The week before, I was in Taiwan when Super Typhoon, Dujuan, hit the island. The typhoon left three dead and 376 injuries in Taiwan. Numerous houses were destroyed and million of households spent the rain-beaten night in darkness from the power outrage caused by the typhoon.
While the typhoon brought some inconveniences to my holiday, we were lucky as we were able to work around our plans and continue our holiday without much hiccups. The work arounds were only possible because of what we did which can be applied to our investments.
Changing of Plans
Plans are meant to adhere to. However, like what Murphy’s Law says, If anything can go wrong, it will, and when something goes wrong, we have to learn to adapt and change our game plans.
When I was planning for the trip, due to the limited window of travel, we chose to travel to Taiwan in late-September till early-October thinking that the chances of getting hit by a typhoon should be low since the typhoon period in Taiwan is between July and September. And true enough, the typhoon hit Taiwan and affected the whole island.
That was when we had to review our plans and see which parts of our travel plans have to be changed.
Similarly, while investing, we should always have a game plan. A game plan which not only includes an entry plan but also an exit plan. Investing is a long-term one. We will have to constantly monitor the companies we invest in and if the investment is not going according to our plans, we will have to revisit our plans and make changes to them. Only then, we can steer clear of the dangers of investing and not get sunk into too deeply, resulting in losses.
Do Not Just Heed Advice From the Experts
A day after the typhoon made landfall on Taiwan, we were supposed to make our way up to Alishan. Being worried that the roads would be affected, we called our hotel in Alishan the night before to seek their advice if we should continue our way up the next day. The hotel staff was very confident that they will not be affected and thus we decided to proceed according to plan and make our way there.
While we were on our way the next morning, we received a phone call from the hotel informing us that we should not make our way up as the heavy rain make the journey up Alishan dangerous.
Even as a local, they were not able to predict how bad the situation will be. Similarly in investing, every situation is different and nobody will be able to tell, based on past events, how the market is going to react to the event.
Watch the News
In fact, the day when the typhoon hit taiwan, I had a group of friends who were supposed to fly back from Taipei. When they were checking out of the hotel, the hotel employees were asking them if they were sure that their plane was going to depart.
Since they did not receive any notification from the airline, they assumed that their flight is going to depart on schedule and proceeded to head towards the airport.
When they arrived at the airport, they had continued to board the plane despite the weather getting worse. In the end, the airline had to disembark them as the weather reached its limit and flight was cancelled.
All these while, if they had watched and followed the news, they would have noticed that most airlines have already cancelled their flight or brought forward the flight timings.
Similarly in investing, even after you have already invested your hard-earned money into the companies, we have to continue watching out and follow the news of the invested companies. It is often in the news that gives the tell-tale signs that something is happening to the company so that we can evaluate if we should continue to hold the investments.
The Bottom Line
Contrary to what most people thing, investment although can bring us financial freedom but that does not mean investment can allow us to sit back, relax and continue to earn money. Often than not, we have to continue spending time understanding the investments we are making and make changes to the investment plans according to what is happening.
Oh, and finally, spending time understanding does not mean to just listen to what some financial advisor had to say and reacting. Understanding the investment is to read and follow the news of the company you are invested in for any policies they just implemented, new products they launched, etc.