. Their integrity outlast every economical cycle
6. Look for companies that have strong durable competitive advantage. In order to maintain its competitive advantage, the business either need to keep innovating (Technology related businesses), maintain its economic of scale (Costco’s low prices) or ensuring customers get the right products to their door step (Amazon.com) with ease without the hassle of physical shopping
7. Reading and analysing is part of learning and research process in investing. Without it, is like driving a car without following the traffic rules. You bound to get into an “accident” one of these days
8. Invest on industries that you understand and interested in. As they say, passion sparks when it your interest collide with what drives and motivate you

What makes you tick and drives your passion in investing journey?

For one, It's an amazing “game” when you manage to find the “Home Run” business that would set yourself against inflation for a start, let alone making passive investment into active one.

What’s your advise on Dos and Don’ts in investing?

@TigerStars @MillionaireTiger