My Story

Before 2001, like a lot of other people, I relied on the financial analyses and research reports, and I believed in the big brokerage firms. Plus, I was overconfident in myself. As a result, I was wiped out by the end of 2001.

I had the option to take a Chapter 13, but I chose not to do so, because it would have created a situation that would have enabled creditors to liquidate my wife’s business.

Instead, I turned to the wisdom in the famous book, The Art of War, for guidance.

The first idea from the book got my full attention was Sun Tzu’s advice to “Turn disadvantage into advantage by learning from mistakes.“

The second idea that struck me was that I did not really “know the enemy” to the degree that I should have, and I had gotten trapped. I had trusted the analyses, research reports, and the big brokerage firms.

Sun Tzu advises to really understand the enemy’s modus operandi. I realized I had not really done the detailed, personal research on the stocks that were recommended by those advisors and analysts.

The principles of The Art of War catalyzed my thinking, and in 2002, with a new perspective gained from the book, I located one particular stock, Elan Pharmaceuticals (ELN). That stock fell from $40 down to $1.03. By the time I recognized it, the ELN stock was at $1.27. In 2004 and 2005, I sold them for about $25. I was back in business!

My problems weren’t over, though. My wife’s small business was part of the mortgage lending industry, and we could see that trouble was ahead for the finance industry. I had an insurance business, and customers began requesting insurance for property that was over-valued. Again, I could see that there were economic problems brewing.

Meanwhile, the Middle East war was costing the country $1 billion a day. When the price of oil jumped from $60 per barrel to $140 per barrel in a 3-month period, I knew the Market was going to collapse!  I thought the Dow Jones would bottom out at 8,000 points. Unfortunately, I was over-confident, and thinking it had hit bottom, I kept buying. I wasn’t just wrong, I was dead wrong! The Art of War had warned me to not ever be over-confident. I had slid down into the valley again.

Fortunately in early 2009, I picked up Bank of America at $3. This stock put me back up on the mountain again. The Art of War guided me to choose BAC, because in accordance with Sun Tzu’s guidelines, I had made sure that I had researched all that I needed to know to make the choice. This time I paid little attention to the commentators and analysts, and instead I had a thorough understanding of all the interrelationships between BAC and all the other players on its field, including the government. Then I made my move.

Because the book helped me get out of the hole twice, I have been motivated to write this book to benefit others.

 

Copyright Y.K. Wong, 2009

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