About Me

2004-10-16-006
I took this photo in Ko Phangan, Thailand. Love that place.

You can call me a geek as I have worked as a programmer and systems engineer.  On the other hand, I have worked in sales and sales management and I love beach volleyball.  So, maybe I do not qualify as a geek anymore.

I studied Computer Science because that was where the jobs were.  Though I understand business, I never thought much of investing.

When you are starting out and have nothing, then getting an income is paramount and most incomes come from jobs.  One can argue that the majority of time spent in school is to prepare a person for the work place.  However, almost nobody teaches you the importance of investing or how to invest.  Nobody in my business school once recommended I take a course on investing.  I’m not even sure if my school had a course on investing.  It if did, none of my classmates took it.

I have a great education with a Bachelors in Computer Science and a MBA.  I aced the GMAT with 91 percentile on one take.  I’ve had good jobs.  During that time, I focused on my jobs and made good salary income.  I was going to be successful!  I was going to be a winner!  I was on top of the world. Investing was something I ignored.

I sought out advice from others and relied on them to tell me what to do.  As it turned out, their advice was usually wrong.  I do not have proof but I think that I was a victim of a “pump and dump” one time.  I invested in it because a very close friend recommended it, which was recommended to him by someone else.  One bad investment after another caused me to have negative net worth.  So, despite a good job and good income, I was less than worthless.  I was a loser.  I was losing money faster than I could make and I had a good job. This not only impacted my wealth, it also impacted my ability to hold on to a girlfriend.  No decent girl wants to stay with a loser.

I learned the hard way that investing can be more important and have a bigger effect on my wealth than my job.  I lost money in real estate.  I lost money on stocks.  (See Investing, A Bigger Impact Than Salary)  I was one of the biggest losers in the country.  I lost more than most people I knew.  When I was on a date with a girl, I tried to be funny by saying:  “I’m an expert on losing money.  If you ever need advice on how to lose money, come talk to me.”  She didn’t find that funny, as she promptly looked for the exit.

I work in technology, so I usually sought out investment advice from older, more experienced friends and family, especially from people who worked on the stock market or real estate industry.  I came to the realization that they were not necessarily smarter, especially after taking their advice more than once, only to lose money.  Besides, IBM told me that my aptitude score was one of the highest in their history.  It was time for me stop asking others for investment advice and for me to figure out this investment world and listen to myself.

So, I dove into, researched and studied investing.  I treated it like a PhD, as I tried to learn as much as I can.  To my surprise, I found it shocking that there was so much to learn and yet, few schools taught this stuff.

If I knew back then, what I know now, I do not think I would’ve lost so much money.  One example is the following.  I owned this stock for several years that had appreciated tremendously.  I was thinking of selling it.  But I thought I would ask somebody older and experienced with stocks for advice before I did so.

cap-gains-1

The older, stock market professional told me the following:

cap-gains-2

So, I did not sell because the thought of paying taxes bothered me.  Later, the stock plummeted.  Well, the capital gains tax problem went away because the capital gains went away.  No need to pay taxes anymore:

cap-gains-3

I would learn later on that an investor should never, ever consider tax implications when making a decision to buy or sell.  It only pollutes your decision-making process. What you should be focused on is whether the investment will go up or down in price and by how much.  Here is a quote from Warren Buffett:

SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.”

Back then, neither I nor the stock market pro looked at the fundamentals.  If we did, we would have realized that the stock was very overvalued.  The P/E ratio was very high.  Even though the company had been increasing revenues for most of its history, it is only when the stock dropped did its P/E come down to approximately 20.

Here are more examples of how I lost money.  I gave some money to an Investment Advisor, who put me into the following stocks at these places despite the fact that I had indicated that I am willing to take moderate risk.

James River Coal:

james-river-coal

Alpha Natural Resources:

alpha-natural-resources

Needless to say, I lost the far majority of those investments.  I should have sued him, but I did not.

Hopefully, I can help some people avoid the losses that I suffered and not make the same mistakes that I have.

Of course, one of the things I’ve learned is to never overpay, even if someone else advises me to do so.  I’ve learned how the market overvalues, undervalues and creates bubbles quite often.

I found out that it’s not impossible to make money from investing or to beat the index.  In fact, I have beaten most hedge funds and Warren Buffett.  I think you can too.  I don’t know if I can continue beating them in the future, but I am going to try to and at least I can brag that I have in the past.

Here are some of the things I have told people after I made it a mission to stop losing money and to learn how to invest:

2009-03

2009-real-estate

The following was another huge opportunity.  However, nobody told me this and it is unlikely anyone told you:

2003

Since I did so well, I got licensed and worked as an Investment Advisor for a big bank.  I learned a lot.  Read Truth About Investment Advisors to understand why clients and Investors Advisors have a dysfunctional relationship and consequently get underperformance.  I learned why most retail and institutional investors get underperformance.  Read Why Most Funds Underperform.

I also found that the majority of retail investors are still paying more fees than they need to and that they treat the stock market like a huge casino instead of a place to buy part ownership of businesses.

Hopefully, you’ll get some value from my blog.  Feel free to ask questions or suggest topics.  If you like what you read, share it with your friends.

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