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Monday, August 06, 2012

Journey as a Full-time Investor - One Year On

Dear readers,

It is with both sadness and happiness that I wrote this blog post. Sad because I had been out of job for one year. Happy because I have survived my first year as a full-time investor! I thought I wouldn't have survived for more than 2 months initially, but thankfully, I had made it through the most difficult part - i.e. the first year.

I wish to thank all the well wishes who had posted comments in my blog here. I have met some of you personally at AGMs. You know who you are, and I wish to thank you all for your encouragement that you have given me. Also, I wish to thank all the silent readers out there who might not have posted comments here but are frequent visitors to my blog. A big thank you for your support.

I have learnt a lot during the past one year, much more than what I could have learnt when doing it part-time previously. The initial sadness of being unemployed was occupied by the activities that I have embarked on since I went full-time into investing. I also have more control on my life and I can now commit to my other activities like jogging every week. No more last minute cancellation due to work schedule. There is no bosses to report to and no unnecessary meetings to attend everyday. No need to apply leave if I don't wish to "work". But in exchange for all these, I have lost my income from full-time employment plus CPF contribution and paid company group medical insurance coverage. My skill in IT is also out-dated now. Might not be able to go back to full-time employment if I wish to in the future.

I have realized it and decided to stabilize my portfolio by introducing more value stocks into it. I have not been buying a lot of growth stocks for quite sometime. Preservation of capital and dividend yield becomes important for me. I have more time to look deeply into companies and I am more confident in over-weighting my better ideas. But most important of all, I am enjoying what I am doing now.

Will I be a full-time investor for the rest of my life? I am not too sure about that but I will try my best to continue my journey. It will not be an easy "walk", but I hope to be able to sustain my journey as long as possible. I hope to share with you more adventures on my journey in many more years to come.

Do share with me your comments that you might have here on my journey. Hope to hear from you soon.

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20 Comments:

Blogger JTK said...

Hi GHChua

Time flies! It has already been one year since you became a full-time investor.

Thank you for your sharings and advice. I have learned a lot from you about investing.
I am still learning how to value the business and trying to understand Mr Market.
It seems like good busineeses cannot be bought at cheaper price because Mr Market is quite efficient.

As the market is going up, I prefer accumulating the cash than buying the stocks. What is your view on the current market?

To me, living only on dividend income looks a bit tough. It may be better to have another stream of income.
Maybe you can polish up your IT skills by developing Apps. Or you could join the open source projects.
You can become a consultant too or teach programming languages.

Cheers!

Thank you
JTK

8:06 AM  
Blogger Cory said...

I will be stepping into similar shoe as you. Once retired, we need to make sure we can survive. Returning to workforce is not a realistic option. All the best.

8:10 AM  
Blogger Everlearning said...

Hi ghchua,

After knowing the numbers of share counters you hold, intitially I marvelled how could this be possible, but it did happen with you.

You have embarked on managing your own ghchua's fund full-time, and in actual terms, you are a fund manager.

This month will be my fourth year into equity investments. I remember the very reason why I took this step: to fight the ever-increasing inflation and the ever-declining interest rates. Yes, I experience some positive results.

I believe not only you will survice as a full-time investor, but also shine brightly as a steadfast investor.

6:26 PM  
Blogger ghchua said...

Hi JTK,

I like to stay almost fully invested at all times, regardless of market condition. I don't really have a view on markets, I just want to buy good stocks at reasonable valuation. I believe if one look hard enough, one can still find undervalued stocks to buy even during bull markets.

My skill in IT is actually in software testing rather than development. The skill set for a tester and developer is actually quite different, though most people misunderstood them to be the same. Programming languages is a never ending learning journey. New languages came out, old version gets obsolete etc. I don't think I can actively keep up with the changes when I am not working in the industry. Newer applications even allows one to map requirements into application languages. There is not even a need to code a single line of program. Things change quite fast in IT and I am out of touch now. It will be very difficult to keep my skills up to date as a part-time IT professional.

Hi Cory,

I agree with you. Which is why my focus now is to strive to be a better investor rather than trying to upgrade my employment skills.

Hi Everlearning,

As always, thanks for your encouragement! Great that you have experienced some positive results to date. Keep it up and stay on your journey!

9:31 PM  
Blogger Siobhan said...

Hi! Great site! I'm trying to find an email address to contact you on to ask if you would please consider adding a link to my website. I'd really appreciate if you could email me back.

Thanks and have a great day!

12:40 AM  
Blogger hyom hyom said...

Hi ghchua,

When you talk about the pain of being jobless, I can feel the pain too. Being jobless is no stranger to me as it has happened to me more than once through no fault of mine (Mr Free-Market is quite cruel). I think you know how much we share in common in our private correspondence.

Since you love investing, I am sure you will be happy as a full-time investor in the long-term. Those who read your blog and your posts on sgfunds know that you have good money-management sense. Your savings should serve as a buffer during the lull period as an investor when the money does not roll in. Do tell us what happened in your second year as a full-time investor.

11:21 PM  
Blogger ucypmas said...

Hi ghchua

Its great to see that you are still active and blogging even after your "retirement". Investing for a living is a life-long undertaking indeed! I personally look at your portfolios for ideas that I could investigate further.

About your investment strategy, have you thought about "slowing" down a little and accumulating more cash. A few reasons why you might want to consider doing that

1) additional cash for emergencies as you no longer have an active employment income. I hope you have personal hospitalisation cover ready. If not go buy one today!

2) To "force" a change in your approach to the type of shares that you would buy given that you are no longer drawing active income? Sometimes a little delay can help you think things through?

3) Your portfolio it is certainly large enough to provide a reasonable amount of cash every year (from churn, cap gains and dividends) - but to improve durability and performance you can perhaps consider even reallocating some of the counters that you currently hold and overweight those you find undervalued or with defensible yields. This is probably against your current method but still something to think about.

I wish you all the best going forward and I personally hope to be in your position as well in 10 years time!

11:13 PM  
Blogger ghchua said...

Hi hyom,

Thanks for your comment. Yes, I will certainly share with my readers my adventures as I go along as a full-time investor.

Hi ucypmas,

1) I do have some cash in hand. These are not part of my portfolio as they are not supposed to be invested. Yes, I do have hospitalization plan bought using my CPF Medisave.

2) I have changed my investment approach a little since I started doing it full-time. I have bought in more value stocks and had not been buying growth stocks for quite sometime. I have also started to sell off some of those speculative stocks in my portfolio.

Yes, I am doing the above slowly and hopefully with time, my portfolio will be more robust and income generating.

3) Yes, I have already starting to do that. In fact, if you have observed, I have not been adding much new stocks. I am just buying those stocks that are mostly in my portfolio. Reallocating some of these counters will take sometime. I will not attempt to sell all the lousy stocks in one go. Rather, I prefer a slow and steady approach whereby I get rid of them slowly by first reducing my exposure to them with a view of eventually getting rid of them completely and reallocating them to my better ideas.

The above will take quite sometime to implement.

12:00 AM  
Blogger Kong Karen said...

Hi ghchua,

I am also jobless. Just quitted my job as COBOL programmer in May 2012. Trying out at investment now.

Tester and programmer faced the same problem. When age catches up, the IT skills can't keep up and an old programmer does not get much respect and is not valued at all. Wasted so many years in the IT industry and achieved little. Quite pathetic.

Hopefully I can gain some insights from you in investment.

8:59 PM  
Blogger ghchua said...

Hi Karen,

Unfortunately, that is life in IT. Of course, we can upgrade our skill set to the latest technology. But we upgrade and upgrade but yet pay is the same or barely moved. As we get older, even if we have the skills, we might not have the ability to complete with younger ones.

I think you have made a brave move to quit and do investment full-time.

Hope to share more insights with you on investment as well.

1:44 AM  
Blogger hyom hyom said...

Hi Karen,

I hope you will lead a happier life as a full-time investor from now on.

Being jobless is no stranger to me. As an engineer who has been retrenched more than once, I can really feel the pain of fellow technical people like you. For my case, having a sum of money accumulated from good financial habits helped me a lot when I was jobless.

8:26 AM  
Blogger Ben said...

Hi ghchua

It inspires me when you decided to quit your job to be a full time investor. I believe that it must be a difficult decision that you have made.

It has also my dream to be a full time investor who can enjoy "retirement" and do the things that I like. It is not possible to proceed on such plans with a full time employment.

I hope to be able to achieve this in 6 years' time.

I read most of your blogs and have learnt some valuable insights from them. I intend to apply the insights and hope to achieve my target in less than the planned timeline.

Ben

4:11 PM  
Blogger ghchua said...

Hi Ben,

Thanks for supporting my blog.

Yes, it had been a difficult decision for me and I had considered it for a long time. Being a full time investor is not actually a full time retiree. Much time had to be spend to read widely and also attend meetings. Unless you are adopting a passive approach in managing your investment, then you can be considered as retired.

Of course, I can use a passive approach in my investments but I still like the challenge of managing my portfolio actively. The challenge of generating income every month for my expenses with no fixed salary to look forward to at the end of every month.

1:09 AM  
Blogger JTK said...

Hi GHChua

How do you generate income every month from investment?
Do you receive enough dividend every month?

It seems like you may need to do some sellings sometimes to generate the cash.
I have one question.
Is your experience in Software testing useful for your investing?
In other words, can your IT skills be applied to your investing?

If I remember correctly, you mentioned that you applied Agile Software Development Methods to do Portfolio management. I believe it can be used to generate income for every month(Adaptability to change).

JTK

10:00 PM  
Blogger ghchua said...

Hi JTK,

I sell stocks not to generate cash for expenses, but rather to switch to other better investment ideas. But normally, I don't like to switch unless the idea is really good as I can wait for dividend to arrive before investing.

Yes, my income every month is from dividends and sometimes from corporate actions like takeover offers.

IT skills can be applied to investing as well. Programming is systematic, so is investing. You got to have a systematic approach to isolate bugs in your programs. You also need a systematic approach to isolate problem stocks in your portfolio. There is no perfect program in the world, and there is also no perfect portfolio. The key is to minimize major "failures" in your portfolio.

Agile method is useful because you know how much cash (or capacity) that you have for every month (or iteration) and therefore you can plan accordingly. The key is to know your stories and tasks well, do sizing and prioritize them. However, as we know, things change and a good stock might not be good anymore and your cash level might differ from your expectation. Which is why your backlog is very important and estimation of velocity comes in. Don't over-commit.

I use agile not for generating income every month, but to make sure I know roughly how much cash I have and then tackle those stocks which is within my capability. There is efficiency here because the aim is to get all my cash invested at every iteration, just like you aim to complete every story in your board in IT for each iteration.

I hope I make sense here because unless you experienced using agile for IT projects, you might not be able to appreciate what I said above.

I have written some concepts on portfolio management and measurement using Engineering and IT approaches previously. Feel free to re-visit them again.

A Black Box approach to Portfolio Performance Measurement
http://ghchua.blogspot.com/2012/02/black-box-approach-to-portfolio.html

Agile Software Development Approach to Investment Portfolio Management
http://ghchua.blogspot.com/2010/03/agile-software-development-approach-to.html

Control System Analogy of My Investment Portfolio
http://ghchua.blogspot.com/2010/02/control-system-analogy-of-my-investment.html

Stock Market vs Control System
http://ghchua.blogspot.com/2008/11/stock-market-vs-control-system.html

3:55 AM  
Blogger faith said...

Hi GH Chua,

I admire you. You are truly a successful full time Investor. Do you favour value investment or investing for dividend yield? In your opinion, do you think investing in IHH now is value investment? Thank you!

Faith

10:15 PM  
Blogger Yihhtan said...

Hi GH Chua,

I guess not easy being a full time investor. Do you need to cater for you own monthly expense or do you have a family to take care?

I'm working toward your position as well when I'm 50 in 10 years time! I may need more years as I have kids to take care of. But at least for now I have a objective in mind.

Wish you all the best and hope to learn more from you.

Cheers,
YH Tan

10:49 PM  
Blogger ghchua said...

Hi Faith,

I do both currently. I need dividends for my monthly expenses but I invest in value stocks too as I have a long term investment horizon. I don't think IHH is a value investment at current valuation. I think the growth potential of the stock might have been priced in.

Hi YH Tan,

Definitely. I have to cater for my expenses every month from dividends received from my stocks and sometimes through corporate actions like takeove offers.

Thanks for your wishes and hope to learn from you too! All the best in your journey towards your objective.

2:29 PM  
Blogger pang shawchoon said...

Hi can you teach me how to become a full time investor, could you please enlighten me.thx you

1:10 AM  
Blogger ghchua said...

Hi pang shawchoon,

I think I will not be able to answer your question fully with just a reply here because you have asked me a difficult question. To become a full-time investor, much will depend on yourself and whether you think you can do it. For me personally, the most important part is really money management concepts and also experience in the markets.

Speaking from personal experience, when I was working, I was already doing part-time investing to gain experience from the markets. Coupled with good money management habits, I have already accumulated a portfolio which I could start my full-time investing journey. It is not a sudden switch to do investing full-time, but a slow, long and hard journey.

I think for a start, you have to define your destination and stay on course in order to reach it. Don't be afraid to make mistakes because that is where you learn and become a better investor. I have made many investment mistakes throughout my journey but I have emerged stronger from each and every one of them.

Good luck to your journey.

8:08 AM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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