Investment Philosophy, no more Warren Buffet
By: Symplified - Angus Tay
Tags: Philosophy, Stocks, Investment, Investing, Stock Market

Hello peeps, Internet has been flooded with Warren Buffet Philosophy on value investing, but how many of us can achieve his height these days. Ever since he made his secret public, do we see other billionaires are born in this way? The clear answer is no, and this method isn’t working for everyone.

So today, I will be talking about another philosophy from a less known investor, CIS. But who the hell is CIS?

Takashi Kotegawa — CIS

I first come across CIS from his book,

Well, CIS is not his real name but his in-game name. His name is Takashi Kotegawa, at the age of 41, with 3 kids from what I gathered, and he was once an esports champion. In the past decades, he has earned 200 million US dollars with his own comfort at home. On Twitter, he has a total of 450k followers to date and often tweets about his investments. Many Japan Investment bank traders have made reading his tweets daily a habit. We know that Donald Trump tweets do affect the stock market, but he is not alone, CIS has once tweeted about his sell-off on TAKATA, on the same day, that stock dropped by 8.8%, and sooner or later, that company has filed for bankruptcy.

Enough of his intro, let’s talk about his investment philosophy. A disclaimer here, CIS is a short and mid term trader.

CIS rule number 1: The stock market is not a probability game.

If we toss a coin for a sufficiently large number, the probability of getting head and tail will be 50% each. But in 10 consecutive tosses, it is possible to get 10 straight heads. Even so, the probability of getting head again is still 50%. You may be thinking, it has been 10 times, the eleventh should be tail right? Theoretically, betting on the tail has a higher probability right? But the fact is, the coin has two faces with equal probability, that’s right, 50% chance each side of all time, which is the case in the stock market. We shouldn’t make any assumptions but to hold the stock during the uptrend. If we always make a prediction on the ups and downs of a bullish stock, we might lose the opportunity. Therefore, CIS rule number 1, never predict the high and low point. Let’s look at the NASDAQ, FAAMG, and Tesla for example. These stocks and indexes have been skyrocketing for years now. If you wait for a down, you might miss the train now, and perhaps you have missed it now, right? :)

CIS also adds that we can actually ignore the first sudden drop and choose to sell at the second sell-off if that happens. But many investors will choose to buy in at this time because they think that it will be a much safer way to buy at a lower position. This should be avoided and here comes rule number 2.

CIS rule number 2: Be a trend surfer, never ever go against the market.

A stock that goes up will continue to go higher, and a stock that falls will continue to fall. The rationale behind this is that people who buy stocks have to put in more capital to make the price goes up, and the reason why the buyers have a greater advantage is unexplainable at that moment but it will be reflected in the price at the end. Always long and never short, once the trend is over, sell them ASAP (CIS only do long).

CIS reminded that when the stock is bullish, you are possible to miss the chance if you are trying to wait for a correction. Hence, he suggested to ride the trend and follow the momentum along. Never afraid to chase high, because there’s always a higher point! We should always listen to the market!

CIS rule number 3: Focus on the final earnings and not the win rate

Besides that, CIS also advised to sell the stock once it incurs a loss but never sell when it goes up, and we must consider our final earnings. Since the probability of winning and losing is almost the same, when we win, we should win big and lose, we should lose small. Even though we have a 50% win rate but we will still ace a high profit at the end! In fact, his winning rate is just 30%! We must always alert that 70% of our decision is wrong and 30% is profitable a huge profit. Hence, we need to minimise the loss in this 70% loss and maximise our profit in this 30% correct investment.

Don’t afraid to admit your loss, stop loss immediately. If the trend goes the other way around after cutting your loss, admit your mistake AGAIN! Respect the market, and go in again. BUT, if there’s a third time, we can stop doing that particular stock, CIS advised.

Voila!

That’s all for this sharing, if you like it, please don’t hesitate to like and share this article, this will definitely motivates me to create a greater and genuine content.

Cheers!