How I invest

Principle 1

I invest. I do not trade.

Investing and trading are often treated as the same thing. They are not.

Trading is a narrower game. A trader tries to guess where a share price will go next, up or down, mostly by reading charts. The question is the price, not the business behind it.

Investing starts from the business. It means studying a company in depth: how it makes money, what protects it from competitors, how it is financed and who runs it. I do not try to guess. I try to understand the company I am buying, so that I know what I own and why I own it.

Principle 2

I build for any outcome, not for my forecast.

Over long periods, shares are likely to do better than other assets. Likely, not certain. I accept that uncertainty instead of pretending it away.

So I do not build a portfolio that only works if my view of the future turns out to be right. I try to build one that should hold up whatever happens: if rates rise or fall, if a market I like goes out of favour, if a company disappoints.

“Stop fruitlessly trying to predict the unknowable.” — Jason Zweig, commentary to The Intelligent Investor

I cannot control prices, the economy or the news. What I can control is my own process: what I research, how much I pay, how much I put into one idea and when I act. Accepting how little I control is what lets me be strict about the decisions that are mine.

Principle 3

Either I understand it myself, or I trust a professional.

If I own a company, it is because I understand the business myself, know why I want to own it and have worked out what price is right to pay for its shares. No one tells me to buy. A tip, a headline or a recommendation is not a reason to own anything.

This work takes time, knowledge and the wish to do it. Not everyone has all three, and there is nothing wrong with that. For anyone who cannot or does not want to study companies, the sensible choice is not to guess, but to find a reliable investment company and trust it with their savings.

The starting point

A share is a piece of a real business.

I treat every share I buy, first of all, as part-ownership of a specific business, and I hold that business to the same standards I would if I were buying all of it.

This idea comes from Benjamin Graham, and everything below follows from it. If I am an owner, I need to know the business, the people who run it, the evidence that it can succeed and the reasons behind my decision.

Principle 4

Know the business as well as you can.

I try to learn as much as possible about every company I own: how it works, how it makes and spends money, and what drives each part of it. Understanding is not a one-off exercise, so I follow the company’s news constantly, not only when the share price moves.

Principle 5

Know the people who run it.

A business is only as good as its management. I want to know who runs the company, understand their decisions and what motivates them. Ideally an owner can influence management. When I cannot, I invest only if I believe in both their ability and their integrity.

Principle 6

Demand proof, not stories.

A good story is not enough. Before I invest, I need verified calculations showing that the business can succeed, and solid evidence behind every key assumption.

Principle 7

Decide on your own conclusions, and own the decision.

My decision rests on four questions I answer myself: what are the company’s advantages, what are its current weaknesses, what risks does it face and what opportunities are opening up for it. Once I have decided, I stand by the decision. If something goes wrong, I do not look for someone to blame. I look for the reasons, and learn from them.

The second foundation

Cycles and the bigger picture

Graham taught me how to look at a single company. Ray Dalio taught me how to look at the world around it. I completed the Dalio Market Principles programme at the Wealth Management Institute in Singapore, and I consider his historical research extremely valuable and his conclusions correct.

His theory of cycles in the economy, and his broader framework for how debt, money and the rise and fall of great powers have shaped human history, are very close to my own view of the world. I agree with them, and I rely on this knowledge in my research and in my investment decisions: a good company bought at the wrong point of the cycle can still be a poor investment.

The third foundation

Reading the numbers

Every company I study, I study first through its financial statements. The base for this work is the accounting knowledge I gained in the Financial Statement Analysis programme at NUS Business School in Singapore.

Accounting is the language a business uses to describe itself. Before I form any view on a company, I read its income statement, balance sheet and cash flow statement, check how profit turns into cash, and look for anything the reported figures may hide. Only then do I move on to the story.

Why this site exists

For people who want to decide for themselves

This site is for those who want to understand a company on their own and decide whether to own it. I try to explain each business in the plainest language I can, so that even a non-professional investor can follow what is being discussed and why it matters.

A fair question is why I do this. At this stage the answer is simple: I have put a great deal of work into studying these companies, and I want that work to be useful to more people than just me.