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Adopting a systematic investment strategy

The book by author William Cai, an adviser and portfolio manager in a local financial advisory firm, includes a chapter on market psychology and behavioural finance to help investors manage their minds and emotions.
The book by author William Cai, an adviser and portfolio manager in a local financial advisory firm, includes a chapter on market psychology and behavioural finance to help investors manage their minds and emotions.PHOTO: BLOOMBERG

Portfolio manager seeks to help investors capture bull markets and avoid bear markets

WHAT'S THE BOOK ABOUT?

Author William Cai, an adviser and portfolio manager in a local financial advisory and fund management firm, wants to empower readers to secure a healthy financial future and investment success.

Written in a reader-friendly manner, his book offers practical and valuable insights that will motivate you to take charge of your financial journey.

The book is filled with various investment options, theories, styles and strategies. It also provides the nuts and bolts to help you construct and manage an investment portfolio as well as identify major market trends.

Mr Cai believes that by adopting a systematic investment strategy, investors can avoid bear markets and capture bull markets.

SIX KEY TAKEAWAYS

1. Many investments are sold to investors without their needs being considered holistically as this can be a long and tedious process. As a result, investors end up with unsuitable investments. The book lists some of the common life goals and ways to quantify them.

2. Most investors - no matter how rich or sophisticated - are not fully aware of the risks involved when investing, and feel regret only later. The book lists seven "all-time" sources of risk for them to better assess the range of investment options available and to guide them towards choosing the right investments to suit their needs.

3. To "sell when markets are greedy and buy when markets are fearful" is easier said than done. Most investors tend to buy near market tops only to sell when they should be holding and buying.

  • HOW TO BE A SUCCESSFUL INVESTOR: STRATEGIES TO HELP YOU TAME THE BEAR AND RIDE THE BULL

  • By William Cai

    Self-published/Paperback/319 pages/$32

    Available at major stores like Kinokuniya, Popular and Times

Any good investment can turn into a bad deal in the hands of an irrational investor. The book includes a chapter on market psychology and behavioural finance to help investors manage their minds and emotions.

4. Many investors have unrealistic expectations of how long-term returns are derived, or hold on to perpetually bearish views.

In addition, many investors who are sold investments are usually presented only with points they want to hear for a sale to be completed, only to get disappointed later.

The book brings readers through the history of the different stock market gyrations and shows them how markets can go sideways and down, and longer and deeper than expected.

With these facts, readers become better investors, know what to expect and become more patient.

5. Many investors make investment decisions based on publicly available information. The book shares the different investment styles, strategies and sources of returns that readers should be focusing on instead.

6. While the buy-and-hold strategy can work in the long term, many investors are more interested in preserving their capital in a downturn rather than beating a benchmark.

Studies have shown that most investors do not know when to buy and sell.

The book shows a systematic way to capture bull markets and avoid bear markets, and lets readers know how to recognise the symptoms before major market turns occur.

A version of this article appeared in the print edition of The Sunday Times on December 10, 2017, with the headline 'Adopting a systematic investment strategy'. Print Edition | Subscribe