Hey Reader - Thomas here.

Good day to my fellow compounders!

In 3-Bullet Sunday, I share with you the three most interesting piece of article, video or podcast I came across for the week on investing and growth philosophies.

Enjoy!

SQ 656 to Fukuoka in 2020. I couldn’t have been more excited about seeing cherry blossoms for the first time in my life... But I never took that flight. COVID-19 shut travel down in March 2020, about a week before departure.

That same month, the US stock market’s emergency brakes kicked in four times in eight trading days. When good businesses go on sale I buy a bit, and if prices keep falling, I buy a bit more. That March I just kept buying as the market fell, until the cash I’d set aside for investing dried up.

And just to be clear, my salary was still coming in, and my emergency cash was untouched. But I had no more bullets, with prices still falling, and that’s when I started thinking about putting my CPF into the stock market.

This week’s piece is about investing my CPF, the retirement spreadsheet I built in my twenties (worked out to the second decimal point, and wrong), and what happened when I put a number on my retirement with the CPF Retirement Payout Planner.

Read it here: https://steadycompounding.com/investing/ran-out-of-cash-march-2020/​

If you’re in the north, CPF Board’s Ready for Life roadshow is on at Northpoint City, 20 to 22 November. No registration needed.

This piece is a paid collaboration with CPF Board. The views, the spreadsheet and the cancelled trip are all mine.

Compound Steadily,
Thomas

I. How to Build Wealth, an Hour a Day: My Book Launch Chat with Reggie

At my last Singapore book launch, Reggie from The Financial Coconut sat me down in front of the audience and started with a question he'd never asked me in all my times on his show: why I got into investing at all.

The real answer goes back to our letter box. As a kid I loved dashing down to check it for McDonald's coupons, until the Singapore Power bills started piling up, each one thicker than the last, and then the pink envelope came. Soon after, the power or the water would be cut off. I didn't want to feel that helpless ever again.

From there we got into what people actually ask me at dinner. A friend recently asked what I thought of SK Hynix, and all he really knew was that memory chips kept rising. A lot of us have full-time jobs and kids, yet we want to dabble in complicated businesses mostly because they're at the peak of the news cycle. Investing doesn't reward complicated games (there are no style points), and most of the reward comes from the waiting.

Reggie also asked how I check a stock after it falls (it starts with my credit card statement), when I'd sell, and what I told three close friends to do if I ever say I want to write another book.

Before I settled on how I invest today, I went through a dividend phase and a technical analysis phase. The Lunch Break Investor is the book I wish I had when I first started, and it's at steadycompounding.com/book.

​Click here to watch​

II. Dennis Hong on What AI Can't Make Abundant

Every big platform shift takes something scarce and makes it abundant. The internet did it to distribution, mobile did it to attention, and AI is now doing it to production, which covers the writing, code, analysis and customer support that used to need people.

Dennis Hong of ShawSpring Partners, a fund that holds just eleven stocks, calls AI "a scarcity-destroying machine." So the question he keeps coming back to is what it can't make abundant.

The moats he'd be most careful with are the ones that come down to having enough people to do the work. When he's in San Francisco he takes Waymos everywhere, and he imagines China will go the same way with Didi, whose edge was having the most drivers locked in. That edge only held while drivers were scarce. I'd never looked at a ride-hailing app's drivers that way.

His whole process is built around why customers stay locked in. While studying Sea in its early years, he noticed people around Jakarta doing the Shopee Shake for Shopee Coins, and he saw it as free advertising and a sign Shopee was becoming the word people use, the way Uber became the word for a ride.

AI puts that to the test. If customers, suppliers and staff were only locked in because the product was hard to make, Dennis says that lock-in is gone. He has a short list of what he thinks survives.

He also explains why he passed on SpaceX at its IPO price, which he puts at a hundred times sales, and what studying it turned up instead.

​Click here to read​

III. Tom Gayner on Eight Doubles and the People Who Missed Them

Markel went public at $8 a share. By Tom Gayner's count, the stock has roughly doubled eight times since then.

It has also fallen 20% or more eight times along the way, and he was in the middle of one when he gave this talk in September.

Gayner, who runs Markel, tells a story from Richmond, Virginia. After the second double, people around town started saying they'd missed it. Then the stock went sideways long enough for everyone to believe it, before jumping again in a hurry, and the people at $64 said they'd missed it too. That's a lot of people kicking themselves at prices that turned out to be cheap.

Price, he says, is the least important of the four lenses he uses to judge a business, which he admits is close to heresy at a Ben Graham conference. He tests it on Buffett's famous American Express bet after the salad oil swindle by asking what would have happened if Buffett had bought the day before the scandal instead of the day after, and he works through both the maths and what it would have done to Buffett's clients.

He also explains why a footrace from Key West to Seattle is the only race he'd fancy against Usain Bolt, and the question he asks himself to tell a temporary problem from a business that's finished.

​Click here to watch​

That’s all I have for you today!

Till next week.

Thomas Author of the #1 Straits Times bestseller The Lunch Break Investor​

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