Chris Lau - Seeking Alpha

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Wednesday, October 07, 2009

Crossing...the...Finish Line (Memo to Followers)

Dear Followers:

KaChing is scheduled to launch trade mirroring in under two weeks. However, this portfolio is likely to be delayed in qualifying for mirroring on launch day. Crossing...the...Finish Line of the race will need to wait.

These are the following reasons:

1. Under-performance against the s&p (largest loss was in commercial real estate) over an 8 month period.

2. Lack of sticking to a stated strategy.

3. Maintaining an above-average cash level provided superior safety but sacrificed on potential gains.

My portfolio IQ score is 126. To qualify, a score of 140 is required. It is close to the finish line, but it not close enough.

Investing is not a race. Investing is about (1) not losing assets and (2) beating the market over a very long period of time.

To Beginners:
There are a number of followers who are new to investing. These beginners are smartly learning about the stock market instead of being a sucker (a sucker is born every minute, but clearly "kaChingers" are not one of them).

My advice to Beginner followers:
* Open an IB (Interactive brokers) account and have a balance of at least $5,000-$10,000.

To Interested Investors:
Mirror more than one qualified kaChing "signature investors." This will give you the portfolio diversification.

Tip: Be sure to review the "analytics" first for investors you intend to "mirror." After all, the IQ number will only tell you risk-adjusted return, investment management focus, and ability to write stock research. Since the cost of transactions on Interactive Brokers is low, buy your own stocks too.

As for investors interested in mirroring my portfolio, the game plan stays the same. When the IQ score reaches 140 some time after the official launch day, mirroring my portfolio will be possible.

Below is the game plan. The approach that will be taken in managing the portfolio will be as follows:

1. Risk for holdings will continue to be assessed well before its potential gains (margin of safety).

2. Continue to build portfolio based on identified macro themes playing out.

3. Maintain Hedge strategy to reduce losses.

4. Be a rabbit. Let favorite stocks reach entry price. Don't chase wins. After all, gains are only as good as price paid.

5. Stick to stated a strategy and become an expert that field. It is the only way hard work may be translated to attaining superior knowledge in that field.

6. Invest in companies for which superior insight and knowledge in them may be attained.

...
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