Tuesday, 31 July 2018

Reflections from Recent Seminar

Or rather, observations, from my recent seminar held just over the weekend.


I shared how should investors go about analysing investment moat of a company, identifying stocks with modest growth rate and comfortable yield so not to be affected by market's sudden change of trend, and selecting strong REITs using the GOV framework and balance sheet analysis.

There was also a major segment dedicated to investor psychology with my personal experience/tricks to better handle the emotional roller coaster, and practical portfolio management.

It was a good session with active participation from audiences. At least they were awake, listening and engaged. Some also stayed back after the talk for quick chats.

These interactions with participants, coupled with my meetings and discussions with clients so far, also provide some revelations about the characteristics of majority of the retail investors out there.

Stock tips are highly coveted
I started the session by showing the standard disclaimer, and stating that I hope to teach audiences how to fish, instead of giving them fish served readily to eat.

But there were quite some questions on stock tips. It is understandable that most investors hope to receive stock tips. The more specific the tip is, the better. Sometimes name of share is not enough. Would be ideal if there was entry price, exit price, time frame, and cut loss price if applicable.

While illustrating certain points and investment concepts, it is inevitable to quote certain stocks as example. So I tried to share their investment merit based on fundamentals and my personal opinion, without being too certain about the returns and outcome.

I hope audiences can understand that being able to perform investment analysis and form a sound, reasonable opinion about the company independently, is one of the, if not the most, criteria for a fruitful investment. Only then can an investor make it far on this investment journey.

Usually free tips should not be taken as gospel truth. And real, solid tips (or intel) don't come free.

Lacking an investment system
By system I mean a comprehensive framework to guide a person on various aspects of investment decisions ranging from stock analysis, buying decision, profit taking, portfolio management, limiting risks, diversification, dealing with psychology biases etc.

Of course there wasn't enough time to cover all the aspects above. But just from portfolio management and investor psychology, it seems that most just invest based on feel or a mesh of half-baked rules and criteria.

It is still ok in an up trending market like 2017. But when it starts turning down with increased volatility, most investors do not know what to do. Because their rules are untested and perhaps not robust enough.

There is no short cut to formulating an investment system that suits each individual. It takes knowledge, experience, and probably a fair bit of hard knocks in the market. But everyone has to start somewhere.

Different profile, different focus, different asset allocation
The younger audiences seem more receptive towards foreign-listed stocks. There were quite some questions on Tencent and some HK listed stocks, while the matured investors were more interested in stocks that were household name or STI components.

The more matured audiences also seem to be more interested on strategic asset allocation, branching away from just stock holdings. Probably they have been through more cycles and are concerned about potential fall during downturn, or its a result of life stage with more family commitment.

But asset allocation to reduce portfolio value swing and protect downside risks is of paramount importance to investors no matter what age group you are at. Market crash can be really scary and its not for the faint hearted. The problem is investors always over-estimate their ability to stare at huge paper loss, and by the time they realise that, we are probably already deep in a downturn.

Its necessary for all, but actual implementation differ by extent/degree between different groups.

There were several good feedback received, which will be incorporated into next run for a better seminar.

My next sharing is on Market Insights and Sector Update, different content from the recent one. Do sign up here if you are keen to attend.


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