Developing Investment Philosophy

It's already slightly more than halfway through the second month of 2019. As I've mentioned previously, I've just started investing directly in the stock market back in June 2018. When I started, I thought I would be a value investor, just like Warren Buffet. It is hard not to at least try to be like him, or at least say to yourself you want to be like him, and then do completely the opposite.

While I knew back then that Warren Buffet is a value investor, I have acted in the market not like a value investor. Indeed, over the course of less than a year, I have made many moves, too many in fact, that are not typical for a value investor. Indeed, my heaviest realized losses were made during the early periods of my investment.

Here, I will reflect back on how my investment philosophy has changed since last June. I hope my writing will help you to be more successful in your investment, and also help you not to lose money in the market.

Initial Months: Excitement Seeing the Rich Returns

I started my investment journey by acquiring shares of Mi Technovation (formerly known as Mi Equipment) through open IPO via Maybank2U (I described my experience here). At that time the country recently saw the first ever change of government after Independence, and the mood in the market was of high uncertainty.

Yet, the IPO performed spectacularly. I acquired the shares at RM1.42 apiece, and at the time of writing is atRM2.44 (72% gain). At one point it even traded at RM3.25, a whopping 128% increase from its IPO price!

The second load of shares that I bought was also through IPO, this time was from Revenue Group at RM0.37. I bought it through Maybank2U again. At that time, the mood in the market has somewhat improved. Just like Mi Technovation, Revenue Group price went skywards after IPO and I decided to sell all of it at RM0.75 for an around 100% gain.

Later Months: Rapid Loss

I got so confident and started pouring more capita. This time I purchased other shares in the open market. Contrary to the philosophy of a value investor, I bought shares of companies without enough due diligence (I don't think you can never do enough due diligence as it's quite impossible to know everything).

And indeed, it is here that I start seeing the shares. I did this both to lock in the gains, as well as to avoid losses when the price went down. There were also times when I got so emotional at having to sell at a loss, and while trying to win back my lost money, only to make a second mistake and further lose more money. Simply put, the desire to become a value investor has morphed into being a trader.

Slowly I realized that I damn need to be extra careful in the market. It is extremely dangerous and you could easily lose money if you don't know what you're doing (I for sure didn't back then. I still don't now, but I do acknowledge where my limits are).

Next: Should I do a Create a Dividend Portfolio

As I read and read online on the stock market, a way of investing that was attractive to me at that time was to create an investment portfolio to create passive income. Should I buy only dividend-paying stocks now, and pay less attention to their capital appreciation? The thoughts of shifting the strategy indeed stayed with me for a while. I did mentioned it in one of my post here.

Next: Buy Undervalued Companies, or at the Dip

I later found myself reading Philip Fisher's book: Common Stocks and Uncommon Profits. Here, he made a thesis saying that you don't need to be in the investment banking field to be successful stock investor. In fact, you could become rich if you stick to only what you're familiar with. Additionally, he introduced a couple of ways to classify the companies that will guide you on when to buy them.


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Understanding my own psychology, and how I tolerate losses and naturally act in the market takes time. If I have to give myself a praise, I have stayed in positions that are fundamentally sound yet was mispriced, especially when the market was heavily sold off in November in December.