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The path to millionaire portfolio ?


It was the May Day public holiday. My deal maker friend just parked his shining Lambo sports car. It was a far cry when I  first knew him 8 years ago. He has since risen to be one of the top deal makers in Singapore and now stays in a big bungalow with a swimming pool. 

He shared with me some of his thoughts behind his success, which I further distill it here for easy understanding. 

Is the "secret" of his success applicable assuming you are just destined to be a normal investor like me? I gave it a long and hard thought and felt that it can be distilled into a few lines. 

1. Focus on your core area of competence. 
2. Once you have done your due diligence on your target, put all your eggs  in it. 
3. Let go of the target when the growth story is no longer there. 
4. Repeat point 1 and 2 again a few times.

Let me give you a simple illustration for better understanding of how I should apply it to my SRS portfolio in "theory". 

Assuming I have done my homework and identified Breadtalk or Riverstone or UMS as a stock that I like very much because of sound fundamental reasons. I will build up a lot of that position (say $100k) in my SRS account rather than a small tiny position of $5k which bears no significance even if it rises 100%. 

Assuming I am right, the stock doubled in value to $200k and I identified another good counter. I will then reinvest that $200k into the next counter. Again, assuming I am right, the counter will double to $400k. From a start up capital of $100k I repeat this process 4x over 10 years and I will become a millionaire. Obviously I am using an extreme example of puting one egg in the basket but hope you get the idea behind it. 

Is the methodology simple? Yes. 
Is it tough to implement ? Yes
Is this strategy for everyone? No. It should be for someone who has a higher risk profile and tolerance and who knows exactly what he is doing. 
Should I do it? Why not. To risk $100k and get back $1m at the end sounds absolutely fantastic. (Assuming no new capital injection)

What stock should I buy now? One honest answer is that I don't know. Many of my old favorites have run up spectacularly. Even overseas education and UMS are doing really well but as I said, having a $5k position in both that stock is not going to make me rich. 

I am currently accumulating QT Vascular for a long term play. (Say at least 6 months to one year). Just bought my first tranche of 50 lots at 33c for my SRS account on last Friday. My second buy order of 50 lots at 30c was not filled on Monday. 

This strategy and this stock is not for everyone and it definitely don't qualify as a fundamentally sound stock so I hesitated a lot not knowing if I should share the name of the Company. 

However, I know some of the shareholders who have done a lot of DD into this company. They are very long term players and it does hold certain promise if the product roadmap is approved by FDA as planned. 

We shall see how this strategy pans out in the coming year. I will share more on my thoughts next time. I am currently overwhelmed with work...(what's new?). 

As for you (if you have been reading from the first paragraph till now), find a few stocks that you believe in and buy it big! And hopefully, it will be a good retirement story for your grandchildren next time!

Happy SRSing. 

6 comments:

  1. In investing, Account Size Really Mattters. Period. - CW8888

    Up to anyone to believe or not.

    ReplyDelete
  2. What are the chances of your preferred stock outperforming the market and doubling in two years? Lets be charitable and say 60%.
    Assuming constant 60% probability what are the chances of doing this four times in a row? 13%.

    ReplyDelete
  3. If one is half as good as Warren Buffet, the strategy will work. The problem is many of us aren't.

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  4. It is not wise for retail investors with full time job to concentrate

    ReplyDelete
  5. The basic assumption here is that one has done his homework and due diligence and knows what he is doing and this is only part of his overall portfolio. Definitely not advisable for anyone who is investing their life savings.

    ReplyDelete