Investment Strategy for 2013
2013 would be a good year for equity markets, at least according to analysts out there. There seems to be a view that China and Korea are the laggard markets last year and they are going to do well this year. But do remember one year back at the beginning of 2012, not many people are predicting that 2012 would be such a good year for equity markets.
I would caution investors out there as markets had ran up quite a bit in 2012. Therefore, do have a diversified portfolio to ride through 2013. Below are my strategy to approach 2013, in terms of investment work plan:
1. Seek value but maintain overweight position in confident ideas. Though I have avoided most high growth stocks in 2012, it did not affect my portfolio that significantly on a whole. This is because I have added more into those undervalued companies in my portfolio and they contributed to its performance. I will continue to seek value in the market, and add onto my more confident ideas.
2. Keep a lookout for M&A deals. M&A deals are a good way to make decent gains from a stock as normally the acquiring company will pay a premium over its last done price, if they are serious in taking the stock private. 2013 will be more of the same, if one can spot stocks that had been neglected by the market but continue to generate good cash flow and have good undervalued assets in their books. Also, one can expect some s-chips to be delisted as well since some of them are trading at low valuations which makes its listing status unnecessary.
3. Educate oneself. Education is important for a private investor, especially a full-time one as he/she needs to consistently keep updated in order to have a competitive advantage over other investors out there. I would want to spend sometime in 2013 to read some books on investment stuff other than the usual annual reports and circulars.
4. Get people on board, share investment ideas. I had met a few investors out there who are willing to share ideas with other investors, but also some who are keeping much to themselves. Sharing ideas with fellow investors helps one to grow as an investor. One can also learn from other investors' mistakes and as time goes by, avoid making those mistakes. So, don't be shy and share ideas among your own investment group or even people outside the group.
5. Be consistent, don't be affected by market noises. I am sure that there will be events that will affect the markets in 2013, just like in 2012. However, do follow through your investment plan and don't get affected by short term market noises. Don't panic if things doesn't go according to plan. Try to see whether you are still on the right track and if you are, keep on course. Do not sidetrack.
6. Patience. Some investors might want to see instant returns from their best stock ideas. However, we know that it is not possible for every stock idea to turn out well. The key is have patience and not to rush into doing something silly. Volatile markets are the best foe for a long term investor and we need to have patience to ride out volatility.
7. Do exercise. Relax your mind from the markets by engaging in some outdoor activities. Your mind will become clearer and more focused when you come back. Do take a break when you don't have good stock ideas and continue to work hard to find when you come back from your break.
Wishing all investors out there many happy returns in 2013 and beyond!
Labels: Strategy
posted by ghchua at 4:39 PM
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