"This stock is a WINNER! ALL IN!" The 3 Aces up my sleeves!

For readers who who are not subscribed to my YouTube channel or who simply prefer reading blogs to watching videos, this is the transcript of another recent video I produced.
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During "Evening with AK and friends 2023", I used the example of Master Leong, an investor who liquidated everything else in his investment portfolio and went 100% into Alibaba's stock.

For good measure, he even used leverage.

So, he didn't just throw in his kitchen sink, he borrowed to throw in another kitchen sink or two which he did not have.

100% of a portfolio in a single stock is not something I would have done, no matter how promising I think that business might be.

It just isn't a good investing strategy to me.

To be sure, it is more like gambling than investing.

It reminds me of the movie "King of Gamblers" with the arch enemies at the poker table.

I know Master Leong had to liquidate some of his Alibaba holdings when the stock price hit an all-time low, taking a huge loss.

He had to because he was using borrowed money.



I said this before.

Most of us do not have money gushing in.

So, for most of us, we have to remember the importance of position sizing.

Bite off more than we can chew, we might choke.

We definitely do not want to use borrowed money to invest with.

All of us are happy during good times.

However, how to stay happy as investors during bad times?

Always have three Aces up our sleeves.

1. Appropriate psychology.

2. Appropriate money management skills.

3. Appropriate investment allocation framework.

I have been blogging since 2009 and I have thousands of blog posts.

Sometimes, some blogs could have had unintended consequences.

Some people might have bought stuff I talked to myself about and some even went all in.



I have always been careful to say that I was just talking to myself and that all of us should have a plan, our own plan.

This started as early as in February 2010.

I said this in a blog on investing strategy.

That "it is, quite simply, a question of proportion."

Later on, "eating bread with ink slowly" became popularized by one of my blogs.

I will leave a link to the blog below.

Why do I invest the way I do?

I invest primarily for income.

Investing for income has provided me with a passive income stream during good times and bad times.

It is very comforting and definitely helps to keep me sane.



I have invested in some stocks which have not done as well in terms of their stock prices, but if their businesses are humming nicely and if they continue to pay me, I am happy enough.

I have invested in some businesses which are facing tough times but because I have sized my investments in these businesses according to my own circumstances, even if it would mean a total loss, if it should happen, it would not be a financially crippling experience.

This is especially when I am not using borrowed money to invest with.

So, I am quite comfortable even if their stock prices go down and, in some cases, I am even looking to buy more.

With lower prices, some stocks will look more attractive.

I should be happy.

Why would I go into a depression?

Again, this is especially when I am not using borrowed money to invest with.



Of course, prices could go lower.

However, prices could also go higher.

Our job as investors is not to anticipate what the Market is going to do, although I try to engage in a conversation with my schizophrenic bowling ball from time to time.

Our job is to have a plan on what to do if Market should do something.

So, if something were to happen, we act.

We can prepare but not predict.

So simple, right?

Simple but not easy, I know.

In closing, I would say that for those of us who get heart attacks from seeing prices plunging, we are probably more into prices than values.

It could also be that we have used up all our war chests too early.

It could also be that we have sized our positions badly and we are stuck with having too much of one bloody stock.

Bloody from bleeding and not profanity, of course.

Whatever it is, look at a bad situation as a learning experience and try to do better henceforth.

If AK can do it, so can you!

Reference: 
How to have peace of mind as an investor?