Think Like The Great Investors

Recently, I read this book called Think like the great investors. The first chapter of the book says that women are better traders than men because they are less over confident.

Personally, I think stock picking is all about making good decisions and good decision making features two key elements.

1. Fact Finding

Prior into jumping into to buy a stock, we should already do our fact finding. Personally, I will read up the past annual reports and gather as much facts as possible.

Using the facts I gathered, I will perform my own analysis on the company to decide whether it is a good buy. There is still much room to improve on my stock analysis. One of the missing step I made in earlier analysis was the lack of comparison of stocks in the similar sector. For example, we should comparing performance of Sheng Siong Group Ltd versus Dairy Farm rather than only doing a stock analysis on Sheng Siong Group Ltd.

I have identified this gap recently in my analysis of Starhill Global REIT by comparing with SPH REIT. By comparing the dividend yield between Starhill Global REIT and SPH REIT, Starhill Global REIT is a better buy if we are focusing on the yield. Of course, there are other factors to take into consideration as well.

Below are some of my earlier analysis done for stocks in my watch list.

My Personal Analysis of ST Engineering

My Personal Analysis of Boustead

My Personal Analysis of Sheng Siong Group Ltd

My Personal Analysis of Nam Lee Pressed Metal

My Personal Analysis of The Hour Glass

My Personal Analysis of Challenger Technologies

My Personal Analysis of Nera Telecommunications

My Personal Analysis of Kingsmen Creatives

My Personal Analysis of Starhill Global REIT

2. Have an Appropriate Level of Confidence

Once we have gather enough facts to support our decision, we should have an appropriate level of confidence. However this is not enough.

The following is an excerpt from the book I mentioned.

We all tend to have a strong belief in the superiority of our own decision making ability relative to that of others. This strongly reinforces our belief that we can control our own destiny and therefore builds out illusion of control.

How sure are we that the buy or sell decision is not an illusion of control? I will think that we should seek a few other people’s point of view. This reaffirm our decision although there may still be a possibility of error.

No one is perfect, am I right?

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