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Thursday, January 03, 2013

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!

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11 Comments:

Blogger cif5000 said...

Hello ghchua,

You are requested to share an idea with me...hehehe.

1:32 AM  
Blogger ghchua said...

Hi cif5000,

I would not say idea but some investment themes that you can look out for this year:

1. Myanmar related stocks.
2. RTO of empty listed shell companies.
3. Low interest rate environment, chase for yield plays.
4. Southeast Asia's consumption power.
5. China and US economic recovery plays.

All the best! :)

12:52 AM  
Blogger Peter Thompson said...

Oh, I love the idea of Myanamar! I personally find it to be one of the most interesting alternative investments out there. The country is very rich in natural resources, and it just opening up to investors. I guess the biggest challenge would be to find a stock or investment that captures the theme by being primarily devoted to Myanamar.

2:53 PM  
Blogger Sanye ◎ 三页 said...

Hi Ghchua,

You mentioned M&A in your post. The players in the F&N saga seems acting half-hearted. What is your opinion on this?

Happy New Year

6:30 PM  
Blogger ghchua said...

Hi Sanye,

It seems that both parties are playing a game of chess. We have to wait and see how things pan out. At this moment, it is still not clear who will win the game.

7:32 PM  
Blogger Unknown said...

How do U exercise? May I ask? Thanks

3:22 PM  
Blogger Ashley said...

Hi,

Notice you have Sinobest. Can share if you are going to accept the cash offer
Thanks

7:27 PM  
Blogger ghchua said...

Hi Ashley,

I don't think I will be accepting the cash offer for Sinobest.

10:07 PM  
Blogger Fermina Dazey said...

Thanks for the tips! My eyes zeroed in on #5 because I’ve been guilty of worrying about market noises, only to end up regretting the decision just a few weeks or months later. The 7th tip goes hand in hand with this, I guess. I need to be less stressed about my investments and whether or not it’s having a good or bad effect on my portfolio.

Fermina Dazey

1:35 PM  
Blogger Loyce Parkin said...

Well goodluck on your investment strategy for this year, and hopefully you will be able to garner the profit you are expecting on your portfolios. Well, I should say that my strategy is still weird with binary broker optionbit optionbitsreview.com because the profit am getting is not enough yet. Since we are halfway through the 2013 I wish I could get my trading right.

9:25 PM  
Blogger Share tips said...

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4:09 AM  

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