You can contact the author (Teguh Hidayat) by email, teguh.idx@gmail.com. The author live in Jakarta, Indonesia.

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Investing is Just Like Mountaineering

Last weekend I with some friends went to climb a mountain, in this case Mount Salak in Sukabumi/Bogor, West Java, which has an altitude of 2,211 meters above the sea level. In contrast to other leisure activities which are relaxing, mountaineering requires physical endurance so I had to exercise regularly for at least a week before the ascent. Therefore, since the last ascent about two or three years ago, only last weekend I had the time to do it again. And after cramps, rain, cold, and thirsty for two days and one night, thank God we successfully reached the summit, and also successfully returned home.

And, by the way, if we do some challenging activities, then usually we will obtain some inspirations. Here are three inspirations from yesterday's adventures, which can be attributed to our job in stock investment.

Me at the Summit of Mount Salak

Investing is difficult and tiring at first, but it will be fun in the end

First, mountaineering is of course tiring. And Mount Salak itself is known as one of mountains with the most difficult climbing terrain in Java, with steep path, long and far away (from the base camp to the summit and back again, the length is nearly 20 kilometers), narrow, slippery and muddy because of the rain, and of course with crevasse. We met several declining path, but soon followed by an almost vertical cliff that must be climbed using a fixed rope. I also met a bridge over the ravine, while the 'bridge' was actually only a tree trunk with two ropes for the handle. For experienced mountaineers, passing through the bridge may be easy. But for such an amateur climber like me, it was really scary! Moreover, I was already exhausted, with tremble legs, and dizzy eyes.

But somehow, me and all my friends got through and keep going, until we finally arrived at the summit. Interestingly, maybe because we've realized that we’re already at the summit and do not need to climb any further, we suddenly felt excited and did not feel tired anymore. We quickly put up tents, change clothes, and cook for dinner (we arrived at the summit around 6 PM). When the dinner finally served, it is the most delicious dinner I’ve ever tasted! I also drink Kopiko 78 degrees that I brought (that’s my favorite coffee every time I analyzing companies at night), and somehow it tasted waaaaaayy better than usual.

Towards the evening before going to sleep, I think a lot until I came into a conclusion that, mountaineering has no difference with investing in stocks. Several years ago, when I went into the stock market for the first time, I don’t know what to do so I easily confused, got hit by market corrections, until beaten by bad rumors that out of nowhere which easily make my stocks dropped. And it was all very tiring! Moreover, I was inexperienced, which makes me easy to panic and do a lot of unnecessary mistakes.

But a few years later, along with the increase of knowledge and experience, slowly but surely I managed to find the good and right ways to invest (I've often discussed the ‘ways’ on this website, largely inspired by my own experience as an investor), which is able to generate a consistent profit and minimize the risk of loss, and I also no longer easy to panic or greedy. At first, everything was but dark and I had to play a guessing almost every day (stock A, will it move up or down?). But now almost everything is under control (beyond my control is the stock market itself, or force majeure events). Today I enjoy my job in addressing the portfolio, can sleep soundly at night, and all the fatigue in my first years is suddenly disappear, exactly the same as when I got to the top of a mountain!

So for beginner investors, if everything looks exhausting, difficult, and dark (because of inadequate knowledge and experience), or even frightening, it was very, very reasonable because, like climbing a mountain, you can not just arrived at the summit without an exhausting ascent, can you? But as long as you keep going, then one day you will reach a point where: 1. You know what to do, 2. You can do it with relax, 3. You make consistent profits without significant losses (small losses are natural, just do not lose heavily like in case of TRAM), then that’s the ‘summit’ that you have just reached, and trust me, when you’ve arrived at that point, then all the tired will disappear by itself, change with a sense of relaxed and comfortable :)

The ability of each individual is different, but as long as they keep going, everyone will get to the top

Second, me and my group (we were six person), and also most of other climbing groups, depart from the base camp at 7 AM. We reached the summit at 6 PM, but some groups that were faster reached the summit early at 4 PM. Nonetheless, there were also some other groups that were slower, who arrived at the summit at 8 pm.

In short, each climbing group had a different speed in reaching the summit. Our group took most ascent time to recover from exhaustion, but some groups look like they do not need a break at all, while the other groups take a longer time to recover.

Although each group had different speed in reaching the summit, but all of them made it to the summit! On the way up, I met several climber who, considering their physical and age, seem impossible to reach the summit, but still they did it (although late at night). Some groups may given up in the middle of ascent and turned back, but most climbers that I encountered on the way, I met with them again at the top.

Now in investing in stocks, admitted or not, every person has different ability in analyzing companies or controlling emotions, which some investors may need a longer time to gain knowledge and experience, to eventually able to make a consistent profit, just like me who could not climb a mountain as fast as a ranger, who can reach the summit of Salak in just three hours.

However, as long as you keep going and not turning back, as long as you continue to follow the correct route and do not try to take shortcuts (be careful!), then no matter what your background, sooner or later you will reach the top! After the experience at Mount Salak, I read a lot about the world's tallest mountain, Everest, and I found that some ‘unique’ people like a disabled person, a 77 years old man, a 13 years teenager, and a man who obviously could not see at all (blind), all successfully reached the summit, though of course they did it with special assistance, and at speeds that were much slower than professional mountaineers. If anyone can reach a summit of certain mountains, including those that seem impossible to do so, then what makes you think that you can not ascent the ‘stock market mountain’ to reach the summit, ie to be a successful investor??? All you have to do, once again, is just keep going, follow the right path (or in this case, do the right thing), and never quit or turning back.

Keep your behavior, then you will be safe

If you read on the internet, Mount Salak is not only known as a steep mountain but also haunted, perhaps the most haunted mountain in Indonesia. Therefore, before depart, leader of the group (not me) advised that we do not say something rude, do not litter, do not do immoral things, and keep your behavior. In essence, just try to behave. Because if not, then we might be fooled by the ‘locals’.

But fortunately we successfully reached the summit and descent safely, and it was because we did behave. Only on the way back to Jakarta, all of my climbing buddies recount their each mystical experiences at the mountain, from seeing ‘appearance’, seeing trees shaken violently, and hear something odd. Thank God, I become the only person who did not see, hear, or feel anything odd.

Well, actually not only in the mountains, in everyday life we ​​are also required to always behave in order to survive, including in the stock market. But in the stock market there are a lot of people who fail to keep their behavior, where small traders has no interest but to keep gambling at junk stocks, while large financiers deliberately trying to stealing from innocent retail investor, by spreading misguided rumors and controlling the price of certain stocks (insider trading). Consequently: Enormous losses is a common story in the stock market, and there weren’t many investors who able to ‘ascent safely’ in their first years as an investor. And make no mistake: Most retail investors thought that large money owners will sure make profit when they controlling the price of particular stocks, but they also could suffer losses because of their own speculation. For those of you who understand insider trading, you certainly know that a stock-maker must ‘distribute’ his holdings smoothly, or he will be stuck holding an ‘empty thing’ at exorbitant prices, and eventually suffered a great loss.

So how can we survive the steep of stock market? Well, by maintaining your behavior, by aligning your intention to invest and not to speculate or stealing from other investors, by investing on the right way, ie to buy shares of good companies at a reasonable/low price, then keep it. I know it is not that easy, especially for novice investors because, in the stock market, there are a lot of temptations to do something wrong. But well, just try to do it, okay? And see the results :)

Okay, I think that's enough. For the next week we will discuss about the debt restructuring of Bumi Resources (BUMI). This might be an interesting topic, as the price of BUMI is now stuck at bottom level of Rp50 per share.

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