Have You Evaluated Yourself?

Li Ka-shing, a business magnate from Hongkong who once became the richest person in Asia, had an accident in 1996 when his oldest son, Victor Li, was abducted by a gangster named Cheung Tze-keung, and the gangster demanded a ransom at HK$2 million. Instead of calling the police, Mr. Li granted the kidnapper’s wish by giving the ransom demanded.

Mr. Li met Cheung in his house, ‘I only have cash of HK$1 million. If you wish, I can go to the bank and draw the rest.’

After short discussion with his friends, Cheung decided to accept the money instead (it is equal to US$ 150 million). Before Cheung left, Mr. Li said, ‘You now have plentiful money to spend for the rest of your life. While you still have a chance, you should go far away and never come back, try to find a fair job and be a good person.’

Mr. Li continued to say, ‘Because if you do this again, no one can save you.’

Cheung, astonished, asked, ‘How could you be so calm? Your son was abducted, and you lost HK$ 1 billion.’

‘Because it was my mistake’, Mr. Li answered. ‘I am an honored person in Hong Kong, so I would likely to be a target of the crimes, but I was not careful. This will be my lesson to guard myself and my family more carefully.’

Cheung, impressed, bid a farewell with a good manner and left, and later Victor Li was released safely. But unfortunately Cheung could not do what Mr. Li suggested. In the next few months, Cheung kidnapped significant figures in Hong Kong and the mainland China for ransom. Finally in 1998 he was arrested in Guangdong, China, and sentenced to death.

The Significance of Evaluation

Okay, what is the lesson we take from the story above? Well, pay attention to the bold sentence of Mr. Li: When you have to lose your money in a great amount because of other people’s doings, are you wise enough to blame yourself alias introspection? I think if another person had been in Mr. Li’s position, he would have cursed the abductor, and blamed the law enforcer of Hong Kong for letting Cheung and his allies free (before he abducted Victor Li, Cheng was a recidivist of robbery and abduction cases, who often to go in and out of prison).

However Mr. Li did not do it. He did not blame the abductor, but he blamed himself since he was not careful, and took a lesson from the incident.

But it was Li Ka-shing. What would have happened if it had happened to us? When we take a loss on the stock market, who do we blame for? Do we blame the wholesaler, JCI and FSA, or equity sales of the brokerage company? It is often for me to hear an investor fights with his sales when JCI drops, because the sales cannot explain ‘why does stock A fall?’. They may complain they are fooled by ‘the wholesaler’ because they buy the stocks which skyrocket but then they go down rapidly. When an investor buys a stock without analysis (it is a speculation) and he takes a loss, he has a scapegoat to be blamed for. In short, everybody is doing wrong except me!

The problem is, when we blame ‘the market maker' because they fooled the retail investor, would they stop stirring the stocks? Obviously not. Or if we blame JCI because it falls, then will JCI ‘realize its mistake’ in the future then climb up?? It will not! You say a nonsense..

But when we point ourselves as the one who has to introspect, then from that awareness we can introspect ourselves. Like Li Ka-shing, he would not ask all the gangsters in Hong Kong ‘Do not kidnap my family anymore!’ (and how he would do that???). What he could do was to be more careful, he might do it by hiring a bodyguard or anything like that. How about the HK$ 1 billion? Well, let it go, we will get it again. Just consider it as ‘the expense’ of the lesson to be more careful.

And I think, Li Ka-shing’ ability to blame himself when he took a loss or lost the money, was the reason for himself to always evaluate and introspect.. which made him to became a wiser person from time to time, and eventually led him to become one of the most wealthy people in Asia.

So, while it is still at the end of the year, have you reviewed and evaluated your investment performances in 2016, so it would be your collection of experiences for you in the future?

If you have not, well, with this article I suggest you review your stock trading during 2016, and the points you may improve, when we are in 2017 and onwards you will have the better investment results. You can write it in the comment column.

(Note: if you are confused on what to write, then let me give you an illustration. When I entered the stock market for the first time, I had already known window dressing, it was mentioned the mutual fund managers would intentionally raise certain stocks to make their investment performances better at the end of the year, and JCI would climb as a result. But after some years, I had learned that window dressing was only a myth, because statistically, JCI tended to drop rather than rise at the end of the year. Based on the experiences above, then I invest more carefully/hold more cash on the final months in a certain year, and become aggressive at the beginning of the next year or a moment before the new year, alias Christmas and New year holidays).

Farewell 2016, thanks for all the lessons and memories! (And also the profit, lmao!) Happy New Year!

Original article was written (in Indonesian Language) in December 25, 2016. For inquiries, please contact the author by email teguh.idx@gmail.com