Framework for Investing | Isaac Fang

Framework for Investing

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Framework for Investing

Citation from CMFAS

The details of the framework are to be worked out separately for individual methods/approach/style. This framework can be distilled further.

Put it simply, 3 main items: (1) Form a view (2) Align your actions in accordance to the view (3) Manage the risks.

Form A View

You got to form a view of where the markets are heading, or which sector/country/counter is going to do well or not. How you developed that view is up to your individual preferences be they technical analyses, fundamental analyses, or a mix of both. (There are other ways too other than FA, TA but that’s for another day.)

Align Actions

It seems obvious that once you have a view, you ought to express it, but that is not so if you dare not pull the trigger. This is the step where you put your money where your mouth/views are. Simplistically, if you think market is going up, you can’t be shorting the market right? What is the instrument of choice to express your view is another decision point. How familiar are you with the asset classes to structure/tilt your own portfolio? Do you want leverage with it? What is your RDMILT and RRTTLLU?

Manage the Risks

What is your contingency plan? Views can be wrong, just form a new one, keep calm and carry on. Do you have a cut loss level? Things don’t always go according to plan. Reducing costs associated with exiting the investment should be thought about before inception right?

Repeating the framework in cyclic fashion is close to the work of portfolio management already. Inject the details of the framework to fit your unique self. If you would like a design driven style discussion with me, please do not hesitate to make an appointment.

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11 Comments

  1. […] is distilled from the higher order framework. The details within can be customised according to the method and style specifics. Formulate your […]

  2. […] types, their own characteristic RRTTLLU as well as RDMILT. They need to be integrated into a framework as part of the portfolio management process. You concoct your own blend to match the extent of […]

  3. […] the cart (method/approach/strategy) behind the bull (market), not in front of it. I believe it is important to know what conditions […]

  4. […] fit in? What does it mean to practice the adaptive market hypothesis? I have written about the framework, distilled further even and shared the entire process overview. Appreciate the interconnections […]

  5. […] risk appetite is not static as well and if there are opportunities in the market for capture, an investment planning review is warranted. In fact, investment reviews are needed whenever investment views […]

  6. […] are not just used for hedging of course, people do use it for speculation as well. A knife has great utility, it can be used for chopping vegetables or it can be used to stab […]

  7. […] types of investments like property, REITs or value investing. The list of investments/strategies/approaches is infinite and no way am I discriminating […]

  8. […] loops are quite dynamic in nature. The market state changes frequently which alters the investment view and may require adjustments to the …. Personal life stage changes also affect their financial plans through a change in […]

  9. […] a choice of instruments to express that view and subsequently, costs and risks must be managed. For more elaboration on the framework of formulating an investment plan, read here. (Thou shall not repeat what has already been said. Here’s to show consistency across all blog […]

  10. […] has this got to do with investment advisory you might think. It is interlinked with the framework, approach, and moving forward, a part of the iterative process of portfolio […]

  11. […] the investing framework and its distillate process. Diversify approaches to the market and look into your own overall […]

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