Some of my friends ask me where they should invest their spare capital (which I attribute to them seeing I work in finance and not to my deeply negative returns). Should they stick to FD, use roboadvisors, buy ETFs or try their hand at picking their own stocks? The short answer is if you can't put in the time to do your due diligence, adopt a passive approach and use a roboadvisor or buy index funds. If you elect to pick your own stocks i.e. the active approach, you will be going up against a ton of highly educated and highly motivated PhDs/MBAs with vast resources. Can you outperform them while holding down your full-time job?
If you choose to adopt a passive approach, then perhaps The Poor Man's Guide to Market Assessment by Howard Marks, Oaktree Capital may be of interest to you to decide when you want to invest more. If you opt for the active approach, I found a reading list that will help you on your journey.
The Poor Man's Guide to Market Assessment by Howard Marks, Oaktree Capital
Buffett once said: “When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something.”
One of my favorite writers, Mr Marks is able to convey ideas and principles in an entertaining, clear and easy-to-read manner. He is the chief of Oaktree Capital Management (fun fact: Oaktree and Navis co-own Evolution Wellness, which owns the Celebrity Fitness, Fitness First and Chi Fitness chains in SE Asia).
Something I have pasted up in my room is his Poor Man's Guide to Market Assessment. To avoid a letter from Oaktree's lawyers, I have not reproduced it here but the link to the memo containing the Guide in page 5 is as below:
I did, however, create an excel spreadsheet for my personal use, which looks a bit like below:
If you find your checks mostly in the left column, then you should hold the trigger on your moneygun.
Reading List
It took me a long time but I finally realised that I should be reading more books and less news. I used to always trawl The Edge and the Financial Times but the value of the information in news decays so fast, whereas knowledge from books lasts longer.
I think the below reading list is one of the best I have seen if you are inclined to start the journey of picking your own stocks. It is from Gavin Baker, CIO of Atreides Management and former PM, Fidelity OTC fund. Kindly also note that the list happens to be my Christmas / birthday present list, just check in with me to make sure I haven't already read it.
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