Portfolio revisited

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Well I seldom share with others my portfolio compositions (I think there was a previous entry long time ago) and well, today is a special chance to revisit it once again!

To those new to equities out there - YES, you can lose money in the market. Equities market is not a one way ticket UP. Please bare this important point in mind before proceeding.

Well, the plus points are:

1. You manage your own $$ without giving those sucker portfolio managers advisement fees
   
2. You are forced to learn what is going on instead of relying on those "so-called" professional fund managers
3. It feels damn good to make $$ (and also damn pain to realize loss; double edged sword)

Ultimately, all sorts of investments all revolve around two perimeters: risk & return. The higher risk you take, the more potential return you can unlock. Notice I used italic on potential returns, for they are easily substituted with potential losses. So from my portfolio, you can see that some of my holdings are doing okay, some are not - its all part of risk & return.

Notice one of the holdings: F&N is about 17% up since I've got it during the Japan's Earthquake/Nuclear Crisis. This holding perfectly fits into the risk & return perimeter - the more risk you are willing to undertake, the higher potential return you can unlock. Of course I am not saying that all of you all should undertake so much risk that I undertook, but a certain amount of risk taking is still necessary to do well in investments.

No one could foretell precisely if Fukushima incident would spread all over Japan and the Asia region but history tells us time over time equity markets usually overreact due to risk/loss adversion, especially during catastrophic events. Therefore, as Warren Buffett agrees with, it is usually rewarding for investors to take some calculated risk and invest in adverse scenarios. The catch to manage your own risk and return perimeters is firstly, to manage your own fear and rationality.

So does it mean that since there is potential loss (as you can see from my holdings in Wilmar International Holdings), should I just shun the equities market all together and leave my money in fixed deposits/mutual funds?

1. First, compound growth rates of equities outperform fixed deposits substantially over time - yes, over a long time horizon, eventually.
2. So long as you are not investing with margin (i.e. borrowed money that has to be repaid asap), you can wait over the long horizon as mentioned in point 1, hopefully that the share price will recover eventually to the level you bought (So long as you did not buy them at some crazy price level)
   
3. The company's you bought should comprise of some decent and dedicated management. Only good, honest and experienced managers can eventually recoup your paper loss. The risk here (for new and sometimes experienced investors) is buying into a crooked company and having your hard earned $$ squandered by these crooks on corporate jets etc.
   

A lot of people tell me they do not have cash/time/effort to invest/learn to invest. I think ultimately, its up to you will and what expectations do you have in life. Some people is perfectly fine to find income security within a job and I must emphasize this is not wrong. Different people simply have different expectations/wants in life.

To conclude, I think we should not take investing like a

1. Sure way to make $
2. Gamble
3. Irrational & over expectations

But to see as a complement to your job to attain your financial goals faster in life.