Principles of Investing
Principles of Investing
Known as ‘Lojikfool’ on the trading platform eTORO, Alan Michael Mullins is one of the most popular investors with around 550 followers - some of whom have reaped the gains of over 200% over five years. A retiree at the age of 42, he has been investing for over 30 years, full time for the last 10.
On Money and Me, Michelle Martin spoke to Alan Michael Mullins, on how his 18-year investment track record posts a gain of 1560% and the 8 principles of investing he lives by.
Michelle Martin: Did your investment journey really start as a teenager with a dream for retiring when you wanted to?
Alan Michael Mullins: Yes, but I didn't start out very well. I made every mistake in the book and probably made up some new ones in the first 10 years. Then, I learned via a process of evolution - I kept doing things that worked and stopped doing things that didn't work and I'm still making mistakes today. But the less mistakes I make, the better I seem to do.
MM: But, your policy is to invest from your salary and invest three times a year?
AMM: Yes, I'm a firm believer in dollar cost averaging. We're at the top of a 12-year Bull Run in the middle of a global pandemic. If people want to start investing now, it just doesn't seem like the time to put all your money in, in one go. Now, most people's biggest cash hoard is just the money - they haven't learned yet. So, that ties in very nicely with dollar cost averaging.
Dollar cost averaging is saving from your income and investing a sensible amount into a sensible portfolio every quarter of the year.
MM: This basic habit of saving, where did that come from?
AMM: As soon as I had a proper job, I was aiming for 50%. I shared a small apartment, I didn't have a car or any expensive hobbies. We can't invest if we can't save. So, that was a very critical part of my early investing years.
MM: Did you invest in Hong Kong? I remember being in Hong Kong and everybody I talked to, including the woman selling vegetables, was investing. Did living in Hong Kong help your journey in any way?
AMM: I spent the 90s in Hong Kong. I had started investing before that, but that was really where I started investing more seriously. And actually, I started my ‘proper portfolio’ in Hong Kong in about 2002.
MM: So, you retired at age 42, did you hit your own target?
AMM: I kind of blew my target away. I found myself making more money when I wasn't working at my job. I thought this is what financial independence feels like, I can choose how to spend my time with my wife, my daughter, my health and my friends.
MM: Walk us through your principles of investing that have done you so well.
Disruptive - Doing something in a completely new way. For example, with telemedicine, you don’t have to travel to the clinic. Just by pressing a button and within 10 minutes, you’re speaking to a GP or specialist.
Growing geographics and demographics - Today, there are 18 year-olds who are digital natives and 80 year-olds who are still digital dinosaurs. As the decades go by, teenagers are going to be spending more of their money on the digital economy. So, that's an example of growing Geographics or demographics.
Profitable companies - When a company is not profitable, it scares away conservative investors so that aggressive or forward thinking investors can get the same companies at a discount. Many of my best companies started out without making profit so I keep a very close eye on the revenue growth and profit should follow.
Great leadership - When you have critical people leaving the company in a few months, you have to scratch your head a little and observe how the leader responds to the challenge.
Consumer-facing companies - B2C companies get bigger with more consumers they have, which could potentially improve their performance. For instance, Lemonade Inc is a company with a wonderful business model that provides a user-friendly AI technology for fast online payments and more and transforms insurance from a necessary evil into a social good.
For more, tune in to Your Money with Michelle Martin on weekdays from 9AM to 12PM.
This interview was broadcasted on MONEY FM 89.3 on 15 April 2021.
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