Alvin Soong’s Blog

This portion covers on Sun Tze Chapter 1 Laying Plans 2/3: (Pre-requisites of investment planning) :

5 Factors:
1) Moral Influence - when recommending investment, we look at the culture and sentiments of people. For example, some would have lower risks than the other, some would have longer time span to others. Catering the right portfolio for each individual is important, as good performance of the triple entities ( the company, the funds, and your financial advisor) would ensure a long term loyal customer who would always come back to you for advise. One should look into the track records of these 3 entities to ensure they are morally sound for you to invest for a long term trustworthy advise.

2)Generalship/Command - Sun Tze states that a ruler deliberates law and capable generals execute them. Ruler may be defined as a company head and general is refering to your financial planner. Despite all changes ongoing in a company, a good financial planner/investor(such as one self, aka general in Sun Tze sense), refers to 5 qualities which are 1) wise 2) sincere (relationship between investor and the advisor must be built on mutual trust and vice versa) 3) compassionate 4) courageous to implement 5) strict/discipline. Given these qualities, one can be focused to get the returns he wants. Of which 5) is the most important.

Negative traits, according to SUn Tze not to have in investing includes 1) Recklessness (else be killed. Here it means one should be decisive in investment decisions to sell/buy) 2) cowardly (else be captured) 3) quick tempered (else be easily influenced and affected) 4) sensitive to honur (else be easily insulted or manipulated) 5) over compassionate to people (else be harassed)

3) Climate (refers to investment climate here) - determined by economic cycles (recession/growth- when is a good time), changes in market, social and cultural norm of that affects how investment products are structures, technological changes and changes in consumer behaviour and law&regulations.

4) Terrains- looking at the possiblities of attacking and withdrawal from the market based on the outlook (or terrain). If one looks at the companies stability in which the investments are based on, then it would be looking at other factors (such as its supply of materials/ labour/ capital markets/ supplies of machinery or equipment/ management/ technology/ consumer markets/ telecommunications)

5) Law and regulations of the organization and governing body. New guidelines can either aid to push up your investments or otherwise. A weak system of investment will easily fall off even though it mentions of high returns (eg. on the autosurfs in the last few years)

Law also refers to nature’s law of investment. Eg. when an article on newspapers claim that CPF may increase their returns to 8-10%, there was a hoo-ha that it is safe. Yet we also know that law here refers to the nature law- the art of investing, that when one mentions a returns of 8-10%, it is no longer refering to low risk (it is always either high risk high returns or low risk low returns). - see straits times forum sat 24th March

6) Know your strengths before investing

7) Training in understanding investments

8) Discipline in investment within your time frame to reach your goals

We would discuss more in details in the next other blogs..

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