Investment Methodology – I Lost For 14 Years In A Row

Investment Methodology

From the time of graduating from high school until the age of 27 I was searching for my dream job. I found that dream job in 1993 in Bangkok, Thailand, when I became a financial analyst in the stock market.

What I liked about the job then, and I still like now, is how much there is to learn. The amount of information, technical knowledge, and understanding of the stock market are infinite. So despite more than 20 years in this job, I still feel that I know so little. But when I started, I knew almost nothing even though I might not have thought so at that point in time, having studied finance at university. The more you learn the more you realize how little you actually know.

In my first day on the job in the next coming weeks, I knew I had found my dream job. I came in every morning very early to review the news of the day, write up a quick summary, and present that to the sales team. I didn’t have stock ideas because I was just a beginner.

The man who hired me, still a friend to this day, was highly experienced in the stock market I was lucky to find a boss with great knowledge and desire to train others. Right from the beginning, he took the time to teach me how to do the job of a financial analyst. His mind was so sharp and he helped me focus on the things that mattered in the stock market.

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I can remember within the first few months sitting down with my boss and telling him I want to be the number one analyst in Thailand. He smiled, looked back at me and said, “you can do it”. I put that comment in the back of my mind and got back to work.

Year after year there were rankings of analysts by fund managers. My name never appeared for many years, I didn’t have enough experience, I wasn’t making an impact, and I didn’t know the fund managers. But over time, my name started to appear, unfortunately at the bottom of the list. Eventually, it started to move up. Then finally, in 2008 it happened, I was voted number one analyst in Thailand. Fifteen years after I set my goal, I reached my goal.

But my winning in 2008 is not the point of this story. The point of this story is that I lost for 14 consecutive years. But, despite losing, I never gave up on my vision. And eventually, in year number 15 I got it.

On a personal level, the lesson I learned from this is to clearly define your goal, believe in it, focus on it, repeat it, revise if necessary, and improve it. Most importantly—get ready to lose! But, no matter how many times you lose, never give up on that goal. Because it is through losing that you build the knowledge and power to win. So keep on losing and never stop learning.

Investment Methodology

Investment Methodology

This experience has taught me how to reach my goals and never give up, but I have also become a better investor from it. Investing is about continuing to learn and having a clearly defined strategy and goal. You will certainly also lose sometimes when investing, the important thing here is to keep your losses small in terms of monetary value and learn your lessons from it.

In fact you can lose 9 out of 10 times when investing as long as the 9 losses are tiny and the one win is big. It’s not a strategy I recommend or use, but the point is that terminal wealth is what matters, not how you got there. Many investment strategies can underperform for months, even years, but be superior in the long run. The key here is about a revolutionary idea which is sorely lacking… It’s called long-term thinking!

Of course you’ve heard it many times, but very few people actually really employ long-term thinking even if they say and think they do. It’s not easy staying true to your investment methodology when it underperforms for a long time. But by staying true to it (assuming it’s a good, well-researched and tested methodology), refining it, and never stop learning from it—you’ll have a hard time at failing to become a better investor.

Article by Andrew Stotz, Become A Better Investor

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About the Author

Dr. Andrew Stotz, CFA
Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company providing institutional investors with ready-to- invest portfolios in Asia that aim to beat the benchmark through superior stock selection. The company also provides buy- and sell-side clients with financial models to value any company in the world and World Class Benchmarking to determine what companies are financially world class. Previously, as Head of Research at CLSA, Andrew was voted No. 1 Analyst in Thailand in the Asiamoney Brokers Polls for 2008 and 2009. He was also voted No. 1 Analyst in Thailand in the 2009 Institutional Investor magazine All-Asia Research Team Report. Andrew earned his PhD in finance at the University of Science and Technology of China in Anhui province, with a focus on answering questions raised by fund managers and analysts during his career about picking stocks and managing portfolios. In addition, Andrew has been a lecturer in finance for 22 years at various universities in Thailand. Since 2013, he has been the president of the CFA Society of Thailand. He is also the author of How to Start Building Your Wealth Investing in the Stock Market.

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