overconnected

Key takeways from the book Overconnected by William H. Davidow :

• connectedivity created new business models (e.g. railroad, internet)
• overconnectivity can cause instability from positive feedback 
• overconnectivity can cause vulnerability from overspecialization
• complex systems are at risk of accidents and contagions
• overconnectivity was a factor in the collapse of Iceland and the subprime crisis
• need to reduce the positive feedback (e.g. through regulation), design more robust systems and restructure overconnected systems

6 Criteria for Selecting Stocks

Dr. Tan Chong Koay's investment philosophy: Be fully invested near the bottom and trimmed near the peak. But should never be fully invested at all times.

Dr. Tan is one of Malaysia's eminent value investor, having managed several award winning funds under his company Pheim Asset Management.

He select stocks based on the following criteria:
1. focused management
2. high earnings growth potential
3. attractive profit margins
4. strong balance sheet with low gearing
5. market leadership in growth industries
6. reasonable valuation

His book Rising Above Financial Storms can be bought from local bookstores.

David and Goliath

David and Goliath - Malcolm Gladwell

- The advantages of disadvantages (and disadvantages of advantages)
- Inverted U-curve:

• first stage (linear rising) - doing/having more make things better
• second stage - diminshing returns
• third stage (flat) - doing more doesn't make much difference
• fourth stage (falling) - more resources are counterproductive

- Big fish-Little pond effect - it's better to be a big fish in a little pond
- Some difficulties are desirable - emerge stronger
- There are limits to what evil and misfortune can accomplish

Investing in the apocalypse

Investing in the apocalypse

book by: James Altucher, Douglas Sease

3 principles of apocalypse investing -

• Fade the fear - buy the fallen index when others are selling in panic; works for stocks too, but when drop by more than 10%
• back door investing- buy large cap strong companies involved in solving the problem, best when crisis will end quickly
• front door investing -buy speculative companies specifically involved in solving the problem, suitable for long-term, slowly developing crisis

E.g. pandemic
fade the fear - buy the falling markets
back-door - companies with involvement in vaccines e.g. GSK, PFE
front-door - companies focusing on specific vaccines e.g. BCRX

Debunkery - Ken Fisher

I read this book recently. To sum it up all this is what he recommends:

invest in stocks all the time even when you are retired
in the long term it performs better than any other assets
the market will always bounce back even after a bear



so just get into stocks when you can
forget about dollar averaging
diversify diversify diversify
growth, value, small caps, US, foreign, various sectors
just buy them and hold
don't trade or time the market
it is too complex for any single indicator to be reliable
that includes pe ratio, interest rates, comsumer confidence and whatnot
or events like sars, terrorism, unemployment
only exception is the presidential cycle
and all these are proven by historical facts
cash flow management is the key
diversity smoothens out the volatility

Well, that's the long term strategy
but who can wait for long term
we all want to become rich now ! right?