05/2021
An “Ordinary Mind” in Buddhism means the average mentality that is given naturally to every human being. It is the common structure or patterns of every human mind. A famous quote from Buddha – “The mind is everything. What you think you become”.
Although I am a Catholic and a very proud one, I have embraced the “Ordinary Mind” in successful investing for more than 4 decades. Shaping the mentality of a sharp and smart investor is also a hot topic in GCP Global classes in the past 3 decades.
What is an “ordinary mind”
The “ordinary mind” is defined as remaining steady and unbiased in all circumstances and in all of a person’s behaviors. It is a very simple and behavioral concept, but surprisingly, many investors (we have taught than 8,000 investors ranging from institutional funds, index funds, hedge funds, family offices and HNI in the past 32 years) find it difficult to apply in investing.
Most investors have ordinary minds. But one thing that sets apart those who can achieve success, is that these people can always maintain an ordinary mindset in all circumstances, notwithstanding many issues that may affect the emotions of a person. As investors, we have always taught that maintaining an ordinary mind, accepting who we are, and doing what we do well, is one of the key success to investing.
Why an “ordinary mind” can lead successful investing
In Tibetan Buddhism, the venerable 14th Dalai Lama defined the mind “as an entity that has the nature of mere experience, that is, “clarity and knowing”. It is the knowing nature, or agency, that is called mind, and this is non-material”.
Do not mistake luck for capability
Wide swings in stock prices in modern financial trading, the most recent led to the collapse of Archegos Capital from US$50 billion in stock fire sale, exemplifies many investors incessant and instant need for profits and glorification. This leads to high risk-seeking behaviors. In fact, if Bill Hwang had folded his hands and rein in his leverage bets before the implosion on Viacom, Baidu and Tencent Music, he would have been one of the most successful investors that no one has heard of.
Bill Hwang, the founder of owner of Archegos Capital built his firm into a US$10 billion family office over 9 years from US$200 million capital. His is the proverbial American rags-to-riches story - when Bill moved to Las Vegas in 1982 as a high school student from Korea, he spoke minimal English and his first job was as a cook at McDonald’s. Upon graduation, he landed a plum job as an investment advisor for Julian Robertson, the respected stock investor whose Tiger Management, founded in 1980, was considered a hedge fund pioneer.
Bill was known for swinging big. This high risk-seeking behavior led him to make concentrated bets on shares in mainly South Korea, Japan and China. As many of these positions were on borrowed money, wins and losses are always supercharged or magnified. He used total return swaps (TRS) in his bets. He then magnified these bets via leverage up to 5 - 6 times compared to the normal 2 - 3 times, deployed by most hedge funds.
As an ex-trader which included a 3-year period working on Wall Street, I can clearly associate with Bill’s ups and downs. Similar to Bill, I love to swing big in the right market conditions. Unlike Bill, I was lucky to have made sufficient so as to retire in my early-40s in 2009. It takes great capability to build your wealth to US$10 billion, but one guiding principle for me is that any new positions taken in a new trade clearly put you back on the starting point again. No amount of experience and capabilities, will be able to protect you from the vicissitudes of the market like sudden price changes. Thus, a maximum on-the-guard attitude is adopted during such periods.
I do admire Bill’s ability to increase the size of his family office assets from US$200 million to US$10 billion. This amounted to a return of 50 times in just 9 years! Working backwards, this meant that his CAGR was in excess of 50% or 5 times the return of the S&P 500 index. As an ex-Wall Street trader, these returns are just simply awesome and mindboggling! In my more than 30 years of investing, there were only 10 years or roughly one-third where I was able to hit a return of more than 50% in a single year. Notably, 6 out of the 10 years were the years following market crisis or huge market sell-offs.
The other 4 years where I had been able to notch up gains of more than 50% were due to either correct stock picks or thematic picks. Such experiences have defined my investing style and how I teach at GCP Global – “Bet Big in Times of Market Crisis”. Of course, I need to add “with little or no leverage”.
Mindfulness in Successful Investing
One thing that have guided me from the practice of the “ordinary mind” is to seek mindfulness. Mindfulness in Buddhism means to “know the mind and be aware of its capacity. It means to pay attention in a particular way to the mind and to the body as well as the experience of daily life. When an awareness of the present moment is cultivated, intention becomes clear”. It is believed that to know the intentions behind the thoughts and actions is to know the self.
Cultivating Mindfulness in Successful Investing
In trading, I have to be a calculated risk taker to win big, but I am also very clear when I am running leveraged positions, let alone several leverages ones, that can cause strong tailwind risks which can happen very quickly. Market crisis and severe sell-offs provide the enlightened investor to bet big, leverage or not and the returns can be phenomenal.
Cultivating mindfulness is an evolving mental training for me. Taking leveraged positions in the market always heighten the level as it perhaps is an inconstant nature of the world. Thus, if I do not achieve the peacefulness of mind, I try to revert to the natural state as soon as possible by reducing the leverage to zero.
The practice of Mindfulness seeks to return the mind to its fundamental state – one of clarity and stillness. Life experiences like running leveraged portfolios through a certain timing creates severe stress, sense desires and muddles the pure state of the mind. The goal is to always return the mind to its original state of clarity. The path forward lies in the cultivation of mindfulness both internally and in daily living.
An ordinary mind’s ability to confront successes and failures include the abilities to correctly attribute causes and effects. Do not mistake luck for capability as it is important to seek out the real reason for success or failure.
We have had the fortune and luck to triple our wealth in technology stocks in 3 years. In our next upcoming DIET class on Disruptors, Innovators, Enablers and Technology on Sat 29 May 2021, we seek to identify and update you on the winning stocks with Mindfulness achieved via the “ordinary mind”. Do take advantage of our Early-Bird Special at
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6. Opportunities to Accumulate Tech and China Internet Stocks – 11 Apr 2021, BUSINESS TECH ASIA
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https://gcpglobalsg.wixsite.com/gcpglobal/post/separating-the-sheep-from-the-goat-in-s-reits
2. WHERE & HOW to make your next Million in the Year of the Ox
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4. “I Made a Mistake” – Best Advise for the Sagacious REIT investor
5. Tripling Your Money with Global Tech stocks
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