15 October 2012

Value Investing Strategy: Review and Future Forecast - Bull Market End?

When we talk about future forecast, most people will focus on economy trend, business cycle, currency, supply and demand, politic etc. As a "tiny" value investor, I am not capable of predicting these uncontrollable events. So, what is the future forecast from a value investor like me? Since most value investors are very independent and unique, this post only discuss my personal points of view.

Yes, the only future forecast from me is just about those controllable investing decision. For example, when I decided to buy a stable dividend payout company, I could predict how much the cash in terms of dividend will flow-in to my pocket in the future. When I decided to buy a growing company, I could predict the amount of appreciation if and only if the assumptions are fulfilled in the future.

From last couple of years to now, my investment strategy and target are still the same, that are, only buy high value companies and with target of 10% annual return. The target of my investment looks quite silly to many people who believe 10% annual return is just a peanut in stock market investment. Yes, it is. I must admit it. Because the actual return from stock market from my portfolio is average of 20% in last couple of years. However, I believe if I increase my target of return, it will ultimately put extra stress that can cause me take unnecessary risk. In addition, I do enjoy the moment when the target of investment is achieved.

No matter it is a bull market or a bear market now, I am still very aggressive to search for any potential good investment from stock market to enrich my portfolio. However, due to the amount of capital is gradually increased and more and more attractive counters are gradually appreciated by the Mr Market. I have been forced to keep more than 20% cash in fixed deposit now. Comparing to last few years of at most 10% cash in fixed deposit versus 90% in stock market, I foresee that I will further increase my cash ratio due to less and less list companies attract my attention.

As a value investor, I do not know when is the end of bull market. But I am quite sure that I will leave the market before the end of the bull market based on the valuation of stock market. That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage.

Written by: Xaivier Chia


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