Kim Namjoon Outreach

The older we get, the fewer friends we have. But we don’t need a lot when the ones we got have always got our back. 💞💞💞

Warren Buffett did not invest in NVDA, AMZN, TSLA, MSFT, GOOG, META and he only invested in AAPL in 2016, 36 years after the stock had already gone up 9,400% from its listing.

Yet, Buffett has made over $183 billion from investing in stocks (no one even comes close). He is now the 6th richest person in the world. If you add back the $50 billion he has given away to charity, he would be the 3rd richest in the world.

The Lesson?
1) Never have the fear of missing out (FOMO) on a stock. You can miss out on some of the hottest stocks in the world and you can still do very well with other stocks.

2) Invest only in what you understand and in stocks that meet your investment criteria. Buffett avoided MSFT because of his close relationship with Bill Gates. He avoided TSLA because it was too unpredictable. He avoided NVDA because he does not understand technology well. So, you do not have to win at every game. You just need to win at the game you are comfortable playing.

3) You do not need to get into a stock early to make great returns. Sometimes, it is much safer to get into a stock 10-20 years after IPO, when it has proven itself to be a consistent wealth compounder than to try to bet on new unproven stocks.

Some people don’t seem to understand the big difference between investing and trading . That’s very dangerous 🙉

The trade I posted on $GME is a TRADE not an investment. GME is a dying business with an intrinsic value of less than $1.20. You must be an idiot to invest in this overpriced , decling business

However, I may take an options trade on this stock purely based on the PRICE ACTION with a good risk to reward ratio using options .

We only INVEST in the top 1% of businesses on the world … the other 99% of crappy stocks , we can make quick profits through hit and run … piranha style

This is so true! The more you jump in and out of stocks, the poorer you get and the richer your stock broker gets.

When you consistently accumulate shares of high quality businesses during times of fear and sit on your ass patiently and do nothing, you compound your wealth massively. You get richer and your broker gets poorer😬

The stock market is made up of 2 groups of people

The first group, speculators/gamblers (majority) treat the stock market like a casino.

The second group, the investors (minority) treat the stock market like a supermarket of business that are on sale.

You can make money in both groups. However, to make money, you have to follow a very different set of rules

The Speculation Game

The speculation game is a lot more attractive as it gives the impression that you can get rich a lot quicker. This is true but the chances of making money over the long run is much lower (less than 5% of people end up profitable).

This is the ‘greater fools game’, where you buy something (even if it has little or no intrinsic value) because you hope a bigger fool will pay a higher price than you. That fool has to then find an even bigger fool to sell to.

To master speculation, you have to understand price action, cut losses fast, have strict profit targets and size your positions correctly. Making money is all about finding a statical edge in the markets ( “win rate x average win -loss rate x average loss” is positive)

The Investing Game

The Investing game is less attractive as it takes a longer time frame to generate sizeable returns. However, the odds of making money over the long run are much higher if done correctly (just buying the S&P 500 index ETF over the long run gives a 100% probability of profitability).

The investing game is all about identifying the top businesses that will grow and compound in value over the long run (at a higher rate than the S&P 500 index) and consistently add shares when prices are temporarily undervalued. To master investing, you have to learn how to identify great businesses and value them accurately.

I love and play both games. Which do you prefer?

Many people ask me if the US stock market is RIGGED. Absolutely, the stock market is rigged in the investor's favour.

If you go to a casino, the best odds of winning in any game is less than 50%. In the US stock market, there is a 78% probability of making money on any given year (over the last 73 years)

And if you hold US stocks over the long run, the probability of making money is 100%. This is because the gains from the up years (78% of the time) more then offsets the losses from the down years (22% of the time).

So, if you are not able to make money investing in the stock market, the problem lies in YOU (your psychology) and not the market.

Understanding the impact of fees on to the fee structure of your investments.

Look for investments with lower fees to help increase your overall returns. Additionally, consider the compounding effect of fees over time and how they can significantly reduce your long-term investment growth. By understanding and minimizing the impact of fees, you can improve your financial outcomes and achieve your investment goals more effectively.

Investors often quote Warren Buffett's advice of ' Be Greedy when Others are Fearful' to get a great deal by buying stocks that have fallen way below their previous highs

However, what is often overlooked is to only buy HIGH QUALITY stocks that have declined during a market correction. HIGH QUALITY stocks are the top 1% of businesses that have consistent growth in revenue, free cash flow and net income, a sustainable competitive advantage (pricing power), conservative debt, high return on capital, secular growth drivers etc...

Buying HIGH QUALITY stocks during market crashes almost assures great returns over the long run. HIGH QUALITY stocks always rebound to new highs once the market correction is over

Unfortunately, the great majority of investors blindly buy LOW QUALITY stocks during market corrections. These are the stocks that may never rebound or may keep declining over the long run.

Knowing the DIFFERENCE is crucial to successful investing!

Best method of Setting realistic timelines for achieving financial milestones

Setting realistic timelines for achieving financial milestones involves a combination of careful planning, research, and monitoring. Here are some tips to help you set realistic timelines:

1. Define your financial goals: Before setting timelines, clearly define what financial milestones you want to achieve. This could be saving a certain amount for retirement, paying off debt, or reaching a specific investment target.

2. Understand your current financial situation: Take stock of your current income, expenses, assets, and liabilities. This will help you determine how much progress may impact your timeline, such as economic conditions, market volatility timeline to account for these factors.

3. Monitor your progress: Regularly review your financial goals and timeline to track your progress. If you're falling behind, reassess your plan and make adjustments as needed to stay on track.

Common mistakes people still make during trading.

One common mistake people still make during trading is letting emotions dictate their decisions. Emotions like fear, greed, and impatience can lead traders to make hasty and irrational decisions, which can result in significant losses.

It's important to have a clear trading plan and stick to it, regardless of market fluctuations or emotional impulses.

Additionally, not properly managing risk and over-leveraging can also be detrimental to trading success. It's crucial to have a risk management strategy in place and only trade with money you can afford to lose.

Let's discuss "Securitization"

Securitization is a financial process where an issuer creates a financial instrument by pooling various types of contractual debt and selling them to investors. This process involves transforming illiquid assets into tradable securities that can be bought and sold on the market.

The most common type of securitization is mortgage-backed securities, where a pool of mortgage loans is packaged together and sold to investors as a single security. This allows banks and other financial institutions to free up capital and reduce risk by transferring the credit risk associated with the underlying assets to investors.

Securitization provides several benefits for both issuers and investors to diversify their funding sources, improve liquidity, and reduce their balance sheet exposure to certain assets. For investors, securitization offers the opportunity to invest in a diversified portfolio of assets with varying levels of risk and return potential.

However, securit Investors must carefully assess the credit quality of the underlying assets, as well as the structure of the securitized product, to evaluate the potential risks and rewards. In some cases, complex securitization structures or inadequate risk management practices can lead to unexpected losses for investors.

Overall, securitization plays a crucial role in the financial markets by providing a mechanism for transforming illiquid assets into liquid securities, but it is important for investors to conduct thorough due diligence and risk assessment before investing in securitized products.

The Singapore stock market is more geared for investors who are looking for dividends as compared to capital gains.

Over the last 10 years (2014 April to 2024 April), the Straits Times Index ETF (STI ETF) had a total capital gain of +1.66%

However, if you include dividends, then total return over 10 years is +42.78% return