My Investment Journey- Since the Beginning

[born2invest]

Hi all,

I recently read a book on investment psychology and it recommended keeping an investment blog/journal on all my thoughts and ideas about our investments in order to be able to look back and not let hindsight or outcome basis get in the way of logical thinking.


I'd prefer to keep it on an electronic version and thought it would be good to post here so I could get feedback from others on my decisions. I'll give a brief history on what formed my thinking and update it from time to time as I make more decisions.

Feel free to comment, question or just follow my "blog"

Thanks,
Elliot.

[born2invest]

A bit of background on me:

- Live in Auckland
- Work in logisitics/supply chain and been working going on four years since graduating university
- 25 years old, male
- Have been saving/investing since graduating and working full time
- Follow Buffett type investing and use discount dividend model as main source of valuing companies

[born2invest]

How growing up formed my investment ideas:

School/university:
- Had to work very hard at school to keep up. My older brother and younger sister cruised through school. I had to get extra classes and after hours learning to keep up at school and university.
- Was particularly good at science and maths. This led me in good stead analysing/forecasting and quickly identifying patterns and ability to grasp financial figures quickly.
- School taught me to outwork people. I wasn't going to out think them at first glance, but working at problems for longer than others allowed me to do well.

Parents:
- Parents were corporate employees working for large companies. They earned good salaries and held management positions before they have recently scaled back and now both work part time.
- Taught me that if I wanted what they have, follow their path of corporate job, upgrade house every 5-10 years and get bigger mortgage to pay off. I thought I could do better.
- They are both quite risk averse and have never invested into shares directly. Only investment is own home and company pensions (which now sit in term deposits).
- Both were very supportive and taught me to go after what I wanted and to talk to the right people to get what I needed or wanted.

Sports:
- Played variety of sports through school but was best at cricket (made and captained school and Auckland rep teams)
- Learnt people skills, how to deal with different personalities and get the most out of people.
- Most important skill I learnt from cricket was patience. I was an opening batsman played to my limited strengths. Some other batsmen of my age were extremely talented and could play a wide variety of shots on any deliveries. I could only really play 3 different shots well and had to be extremely pateint for the ball to arrive in those spots for me to do well. Slow and steady wins the race was my technique. This served me well in investing to wait for that "fat pitch" as Buffett calls it.
- If I had a weakness to certain things, I would stay later at practice, practice by myself or friends/family and work work work until it became a strength.
- I got dropped from the school 1st XI after working so hard to make it. This created a real "chip" on my shoulder and made me work even harder.

Reading:
- Prior to university, I hardly ever used to read books.
- During my first year of university whilst waiting at the airport to fly down to Palmerston North, I came across a book called "rich dad, poor dad" in the bookstore at the airport. I read it and it was extremely interesting. I went straight to the library once I arrived in Palmy and put it on hold straight away.
- This sparked an interest in finance and particularly stocks and property. I've since read 100's of books on the subject. It is not uncommon for me to have 30-40 investment books on hold at the library at any one time. I generally read 1-2 investment books each week if I can.
- I got a particular interest in value type investing and hang onto any word Warren Buffett and the likes have to say. I can honestly say read 30+ Berkshire Hathaway annual letters to shareholders was the best learning I've ever read on the subject.
- I came across words such as "mr market" "margin of safety" and "intrinsic value" and begun using a variation of the dividend discount model/gordon growth model amongst other things.

[Harvey Specter]

- Most important skill I learnt from cricket was patience. I was an opening batsman played to my limited strengths. Some other batsmen of my age were extremely talented and could play a wide variety of shots on any deliveries. I could only really play 3 different shots well and had to be extremely pateint for the ball to arrive in those spots for me to do well. Slow and steady wins the race was my technique.

off topic but my brother, a tail ended batsman famously earned himself a 40 minute duck while playing under 18 rep level cricket. Not sure if the other batsman managed to get enough runs to make his tactic be worthwhile.

- This sparked an interest in finance and particularly stocks and property. I've since read 100's of books on the subject. It is not uncommon for me to have 30-40 investment books on hold at the library at any one time. I generally read 1-2 investment books each week if I can.

Any particular favorites? Any you have bought after reading them? Any you have re-read?

[born2invest]

off topic but my brother, a tail ended batsman famously earned himself a 40 minute duck while playing under 18 rep level cricket. Not sure if the other batsman managed to get enough runs to make his tactic be worthwhile.
Any particular favorites? Any you have bought after reading them? Any you have re-read?

Favourites would be "Buffettology" and "Why Warren Buffett looks to growth and management when investing".

[born2invest]

Second "Investment":

- I set up an account with Rabodirect and "invested" my money into $1000 lots of term deposits at around 4.5% interest.
- I enjoyed seeing my savings grow but the interest was tiny for the time it was taking me to save the money.
- I intended to save this up a buy a house.
- I learnt from this that term deposits are not going to make you wealthy.
- I worked at ASB for 1.5 years whilst in this period and had lots of conversations with wealthy businessmen/women that came in who had invested into real estate and the stock market.
- My uncle has a few stock and property investments so I learnt through.
- My partner and I made an offer on a house as an investment property in late 2011 but this fell through at the last stage after 4 months on council consultations.

[toast2success]

How growing up formed my investment ideas:

- Was particularly good at science and maths. This led me in good stead analysing/forecasting and quickly identifying patterns and ability to grasp financial figures quickly.

Did you end up majoring in one of these or double major in one of each?

Great that you have done this and are aware of this at a 'young' age. I'm still trying to pay off 15 years + of living on credit cards. Awesome to see what you have done and hope it inspires others.

[born2invest]

Did you end up majoring in one of these or double major in one of each?

Great that you have done this and are aware of this at a 'young' age. I'm still trying to pay off 15 years + of living on credit cards. Awesome to see what you have done and hope it inspires others.

I ended up studying agribusiness/horticulture at Massey. I enjoyed papers in import/export and supply chain mostly.

[born2invest]

5th/6th "Investments":

- After my purchase of Credit Corp Group in April 2012, I still had 5-6k left in savings. I kept accumulating money from my wages and my savings account kept growing. I couldn't find anything I wanted to invest into for another 12 months and I had about $18k in savings by March 2013.
- It just so happened that I needed both a new car (my old one kept breaking down, so spent $5k on a new more reliable one which I hope to keep for many more years), I had to spend over $2k on medical bills in order to sort out digestive problems that arrised and also had to pay $1k in a court claim and replace my road bike which cost $1k also after the court claim on a cyclist vs car incident was sorted through. This wiped out almost $9k of my savings so I was reduced to 10k left by April/May 2013.
- I decided to put this remaining $10k into a term deposit to earn 4% instead of 3% in my savings account. What a mistake this was!
- While my term deposit was locked away I saw the price of several shares plummet to good prices. McMillan Shakespeare (MMS) was one. Supply Network Limited (SNL) was another that dropped from $1.90 down to $1.25 or so. Another mistake was not breaking the term deposit and investing in the company at this rediculously cheap price. My term deposit finally matured in late July and I bought $12k worth of SNL for around $1.40. It is now trading around the $1.90 mark again, a 35% increase not including the dividends.
- Lesson I learned from this episode was that at the end of the day, the difference between 3% and 4% in a savings account or term deposit over 3 months on $10k is around $20-30. If I had bought SNL at $1.25 as opposed to $1.40 I could have made 50% profits as opposed to 35% so I essentially lost almost $2000 or so in potential gains by earnig an extra $20 on my term deposit. Lesson learned!
- Lesson is to keep cash available to use immediately when good oppotunities arise and not have it locked away in term deposits/fixed interest.

[Snow Leopard]

I hope that this is not going to be another trilogy trying to cash in on The Hobbit hype.

Best Wishes
Paper Tiger