‘Invest to Seek Losses’

Last night before going to bed, I, as usual, browsed the internet on the phone, and I come to a website and forum about jobs and careers. When I go into a forum for jobs for entry level (fresh graduate or experienced 1 – 2 years), I noticed something: Everybody talks about, how much salary in company A? If l made it to be appointed as a permanent employee, how much my take home pay will be? What are the benefits beyond salary?

On the other hand, almost nobody asked about: What is the jobdesks in company A? What kind of work experience can be gained there? What are the difficulties, challenges, and opportunities that can be achieved? If someone asking about jobdesk, still he would ask about the salary first.

In essence, if we meet prospective employees who just been graduated from college, usually they are more enthusiastic to talk about what they’ll get, and not what they’ll do.

However, for jobs at higher levels, such as for the position of manager or director where the candidate must be experienced for at least 5, 10, or even 15 years in the same field, it is a completely different story. If you read the job ad in the paper for the position of manager or director, the jobdesks and the criteria for candidate are clearly written, but the ad will never mention about salaries.

And that's because, for a position that requires great responsibility such as director or CEO, you don’t have to ask about salary, because it is obviously much larger than salary of a regular employee. Also, people who have occupied the position of manager/director are usually rich enough, so when he applied for the position of director in another company, he was usually looking for a new challenge, a new working atmosphere, or the opportunity to make a higher achievement, so it’s not a matter of salary (although, of course, if a director of a small company moved to a larger company, then salary would usually rise). Simple example, when Jose Mourinho successfully made a history in 2010 by bringing Inter won the treble, in the same year he was immediately moved to Real Madrid. So what motivated him to move? Well of course, to acquire new challenges, to score new achievements, and if possible, to make another history! Ie to become the first manager in the history of football that won the Champions League in three different clubs (Mou has won the Champions League twice, each with Porto and Inter). While about salaries or money, Mr. Jose already wealthy even since he was managing Porto, eight years earlier.

Okay Sir, so what do you mean? Well, every time I met or received inquiries from beginner/prospective investors, usually they are enthusiastic about how a successful investor could have a lot of money, generate huge profit, could trade stocks for living, financial freedom, have much free time for family, to become wealthy while sleeping.. and so on.

But when I talk about the duty/jobdesk of an investor, which is to read financial statements, read the 500-page of annual report and prospectus, must learn/understand the economic sectors, must learn continuously about how to analyze, must control their emotions and, the most important, should experience the loss and market crash situation, then all the enthusiasm disappear. In short, just like a prospective employee of fresh graduates who are more interested about how much the salary rather than the jobdesk, novice investors are also more interested about how much the profit he will obtain, rather than any work that he must done. Lo Kheng Hong once said that he is became rich while sleeping by invest in stock, but it does not mean that you can just buy a stock randomly without any analysis and strategy, then go to sleep!

However, an experienced investor would say different thing. They are well aware that to be success in the stock market, just like to be success in any other fields, it can not be achieved without hard work and a little sacrifice, in this case to work hard to gain knowledge and experience, and sacrifice in a form of losses. There is no large investor anywhere in this world, who went on to become wealthy without ever suffer huge losses or experienced market crash conditions. There is no one big investor who could immediately have ‘nerves of steel’ without ever experiencing a condition of panic and confusion before.

So every time I drink together with partners/senior investors, we are always discuss about the economic outlook, prospects and risks of certain stocks (we never forget about risk), the development of certain sectors in Indonesia, and so on. We also do a lot of brainstorming about what investment strategy should be applied in the future.

Then how about profit etc? Well, we understand enough that as long as we focus on what to do, then we do not need to worry about what we'll get. The logic is simple: If you are the manager of a soccer team that successfully reach the final of a tournament, where you only need another win to be a champion, what will be your focus? Will you focus to train players, build a strategy, observing the opponent’s tactics and so on.. Or focus on how much the prize money you would received later if your team win the game and become a champion? Now, if you focus on the prize and forget about the strategy, will your team win or lose the game???

Thus, if you want to be a successful investor, you should first change your focus from the results to the process of investment itself. I will not lie to you guys: The stock market is very cruel to those who do not want to work hard and expect instant results. However, the stock market is also very friendly to those who can see that investing is an adventure without end, who happily read the financial reports every three months, who likes to analyze/dig information about companies, who focus on future strategy rather than reading the daily news and rumor, and who does not grumble when suffering a loss but rather use it as an evaluation and learn from it! So class, as an investor, what should you do?

Me with the late ‘Uncle’ Bob Sadino, one of the richest men in Indonesia, in 2008. One of his best quotes, ‘I am doing business to seek loss’, which I read as, ‘I am investing to seek losses, because from the losses I could build an evaluation for generating better investment strategies in the future!’

Any inquiries about investment in Indonesia Stock Market, please send an email to teguh@averepartners.com