Sunday, July 16, 2017

17 year old investor... Wow!

Very interesting read about a 17 year old guy from Canada who started investing proper even earlier than me.. really makes me feel old ;)

I agree with Brandon on the following key points which makes a good young investor:

- Good in arithmetic/maths/counting/numeracy (he's just too humble)
- Research, research and lots of research, which IS time-consuming but often rewarding
- Willingness and ability to take calculated risks
- Passion for investing
- Focus more on growth stocks than dividend plays
- Passion (again!), the willingness to experiment and a go-getter attitude (rather than leaving the investing to funds)
- Self awareness
- Willing to learn from mistakes and not be in a state of denial
- Humility


"...Brandon is top of his maths class but he doesn’t think this gives him the edge when it comes to stock picking. What enables him to pick winners, he said, is the amount of research he carries out into his stocks, typically between one and six hours a day.
His age means he can afford to take more risk than most investors. “You can start with £1,000 when you’re 18 and you could build up a lot over time,” he said. “If you make even 10pc a year you could have a huge amount by the time you’re in your 30s.”

When Brandon gets home from school his mind is instantly drawn to investing. He said: “When I get in I don’t feel like doing my homework – especially if it’s geography. I spend most of my time investing. I love it. The feeling when your stocks are doing well is amazing.”

He models his own investing on the work of Peter Lynch, the American fund manager who ran the Fidelity Magellan fund and achieved the best 20-year average returns on record. Brandon’s everyday activities include trawling through company reports to assess their profits and assets.

He described himself as a “growth” investor and buys only small individual stocks, which he holds for a few months. But he added: “If I buy something I make sure I’m ready to hold it for a long time if it tanks. I want to invest in a company that’s going to do well in the long term – even if I’m only aiming to hold it for the short or medium term.”

The young stock-picker currently has his entire £49,000 portfolio in one share. He doesn’t want us to name it, but it has a market value of around £20m.

Companies he has held in the past include Disney, Ryder, an American trucking company, and media firm InterActiveCorp, He’s never owned a fund because he thinks the point of investing is to beat the market and he’d be less likely to do this with a fund.
Brandon said his biggest mistake had been feeling too scared to buy shares at the right time. He advised cautious investors to “learn until you’re not nervous any more” and said a lot of novices went wrong because they didn’t research properly.

“If you didn’t research a stock and its shares go down, it’s your fault. Learn from your mistakes,” he said. “A lot of people get scared out of stocks. A lot of them jump a bit and then go back up. My advice is do your homework and trust the numbers,” he says.

His track record is short, but he does appear to practise what he preaches. The day after he bought InterActiveCorp its shares plummeted by 12pc. That’s when he doubled his position. By the time the shares were back up at the original price he had made 6pc, and when he sold the shares two months later he had made 30pc.

"People also buy stocks because they are a great company. But there’s a difference between a good stock and a good company. For example, Netflix and Tesla were good stocks when I bought them, but they are overpriced now. Netflix has a price to earnings ratio of 84 which is really high,” he said.

When asked why most teenagers didn’t invest, he said young people just wanted to have fun. “But to me this is my fun.”

Brandon claimed to know several other children his age who also invested real money on the stock market, although he said they didn’t go around shouting about how much they were making. “If people ask, I’ll tell them, but my investing friends and I tend to keep it to ourselves. We like to discuss investing ideas with each other but we don’t really tell each other how much money we’ve got.


Full article at this link:

http://www.telegraph.co.uk/finance/personalfinance/investing/11299477/Lessons-from-a-17-year-old-investor-who-has-doubled-his-money-in-14-months.html

Sunday, January 1, 2017

Happy new year 2017 and review of 2016

A very happy new year to all readers! Time really flies, it is the start of the new year again. Lets hope that 2017 will be a healthy, happy and rewarding year for all of us!

Year 2016 was indeed a very interesting year. There were many surprises - Brexit, Trump's election, Schooling's Olympics win and others. Some of them were positive, some negative, some were supposed to be negative but turned out to be positive (and vice-versa). For example, I was (and still am a strong supporter of Hillary), and was rooting all out for her to win but Trump's election actually was quite a positive event for the stock market.. the stock market rallied "yugely" after his victory (DJIA is up 13% for the year). There was a negative initial reaction after UK voted for Brexit, but the FTSE actually rallied and closed at a high of 7142.83 for the year! Brexit was supposed to be a disaster for UK but looked what happened to the FTSE! Lesson learnt? Be wary of conventional wisdom (and what the man-on-the-street assumes to be the case).

The local stock market registered a flattish performance. It closed the year down 0.07%. There were more IPOs this year (compared to the last). I, for the first time since I started investing, did not manage to get my hands on any IPO shares this year! Disappointing, but unsurprising (as they were mainly placement-only IPOs and for the remaining few that were via ballot - I just wasn't lucky enough). On another note, there were more bankruptcies and trading suspensions in the SGX this year. The big ones - Swiber, Swissco, Technics Oil & Gas, Rickmers Maritime, Linc Energy. And there were also more delisting - Eu Yan Sang, NOL, OSIM, SMRT, Select, Otto Marine. The suspensions were mainly in the oil and gas whilst the delisting were mainly government related!

On the investment front, I think that year 2016 was a very fruitful year for me. I am very happy to say that my portfolio has done extremely well. My portfolio increased 82.415%! My personal best and record!  :) I am glad I have learnt the painful lessons from 2015 (my portfolio dropped in value last last year) and rebounded very strongly in 2016. Most importantly, I have adopted a wider margin of safety in stock selection and displayed good levels of patience and sitting still (however the market noise). And when the market displayed irrationality (eg during Brexit, Trump's election etc), I have sat tight and/or used the opportunity to patiently accumulate shares at the cheap. It also helped that I was busy (and distracted) with other personal stuff (eg ABRSM Grade 8 Piano exam which I thankfully passed on my first attempt etc.) and had little time to panic-sell or fret etc.

Year
My Portfolio 
(inclusive of capital injections)
My Portfolio 
(less capital injections)*
STI
2010
+11.7 (annualized)
-0.8 (annualized)
+10.1
2011
+35.3
+17.0
-17.0
2012
+25.9
+9.9
+19.7
2013
+32.0
+19.9
0
2014
+53.7
+44.2
+6.2
2015
-0.6
-9.1
-14.3
2016
+82.4
+74.7
-0.1

Furthermore, 2016 was a very rewarding year whereby I broke many personal records. Besides my portfolio reaching a new milestone, my year-on-year portfolio growth reaching a record high of 82.415% and me passing my ABRSM Grade 8 Piano exam on my first attempt, I achieved many other personal bests. I attained my best semester and cumulative academic score till date! I earned the most money giving tuition since I started giving tuition several years back. I also earned a record amount of bank deposit interest, most since 1998 (when the deposit interest rates were still sky-high in 1998). I also attended more than 10 AGM/EGMs this year - another record! Of course, attaining these achievements expended much time and consequently I had much less time to travel (compared to previous years) - I only traveled to a single country this year. Next year, I hope that I will be able to travel more and spend more time with my loved ones.

Going forward, I will be graduating next year and entering the job market. I think we all know that the job market is not too rosy (with many layoffs especially in the Oil and Gas and Shipping sectors). As with my peers, I am somewhat worried about the ability to secure employment (but I guess less worried as I have done pretty alright on the financial front). And that is the purpose of this blog right? (as exemplified by the blog title - Starting Early, Planning Ahead) It is to start early in investment and financial planning to allow oneself to plan ahead and be prepared for uncertain times like these.

Given that I would be a full-time employee (and not a full-time student) in 2017, this means that there will likely be enormous capital injections (unlike the previous years whereby I was still a student or a NSF and my portfolio's performance can largely be attributed to organic changes less some small side income eg from giving tuition, allowance). Hence, I will endeavor to also report my portfolio's performance on a "net of capital injections" basis going forward (as above). Nevertheless, it should be noted that this figure is an estimate* and prepared on a best effort basis.

Last but not least, a very happy new year to all readers! HUAT AH! 

Sunday, June 26, 2016

Thoughts on Brexit, affected SGX counters and updates

What an eventful Friday morning (SG time)! I was home all day (due to a bad flu) watching the election returns and financial markets. The outcome of the elections was pretty apparent and obvious to a seasoned political observer (a.k.a. myself) within an hour the first votes were announced (SG 8am++), especially when the Newcastle results were announced. However, the financial markets were not as responsive and aware until 11am when the markets started plunging really badly (STI down 50 over points). In short, financial markets are slower to react than political markets, or maybe the STI is behind the curve compared to other markets. It is my strong belief that a good, basic political understanding is important for investors as political events and changes can affect government and business policies which will in turn affect the companies we are invested in.




Brief Recap for the uninformed: As most would know, the United Kingdom (or Divided Kingdom) voted in favour of Brexit 51.89% to 48.11%. This results reflects a divided (non-united) kingdom with Scotland, Northern Ireland and London voting against Brexit. The British Prime Minister has set out a timetable for a transition of power (a.k.a. resignation). The Scottish First Minister has hinted that a second Scottish independence referendum is on the table. All European markets closed in the red (FTSE down 3.15%, DAX down 6.2%, CAC down 8.04%). And the DJIA closed down 610 points/3.39%) last Friday. The only winner is Gold (up 4.43%).


*Note: I am not asking people to buy Gold, although it is true that Gold prices tend to increase when there is fear/uncertainty


As for the impact of this Brexit on my personal portfolio, I remain largely unscathed. In fact, my portfolio is slightly up on Friday. I am glad that after last year portfolio review and performance, I have taken on a more conservative approach. And, I am thankful that ahead of the Brexit vote, I have re-balanced my portfolio towards safer investments and out of more volatile ones. So again, being politically aware does help! My portfolio performance since the start of this year is positive by double digits (unlike STI which is down). I do hope I can sustain (and improve on) my portfolio out-performance and we shall see how it fares at my year-end review.

As for which counters might be affected by this Brexit vote, I think that Comfortdelgro (which has transport operations in UK), property counters like Ho Bee, City Developments (which released an announcement about impact of Brexit on SGX online), Hwa Hong, Guocoleisure with exposure to the UK property markets would be impacted. This is because as the value of pound would likely fall, the earnings and valuation of these properties denominated in pound would be lower, and adversely affect the dividends and NAV of the companies when the pound is converted to SGD.

Personally, I am interested in taking a stake in Guocoleisure, but I am glad that being a politically aware person, I have put off my purchase till after the Brexit referendum. And I am glad I did that, Guocoleisure was down 5.52% on Friday and closed on a YTD low of 82cents.

Conclusion: To be a good investor, we cannot just solely be focused on the share prices and financial reports, we should at least have some awareness of financial markets, business and political, economic and social environments that our invested companies are operating in!