This is a peculiar way of writing a blog – I actually wrote the following on paper, and then type it. The reason is one of preference and another of necessity – preference, that I decided to try out writing as a way of organizing my thought; necessity, that I am in the Chinese Library and there is no computer around 
You might have noticed that I had locked the previous post. Actually, my reason of locking the post is not because I do not want you to read it. I did it to explore the ‘hurdle rate’ of my posts. If you are not familiar with CAPM and consequently the term ‘hurdle rate’, well, it refers to the rate of return an investment must generate to make such an investment worthwhile; otherwise, one might as well put the money in the general stock market. Put it in my context, locking the post might be too high a hurdle rate; so I decided to lower it a bit by giving you the password, “churchill”. Let’s see what will happen
To turn to the topic proper. My experience of the past few months makes me feel regret of not listening to wise men’s words, particularly Ben Graham’s. He said that an enterprising investor must view his investment operation as a quasi-business. A business must be paid full attention if it is to have a chance of success. Although being interested in investing, I was half-committed – until a few months (weeks?) ago which I started to devote considerably greater attention. Time is the ultimate constraint, of course; I find that even though I can live a thirty-hour day (15 hours awake follow by 15 hours of sleep), this won’t allow me to make my day ‘longer’ in any meaningful sense. In fact it could make me worse off, which it did.
How much time I must spend to engage in this business? First of all, I would spend at least three hours a day reading news and reports. Reports are much more comprehensive and in-depth than news items, so one report a day is a considerable achievement. The sources are extremely diverse – just figure out how many reserve banks are there in the United States! Economic and commercial reports are but one area in which attention is to be paid; there are other equally important fields, such as legal and accounting, local and international politics, and if you want, mathematics and science. By now you might think, or ask whether, all those reports are useful in its form. The usual situation is that I will find one useful reports out of ten, or twenty. In other words, it is good not to miss out any relevant information, although some might ultimately proved to be useless.
So much about news and reports. Despite all of the above ranting, news and reports actually form only a minor portion of the reading. The bulk of the reading is on the tools of investment – the requisite knowledge. It is anything from accounting to management. Why do not I attend a business course instead? After all, such materials are studied in business course. I could not directly answer the question, but I can give some of my ideas regarding this. I’m not someone who maintains a ‘balanced’ or ‘neutral’ point of view; I buy into an idea wholeheartedly, or not at all. I would rather learn an idea thoroughly on my own, than to learn two ideas in passing, under someone. These are incompatible with prevalent ‘balanced education’ view, and I had been ‘materially’ hurt by my conviction (think of my grades). Nevertheless, I think my idea would stay with me for quite some time. Return from the digression; reading also requires me to compile to-read list and to seek other sources of references. The growth of items in the list is exponential, and I am quite skeptical about my ability to finish studying the materials within my lifetime. Nevertheless, this task I carry on at some five hours a day.
So far the two tasks had taken me at least eight hours a day. Now on top of that, add another heading call “reading company filings and reports”. Sourcing for reliable information takes time. Reading the materials takes time. Making appropriate adjustments takes time. Deciding whether something is worth putting on a watch list takes expertise, meaning more time to perfect the skill. But after going through all that, when Mr Market knocks the door and proposes a term to buy or sell, it takes less than five minutes to make a decision. So much for that five minutes!
By now it is apparent that I had to do investment full time (if I had not been so convinced). There are a number of problems to be solved, though. First I had to learn enough and had the requisite skills. Alongside that I had to get capital to start off – cold hard cash, no borrowing. I too had to pay off any outstanding loans I have right now. Next I had to establish (or find my way to) the mechanisms and connections – know who to find when need to buy something, or get complicated stuff done, or when get into trouble. I had to keep my self alive, well clothed and fed, obviously – so far I had neglected this! Not to mention putting in place an effective internal control and supervision of capital, solving problems arising out of international operations (taxes, registration, ownership of asset etc.) etc.
Hope to hear a comment from you!
