There are many parallel's between finding a perfect portfolio and searching for a good spouse.
On Valentine's day, let's look at at some concepts in investing which can be easily translated into the realm of Love and Romance.
a) You need to know what you want.
In fundamental analysis, some investors search for value stocks and some go for growth stocks with a great story. Similarly, you need to have an idea of what kind of girl would suit you in a relationship. Not spending time thinking about this problem will result in having needs which only a few women can fulfill on planet Earth, i.e. you might end up wanting a decent and conservative girl that will whip you silly and rock your world in bed.
A growth stock is like the hot, tanned chick in a bikini who pole dances and can show you her hidden tattoo if you are nice to her. A value stock is like a beautiful girl who loves playing with children and who is courteous to your parents and gentle with you. Some people go for growth, others, go for value.
b) You need go to the right place to find that special someone
Once you know the kind the stock you are looking for, you need to set up a screen to filter through the universe of stocks in SGX. Value investors go for low P/B, P/S, P/E with high free cash flow and dividend yield. Growth investors go for the consistent growth in revenues and EPS for the past 5 years and a story to sustain that momentum.
Similarly, conscientious girls are best found in schools and the accounting department in the workplace. If you want someone fun and outgoing, you can always go for dance classes. Don't go to a venue to find a particular type of girl that generally does not exist there. I could be proven wrong, but I doubt you can easily find a conservative and gentle mother for your children if your hunting ground is in China Black.( Note : I know there's no more China Black but you get the picture. )
c) Getting a wingman or a male friend to comment on someone who is your potential target.
Sometimes it's hard to understand why a stock is being sold as a bargain. Maybe there is forex risk. The company may be losing out to an innovative upstart. Or the stock belongs to a sunset industry. Reading the comments of a good financial blogger would give you an idea owning the stock is a good idea.
Similarly, perfectly good-looking women may be single in her late thirties. A wise guy will find out why this is so by probing her friends or doing some research. Maybe the hot-chick is tremendously neurotic or she is expensive to upkeep. The dating market can be as competitive as the finance market. Many good ones are already taken during University.
You need to find someone with a flaw that you can tolerate to be happy in this world.
d) Determine your appropriate level of commitment.
If you are just scoping the stock the first time, keep your exposure to a minimum at 1% of your portfolio. After a few quarters and some dividends later, you will have a keen idea of whether this stock is one to keep in your portfolio. You can increase your exposure to 5-10% if that is the case.
Similarly in dating, you should not be rash. When you first get to know someone, dating casually will do. A person who thinks like an investor will certainly not go for one night stands ( that's for the folks who play options ). Make sure that you really know someone and her family before you commit to a marriage or cohabitation.
So there you have it. By training yourself to be good at picking stocks, you will find that many techniques can be brought to other areas in your life.
Hope that you have a Happy Valentine's day and have found someone that you can truly buy-and-hold for the rest of your life.