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22-04-2012, 09:32 AM
Is it really difficult to invest properly? 
The Straits Times
Apr 22, 2012
SMALL CHANGE
Don't go chasing stock tips
To make money, learn the traits of successful investors instead
By Goh Eng Yeow
At the inaugural Sunday Times Invest Seminar held recently, speaker Lim Say Boon, chief investment officer of DBS Private Bank, remarked on how difficult it was to make money in the current uncertain market environment.
'If it were so easy to make money, I would not be here working on a Saturday,' he told the 600-strong audience on April 14.
It is a view shared by many in the audience - risk-averse investors like myself, who would like to enjoy a better return than the paltry 0.05 per cent interest we get on our POSB accounts, but are unwilling to put our hard-earned nest eggs at risk.
I mingled with the crowd after the seminar, and the recurring theme was an almost obsessive search for safe-haven assets. I was also flattered that some of the participants were keen to find out what I had invested in. 'Will you be buying the new Genting perpetual securities?' one of them asked.
Sure, I have covered the financial sector for almost 25 years, but even I have had my fair share of hits and misses among my investments.
But one piece of advice I want to offer is that, rather than focusing on specific stock tips, people should consider the traits of a successful investor.
One of the perks of being a markets writer that I have enjoyed is the opportunity to meet a number of investing geniuses over the years.
One thing that struck me is how ordinary they were. None of them seemed exceptionally clever, like the brilliant physicists and mathematicians I met at Cambridge University during my undergraduate days. Some of the investors did not seem to be very competitive, or even driven by the desire to make money.
Perhaps it was their other interests that turned them into such great investors, as they did not get distracted by the roller-coaster that hits the market from time to time. In fact, many of them did not even bother to track the market on a daily basis.
But they shared a common trait: All of them seemed to be at peace with themselves and the world, enjoying happy marriages and blissful family lives.
As investors, they also knew their limits. They would not be chasing after shares whose prices had already risen during a super bull run.
But when the blood was out on the street and the world seemed to be on the verge of collapsing, as it did in September 2008 when US investment bank Lehman Brothers failed, they would be out there, making big wagers on the market.
One other important trait they possessed was the ability not to miss the wood for the trees. Good investors go about life with their eyes open.
While others were chasing the latest hot stock tip tossed out by their brokers and analysts, they would be observing consumer habits and making careful notes of any trend that might be evolving.
And rather than taking analyst reports at face value, they would test the assumptions made in the reports with their first-hand experience.
There is another thing that I have noticed about good investors: Most of them do not invest in stocks or financial instruments about which they do not possess a good understanding.
The best example is legendary investment guru Warren Buffett, whose former daughter-in-law, Ms Mary Buffett, has just come out with another best-seller, The Warren Buffett Stock Portfolio, which examines the 17 stocks that helped him to achieve his extraordinary wealth.
Mr Buffett's stock portfolio, she noted, is filled with counters with a 'durable competitive advantage' and 'predictability of earnings'.
Take Wrigley's chewing gum, one of Mr Buffett's core stock holdings. Even with the advent of the Internet, which has revolutionised the way people interact with one another, people will still chew gum.
The same investing principle applies to US retail giant Walmart Stores, another of Mr Buffett's core stock holdings.
This is a company where an investor can get a pulse of the business simply by strolling into the many department stores it operates. For us, the local corollary would be grocery giant Dairy Farm and supermarket operator Sheng Siong Group.
The key, of course, is to identify such businesses and make sure that you have the cash ready to buy into their shares when they are unfairly sold down during stock market turmoil, which now occurs with distressing regularity.
It is a simple rule often articulated by Mr Buffett: Be fearful when others are greedy and greedy when others are fearful.
engyeow@sph.com.sg
The Straits Times
Apr 22, 2012
SMALL CHANGE
Don't go chasing stock tips
To make money, learn the traits of successful investors instead
By Goh Eng Yeow
At the inaugural Sunday Times Invest Seminar held recently, speaker Lim Say Boon, chief investment officer of DBS Private Bank, remarked on how difficult it was to make money in the current uncertain market environment.
'If it were so easy to make money, I would not be here working on a Saturday,' he told the 600-strong audience on April 14.
It is a view shared by many in the audience - risk-averse investors like myself, who would like to enjoy a better return than the paltry 0.05 per cent interest we get on our POSB accounts, but are unwilling to put our hard-earned nest eggs at risk.
I mingled with the crowd after the seminar, and the recurring theme was an almost obsessive search for safe-haven assets. I was also flattered that some of the participants were keen to find out what I had invested in. 'Will you be buying the new Genting perpetual securities?' one of them asked.
Sure, I have covered the financial sector for almost 25 years, but even I have had my fair share of hits and misses among my investments.
But one piece of advice I want to offer is that, rather than focusing on specific stock tips, people should consider the traits of a successful investor.
One of the perks of being a markets writer that I have enjoyed is the opportunity to meet a number of investing geniuses over the years.
One thing that struck me is how ordinary they were. None of them seemed exceptionally clever, like the brilliant physicists and mathematicians I met at Cambridge University during my undergraduate days. Some of the investors did not seem to be very competitive, or even driven by the desire to make money.
Perhaps it was their other interests that turned them into such great investors, as they did not get distracted by the roller-coaster that hits the market from time to time. In fact, many of them did not even bother to track the market on a daily basis.
But they shared a common trait: All of them seemed to be at peace with themselves and the world, enjoying happy marriages and blissful family lives.
As investors, they also knew their limits. They would not be chasing after shares whose prices had already risen during a super bull run.
But when the blood was out on the street and the world seemed to be on the verge of collapsing, as it did in September 2008 when US investment bank Lehman Brothers failed, they would be out there, making big wagers on the market.
One other important trait they possessed was the ability not to miss the wood for the trees. Good investors go about life with their eyes open.
While others were chasing the latest hot stock tip tossed out by their brokers and analysts, they would be observing consumer habits and making careful notes of any trend that might be evolving.
And rather than taking analyst reports at face value, they would test the assumptions made in the reports with their first-hand experience.
There is another thing that I have noticed about good investors: Most of them do not invest in stocks or financial instruments about which they do not possess a good understanding.
The best example is legendary investment guru Warren Buffett, whose former daughter-in-law, Ms Mary Buffett, has just come out with another best-seller, The Warren Buffett Stock Portfolio, which examines the 17 stocks that helped him to achieve his extraordinary wealth.
Mr Buffett's stock portfolio, she noted, is filled with counters with a 'durable competitive advantage' and 'predictability of earnings'.
Take Wrigley's chewing gum, one of Mr Buffett's core stock holdings. Even with the advent of the Internet, which has revolutionised the way people interact with one another, people will still chew gum.
The same investing principle applies to US retail giant Walmart Stores, another of Mr Buffett's core stock holdings.
This is a company where an investor can get a pulse of the business simply by strolling into the many department stores it operates. For us, the local corollary would be grocery giant Dairy Farm and supermarket operator Sheng Siong Group.
The key, of course, is to identify such businesses and make sure that you have the cash ready to buy into their shares when they are unfairly sold down during stock market turmoil, which now occurs with distressing regularity.
It is a simple rule often articulated by Mr Buffett: Be fearful when others are greedy and greedy when others are fearful.
engyeow@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
