Business Times Interviews - Starting Young

(12-09-2011, 11:41 PM)KopiKat Wrote:

Quote:Q: How do you choose the stocks you invest in?

A: Before deciding on a stock, I will look into the business, namely what the current business is doing. With BreadTalk (one of my investments), for example, I checked out how many outlets they have; I will also do a five-year trend and calculate a five-year revenue, the profit margin and the operating costs. After that, I will do a simple forecasting - using their growth rate to calculate the net asset value, which I get by subtracting liabilities from assets. As a value investor, and a fundamental kind of investor, I will read annual reports every day and devote two to three hours to them every weekend. You can also go to some websites to get information, like the SGX's daily announcements of all the companies.

Either the reporter anyhow report or this fella anyhow throw smoke or what's stated in bold is too complicated for me to understand.

I think the reporter anyhow report...otherwise he is saying:
forecast NAV = f(g) = Assets - Liabilities which is to me.

Pretty interesting that he got an insight while playing neopets...kinda reminds me of Newton sitting under the apple tree. Goes to show that one should always keep an open mind- you never know what in your current environment will inspire you.

Haha, Neopets, I used to play that, but the 'Stock Market' there really doesn't reflect the real world at all. Stocks in that online game just randomly goes up for no reason and crashes the next day without any explanation and buying cheap stocks in that game has a 90% chance of gaining.

Try that in the real world (eg. Buying Bank of America stock) is kinda suicidal.

Business Times - 19 Sep 2011

STARTING YOUNG
The 4Rs approach to value investing

Ivan Ho shares about his pursuit of consistent returns, which led him to co-start a research company. By DOLLY CHIA

WITH a desire to increase his inheritance from his late father, Ivan Ho Wai Kit chose to major in Finance in the National University of Singapore (NUS) and discovered the 4Rs approach to value investing.

The 24-year-old went through cyclical gains and losses in his investments and realised that technical analysis and trend forecasts lacked the ability to get consistent returns on investment. He then abandoned his charts and explored value investing in pursuit of consistent returns and managed to triple his initial capital. He met three other students in NUS who share his views and the four of them created a small research company called Project Zero.

Q: Can you explain what are the 4Rs of value investing?

A: The 4Rs of investing refer to the right industry, right company, right management and right price.

A 'right' industry under the perception of value investors is an industry that has relatively few competitors, is relatively hard to enter due to high initial capital expenditure or certifications, like oil and gases or engineering industries. So we avoid companies whose industries have little barrier to entry such as food and beverage companies. Industries that are growing or stable by nature are also considered 'right', such as the medical industry.

To find a 'right' company, we look at the quantitative and qualitative sides of things. On the quantitative side, we look at ratios. We like companies that deliver consistently high returns on investments, low debts, high profit margins, high current ratios, low capital expenditures, strong free cash flows as compared to the industry. On the qualitative side, we study the company's economic moat, the brand name, core competence and the nature of their product.

Price is what you pay, value is what you get. As value investors you need to think like an owner. When you buy into a stock, think of it as if you're buying the entire business. You need to understand the business model.

Apart from that, you also need to understand the 'right' management. You need to meet them and study their employees. There are three very important personality attributes they must possess: integrity, competence, passion.

The last R refers to the 'right' price. When most stocks are trading at 25 to 30 times their expected earnings, it is time to be cautious. When there is a recovery we look out for four signs: interbank spread narrowing, tightening of the corporate bond spread, mortgage rates dropping, and bond issuance increasing. These are very theoretical and can be easily done especially in research-intensive schools such as NUS.

For the layman, you need to start searching for undervalued 'gems' when you see words like 'recession', 'meltdown', 'doom', 'gloom', 'dark cloud' appearing in the newspapers.

Q: Why did you choose Finance and not any other industries?

A: Because Finance is where all the money is. When I was at Singapore Poly, I had the chance to study either Architecture or Business; so I asked myself: 'Where does the money usually flow to?' and (the answer is) probably Finance. I didn't regret that because it was a very interesting topic for me.

Q: What is your investment strategy?

A: My investment strategy is the same as Project Zero's. I use the 4Rs and when they come in alignment, I will buy the shares.

I usually aim for mid-cap stocks with consistent high returns on investments, high margins, low gearing, and avoid small-caps. I'm afraid to buy into these small companies, which will become value traps later.

The reason why I aim for mid-cap stocks is that capital gain comes easier with this class of stock as opposed to small-caps, as the big boys such as the fund houses and high-net-worth individuals are able to buy into their stock and not fear the non-liquid nature that small-caps have. High paying dividend stocks such as CapitaCommercial Trust (CCT) and First Reit are also my favourites, as I can use the dividends received to reinvest.

Currently, I'm still holding Suntec Reit, CCT and Boustead. I've sold Hour Glass and many other stocks three months ago. I'm now waiting to enter the market again to buy more gems.

Q: What was your worst investment?

A: My Poly lecturer recommended me to put some of the money into his company. It was supposed to go public. He promised about three to five times' returns. I didn't study the fundamentals and honestly, I was greedy. I put quite a huge sum of money into that company. As of today it still has not gone for an IPO and there are a lot of problems with the management. That was my worst investment. I blame myself because you have to take responsibility as an investor. You can't blame other people because it's your choice.

Q: How did you come across the value investing method?

A: I came across the value investing when I was in National Service, and had a lot of free time. It was during the 2008 crash and I was quite intrigued by it. A lot of people were afraid of investing. So I googled: 'The most successful investor in the world', because success leaves trails and you have to follow them. Warren Buffett's and Peter Lynch's names came up. I read their biographies and annual reports and studied the structure of value investing.

Q: How has value investing affected the way you invest ?

A: In 2008, I applied one of Warren Buffett's famous rules - invest when fear is the greatest. That's how I picked out gems in the market like Suntec Reit, Hour Glass, and CapitaCommercial Trust.

Q: How did Project Zero come about?

A: It came about when I was at NUS and I was constantly looking for 'gems' in the market. I needed help and I needed to find people with the same investment mentality. I met my friends, Jing Yang, Liao Hanxiang and Huang Qiyuan, and our investment methods are in line with each other's so we started a research group, to find 'gems'. We are now a company which does research on local stocks and free-sharing using the 4Rs of value investing. There are currently 32 members in Project Zero.

Our head researcher, Qiyuan, came up with his own model to evaluate companies based on the 4Rs. In value investing we want to find the intrinsic value of the company which is not shown in the stock market. Depending on the risk appetite of the investor, we will build in a margin of safety. If the intrinsic value is higher than the stock price, we will build in perhaps 20 per cent margin of safety and that will indicate where we will enter the market or buy into the stock.

Business Times - 26 Sep 2011

STARTING YOUNG
Inspired by a soap opera

Ernest Lim knew he wanted to be an investor at the age of 21, reports DOLLY CHIA

OBTAINING his Chartered Financial Analyst or CFA certification at a tender age of 28, Ernest Lim says he is currently getting 10 to 20 per cent returns from his investment capital every year.

Inspired by 'The Magnate', a 1994 soap opera, the 30-year-old saw the financial world as his route to wealth.

Unlike most people, he chose to study accounting during his time at Nanyang Technological University (NTU) with no intention of becoming an accountant, but rather, an investor who fully understood financial statements.

Q: What is your investment strategy?

A: Its more to buy the best company in the best industry at near to the best price.

I don't pounce on very speculative stocks. When I trade I put in a lot of research. It's not like the uncles and aunties who invest based on tips they heard.

The company must be a company you understand. You must know their business calculations and know what they are doing.

Q: How much have you earned with investing?

A: More or less about 10 to 20 per cent per year since I started nine years ago. I also made some losses during the financial crisis.

Q: What was your best investment?

A: My best investment was after my NTU days. It is a company called Broadway Industrial. It's a small to mid-cap company, which does actuator arms.

It is actually a big company in this field as it is the top three suppliers for actuator arms, which is used in the hard disk drive industry.

I bought in at around 29 cents in December 2009 and sold it in January getting 60 to 70 per cent returns.

Q: When was the first time you invested your own money in the stock market?

A: That was when I could open a trading account when I was 21 years old and put small amounts of money in my account. I was studying at NTU then.

The excitement of investing in stocks made me gain interest in them. I also like to work by myself and I like to do research.

As long as you put in the effort to understand the company, chances are you will get your returns when you invest.

Compared to working for a company, you will grow your wealth faster if you invest in the stock market, but it has to be at a sustainable rate.

Q: What was your initial capital?

A: It was not big. When I set aside capital for investment, I will make a case assumption that the money will be lost.

Even if I do all the homework to research any one company, the company may go bust and the financials may not be what it seems.

I set aside about 5 to 10 per cent of investable capital, so assuming the company goes bad I will only lose that amount.

Q: What was your worst investment?

A: My worst investment was done during my time in NTU. It was in ACCS, which is also a small to mid-cap company. It does the service and repair of mobile phones in Singapore and Asia.

I bought in February 2005 when they announced that they lost Nokia as a customer and the share price dropped. It was a good bargain then.

I did not have the proper knowledge when I was in NTU as well as the contacts and people to know more about the company.

I saw in some forums that people were posting comments saying that the company would have other customers who will pick up the slack.

In the end, it was not true and that was quite a bad investment because I bought it at 50 cents and I had to cut loss at 30 cents. It went lower to 10 cents after that. It has now been renamed, and below the radar screen of most investors.

Sometimes we need to make mistakes in order to know what is lacking in our investment strategy.

Research takes time and I thought that the price would move up by the time I'm done with it. Given another chance I would not do that again.

Q: How has taking accounting in school helped you? Would you be better off with a finance degree?

A: During my NTU days, I also took up finance modules. In NTU, the business and accountancy classes have the same first year syllabus.

During year two and three, I took up financial modelling and derivatives securities so as to know the concepts behind investing.

Q: When did you know that you wanted to be an investor?

A: Since I was 21, I knew that I wanted to be an investor. I did not see myself as a remisier but I've always wanted to be in this field. Even though I studied accountancy, I did not go to the Big Four when I graduated.

I went to GIC Special Investments to help support the investment groups. I then went to an asset management firm to manage assets of high net worth clients.

During my last year in accountancy, I took up the CFA to be more knowledgeable in portfolio management.

Q: At what age did you get your CFA?

A: The CFA requires four years of relevant industry experience so I took the first paper during my third year in NTU and passed.

There is a total of three papers and I took two to three years to pass them. I then worked till I was 28 and completed my CFA. That is the fastest path to get a CFA.

Q: How many companies do you currently invest in?

A: At this point of time, I do not currently invest in many companies. From this year, there are a lot of event risks that are uncontrollable. The outcomes of these events are very difficult to predict.

For example, in February there were problems in the Middle East, like Egypt. In Singapore in late February, there were the S-chip problems, and accounting irregularities which affected sentiment. Then in March, there was the Japan earthquakes. On and off, you had European and US debt problems.

As far as I know, paper trading never works because there are no emotions involved. When real money is at stake, people behave in vastly different ways!

Business Times - 03 Oct 2011

STARTING YOUNG
Women can excel in investments

The undergraduate believes the investment world should not be male-dominated, reports DOLLY CHIA

TWENTY-THREE-YEAR-OLD Danielle Hong believes that the investment world should not be male-dominated and that women can also excel in investments.

Currently in her third year in the National University of Singapore (NUS), she aims to enter private banking upon graduation.

She believes that women are well equipped with sixth sense to sniff out management inefficiencies within companies while men are more inclined to numbers.

Ever since she assisted her parents with equity research, she has always wanted to start investing her own money.

Q: What made you gain interest in investing?

A: My interest in investment comes from various aspects and experiences. One of them was from my internship with Singapore Press Holdings (SPH) in Lian He Zao Bao during my junior college holidays. I was with them for five weeks.

I got to interview other people during company events and company reporting results.

I've also learned about investments from my colleagues in Zao Bao. I was about 18 then.

I then went to NUS Business School as I have always been interested in business.

Q: What is your investment strategy?

A: I follow more a behavioural finance approach, with a certain amount of fundamental and technical analysis.

I invest in equity more on a short-term basis, but I invest in foreign exchange (forex) market with a fund manager to manage my money well.

I trust what I see first-hand about the markets; I analyse them, and together with market reports, financial reports, news and certain technical indicators, I then decide on whether I should hold it long or short.

I also utilise my network well, gathering as much information as I can.

Everyone has different strengths and weaknesses, and we need to utilise our strengths well to do well in everything, including investment.

Q: What was your first equity investment?

A: My equity investment started with Chinese hotel chain listed in NYSE (New York Stock Exchange). It was almost two years ago, and I was helping this investment-consulting firm Focus Partners Limited conduct research on High Speed Train (HST) development in China.

I attended the company's owner, JP Odunlami's talk on hedge fund and related topics on investment organised by NUS, and I was intrigued by the equity market.

I volunteered to help him with market research and he agreed.

I did on the ground market research in China on HST developments, business hotels and business luggage.

I went to Shanghai, Nanjing, Wuxi, Hangzhou and Ningbo - they are all cities with great economic growth.

I went to the railway stations, to see the development on HST, and the market for business hotels.

As expected, every station has at least several three to four star hotels in close proximity, to cater to business travellers and tourists. These hotels also have a good business.

I remember my night in Nanjing, when I didn't have hotel bookings; there were no hotels with available rooms, especially hotel chains like Yu Ting. I was told that they have excess demand even from members, so they couldn't cater to walk-ins.

The other cities I went to also had a good development in this area, with more hotels being built near HST stations. Although I feared for an over-supply of hotels, I believe the good market condition can last for at least a year.

I then searched on-line to compare hotel chains in China that are listed on NYSE and NASDAQ.

I analysed the profitability of their companies using their financial reports, and information on-line.

The companies certainly have good development, but their stocks were a little overpriced and in the long run they would come down to a more reasonable price.

With the eagerness to test water in equity market, I bought into the sector and made about ten to 15 per cent returns before closing my position.

Q: What was your worst investment?

A: After my earnings from a shipping stock, I watched the shipping industry closely.

I read brokerage report everyday, and when they recommended this particular shipping stock, indicating optimism in the shipping industry, I bought into it.

Instead of diversifying my portfolio, I bought shipping stocks for my whole portfolio.

The worst thing was, I didn't set a limit for cutting losses and held on tight to my positions.

Most people, like me, become emotionally attached to their stocks and hold on to them even though the market is going against them, hoping the stocks will rebound.

The industry is not really doing well now, along with the market.

The lesson I learned is that if you're not going to hold a stock for very long; like two to five years with constant dividend payments, you need to set a limit to cut loss and to cover up your positions.

Q: What stocks would you recommend people to buy right now?

A: The best short term investment would be Raffles Medical Group and the best long term investment would be Revlon due to its non-cyclical and strong financials, with a high earnings per share.

Forex Funds with stable returns and program trading to ride along the risky and volatile markets are also good investments.

Q: What was the most valuable lesson you learned from your experience?

A: I've learned not to trust brokerage recommendations fully as they may have motives behind their recommendations.

You need to do your own research and only trust yourself.

Prior to investing real money, young investors need to train themselves using virtual platforms to gain knowledge, experience and train their discipline for cutting lost.

Losses are usually good lessons as well, although it is not a cheap one.

Business Times - 10 Oct 2011

STARTING YOUNG
Helping others to be financially literate

Undergraduate set up firm after learning from his own experience in investing. TEH SHI NING reports

EXPERIENCE is often the best teacher. But to spare others the pain of wrong investing decisions, undergraduate Sam Goh Nai De learnt from experience, founded a financial literacy firm and now coaches others via seminars and talks on all things investment-related.

The 24-year-old started his own wealth coaching firm with a fellow student in 2009, to provide what he terms 'true financial literacy'. That is, the promotion of prudent investing skills to help individuals to make informed investing decisions.

This came about when, during a six-month investing hiatus after an investment soured, he paid the price of 'cold, hard cash' and learnt that many investing courses and seminars out in the market were unhelpful ones pushing specific products.

His firm, Wisdom Capital, has since broken even, with close to 90 seminars delivered at schools, companies and to members of the public. The long-term plan, says Sam, is to turn the company into a not-for-profit entity, one via which he can continue to pursue his passion and hobby of imparting investing knowledge.

He shares with BT some of his investing ups and downs and his interest in financial literacy.

Q: How did you get started investing?

A: I first started dabbling in investments at the age of 18 and engaged in a series of trading activities via my uncle's stock trading account. At that time, only individuals above the age of 21 could open an account.

My uncle played an instrumental role in stirring my interest in investing. I used to live in my uncle's house while still a primary school pupil and remember how his eyes would be glued to the teletext stock market numbers on the television screen. I was fascinated with the numbers on the screen, and started asking him many questions about investing.

Q: Is your risk appetite high or low?

A: Based on a risk profiling test that I've done, I am a growth investor. In other words, I can assume relatively high risks. The ideal portfolio for a growth investor is to have 70 to 80 per cent of his investments in equity related products and allocate the remaining 20 to 30 per cent to fixed-income products. As I have a relatively longer investment horizon, without assuming many commitments currently, I can reasonably take on a higher level of risk to chase higher investment returns.

Q: What has been your worst investment to date?

A: This has to be the very first stock I bought into when I started investing in 2005. Back then, my investment knowledge was limited and I was not aware of the inherent risks associated with stock markets. I invested $8,000 in a local water treatment and bio-technology firm, solely on the basis of a 'hot tip' from a good friend of mine who had been pretty successful in the stock markets. However, this proved to be a bad investment decision. The company's share price plunged more than 40 per cent after a series of negative news announcements associated with business operations overseas, and I lost more than 50 per cent of my capital pulling out of that investment.

Q: And your best investment?

A: About three years ago, I invested close to S$15,000 into ETF Gold. My entry price was US$750. Now, I am close to doubling my investment. In fact, I have adopted the dollar cost averaging technique to increase my investment exposure to gold whenever it goes into a mini-correction.

Q: What are some lessons you've learnt?

A: The most important investment an individual should engage in is an investment into financial education. To achieve investment success, an individual needs to learn the art and science of investing. As Warren Buffett puts it, never invest into something that you don't know.

Q: Could you share your investing philosophy?

A: I believe it is very important to have a strategy in investing, and think it is best to have a framework and system in place. My preferred strategy is to first identify broad investment themes, not unlike the sovereign wealth funds', followed by sectors, and then asset classes or specific companies.

For example, keeping to an investment theme of 'emerging super economies', I invested successfully in Golden Agri-Resources and CapitaLand for their exposure to such economies.

Q: What is your current investment portfolio like?

A: I am currently staying out of the stock market, but am looking out for good, attractive bargain investments. I've kept my investments in commodities, including the SPDR Gold ETF and Silver ETF.

I also have some, but minimal, exposure to derivative products such as forex. My favourite pair is Euro-USD.

Q: What are your long-term financial goals?

A: Financial freedom. I want to be debt free and aim to do that both by wealth accumulation - my investments - and by taking care of my personal finance. I do that by setting myself a monthly cash budget, and making sure that at least on an annual basis, I enjoy a budget surplus.

Monetary reward aside, I think the thrills and frays of picking out a winning stock or fund is something I find fascinating. At the same time, investing is a fundamental step to achieving true financial freedom. I regard investing and promoting financial literacy as a passion, a hobby that I enjoy doing and will continue to do in my free time.

I hope to pursue a career in financial advisory or priority banking upon graduation, but will then convert Wisdom Capital into a not-for-profit body to continue promoting financial literacy.

If you're between the ages of 17 and 30, and have an interesting investing tale to share, do email btyif@sph.com.sg now, with 'Starting Young' in the subject header.

Business Times - 17 Oct 2011

STARTING YOUNG
Discipline 'key to success in trading'

SMU graduate Spencer Li, a proprietary trader, tells TEH SHI NING trading is not all risky gambling

TENNIS and trading have a good deal in common, says Spencer Li of his two passions. To the tennis spectator or passive market onlooker, both may seem full of thrills, spills and excitement. But to the tennis player on court or the trader in front of his screen, it's quite another story.

'Consistency and discipline, that's what the two have in common if you want success,' says the 25-year-old recent graduate of Singapore Management University (SMU).

Now a proprietary trader for a private fund specialising in intraday trading of future - 'a dream come true' - Mr Li is quick to dispute the notion that trading is all risky gambling.

As with tennis, where flashier moves are no substitute for well-mastered basic strokes, steady discipline is what wins in trading too.

'It is challenging, because of the discipline to wait and stay out till an opportunity comes, confidence to execute without hesitation, and mental grit to cut losses. But it's also boring because 95 per cent of the time, is just spent waiting and observing,' he says.

It has been five years since Mr Li started dabbling in investments, trading options, stocks, CFDs, forex and futures.

What began as a simple blog to record this trading journey and share market views, has since grown into a full-fledged website (www.synapsetrading.com) with a Facebook page that has drawn over 12,900 fans.

Having developed his own way of reading charts to understand markets real-time, the Certificate of Technical Analysis holder has also given several talks on the subject over the past few years, with more in the pipeline.

He spends an average of five hours a day on the subject, excluding the hours of experience gained each day on the job.

He tells BT-Citibank Young Investors' Forum more about what he's learnt and is still learning.

Q: What got you interested in investing?

A: My family is quite frugal and my parents advocate saving and investing prudently. Hence, they take a more long-term and passive approach to investing.

After national service, I worked as a financial planner. This got me interested in personal finance and investments. After that, I attended numerous talks and read many books to expand my field of knowledge, aided by several mentors.

I met many other enthusiastic traders in the SMU EyE Investment Club, which spurred me on. Initially, my dad did not take to the idea of short-term trading because he thought it was too risky, but I persevered with my own capital to build up my portfolio.

Among the books I read - I've read over 200 books on trading now - the ones by Jesse Livermore and Richard Wyckoff inspired me most.

Q: That's a lot of reading, what spurs you to 'invest' the time to invest?

A: Besides the allure of financial freedom, I feel that it provides an intellectual challenge that requires great mental discipline, which reminds me of my days as a chess player. Investing also allows me to blend knowledge across different disciplines, and understand what goes on around the world.

Q: What's your risk appetite like?

A: My risk appetite is low so I am willing to let go sub-optimal set-ups and only wait for the best opportunities.

I do not like to hold my positions for very long because the longer you hold an open position, the more uncertainty there is and the more risk is involved.

In addition, I spend more time on risk management (calculating optimal capital allocation and minimising drawdown) than on my actual analysis. This helps me to preserve my capital.

Q: How would you describe your investing philosophy?

A: My style is to consistently seek out high-probability and low-risk opportunities by studying price action and volume. I use these on multiple timeframes, to enter the market when there are certain fluctuations against the main trend. Getting the timing right is the crux, and the three main tools of my system are chart reading, risk management, and psychology.

Q: What's been your best investment?

A: My best investment to date has been in accumulating knowledge because the returns are still compounding.

As for my actual investments, I look at my investment portfolio as a whole rather than at individual investments. My best percentage gains were during the 2009/2010 recovery period, and during the more recent crash. I went into the market with leveraged short positions using CFDs. The latter provided a roughly 25 per cent gain in my portfolio over two months.

Q: And the worst?

A: My largest drawdown was during the 2008 stock-market plunge, where I wasn't nimble and disciplined enough to cut my losses fast. My portfolio declined by roughly 15 per cent. I learnt that the news tends to remain bullish near market tops, hence it is prudent to trade what you see and not what you think.

Q: Any tips to share?

A: It is crucial to start investing or trading only when you have a sound strategy and methodology for analysis, taking into account your personal finances, risk profile and time horizon.

Take time to master the skills and knowledge, and apply it slowly to gain experience, keeping your expectations on returns realistic. I chose 'Mind over Markets' as the tagline of my website because I believe that to master the markets, you first need to master yourself.

This means changing the way you think and approach the markets. Once you understand the psychology and principles behind trading and apply them, the profits will naturally start coming in.

Wish to share your story too? If you're between the ages of 17 and 30, do email a brief description of your investing journey to btyif@sph.com.sg with 'Starting Young' in the subject heading.

Erm, Warren Buffett mentioned buy low, sell high? I thought that would have been common sense? He seems bullish on SMRT. I think the reason for the huge crowds is because of there aren't enough trains to support all the commuters!

Business Times - 24 Oct 2011

STARTING YOUNG
Investment tips - from the Red Cross

Lim Tern Poh's experiences and observations in his daily life give him investment ideas, reports DOLLY CHIA

A GOOD book can stir the heart. For 23-year-old Lim Tern Poh, reading The Automatic Millionaire by David Bach was all he needed to kick-start his investing career.

When he was 17, the book revealed to him the world of mutual funds, which became his first investment. Dollardex.com was his gateway to the investment society. Subsequently, he started diversifying his portfolio by going into equities.

Every dollar in his portfolio came from his own savings from his part- time job. The money-savvy college student won the Money SENSible Youth Award presented by the Monetary Authority of Singapore (MAS) during his sophomore year in Republic Polytechnic.

Currently embarking on his second year in finance at Singapore Management University (SMU), he hopes to enter private banking upon graduation, while growing his portfolio 10-20 per cent.

Q: What do you currently invest in?

A: I invest primarily in mutual funds that focus on Singapore, such as Aberdeen Singapore Equities, and equities in general. I also hold StarHub and Sheng Siong stocks right now.

My most recent purchase was SMRT stock.

As Peter Lynch said: 'Investors can beat the market by using common sense and information available to all of us as we go about our day-to-day lives.'

You see the trains getting more crowded now, and with the new second line, I'm sure SMRT will have higher future profits.

Q: What was your best investment?

A: My best investment was in StarHub. I hold some StarHub shares and I'm quite happy with it. I gained about 10-20 per cent from investing in its stocks. I am still holding them right now.

Q: And your worst investment?

A: My worst would be a unit trust because back then during the 2009 financial crisis I think I sold off too early; I didn't hold on long enough. That's why I think I made quite a loss in the unit trust which I initially bought when I was 17 or 18.

I invested in it for 2-3 years back then. If I had held on to it longer, I would've gotten much more.

Q: What is your investment strategy?

A: My investment strategy depends on a lot of factors. For example, through your daily lives, you can observe what are the better companies.

By observing that trains are getting more crowded, it might be a good time to buy SMRT now.

Q: What are your plans after graduation?

A: I plan to work in a bank, maybe on the investment side, but now it's still tentative because it depends on whether I would still have the interest when I graduate. Now I'm still exploring other alternatives. Perhaps other than banking, I could go into sales in the front office of the banking operations.

Q: Do you have an investment strategy?

A: Take on calculated risks so that when you invest, you don't take on too much or too little risk. It is based on my individual judgement. I can't put it in words. It is subject to a lot of things like market conditions, personal opinions of the market and other things.

I believe in Warren Buffet in 'buying low, selling high', so I look for stocks that have low P/E ratios. On top of that, I also look at the fundamental analysis as it teaches you what is a good company to buy while TA (technical analysis) tells you when is a good time to buy.

Q: Do you have any valuable lessons to share?

A: When it comes to investing, what I learn from textbooks is not enough.

I am a member of the Red Cross disaster management committee. So you're taught how to manage a disaster when it happens, so from there I learn more about risk management.

When a disaster happens, you're taught how to remain calm and be objective. So I apply those principles in investments and when the market is volatile, I learn to use those principles to keep my emotions under control and be objective. The textbook tells you to be calm and objective during a crisis, but without going through real experience it's hard to apply that.

You need to do something outside the textbook to learn about risk management. These are the essential soft skills which will help you in your investments.

Q: What other exposure do you have to investment?

A: I am actually a part-time financial planner for Manulife Financial now. That's one of the reasons I am considering sales in a bank's front office.

I have worked as a financial planner for AXA Life Insurance and met a good mentor who advised me to move to Manulife after six months in AXA. I have been in Manulife for one-and-a-half years now.

Q:What do you find so rewarding or fascinating about investing?

A: Investing is fascinating because it is not just a test of one's analytical ability; it is also a test of one's emotional stability, foresight, courage and discipline. I cannot think of any other thing that is so intellectually stimulating, challenging and rewarding. This makes investing one of the most exciting things in life that I have ever come across.

If you're between the ages of 17 and 30 and would like to share your investing story, email btyif@sph.com.sg, with 'Starting Young' in the email's subject heading.

I believe really strongly in helping yourself before you help others. The main reason being that one might end up being more of a hindrance than help when one is relatively inexperienced and not competent enough.

That's why I rarely post analysis except where I require help in clarification. This guy's post is probably a good validation of that line of thought.

(24-10-2011, 04:52 AM)Musicwhiz Wrote: [b]Business Times - 24 Oct 2011

Subsequently, he started diversifying his portfolio by going into equities.

Is this supposed to be diversifying? Sounds more like concentration to me.
This is probably in the Journo's words though so bad choice of words to use.

Quote:You see the trains getting more crowded now, and with the new second line, I'm sure SMRT will have higher future profits.

My take is that further probing needed here. Why not SBS Transit (their direct competitor) or even Comfort Delgro (which holds quite a bit of SBS Transit) which operates the NEL and have been awarded the future downtown line? Is SMRT a screaming buy at current price? What are the factors for the crowds (residential population growth? tourists? what is the bigger factor and what is the factor's likelihood for further growth?)

Quote:I believe in Warren Buffet in 'buying low, selling high', so I look for stocks that have low P/E ratios.

I hope something was edited out here. But if this guy is just looking at P/E ratios, I think he will be in a lot of trouble at some point in time.

Good points Kazukirai.

I guess these interviewees are all "young" in the sense that they had just started out, hence they are prone to make mistakes or to have blanket assumptions about certain issues. Agree that it's rather superficial, and not just with this guy. I guess more probing needs to be done to assess if a business is good or not, and not merely simple scuttlebutt techniques like "watching huge crowds on SMRT trains" or using "low PE ratios" to justify an investment.

Easy to quote Warren BUffett, but pretty hard to have the same mental model, tenacity, fortitude and attitude, among other essential qualities.