#193. Investment Guru

Where Is The Investment Guru?

More than a decade ago, I was introduced to Unit Trust investment by a friend. We were university students. He has signed up to be a unit trust consultant. He shared with me the potential to make money from unit trust investment. I was awed to see we could make more profit than if we just keep our money in fixed deposit.

Two years after I graduated, with some money from work, I eagerly contacted my friend. I called him to get his unit trust consultant ID and went to the bank. Taking his advice on 'diversifying', I deposited all my savings into 5 different funds.

After I walked out of the bank, I felt like an investment guru has just sent me free money. Imagined profits were already running in my little greedy mind.

Of course, it was back in those days like it is today. Recession and market downturn happened. I saw my investment value dipping fast and furious. I was furious too. I thought my guru has told me to diversify my investment and I would be fine. Out of the 5 funds that I have invested, only one fund was still in profit.

Instinct told me to cut losses. I moved all the money from the 4 funds into the only performing bond fund. A few years later I recovered all the losses and made a little profit. I sold all my unit trust investment. After that, I told myself that when investing in unit trust, just buy the bond fund. That was what I thought.

Anyway, I thought to myself, that guru's advice on diversifying perhaps was wrong. Perhaps a more focused approached will work better. Then some friends told me about Warren Buffett's approach. They say he does not diversify. He buys only a specific market.

Now when I invest in gold, I read up some opinions from some internet forum. There are gurus too in this forum. There are the Elliot Wave gurus. There are the theory of cycles guru.

The Elliot Wave gurus talked about at what target price we will soon reach. And we can take profit when we reach that target price.

The theory of cycles guru from time to time tells about a specific date to buy. He or she will tell the forumers that this and this date is a good time to buy and a good time to sell.


Something is not right

The Elliot Wave gurus are usually giving opinion such as if the price breaks through USD1,050, then it will move forward. And they continue, if the price drops below USD1,020 that means the bear is coming.

From all these gurus, I learned that we must question ourselves. What is wrong? The wrong thing is they can never tell which way the price is heading. They are giving 50:50 answers. It may go up, it may go down. It's not a good enough answer for me.

Now, the cycle theory guru. What about them? This and this date is a good date to buy. Yes, there are times the dates are correct. For example, 2 October 2009 was a good date to buy gold. It was the day before the full moon on Saturday. Since the market/bank close on Saturday, the day before it is a good day.

Yes, 2 November 2009 (Monday) was another good day to buy gold. It was a day after the full moon day (1 November 2009 Sunday).

Does that mean all full moon days are a good day to buy? There were full moon days where price dipped. We just have to be careful with the cycle theory.

Following these advices, I have missed many opportunities especially the recent uptrend in gold possibly making more than 10% within a month. I made a very small profit only this year. Smaller than those buy-and-hold investor.

However, all is not lost. In my last article, you read about techniques that can make more than buy-and-hold strategy. And also the best part is the guru is in us.


The guru is in us

I have decided to abandon all gurus.

If you are a surgeon, do you need a guru to be standing next to you in the operating theater to tell you where and when to slice and cut?

When you drive your car, do you need someone sitting besides you to tell you when to shift the gear? When to hit the brake?

Some forumers and even close friends still say, "Just tell me when to buy and sell."

Do you prefer to have the airline pilot land the plane you are in with fully automated system? If autopilot system works, why do airlines still pay hefty salary to real pilots? You have to learn to land your own investment plane as well as how to take off.

If you decide to make your money work hard for you, you have to be as serious as a surgeon and pilot. You have to learn all you can and be your own expert. I told a friend that I have bought a book that is more than two hundred Ringgits to learn serious investing techniques. He said, "After you have read it, can you summarize it for me?"

People go to university to study many years to be engineers, doctors and accountants. And then they go to work for big companies putting their knowledge to use. When it comes to their own financial matters and making their money work hard, they show a different attitude.

Do you rather work hard for a company that has no family ties to you? Or do you rather work hard for yourself and your family by improving your investment knowledge? People have their priorities in reverse manner. I would rather work hard for myself and people that I have family ties with.

If we can spend so many years and money in school and college, why can't the same be spent on our own education in investment knowledge? Two hundred Ringgits is nothing compare to the money you spent in college education that only lands you in a slavery world.


Invest in the guru, your own self

A guru is an expert in the thing he or she does. To be a guru requires deep understanding in the subject matter. Remember, A.S.K.

Keep searching and researching. Keep questioning and asking. Above all, remember to keep investing in developing and improving your knowledge on investment techniques.

My timing on buying and selling is now based on my own technical analysis. Some of you have asked me what books do I read. I can't give you a specific book. You just have to reading as many good books that you can find on technical analysis. Giving you a book name will only limit you to that book as the all-time guide. It's not. There are many good books.

A tip to finding good books. When you are ill, you go to a doctor. So when you want to be rich, you take only advice from the rich. I read books written by successful investors. No, I have not read any book on Warren Buffett's ideology. He is not a technical analyst, he is a fundamental investor. However, you may want to read those books on him. Whatever that you think suits your style of investment. My view is more towards technical analysis. Studying the charts and timing.


Question your every move

There are many people who want to make their money work hard for them. However, they say, "Just tell me when to buy and sell."

My advice is, the lazy bugger dies in the winter. They want to be spoon-fed.

When you ask the guru, and he tells you an answer, you feel like you have discovered the whole secret. It's not. There are so much knowledge in the guru's head. He can't possibly share it all with you. He only offers you a tiny portion of the knowledge. Being your own guru helps you to analyse the price trend better. You make your own informed decision.

Many forumers say "When to buy? When to sell?" They forget the most important question. "Why sell? Why buy?"

Why is it time to buy? Why is it time to sell? If you can't answer these questions, don't ever buy or sell.


Take ownership of your own investment

I urge you to be your own expert just like you drive your own car with no one telling you when to hit the brake. Following a guru is a dangerous thing that many people fall into.

I have also seen times when people blame the guru when he was wrong. The guru has been right for the last 9 times, but was wrong on the 10th count. And he was blamed and criticized simply because the followers have so much greed. They want to make profit out of all the 10 times. They can't lose even one time. They are not thankful when for the last 9 times they have profited from the guru's advice.

It still hurts my heart when I see people losing money in unit trust investment simply because their agents tell them to buy. They jump when the agent says jump. The treat the agent like guru advising them. Or at least they think the agent will be the guru to help them look after their investment. But unit trust agents sometimes don't tell them when to open the parachute.

If have you taken ownership of your own investment and be knowledgeable on investment techniques, you will not fall without a parachute.

Be your own guru.