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Archive for the ‘Fundamentals’ Category

table

Accurate as of 31st December 2013

Initial Net Asset Value: $10.00

Net Asset Value as of  31 December 2013: $17.40

dec

Hypothetical Growth of $10,000 invested since September 2011 (NAV at September 2011 was $9.71)

* A total return index is an index that measures the performance of a group of components by assuming that all cash distributions (dividends) are reinvested, in addition to tracking the components’ price movements

* I have changed the benchmark to the iShares S & P 500 TR Index to reflect the fees of a index fund. NAV is calculated net transaction costs and tax.

* As of the first quarter FY 2014, the reporting date has been shifted to the last trading day of each month e.g. 31st December 2013.

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In this letter, I thought I take a break from tradition and not talk about the performance of the fund. Instead, I like to share the experiences I had over the past 18 months, the conclusions I’ve drawn, and where I am personally taking my life in future.

The two most fundamental things which exist for us are time and money. We study hard to get a degree, work hard to get a good job to help us attain the financial capability that we desire. In return, we exchange our time to achieve this goal. People with money have the opposite “problem”. With enough money, they can purchase “time” by hiring people to work for them, to do their chores and to settle their problems.

A word on investing. The prudent management of your money, combined with frugal spending habits, in the long run will make you a rich person. Not filthy rich, but rich nonetheless. The problem with this is that it requires (1) a sizable amount of capital to begin with & (2) a considerable amount of time in the length of decades.

Depending on your goals, your current financial standing, and your resources, this may suffice. However, underlying this is the assumption that you and I are going to live for a long time, and that you want to lead frugal lives.

If there’s anything I’ve learnt, it’s that life is unpredictable.

You have no idea what’s about to befall you. Illness, death, tragedy. There is no guarantee that each of us will live to a ripe old age. While I admire Buffett, I certainly do not wish to lead his life. While he draws happiness and contentment from reading annual reports and investing, my own interests vary a great deal from him. I like to live a large life, seeing and learning everything there is in the world, experiencing the different things there are, and trying everything at least once.

Your mileage may vary, and I think the most important thing I’ve realized is that respecting someone is one thing, but idol worship is another. Implanting the ideals of another on yourself will not make you a happy person.

Where does this lead us?

All great fortunes can be traced back to a few industries – oil, finance, real estate and finally, owning your own business. The world is a dramatically different place than it was 50 years ago, and the opportunities really are boundless. Today, at the tip of your fingers, you have access to information from world class experts around the world. You have the ability to tap onto help from people working in different countries. You have the capacity to learn anything that you could possibly want to. Whole industries are undergoing revolution. Just look at traditional business models like retail and publishing – which have been unseated by upstarts like Amazon.

The traditional path which we have been cultivated to believe will work from young to succeed is broken. Built for a different world, the rules of everything are being re-written. Unless you have a specific career that you wish to embark on like medicine or law, there is really little utility in possessing a degree. Bear in mind that I am coming from the point of view that you want to experience all of life, to achieve financial independence, and to be outside the “system” – all at a relatively young age.

I do not purport to have the answers… yet. But what I do know is that the traditional path will not help you get there if these are the things you want. Investing can only take you so far, and even if you are a brilliant investor, and unless you choose to leverage on your talents and work in the financial industry, it is impossible to reach these goals (assuming you are starting out with little or no capital of your own).

In light of all this, I decided to devote the next few years of my life to carve out an unconventional plan to reach my goal. From the fees generated from managing money, I intend to channel it to exploring different avenues and project (think venture capital). It’s a different ball game. But like all investing, there’s always a trade off where you invest you capital. In the end, readers must ask themselves whether their capital is best used investing passively, and where there exists a “ceiling” to their returns (Buffett managed 30% per annum at his peak), or to invest in uncharted waters where the risks and rewards are harder to map out.

I had fun time writing till now. I don’t intend to stop investing any time soon. I love every moment of it. It is one of those truly holistic professions, drawing from every discipline. You can do it every day, and the markets will always find a new way to surprise you. I intend to do this for a very long time.

While it will continue to be part of my arsenal of skills, I intend to take the time to explore different ventures. A new blog will possibly be built to split it off in the future to document this. To end off, I will be blogging much less in the future, and I wish everyone all the best in their endeavors going forward.

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For those who know me, I recently made the decision to switch courses from reading medicine to reading law. This decision was not made easily. However, I believe that it is one that puts my life in the right direction.

When I started this site close to two years ago, I had no idea where this would lead to. What began as a curiosity and interest soon developed into a full blown passion. The ideas that Benjamin Graham introduced, curiosity, honesty, a wilful disregard for the conventional norms and his generosity reverberated with me, providing to me role model to inspire myself towards. They were concepts that not only applied to investing, but life as well.

No matter your age, I am sure that you understand the importance of passion. As children, we have boundless curiosity and a thirst for knowledge. With time, these traits ebb away as we are told to adapt to the “real world” where conformity and results are far more treasured. As current student, I understand the pressure to conform to the pressure of society – to take up a degree or job that you have no real interest in for the money.

And yet, there is a real danger in giving in, in deciding that you have to listen to others. If you start to compromise on your beliefs, there is no end to it. It is no surprise that so many people are unhappy with their jobs. How contented can one if you hate what you are doing?

When I look at my role models, people like Steve Jobs, Richard Feynman, Carl Sagan, Warren Buffett or Richard Branson, they all share one trait – they love their jobs and wouldn’t trade a dime in the world to do something else.

When I was young, I used to admire the smartest and brightest people around me. Those who effortlessly scored top grades, who aced their exams, who made everything look like a breeze. As I grow older, I noticed a change. The people who were succeeding the most in life weren’t these people at all. The people who were excelling in life (not exams mind you) were those who were honest, who had a determination to never say no, who never compromised on their convictions even if no one believed in them. The ability to excel in an exam, or superior intellect while useful, was not pre-requisites to success at all.

Living in Singapore, I understand full well the importance of material wealth. Money gives us a real power and ability to do the things we want to do in life. However, focusing on money alone will not make one happy. In order to do great work, you need to have the passion to sustain you throughout your journey. I know an abundance of friends who are jaded, discontented and am unhappy with their lives despite landing prestigious degrees or jobs. I truly believe that if you can do great work, and offer a valuable service to others, the money will follow. Life simply does not work the other way round.

Inspired by Benjamin Graham, I believe that I have found something that I intimately connect with, that gets me excited everyday to wake up to, and something that I believe that I can excel in professionally in the future. To those who have not found something that they love, please keep looking. While it is not easy, take solace that you are not the first in this journey. Ultimately, if you can believe in yourself, that’s all it takes for you to succeed.

 

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Accurate as of 17 August 2012

Initial Net Asset Value: $10.00

Net Asset Value as of  17 August 2012: $10.40

Hypothetical Growth of $10,000 invested since September 2011 (NAV at September 2011 was $9.71)

* A total return index is an index that measures the performance of a group of components by assuming that all cash distributions (dividends) are reinvested, in addition to tracking the components’ price movements

** Unfortunately my computer crashed and I lost the data for the 3rd Week on June. The month of June reflect the closing prices on the 5th July 2012.

Portfolio Net Asset Value will be updated monthly at the end of the third week of each month.

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