BigAlpha X IPOT

Saturday, 20 November 2021

Tirta Prayudha
Stock Investor since 2012
THE RICE AND THE CHESSBOARD STORY
The Power of Compound Interest
18,446,744,073,709,551,615
grains of rice on the 64th square
The same amount that will be enough to cover the
whole India territory with a meter thick layer of rice.

In which ”square” are you now?

The magic of 26%
...that earned Warren Buffett his first billion!

Did you know?

Investors that grow their profit at 26%
per annum will double their
money in 3 years.
“Buy stocks like you buy
groceries, not perfume.”
— Benjamin Graham
Don’t believe the hype!

Fundamental analysis can

help you determine whether a stock
is undervalued or overvalued
THE APPROACH TO
INVESTING
TOP-DOWN

BOTTOM-UP
 You will look into the economic big pictures
before making investment decisions.

Global Trends Analysis

How does a
TOP-DOWN
Sector/Industry
INVESTING Analysis

work?
Stocks
Analysis
 Analyze fundamentals
...How about of the company

BOTTOM-UP
Compare with
INVESTING? companies in the
same sector

You will focus on the company’s

underlying fundamentals.
Pick
stocks
This better suits longer-term investors.
MACROECONOMICS
Geopolitics

Government Policy

Monetary & Fiscal Policy

 Why Geopolitics Matters
Geopolitics explains how geographical location affect the
way countries and businesses reach their political goals

...as well as potentially shape political

risks.
It also influences Government Policies*
*implementations may vary across countries

❏ Foreign Investment ❏ Employment &

Governments are allowed to restrict
Labor Law
foreign investment or stop foreign It covers matters from (minimum)
firms from operating in their wage, benefit plans, unions, to
countries. medical leave.
E.g. Omnibus Law

❏ Ads Regulations ❏ Tax Code

Specific rules may be applied to E.g. Value-Added Tax (VAT),
specific products/industries. Luxury-Goods Sales Tax

❏ Monetary & Fiscal Policy

(explained on the next slide)

Source: https://chass.usu.edu/aggiesgo/geopolitics-defined
 -------------------------------------------------
Monetary Policy Fiscal Policy
Managed by Central Bank Managed by Ministry of Finance

Regulate the flow of money Manage tax revenues and policies

and interest rates related to expenditure

Focus on economic stability Focus on economic growth

Source: https://byjus.com/commerce/difference-between-monetary-policy-and-fiscal-policy/
Monetary and Fiscal Policies
have direct and indirect effects on many things,
from your personal spending to interest rates
and inflation.

Source: https://byjus.com/commerce/difference-between-monetary-policy-and-fiscal-policy/
Inverse Correlation Between
Interest Rates & Inflation

Reduced Higher Higher

Inflation
interest purchasing economic
increases
rates power growth
Inverse Correlation Between
Interest Rates & Inflation

Rising Higher Lower

Inflation
interest consumer economic
decreases
rates saving growth
Industry Analysis
Provides understanding of a company’s position
relative to its competitors or other companies
that produce similar products/services.
Economic Moat
A company’s competitive advantage which
allows it to stay ahead of its competitors.
How to Identify A Company’s
Economic Moat?
Different “castles”, different “moats”
Low Cost Advantage Moat High Switching Cost Moat
Company producing goods/services are E.g. Netflix’s “irreplaceable” original &
produced at the lowest price possible. exclusive contents.

Intangible Assets Moat Size Advantage Moat

Types of Economic Moats
Branding, patents, and trademarks can
increase customer loyalty and allow the
Sometimes the bigger, the better.
This happens when at a certain size, the
company to charge a premium on its company can produce goods/services on a
products. larger scale with lower input costs.

Regulations Moat Soft Moat

Government policies may Some moats are harder to identify.
establish “obstacles” to entry e.g. unique leadership or
in particular industry. corporate culture.
A holding company with portfolio of businesses
engaged in coal mining and logistics activities
in East Kalimantan, Indonesia.
So, how to improve
your stock returns?
 Increase your saving rate
✓ Set target!
✓ Automate your savings
✓ Track your spending
✓ Pay off high-interest debt ASAP
✓ Have a side-hustle
Stay in your circle of
competence

Stick to what you know and

never be afraid to say “I don’t know.”
Another investing strategy by Warren Buffett:

Make a few, big, and infrequent bets

“A few major opportunities clearly recognizable as such, will

usually come to one who continuously searches and waits,
with a curious mind, loving diagnosis involving multiple variables.

And then all that is required is a willingness to bet heavily when

the odds are extremely favorable, using resources available
as a result of prudence and patience in the past.”

- Charlie Munger
And when the “perfect pitch” comes along,
make sure to...
...strike hard!
Also, be extra patient.

Good things come to those

who (know when to) wait.
Thanks!
@bigalphaid

@BigAlphaID
 CONTACT
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