Posted by: donmihaihai | September 13, 2008

What is your advantage?

Any competent management/owner will look, search and development their company competitive advantage if there isn’t any, sustain and develop it further if the company has already process some form of competitive advantage. It is a fact that in our competitive world, if the company is selling a commoditise product/service with no advantage against their competitors, their existent is in question. Beauty China is pumping in money, building “Colour Zone” brand ever since the 1st time I get to know them. After leading the diamond instrument industry with technology, Sarin is not stopping there, it is trying to distance themselves further from their competitors by pumping more money into R&D, buy if there is better technology available outside, trying to gain more distance and offer a wide range of products, making their product the de facto standard.
In our career, we specialise. Not just that we are not building our career in a wide number of fields like law, engineer, finance, etc, we even try to specialise further by trying to be an expert in a narrow specialise field of the specialize field. In 1935, Walter J. Schloss wanted to get ahead in the statistical department(analyst department) but he lack the connections to bring in wealthy family or friends which was the norms in those days for anyone to be successful in the statistical department so he listened to an advice and enrolled in a course Advanced Security Analysis taught by legendary Benjamin Graham. And… he achieved extraordinary results for 49 years after working for Benjamin Graham for 9 1/2 years and become a legend himself by focusing on a narrow specialise subject.

What about in stock investing? As I see from successful investors like Walter J. Schloss and other, it is specialisation and playing to our advantages or competences. Simple and easily understandable? I think so but in reality, I guess only a small percent of all investors are doing it. Disagree? Let sit down in a quite room and think about it…

When the bull was running, anything goes, “investor” will choose on the method/s they want to play. Which method? Some will use value investing, technical analysis, FATA, trading, intra-day trading, etc. It doesn’t matter whether which one is being use but whether they are making money. And for value investing, especially value investing, when bear come, it doesn’t what the numbers, share price, fundamental are saying, what matter is share price is dropping. Different strokes for different times? Or just nerd following, average or commoditising like companies where competitive advantage are not being build, lousy pay as specialisation skill is not achieved.

What are my advantages or rather disadvantages? I know nothing about chart and lousy at forecasting on what will happen to the stock price or market direction and I do not know what is the next hot stock or trying to interpret how news in the paper will affect the share price and where is the bottom for the market. But I know some basic accounting, able to read some simple annual report, understand a little on some industries. By keep doing the same things, deeper and building up these basic knowledge, I will build up my advantages someday. There is no different strokes for different times, at least for me. I am not Michael Phelps.

So what is your advantage?

Let me borrow this : There are 3 types of people 1) people who know that they know, 2) people who know that they don’t know and lastly 3) people who do not know that they don’t know



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