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(04-07-2011, 08:22 PM)memphisb Wrote: [ -> ]I think starting young means alot more time on their hands to do research etc. That would be a good advantage over the rest of the adult investors.

Agree fully with what you said. Time is indeed necessary for one to learn, and also gives more time to compound our money. Though I must stress that one has to customize one's approach to suit one's own temperament and abilities - there's no one right answer out there on how to invest successfully. The sooner the youngsters learn this, the better for them as it will accelerate their learning curve and also their wealth creation. Smile
I find this good for young people:

(trying to get my children to watch, they seem not interested Confused)
This is kinda old, but if you're thinking of investing in malaysian properties this serves to highlight the risks involved that are completely outside your control.

They have created a system that consistently put clowns in control, what % returns do you need to have to justify the risks?
(09-07-2011, 11:01 AM)piggo Wrote: [ -> ]This is kinda old, but if you're thinking of investing in malaysian properties this serves to highlight the risks involved that are completely outside your control.

They have created a system that consistently put clowns in control, what % returns do you need to have to justify the risks?

Looking it in another way, Malaysia is a great "business" with good fundamentals. Even with the kind of politicians, Malaysia is still progressing well. However, much of their income in the last few years comes from crude oil(high quality one some more..) and they will need to replace the loss of income from crude oil in the future.
Business Times - 11 Jul 2011

Taking a cue from Buffett's ideas


WHEN 23-year-old Richard Liao sets his mind on something, he goes full steam ahead.

The final-year business (honours) student at Nanyang Technological University (NTU) is also the equities fund manager of the NTU's Student Managed Investment Fund, chairman (financial workshops) and research executive of the NTU Investment Interactive Club, as well as business development director of the university's Risk Management Society.

All this, despite the avid reader and chess player initially wanting to pursue a physics degree to become a researcher in a laboratory. Now an intern at Great Eastern, he will be spending four months in New Zealand on a student exchange programme.

Q: What influenced you to begin your investment journey?

A: My family has always taught me the value of saving and being thrifty. There are always times when you have to prepare for a rainy day - you need to save some money for an emergency.

When my parents bought our current house, they overestimated their purchasing power and took up a very big mortgage loan. It was at the peak of the housing bubble in 1997. When the prices crashed, even the selling price couldn't pay for the loan and we had to hold on to the house.

Because of this, my mother said that I have to start working earlier. Initially, I wanted to study physics and be a researcher to get a PhD, but that would take too long. So I thought, maybe I should do something else instead. This is also why I am completing my degree in 21/2 years instead of the usual three.

Q: How did you start your investment journey?

A: In junior college (JC), GIC gave us a talk about fund management, which interested me. I started reading about finance and investing. I thought about how I could make a living for myself and my family, so I decided to change my major to a finance-related one when I was in JC2, in 2006.

Throughout my national service and the period before the start of university, I was always reading up to gain the knowledge and skills required to make sound investment decisions. The first book I read was on the investment habits of Warren Buffett and George Soros.

Q: What is your current investment philosophy?

A: I follow Warren Buffett's approach of focusing on value and growth investing. I search for undervalued companies which have growth potential - the Growth at A Reasonable Price (GARP) strategy.

However, with the recent financial crisis, fundamental investment is not really useful any more. When you invest in undervalued companies, other investors also have to see the value in the company before its stock price can rise. If they don't notice the company, you will never get your returns. So what I think is the most viable philosophy now is the global macro style - where you analyse the macroeconomic trends and invest accordingly.

Because you are a small player, you can't really go against the big trends. So the best style is to go with the flow, the style of systematic trading and trend following.

Q: Describe your current and ideal portfolio.

A: I don't trade in stocks because I do not have a large capital to start with. So I start with forex and a three-digit portfolio. I play only the major currencies as they are the most liquid, such as the US dollar, euro and Australian dollar.

Forex is good because you can start with a small amount of capital. The leverage is very high, but you have to control your capital by setting a stop-loss.

My ideal portfolio would be composed of 20 per cent each in fixed income and currencies, and 30 per cent each in equities and commodities. It is good to have a range of different asset classes, but it would really depend on the current economic situation. However, I believe that commodity prices are still going to go up in the long term, such as those of gold and precious metals.

I would also consider emerging-market bonds.

Q: What financial planning have you done for yourself?

A: I'm a certified financial adviser. I took the CMFAS M5, 8, 9 and SCI HI exams to help me clinch internships. I intend to continue the policies my parents have bought for me. I will review them and see what else is needed.

I'm also saving to start an algorithmic trading system, when I start working next year. I will need at least US$5,000 to host it on a virtual private server in a cloud. Eventually, my aim is to set up my own fund, maybe this algorithm is my start-up. I guess you could call me an aspiring fund manager.

Q: What is your best and worst investment?

A: At the beginning of 2009, I made a 40 per cent profit in a single trade over the euro/US dollar pairing. It was a several-month trend and I managed to capture the entire profit from there while risking only 5 per cent of my trade. I feel that it is the best investment as I had discipline in following my strategy and it turned out to be profitable.

My worst investment is probably when I speculated in silver at the beginning of this year. I speculated in silver CFDs (contracts for difference) and made a 100 per cent profit overnight. I was shocked because I didn't expect it to go that high. But I consider it my worst investment as it was a very risky trade and I could have lost everything - it could have wiped out 50 per cent of my capital. A lot of it was based on luck, I just managed to capture the last bull run of silver before prices fell.

Q: Any advice for novice investors?

A: You have to do a lot of homework, as investing and trading is not easy. You have to make an effort to understand what you don't know. Over the past five years, I've read very extensively about different methods, ideals and philosophies to cultivate my own investment philosophy.

You must also differentiate trading from investment. Trading is more of a short-term view on the market while investing is a long-term thing that seeks capital appreciation.

Finally, trade in what you understand well. Learn as much as possible before putting in your own money. As Warren Buffett says, risk comes from not knowing what you are doing.

A lot of people tell me that trading in forex is very risky. But if you know what you are doing, and the mechanisms behind it, it will actually be a low-risk kind of trading instead.

If you're between 17 and 30 with investing experience to share, do get in touch.

E-mail with 'Starting Young' as the subject heading and include your name, contact details and a short write-up on your investing story
Business Times - 18 Jul 2011

Undeterred by personal setbacks


YONG Tat Yan does not allow setbacks to define his quality of life or hinder him from reaching personal goals - both as an investor, and otherwise. And he certainly knows what it is like to have the odds stacked against him.

Born with a hearing impediment, the 28-year-old has been his family's sole breadwinner for several years now, ever since his father, diagnosed with stomach cancer, died of a post-operation bacterial infection.

Mr Yong, who has used a hearing aid from young, spent his primary school years at a special school for children with hearing difficulties. He subsequently made the shift into a mainstream secondary school, a transition which he admits was, at first, 'a culture shock'.

Undeterred, Mr Yong went on to graduate from SIM university and currently works full-time, doing accounts at a law firm in Raffles Place. 'It was very difficult to find a job. I found my current job only because of my colleague, he helped me a lot,' he says.

Now pursuing an professional accounting qualification with the Association of Chartered Certified Accountants (ACCA), Mr Yong spends his spare time and weekends studying. He also helps out around the house to ease the load on his mother, who devotes her time to caring for his younger sister - 19 this year - who has a brittle-bone condition.

Q: How did you handle money when you were growing up?

A: Like father, like son - I was very frugal. My father spent money very carefully. Also, I had very little pocket money, just $2, and so it was spent mostly on food. I did buy soccer stickers though - my friends and I made quite a hobby of collecting those. During Chinese New Year, I would save up all my hongbao money, unless there was something that I really wanted to buy.

Q: What sort of financial planning have you embarked on?

A: Not much, mainly because my budget is small. I would rather put the money into investing.

Q: Are you more a spender or saver?

A: Definitely more a saver; I save as much as I can, and use that to invest.

Q: Do you use credit cards?

A: No. The thing about credit cards is, if you forget to pay the bills, there is always the unwelcome possibility of getting charged extra. Also, Warren Buffet says that it is better not to have credit cards - they are essentially free money for the banks.

Q: When did you start investing?

A: I had no knowledge of investing prior to my father's death. His Central Depository (CDP) trading account was left to the family after his passing, so my mother and I began investing from then.

Q: What are your current investments?

A: My current portfolio consists more of shares - about 80 per cent, with the remaining 20 per cent being cash. I only invest in shares; they have no expiry date whereas bonds, for example, do.

Some of my money is in Singapore stocks, but the US market is really where I have invested heavily. The American furniture company Basset and Nicholas Financial Corporation, are two examples of US companies whose shares I hold. The UK is another market that I have invested in.

In all these markets, financial and technology companies form the bulk of my investments.

Q: How would you describe your risk appetite?

A: I am very risk-averse. I believe in minimising my losses and use Benjamin Graham's security and risk valuation method to do this, as far as possible.

Q: What are your best and worst investments so far?

A: My best investment has definitely been Basset. I made a profit of more than double with it - 106 per cent to be exact. It was my lucky break, really, because the company was financially stable through last year's property crisis. I bought those shares in December 2010 and have already sold them off - the share price shot up unexpectedly, so I had no choice but to sell and claim the profit.

I also own two China stocks, companies which are listed in the US, and I regard them as my worst investments because their financial statements are problematic. I feel that China companies are not very honest.

Q: Is there any advice you would like to give to young investors?

A: The first thing is to get the right investment philosophy. I recommend following Benjamin Graham's wisdom on investing according to stock market fluctuations. Being in control of your emotions is also important - don't let them get in the way of rational investing.

When you buy shares, the most important thing is to know the company - at least have a rough idea of what it does, and make sure that the company will be stable in the next five years following your investment. Investing is about approximately 85 per cent skill and 15 per cent luck.

Q: What are your long-term investment goals?

A: I hope to start my own investment fund in the future, so that I can look after my family. Maybe, with such a fund, my mother can finally have her own time to go shopping, or relax.

Seems this guy has a love-hate relationship with Jiutian Chemical! Tongue

Business Times - 25 Jul 2011

A mission to accomplish

Stanley Chia aims to teach young people financial literacy, reports TAM YU LING

AT age 24, Stanley Chia is no ordinary investor interested only in money making. He has a grand mission, and that is to increase the financial literacy among the youth of today.

It was with this goal in mind that he took a 10-month long sabbatical from his current course of study at the Nanyang Business School. That sabbatical resulted in Envisage Social Education, a social enterprise Stanley founded with the aim of developing social responsibility in young people.

Starting first with financial education, Envisage will eventually broaden its scope towards inculcating social responsibility among youth at the family and national levels too, says Stanley.

He tells BT about his investing journey so far, and how his new social enterprise ties in with his investing.

Q: How did you handle money when you were growing up?

A: My parents are extremely strict in terms of educating me on the value for money. For example, I had to do household chores so as to earn my own pocket money. As such, I am always conscious about my spending, and actively save up to 50 per cent of my pocket money.

Q: Are you a spender or a saver?

A: I am definitely a saver. I am extremely thrifty and selective in my spending on anything else other than food. Even then, I set a budget for food expenses so as to ensure that I do not overspend.

Q: Do you use credit cards?

A: Yes, I utilise supplementary cards from my parents but I pay them back for expenses that I have incurred. I track all credit expenses by keeping the receipts and being conscious about my total spending whether in cash or credit.

Q: What got you interested in investing?

A: It was in the early years in a polytechnic that I learnt about how I can grow my money through investments. My very first encounter with investing was when I signed up as a facilitator for an investment workshop.

At the workshop, the organisers made us sign a million dollar cheque addressed to ourselves, to encourage us to pursue financial success as an overall target. The exercise left a deep impression on me. I quickly developed an interest in investing which I now see as a means of acquiring financial freedom.

Nevertheless, I was conservative in how I approached this new found interest. I first started by reading more financial news and magazines to build up my knowledge in the area.

It was only when I was 18, and in my third year at the polytechnic that I started utilising my savings, coupled with some funds from friends, to co-invest in stocks listed on the Singapore Exchange.

Q: What do you currently invest in?

A: I started investing in stocks two years ago, and last bought equities a few months back. I've invested heavily in the stocks of companies in the retail and construction industries (CapitaLand and WingTai), and those in the commodities industry (Noble and Olam).

In order to obtain greater leverage against brokerage charges and also to promote wiser money management strategies among my peers, I also convinced some of them to co-invest their national service allowances.

Currently, I have liquidated most of my positions and diverted the capital into my start-up, Envisage Social Education Limited. Through my company, I hope to increase financial literacy among the youths so as to help them counteract the negative effects of consumerism.

Q: What is your approach towards investing?

A: I approach my investment choices by first conducting thorough research into industries of interest or growth. I also choose to invest in companies which I am familiar with, and which are supported by strong financial fundamentals.

Industry trends, specific companies' operational and growth strategies, management teams and competencies, and internal trade movements are among many other factors that one must have a clear understanding of before making a wise investment decision.

Q: What were your best and worst investments so far?

A: My best investment has to be a trade which I made in 2007, prior to the economic downturn, where I made more than 100 per cent profit from Jiutian Chemical Group.

But, Jiutian also turned out to be my worst investment. The profits I have earned from the trades I did in Jiutian have made me biased towards the company. After the global economic crisis, I became overly optimist about the economic recovery and took a position in the company.

I did not manage to recapture the earlier success that I had with the company in this trade. A change in management, coupled with the company's failure to manage the rising costs of raw materials caused the stock prices to hit a new low, plunging further than when it was during the economic crisis. After liquidating my position in Jiutian, I calculated my losses and realised that I have made a 75 per cent loss based on that trade alone.

Q: What was the key takeaway that you had after your bad investment?

A: Although I made a bad trade, I felt that the experience taught me an important lesson. First, I have learnt not to be too emotional and optimistic in one's outlook of markets, especially during highly uncertain market conditions.

Second, I have also learnt to be more disciplined in cutting losses and not allowing positions to decline too much before selling them off.

It is scary that this guy is starting an investment course.
It is even scarier that there are people willing to sign up.
Everyone is so eager to increase everyone else's financial literacy these days... Singapore is truly moving towards a more gracious society where everyone cares and shares :p
(26-07-2011, 07:58 AM)piggo Wrote: [ -> ]Everyone is so eager to increase everyone else's financial literacy these days... Singapore is truly moving towards a more gracious society where everyone cares and shares :p

Haha! It certainly sounds good for "sales talk" eh? One has to also start asking if these people are purportedly as good in personal finance as they claim! Tongue
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