9 Key Lessons from a Decade of Investing

I am fast closing in on the 10th anniversary of my first ever purchase of a Singapore stock.

Back in 20 October 2005, I made my maiden investment and bought some units of retail and commercial real estate owner Suntec Real Estate Investment Trust (SGX: T82U). I still own those units today and thankfully, they have been a very satisfying long-term investment.

My portfolio has come a long way since then. In my decade of investing, I have picked up my fair share of winners and losers. There are learning points to be found in both.

Here’re nine key lessons I’ve picked up from my investing journey so far:

Lesson No. 1: The value of simplicity – click here

Lesson No. 2: The power of long term investing – click here

Lesson No. 3: Find your investing home – click here

Lesson No. 4: Being Motley – click here

Lesson No. 5: Know when it is “too hard” – click here

Lesson No. 6: Investing is psychological – click here

Lesson No. 7: Staying humble – click here

Lesson No. 8: Keeping an investing journal – click here

Lesson No. 9: Being disciplined

Every investment approach has its limitations.

The traditional net-net investment approach – which is founded on looking for companies that are worth far more dead than alive, and made well-known by investing sages like Benjamin Graham – may bring real stock market bargains to you. But, it can also throw value traps to ensnare you at the same time.

At the other end of the investing spectrum, growth investing may offer stupendous returns from latching onto fast-growing companies with promising futures. But, if those companies see their growth stall, their shares can fall – hard.

To that point, we have seen how shares of growth stock Sarine Technologies Ltd  (SGX: U77) got halved over the past year. Sarine Technologies, a provider of diamond manufacturing systems and products, saw big drops in both its revenue and earnings due to unfavorable industry conditions.

Understanding the limitations of your favored investment approach might help you avoid the blow-ups which can come with the successes. And when you have the understanding, all that’s left is the discipline to stick to your own knitting. While it sounds straight-forward, there can be things that tempt us to stray from our investment approach or we can fall prey to psychological errors that contrive to derail our best efforts.

Staying focused and disciplined is the key.

A Fool’s take

There are many ways to approach investing.

My preference is towards long-term investing in growth companies with a simple investing thesis. At the same time, I remind myself to be flexible in my thinking and not be too dogmatic. Paradoxically, discipline is important as well when implementing my favored investment approach.

Meanwhile, the “too hard” pile is something I use often too. In the act of investing, I also try my best to take into account the possible psychological biases that can influence my decision making. Keeping a journal is one way I deal with my biases. It is also very important, in my opinion, for one to remain humble even if he has found investing success (the financial market can be an unforgiving place for the cocksure).

Most of all, it’s an investing approach which fits my lifestyle as I do not have to tend to my companies on a daily basis. If the business keeps purring, I can enjoy a good night’s sleep and spend time on other important things in life.

I hope these lessons I’ve learnt can be helpful for you too.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Suntec REIT.