On Thursday, October 1,
I met face to face with an investor named Joel Cohen, who works for Mitimco, an asset
management company in the US with AUM of approximately US$ 19 billion. Although
I’ve had previously met several investors from abroad (where they came to
Jakarta), but this is my first time to meet someone who represents a large
institution. So for me, it's a brand new experience.
In that discussion, Mr.
Cohen asked many questions. And one of the questions is, ‘Mr. Teguh, as an investment
professional, what do you do in order to generate satisfactory investment returns
that are consistent in the long term?’
Unfortunately, because
of my limited ability in speak in English, then although I had a lot of answers
to the question in my head, but I could only able to say a little part of them.
For this reason, I will answer it again in here. Okay, here we go!
The hardest part in
investing, like I always said, is not in analyzing the companies, money
management, etc., but emotional control.
When the market is in a panic, it is very difficult for any investor to be
greedy alone, and like wise, when the market is in an euphoria, it would be
very difficult for any investor to be fearful alone. Because, like it or not,
an investor is actually a part of the stock market as well. There will always
be investors who are not able to capitalize the golden opportunities from the
decline in stock prices, because they fail in control their fear. In other times, also there will always be investors who
foolishly buy certain stocks at a very high price, because they cannot bear the
market euphoria! When an investor is no longer able to control his emotions,
then all calculations and analyzes he made before would be totally useless.
Therefore, in order to make
a satisfactory investment returns in the long run, the emotional control is
essential. It's okay if you occasionally suffered losses from capital markets,
because that's just a part of the game! Because even FC Barcelona could lost at
any time to FC Granada, for example. But once you lost control, then well,
that's probably the end of the game, because you might instead kick the ball
into your own goal.
The question is, how to
control these emotions? There are probably a thousand answers to this question,
but here's what I do: To control your emotions, you have to be as calm as possible. The trick? Do
whatever you like, go whereever you want to go, and take a deep breath in the
forest!
So, believe it or not,
as an investor, I ain’t spent most of my time by sitting behind a computer
desk, studying company’s documents, let alone staring at the movement of stock
price all day, not at all! What I do is..
- Playing video games from early morning until noon (PES, Assassins Creed, GTA, Forza Motorsport, Skyrim, The Witcher, Battlefield, Tomb Raider, Call of Duty), this is my hobby since elementary school until now
- Watching discovery channel, cooking show (I love culinary), History Channel, music concerts on YouTube, or watch the live concert itself.
- Read historical novels, mainly about the history of imperial Chinese.
- Go to mountains or beach at the weekend, make a bonfire and barbeque
- Go around Indonesia, visiting cities that I have never visited before.
- Playing badminton, running and walking at the city park near my house.
- Eat!
- Take nap
- Return home to Cirebon, take the grandmother of my children to walk and shopping, and
- Return to Bandung, spend the whole week with my two kids. At the end of the week, I invite them plus their mother to go to city to buy shoes and eating ice cream.
From all the above
activities, what I like the most is to go alone to a tea plantation in Ciwidey,
or the pine forest in Lembang, both in Bandung, to sit on a large rock and draw
a deep breath. If you do the same thing, say at the weekend, then even if you
are bearing the heavy burden in your head (like when your portfolio is on ‘fire’),
but you will feel free and relieved. When you return to the ‘battlefield’ on Monday,
you will mentally ready, and you
will be able to rearrange your stock portfolio with a clear mind.
In many cases, an
investor usually unable to think clearly in managing its investments, it’s not
because he suffers losses or the like, but because he has a burden of thinking
beyond his position as an investor, be it a family problem, a problem in the
office (if he have another job, like most of retail investor), or others. As a
result he failed to focus, and it will worsen the situation. Like if you are
stuck in traffic: If you drive home from work and really tired, you will be
pissed simply because the car in front of you not getting ahead. But if you
just returned from a relaxing holiday, then even though your rearview grazed by
a teenager who drive a motorcycle carelessly, you may smile instead (actually,
this is my own experience).
So let's conclude. To
be a successful investor you should be able to control your emotions, and you
have to be as calm as possible. The trick? Enjoy your life, remove all the
burden of thinking, and breathe fresh air in the mountains.. Thus, believe it
or not, when I go on vacation, I consider it as a part of my investment job. Of
course I still do routine work such as analyzing stocks, studying the
macro-economic conditions, and continue to seek ‘hidden gems’ in the wilds of
the capital market. However, I only spend small time for those routine works,
ie less than four hours in a day. While if I go on vacation, it may take a
whole weekend plus the monday!
Well, that's my secret.
Now what about you?
Any inquiries about investment in Indonesia Stock Market, please send an email to teguh@averepartners.com.
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