We recently had a conversation on how accountants have an upside over us normal human beings in that by training they have to be acquainted with numbers much better than us
Able to interpret financial statements
For one, we have a problem interpreting balance sheets. I took a module in university so I am a little privileged, but for many friends it looks daunting for them.
The ability to interpret statements will go in a long way to recognize the fundamental nature of what officially the company declared.
You will be able to pick out profit and loss, cash flows and whether the company is overly leveraged
Sampling your life as a balance sheet
I also think that since they learn about this in tertiary or secondary education, it puts them on a good footing of not getting into debts, able to recognize that they are overleverage and to build up good assets
Not always the case
So my friend was telling us that this is not always the case. He has a friend who believes Jurong Technology, to him a blue chip, will always do well. Well Jurong Tech went on some really good runs, and to be honest when you see such a 2-3 years sustain runs supported by good profits you will think that way.
Well the story ends that he continued to stay invested right up to when its share price fell from dollar plus to near zero and got delisted.
Another accounts train fella got invested in Chartered Semi conductor which we all know was a Temasek holding (big brother won’t let them die right?) . Chartered went the same way as Jurong and the person probably loss a huge portion of their investments
What do you think? What about the accountants around you?
To me, fundamental reading is only part of the game, these guys fell into the trap of forming a picture that large and blue will always stay that way. Cutting losses are painful but if you have the skill to evaluate that the business proposition is failing or is not what you thought to be, you better do the same thing.
I have my own experience in thinking Interroller (Pteris) was a good blue chip paying dividend stock. When the management leaves, all hell broke lose. The business never recovered. My stock went from what I purchased at 80 cent to 13 cents currently (And I bought after a massive drawdown)
You guys should have encounter your fair share of accounts train people. Do they do well in their personal finance or manage their portfolio well? We would like to hear your stories.
- Moat Market Intel: GoodRx, O’Reilly Automotive Deep Dives, Semi Brain Drain at Apple and Druckenmiller Wisdom. - September 22, 2021
- How would you successfully close a prospect who has a better growth of wealth than your recommendation? - September 19, 2021
- Evergrande’s debt issues may result in aftershocks in the high yield bond market. - September 17, 2021