Business Times Interviews - Starting Young

Business Times - 22 Aug 2011

When best to take risks

Undergraduate believes in taking risks when young.
By MICHELLE YEO

RISKY decisions are best attempted when young, according to 22-year-old Poh Jin Hui.

The second year business undergraduate from the National University of Singapore believes it is better for younger investors to take bigger risks as they have less to lose.

His risk-taking certainly seems to have paid off and he has since doubled his initial investment of $15,000, spreading them over deposits, equities and derivatives.

In his free time, the self-confessed Starbucks lover enjoys meeting his friends at the popular cafe for a drink or two. Mr Poh is also a fan of travelling and will be off to Norway for a student exchange programme next year.

Q: When did you start investing and what got you into it?

A: Like most guys my age, I got to know more about finance after junior college. I started off with putting my cash into fixed assets which would yield better rates as compared to merely just leaving my savings in the bank. I then used the waiting period to pick up more knowledge on finance.

Before I went to university, I worked at Citibank and after speaking to some colleagues who were active investors, I decided to step out of my comfort zone and put my money into some equities, starting with local stocks and blue chips like SingTel and DBS.

Q: Describe your current portfolio.

A: Its currently made up of Singapore and US stocks as well as a bit of derivatives, which I've just started going into.

Q: What was your best investment?

A: Yangzijiang. I invested in it earlier this year and within that week it rose by about 10-15 per cent.

Q: And your worst?

A: About one and a half years ago when I invested in Citigroup. A lot of people also went in at the same time as I did when the price of the stock was very low. I was really expecting it to go up but at the time when the company was actually doing well, the market sentiment was still quite bad. Since the stock price did not go up but instead remained stagnant, I decided to pull out and made some losses.

Q: Are you generally a risk-taker or are you risk-averse?

A: On the scale of one to 10, with 10 being very risk-loving, I would give myself a seven. This is probably also due to my age. Currently, I do not own that many assets but I would certainly own far more at the age of 30 or 40. Thus I think it would be better off making risky decisions and losing whatever I have right now than doing so in the future when I have more to lose.

In the long run though, I believe that achieving stability is more important than short-term gains.

Q: In that case could you share with us your riskiest investment?

A: The most risky investment I made was deciding to buy Apple stocks. The risk did not lie in the stocks itself because Apple stocks are definitely not risky - they are always on an upward trend.

The risk involved was that I had to leverage money to purchase the stocks because they were very expensive. I ended up entering and exiting within 30 minutes. I ended up making some earnings but the risk was very high as the amount of money I used to leverage was huge.

Q: Could you share some investing tips?

A: I think it is important not to be emotional. When you see your investment going down by a significant percentage, you should know when to pull out and not cling on to it, hoping that it would rise again. In recent years especially, the market has been very volatile and so investors should always decide in advance when would be bet to pull out.

Initially, I made a lot of wrong decisions by not pulling out when I ought to have pulled out or not going in when I ought to have. I think the bottom line is that investors should not be greedy and should always invest within their means.

Q: What advice would you give specifically to younger investors?

A: I think new investors should try their hands at investing in a virtual trading platform before attempting any real investment. These platforms provide lots of financial tools and charts which will help new investors familiarise themselves with the tools used in financial analysis.

Q: What do your parents think about your foray into investing?

A: My father actually does not quite approve of my going into investment at this age. I think he is worried that I'm not mature enough to handle my own portfolio and to deal with the risks involved in handling the amount of assets which I have.

Nevertheless, I do believe that I started at the right time as it gives me a period of learning before I enter the working world and encounter people already equipped with such knowledge.

Q: Where do you see yourself financially in the future?

A: I do not see myself working in the capital market for a long period of time. I would not mind working in it for a short period at the start of my career as it is exciting and returns are very lucrative. But I see myself going into corporate banking, preferably in a foreign bank in the long run.

As for concrete financial targets, I do not set any because a lot of things depend on opportunities. I rather not stress myself too much in trying to achieve a certain goal.

If you're between 17 and 30 with investing experience to share, do get in touch. E-mail btyif@sph.com.sg with 'Starting Young' as the subject heading and include your name, contact details and a short write-up on your investing story.

Quote:Apple stocks are definitely not risky - they are always on an upward trend.

Ah. The omniscience of youth.

I hope for this young man's sake that he goes bust very soon, so that he gains some wisdom quickly. It will be much more painful if he goes broke later on, when he has much more at stake. Especially if by that time he's got a car, wife, house and kids.

(22-08-2011, 11:27 PM)d.o.g. Wrote: I hope for this young man's sake that he goes bust very soon, so that he gains some wisdom quickly.

Haha, d.o.g., I was also quite amused when I read that section. Risk is defined by how nicely a stock is trending up? That's bollocks I say.

They usually do learn over time, though it's usually through "the hard day". I also hope, for his sake, that he gets the message sooner rather than later.

(22-08-2011, 06:36 PM)Musicwhiz Wrote: Business Times - 22 Aug 2011

When best to take risks

Undergraduate believes in taking risks when young.
Q: In that case could you share with us your riskiest investment?

A: The most risky investment I made was deciding to buy Apple stocks. The risk did not lie in the stocks itself because Apple stocks are definitely not risky - they are always on an upward trend.

The risk involved was that I had to leverage money to purchase the stocks because they were very expensive. I ended up entering and exiting within 30 minutes. I ended up making some earnings but the risk was very high as the amount of money I used to leverage was huge.

Nice.
I got lost somewhere there.

(22-08-2011, 06:36 PM)Musicwhiz Wrote: I started off with putting my cash into fixed assets which would yield better rates as compared to merely just leaving my savings in the bank.

A lot of people also went in at the same time as I did when the price of the stock was very low.

Apple stocks are definitely not risky - they are always on an upward trend.

I ended up making some earnings but the risk was very high as the amount of money I used to leverage was huge.

I think new investors should try their hands at investing in a virtual trading platform before attempting any real investment.

This kind of fella also can call Investor? I think at best, he's a trader. At worst, he's a gambler. He used the word 'Fixed Assets' when he meant 'Fixed Deposits'.

And I can't believe his advice on using virtual trading environments. Shouldn't one be learning basic and sound principals such as accounting, financial statement analysis, industry characteristics etc?

However, I'd give him a tiny benefit of the doubt that the newspaper did a lousy editing job to fit his reply into the word limit.

(23-08-2011, 09:44 AM)kazukirai Wrote: This kind of fella also can call Investor? I think at best, he's a trader. At worst, he's a gambler. He used the word 'Fixed Assets' when he meant 'Fixed Deposits'.

Hehe. I guess that's why they are called "Young Investors". They can call themselves anything they wish and employ a myriad of methods, ultimately they are still doing self-discovery. I guess the editorial team at the Business Times must have been dozing off when they did not spot "Fixed Assets", instead of Fixed Deposits!

(23-08-2011, 09:44 AM)kazukirai Wrote: This kind of fella also can call Investor? I think at best, he's a trader. At worst, he's a gambler. He used the word 'Fixed Assets' when he meant 'Fixed Deposits'.

And I can't believe his advice on using virtual trading environments. Shouldn't one be learning basic and sound principals such as accounting, financial statement analysis, industry characteristics etc?

However, I'd give him a tiny benefit of the doubt that the newspaper did a lousy editing job to fit his reply into the word limit.

Totally agree! Most people can't seem to be able to differentiate between investing and speculating.

Can only pray for such young "investors" that they don't get burnt too badly if their high leverage 30 minutes bets fail them..

Looking at the way they "invest", I am wondering, maybe it is safer for them to just go to MBS or RWS? Just take the $100 entrance fee as brokerage fees.

I hope he discovered this forum by chance and discovered some follies of his.
Anyway youth is a good thing, it gives one more chance to experience and learn.. that is if one really learns from mistakes.

But let's give him benefit of doubt, maybe he doesn't wan to call himself a trader, sounds like a gambler so he called himself an investor though he is using trading on margin strategies.

Btw AAPL shouldn't be classified as a technological counter, its more of a combination of consumer discretionary cum tecnological plus a little dash of cultism. Heh heh.

Stocks are a Ponzi scheme? Wow, the interviews are getting more and more "out of this world"!

Business Times - 29 Aug 2011

STARTING YOUNG
Making his pot of gold from silver

Lim Ting Ping pays his way through NUS by investing in the precious metal, reports STEPHANIE RIADY

AS GLOBAL uncertainties lead investors to speculate on the price of gold, Lim Ting Ping finds investment potential in a less well-known, but in his opinion, equally good option. Against the pressure to follow the sentiments of the crowd, he did his due research and started his investment in silver.

The 25-year-old investor's success has allowed him to finance his entire four-year undergraduate studies at the National University of Singapore, as well as to start his own online marketing business. Yet, in retrospect, he believes that this is a risky investment strategy, and would advise new student investors to invest a portion of money earned from business - instead of investing with the goal of financing a business.

Q: How did you get started investing in silver?

A: I first got thinking about trading when I was in junior college, when a friend asked me (if I have ever) considered going into financial trading. This caught my interest, so I decided to read further about investing. I had the option of investing some money that I had saved from my Web posting business that I started when I was 14 years old.

But what should I invest in? What was clear (back then) was that I had learnt not to invest in the stock market. When I was in the army, I read a lot on economics in publications like Time magazine. At that time, I came across an article on the mortgage crisis issue - and I read this before the 2008 crisis happened. My friend was telling me that it was going down, and hence I thought that we should not be investing in the stock market. When I left the army, this idea was etched in my mind, and that is why I started investing in silver instead.

Q: How was your first trip investing in silver?

A: It was very simple. The first thing I bought was a very small ring, but I subsequently went further and invested all my money in silver. The price of silver went up, and it continued to go up again, so I made double the money from there on. Before the market crashed in October of 2008, I sold off my investments in silver. I bought silver at $12, it went up to an all-time high of $20, and I sold it off at $17.

However, even though I was making money in silver, I actually lost money in real terms, due to the exchange-rate risk between the US dollar and the Singapore dollar. I realised that I made 10 per cent that month, but did not make money on a net basis because the US dollar was also going up. That's when I realised I needed to be in the foreign exchange market, and this incident spurred me to learn about this new area.

Q: Why did you choose silver, of all commodities, to invest in?

A: I've done a lot of research on silver. If you look at the economic fundamentals, gold may seem more valuable in a sense. But if you look at the past, the amount of gold above ground is probably the same amount as silver. As people use more and more silver within the industrial context - for things like photography, iPods, televisions, for example - the amount of above-ground silver will actually be less than gold. So in a sense, the value of silver should be more since there's less of it available.

As a result of this, I became more and more convinced that it made sense to buy silver, and it has certainly made the most money for me so far. As part of my strategy, I used a lot of options - I bought a lot of core options on silver.

Q: Why do you to stay committed to silver?

A: Although I discovered silver on my own, the reason I stayed committed in this trade is because of my professor, who taught me macroeconomics. He told us something that I will not forget. He said 'inflation won't happen in the short run, but only in the medium run'. This meant that even if the government pumps in money, inflation would only happen after about five years or more down the road.

During crisis, we usually expect prices to deflate, and that most asset prices will go down. I remembered my professor's words, and I figured that since prices are low during the crash, I should buy because inflation should come up. Although it will not happen immediately, it will come. And if you look at prices now compared to the past, you will notice that prices have been moving up. So, I guess I made the right call back then. Because of my professor, I stayed committed to my investment trip in silver.

Q: What advice would you give a student who is seeking to invest to pay their way through college?

A: I suggest that from their income, they allocate 10 per cent for savings, 30 per cent for business, and 10 per cent for spending. It is only the other 50 per cent that should be invested.

I do not think students should invest in stocks because it is, in my opinion, a ponzi scheme. You don't have control - and in investing, we want control.

If I could go back in time and alter my investment strategy, I would actually start a business instead, or invest in a business. Ideally, I would start a business first to have a job that pays well, then invest that money into something. That should be the order of the process.

But I do notice that most people start by investing first, and then they use that surplus money to finance a business. That's the wrong approach. I think it's too slow.

If you're between 17 and 30 with investing experience to share, do get in touch. E-mail btyif@sph.com.sg with 'Starting Young' as the subject heading and include your name, contact details and a short write-up on your investing story.

While I don't doubt that this guy knows some things about Silver- I feel it's necessary to highlight some points in his interview that I feel are dangerous for any young, fledgling Buddies who might get 'inspired' by his interview.

' Wrote:When I was in the army, I read a lot on economics in publications like Time magazine.

Of all places to learn Economics from, he learns from a Time magazine...He probably hasn't heard of the curse of Time's front page. The Economist, in my opinion, is a much better publication.

The best place to start will be Econs texts as that builds some form of framework for understanding economic principles. Then from there, observe and realise how different reality is.

' Wrote:As part of my strategy, I used a lot of options - I bought a lot of core options on silver.

Leveraging up. Being lucky doesn't make one smart.

' Wrote:He said 'inflation won't happen in the short run, but only in the medium run'. This meant that even if the government pumps in money, inflation would only happen after about five years or more down the road.

And if you look at prices now compared to the past, you will notice that prices have been moving up.

I think his Econs professor should be feeling sad to be mentioned here- not so much that his theory is wrong but that his student doesn't understand the term inflation.

Inflation after all is defined as 'a sustained increased in the general price level'. If you buy something on hope that its price goes up due to inflation, then going by the textbook definition of inflation, how does one do better off?? All it does is preserve the number of burgers one can buy.

If he thinks that he Silver will give him good returns, he must essentially be thinking that Silver does better than Inflation, there must be some driver of value. This driver must either come from increase in Industrial Demand for silver (which means the economy picks up in certain sectors) or that Investors flock to Silver as a store of value, momentarily driving prices of Silver higher than the general price level.

' Wrote:I do not think students should invest in stocks because it is, in my opinion, a ponzi scheme. You don't have control - and in investing, we want control.

I hope this guy isn't an NUS econs student. He needs to start reading Minsky and some history to really understand what Ponzis are.

The base case for Ponzis are schemes where monies from later investors are used to pay off early investors. the scheme ultimately collapses when the pool of later investors start drying up and investors can't be paid the returns they were promised.

' Wrote:But I do notice that most people start by investing first, and then they use that surplus money to finance a business. That's the wrong approach. I think it's too slow.

He thinks Stocks (which legally are part ownership of a business) are scam while Businesses are good. This guy obviously doesn't know much about stocks at all.

I've also been thinking about Stocks vs Business and maybe Buddies would like to share their views. If we see Stocks are ownerships in Business, and usually Businesses that get listed usually have some form of successful operating history before listing, would you not consider a Listed Co. as a less-risky business than a start-up?

After all, a business operating for some time will have the advantage of knowing the industry, an established clientele, good relations with suppliers etc. Compared to a startup, you have to build all these relations with customers, suppliers, regulators etc from the ground up.

Of course, one would naturally expect a premium to be paid for a listed co. hence, Graham always reminds us, "At what terms and what price?" But if the price were attractive enough, why would I go for a start-up vs. a more established entity?