You can contact the author (Teguh Hidayat) by email, The author live in Jakarta, Indonesia.

See my activities in Instagram, @teguhidx.

The Secret Method of Investment

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..
  1. 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
  2. Watching discovery channel, cooking show (I love culinary), History Channel, music concerts on YouTube, or watch the live concert itself.
  3. Read historical novels, mainly about the history of imperial Chinese.
  4. Go to mountains or beach at the weekend, make a bonfire and barbeque
  5. Go around Indonesia, visiting cities that I have never visited before.
  6. Playing badminton, running and walking at the city park near my house.
  7. Eat!
  8. Take nap
  9. Return home to Cirebon, take the grandmother of my children to walk and shopping, and
  10. 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?

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