Wow rich kid. At 22 he has a 7-figure portfolio?? Maybe his dad's money? It will be impressive if it was indeed all his! And what with all the talk about alpha and beta....I really don't understand Greek Letters - maybe he should start to actually invest instead of talking about passive funds, value-at-risk and other arcane concepts.
Then again, he thinks picking stocks are useless. I guess he is a very good student of the EMH!
Business Times - 05 Sep 2011
STARTING YOUNG
Gaining his father's trust
Daryl Chia sold off half his father's portfolio and hedged the other half with put options, saving him a few hundred thousand dollars in losses, MICHELLE YEO reports
WHILE most collectors hoard antiques, furniture or art, 22-year-old Daryl Chia seeks to collect something rather different: the soon-to-be freshman at the University of Warwick wants to build a formidable collection of letters behind his name.
He started investing in 2007; and since then, Mr Chia has already picked up the title of Professional Risk Manager (PRM) and soon will be adding the titles of Financial Risk Manager (FRM) and Chartered Alternative Investment Analyst (CAIA) to his name, before he flies off to school this month.
And after that, he'll gun for a Chartered Financial Analyst (CFA) qualification, though only after he attains his bachelor's degree in Mathematics, Operational Research, Statistics and Economics (MORSE).
Q: When did you start investing and what got you into it?
A: I started in 2007. I actually took a year off junior college (JC) to practise archery so as to compete in the national team. After an injury which put me out of the team, I started using my time to read about investments, asset allocation and the Financial Times newspaper, spending up to 12-16 hours a day at times.
I was fortunate to start at a very interesting period, financially. Based on my research, I felt that there was an impending recession at that time so I went and sold off half my father's seven-figure portfolio and hedged the other half with put options, saving him a few hundred thousand dollars in losses. With that, I gained the trust of my father as well as others I was in contact with.
Q: What do your parents think of your forays into the realm of investment, especially at such a young age?
A: My parents are quite liberal in the sense that they would let me do whatever I want, including taking a year off JC to pursue archery. Of course, there was a bit of convincing to do on my part initially to give my parents an idea of my plans for the portfolio as well as my financial knowledge.
Q: Describe your current portfolio
A: It is almost a seven-figure portfolio. My portfolio can be divided into two portions. The first part seeks to maximise beta returns, but only doing so in the most efficient manner. This part of my portfolio comprises stocks and bonds in the usual 60-40 ratio. Because I think investing in mutual funds is an expensive way of gaining beta exposure, most of the stocks I hold are in passive funds.
The other portion of my portfolio seeks to gain alpha returns. Within this part, half of it is invested in funds of funds while the remaining half of it is invested in my own fund, which I use to conduct my own research.
Q: Do you actively pick stocks?
A: No, I do not engage in active stock picking at all. I believe the asymmetry of information in the stock market is quite high. Those who are in the know would have access to special information but if you are not one of them, it would be hard to get such information.
Q: What was your best investment?
A: I would say my best investment is really the investment I made in my education because I really worked very hard for it. In the field of investments, it is easy to look back at your past decisions and rationalise them into either good or bad ones when they could have purely been based on luck. I did not get education because of luck. It is something I worked hard for.
Q: And your worst investment?
A: My worst investment would be the time I spent trying to time the market and to spot the dips and bumps. A lot of cognitive biases come into play during this process.
Q: Describe your risk appetite.
A: I would say I lean more towards the aggressive side. Ultimately though, I think my risk appetite is still quite balanced and because my portfolio is very diversified, I can afford to take on larger risks.
Also as a professional risk manager, I make sure I use Value at Risk (VaR) metrics to ensure that I stay within my risk limits.
Q: What advice do you have for young investors?
A: I recommend saving up and investing regularly, especially in passive or index funds rather than mutual funds. Also, if it is financially possible, I recommend investing in a few funds of funds.
Finally, do not waste any time trying to time the market. For younger investors or those who are new to finance, I stand firmly by the 60-40 stock-bond ratio which I think is a good enough basic rule to follow. That way, you will not need to constantly keep track of the changes in the market and hope to time it but can spend your time focusing on more important things.
Q: Where do you see yourself financially in the future?
A: I want to go into either fund management or risk management after I am done with my university education.
Eventually, I hope to achieve financial freedom so that I can focus on the more important things in life such as family and friends. Q: Do you have any role models?
A: I do not have one specific role model but many. I would say I am a pretty outgoing person, and I like to make friends and network. I believe that there is something to learn from everybody, and I try to learn as much as I can from the people around me.
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
Homepage
PR Newswire
