How should we handle the situations that affect your Investing Results?
I have been doing value investing for many years. At times, I do have the willingness to try new things for the sake of learning. Such attempt to try new things often result in one major new knowledge and, may happen or may not happen, one minor new knowledge.
Before I relate my brief experience (written below), I believe that, to handle the bad situations, we should spend some time, at interval, to understand first order and second order of impacts, whether it is good or bad. It is really to sit down, gather the facts, analyse the facts, imagine what will happen now and in few years time, and decide whether you want to hold on it or sell it. It is ok to lose some during the course of finding out. In doing so, you gain new knowledge that will lead you do better next time.
As mentioned in my previous blog article, I invested in Calbee (stock) in August 2011. It is the first attempt to buy stock that is not within standard metric of value investing. I liked the product offering and quality financial performances (based on my opinion). It was going quite well till late 2012.
Calbee made a public announcement (in Japanese) and series of notifications (spanning few months) - it was about glass fragments unknowingly went into the potato chip packages. Calbee swiftly resolve it with apologies and collection of these faulty products together with refund. Calbee spared nothing even if it does not know which package has the glass fragments. Anyway, you would know if you bother to read Japanese-written announcements in real time at that time. It is not widely discussed in English.
The action is very proper. To many of us, we can forget it as long as we know it will not happen. To Japanese, it may not be the case especially when the reputation is paramount importance. It is hard to know whether Calbee's reputation is badly dented. I decide to 'ride' with Calbee throughout this problem that will affect stock price.
The obvious metric to identify whether its reputation is badly dented for good is domestic market share. Over time, the domestic market share is still stable (in the end). I reaped 323% return for that.
Therefore, my major knowledge is to appreciate the qualities of compounder and my minor knowledge is that management makes huge difference with the responses to any types of crisis.
Having said that, I would spend sufficient time to study the current management and its succession plan. I want to be comfortable enough to buy and hold stock for certain periods of time. The journey is always long for me to crave my skills to identify such management's attributes.
It is no different from me being transitioning from buying cheap products to buying good products with wonderful customer services. Please take note that I did not indicate excellent products because different people have different perception of what a excellent product should be. Hence, I tone down towards saying/typing good product.
Being Singaporean myself, I never opt for SIA (national airline for Singapore) as long as ANA is still around. I love using ANA services because of its attentive to the provision of customer services. Even if ANA does not offer direct flight to Osaka (which SIA does), I still choose ANA with one stopover (international flight and then domestic flight). I am not trading wonderful customer service for convenience.
Unfortunately, I could not bear to pay few hundred more for ANA's flight services in Aug 2020. Eventually, I went for SIA's flight services with bad arrival time (in Japan) as I have no idea if ANA will tweak its price down on a fixed date which I cannot reschedule due to my friend's dilemma. I am very willing to change the flying dates (if not for my friend) for a better price from ANA.
I am writing this because I am very positive about ANA but I am not sure about other brands of which I used for many years.
I wish you, the readers, happy new year.
Before I relate my brief experience (written below), I believe that, to handle the bad situations, we should spend some time, at interval, to understand first order and second order of impacts, whether it is good or bad. It is really to sit down, gather the facts, analyse the facts, imagine what will happen now and in few years time, and decide whether you want to hold on it or sell it. It is ok to lose some during the course of finding out. In doing so, you gain new knowledge that will lead you do better next time.
As mentioned in my previous blog article, I invested in Calbee (stock) in August 2011. It is the first attempt to buy stock that is not within standard metric of value investing. I liked the product offering and quality financial performances (based on my opinion). It was going quite well till late 2012.
Calbee made a public announcement (in Japanese) and series of notifications (spanning few months) - it was about glass fragments unknowingly went into the potato chip packages. Calbee swiftly resolve it with apologies and collection of these faulty products together with refund. Calbee spared nothing even if it does not know which package has the glass fragments. Anyway, you would know if you bother to read Japanese-written announcements in real time at that time. It is not widely discussed in English.
The action is very proper. To many of us, we can forget it as long as we know it will not happen. To Japanese, it may not be the case especially when the reputation is paramount importance. It is hard to know whether Calbee's reputation is badly dented. I decide to 'ride' with Calbee throughout this problem that will affect stock price.
The obvious metric to identify whether its reputation is badly dented for good is domestic market share. Over time, the domestic market share is still stable (in the end). I reaped 323% return for that.
Therefore, my major knowledge is to appreciate the qualities of compounder and my minor knowledge is that management makes huge difference with the responses to any types of crisis.
Having said that, I would spend sufficient time to study the current management and its succession plan. I want to be comfortable enough to buy and hold stock for certain periods of time. The journey is always long for me to crave my skills to identify such management's attributes.
It is no different from me being transitioning from buying cheap products to buying good products with wonderful customer services. Please take note that I did not indicate excellent products because different people have different perception of what a excellent product should be. Hence, I tone down towards saying/typing good product.
Being Singaporean myself, I never opt for SIA (national airline for Singapore) as long as ANA is still around. I love using ANA services because of its attentive to the provision of customer services. Even if ANA does not offer direct flight to Osaka (which SIA does), I still choose ANA with one stopover (international flight and then domestic flight). I am not trading wonderful customer service for convenience.
Unfortunately, I could not bear to pay few hundred more for ANA's flight services in Aug 2020. Eventually, I went for SIA's flight services with bad arrival time (in Japan) as I have no idea if ANA will tweak its price down on a fixed date which I cannot reschedule due to my friend's dilemma. I am very willing to change the flying dates (if not for my friend) for a better price from ANA.
I am writing this because I am very positive about ANA but I am not sure about other brands of which I used for many years.
I wish you, the readers, happy new year.
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