A Million Dollars Lesson

Investment Process, Luck, Market, Psychology, Risk, Strategy

In investing, knowing what not to do is more important than knowing what to do. But since we don’t have all the time in the world to make all the possible mistakes to figure out what not to do, the best way is to learn from other’s mistakes.  In What I Learned Losing A Million […]

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Why Negative Thinking Makes You A Better Investor

Decision Making, Investment Process, Psychology, Risk

What does going into space and investing in the stock market have in common? Both activities engaged in a high risk, high uncertainty environment. Whereas astronauts have to deal with the risk of 526,000 gallons of propellant blowing up beside them during takeoff or the shuttle disintegrating during re-entry into Earth’s atmosphere at 7.8 km […]

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15 Investing Lessons

Circle of Competence, Decision Making, Expected Value, Filter, Investment Process, Opportunity Cost, Portfolio, Probability, Psychology, Risk

1. Experience may not be a good teacher Most elderly who died in Hurricane Katrina dies not because of their health, but because of confidence and denial. They have survived several hurricanes over their lifetime, so they believe Hurricane Katrina is no exception. Experience can create a close attitude that prevents us from seeing things […]

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Do You Understand the Business?

Circle of Competence, Expected Value, Investment Process, Psychology, Risk

“Buy things that you understand”, “Stick to what you know”, or “Stay within your circle of competence” – We hear these advises all the time so we don’t invest in stocks we know little about. But what define understanding? How do we know if we truly understand a business? If I know Apple designs, develops, […]

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Find Your Edge


Analysis, Circle of Competence, Contrarian, Independent thinking, Investment Process

In my previous post, I wrote that to achieve outperformance or above-average returns, your investment process has to be ‘unconventional’ compared to the majority. And that can only be achieved through originality, independent or contrarian thinking, and making connections from disparate information.  Bill Miller, the former Legg Mason portfolio manager, emphasizes the importance of making […]

September 15, 2019

Scale Economies


Analysis, Moat, Scale Economies, Strategy

Scale economies is one of the seven moats of quality companies.  Scale economies mean the fixed cost per unit falls as volume increases. Fixed cost is indivisible. And indivisibilities are more likely when an activity is capital intensive. The 3 main sources where scale arises are distribution, manufacturing and niche market.  A dense distribution network […]

September 2, 2019

10 Lessons on Moats


Capital Allocation, Compounder, Moat, Strategy

Moat is independent of market size The common misunderstanding for moat like scale economies is that it only exist in large markets. While a company has to reach a certain size to achieve scale advantage, it is in relative to the size of its competitors, not the size of the market. A company that is […]

July 25, 2019