We had a great chat with Mr. Alvin Vong, CEO of EquitiesTracker.com back on 2nd May 2018 during our May Facebook Live Event. Here is the complete interview with transcript. Enjoy!
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Stanley: Hello everyone! Welcome to our Facebook live event, our “ask us anything” session again. This month we have a very special guest, which is the CEO of equitiestracker.com; Alvin Vong. I met Alvin a few weeks ago, and I have to say, he’s one of the most learned, and knowledgeable investors I know about the Malaysian stock market. So, I see him as my Bursa guru, and let’s welcome Alvin. Hello Alvin! How are you?
Alvin: Hey Stanley! Thanks for having me, on Value Invest Asia, and thank you for the praises
Stanley: [Laughs] Yeah! Definitely! So, you guys if you have any questions for Alvin you know, we have compiled a list of questions from him from all of you previously last few weeks, but if you still have other question, you can just comment down below. Say hi to Alvin when you’re logged on, Alvin actually told me the Equitiestracker’s gonna give you – a very special gift for everyone at the end of this session. So, stay tuned until the end, and Alvin will share with us, what is the special gift. So, the topic for today is the six category of stocks, or investors should know, and I think this six categories is something that equities tracker and Alvin has sort of created, maybe you want to give us a rundown on what the six categories are, and now maybe we go in detail, on each one of them. Yeah!
Alvin: Sure! Thanks Stanley. So, one of the things you know, we had issues with when we were trying to craft up a portfolio was you know, a lot of us will go through you know, should I put – in terms of sectorial, should we do technology, should I do consumer, and so on so forth, as we dug through, we started realizing actually within sectors itself, you can actually differentiate very distinctively the types of stocks that actually sit within the same sector. So, the six category – so we decided that actually let’s start categorizing these companies, because each of them will give you different risk profiles. So, the six – I just read out the six to you, the first one right on top, is what we call investment grade stocks; right? Investment grade stocks, our definition is very simple; they are more than ten years old, they’re at least ten year old companies. So, we go by age, number two; they have been continuously profitable for the last, at least the last ten years right and they have continuously been paying dividends continuously for last ten years minimum, and they must have had at least ten years of positive operating cash flow. So, then you get an idea that investment grade stocks are you know the lower risk guys, right? Then your next level actually, you go down one step, would be what we call emerging grade stocks; right? Now, emerging grade stocks are stocks that are at least four to five years old, and less than ten years old, and they lie so between this area where they are emerging to become investment grade stocks. So, they are on their way to maturity, right? You know, and if you go down one level, then we realize that – look. Yeah! We have emerging grade stocks that give us a nice you know, nice potential to move to investment grade stocks, and the third level, as you move is called cyclical stocks, right? So, cyclical stocks go up and down, they always go up and down, and that’s quite normal. So, for example, if you think about any stocks, that are tied into say a specific price point. So, for example is a palm oil companies, right? I have plantation companies, so when it rains you know, it’s quite normal to produce the same amount of crops, right? Typically, you may have some variations, but what will really determine whether you make a really bountiful harvest, or you make a lot of money, or you make very little, it’s actually the price of CPO.
Stanley: Yeah! Okay.
Alvin: So, if you have massive bountiful and everyone also has a bountiful supply, and obviously the demand has been you know, it creeps up slowly over time, then obviously CPO prices will come down, therefore your profits will come down, right? So, you’re gonna see that kind of cyclical nature in this businesses, and why you want to identify them early on is because, when you know they’re cyclical, therefore you can very clearly define your strategy, right? So, you won’t be buying or holding this for next 20 years, and you know, it goes for all the cycles. If that makes sense?
Stanley: Yeah! Okay. Let’s stop right there with just a three categories right now, we talk about investment grade, emerging grade and cyclical companies. I think we have a question previously from Lim; he’s asking, when you say these six category, do we as an investor just focus on one particular category, that suits how our investments are, or you know, we should really just look at all the six category, yeah when we find opportunities, what’s your approach?
Alvin: Okay! So, not to be confused by – so we understand you know as value investors you know, Buffett always talks about this, it does small circle of competence, right? He says that you must buy a business that you do understand, right? So, this is very different from the category of stocks, because the category of stocks actually defines your risk, right? So, if say you like this business, and you understand it really well, and say it’s in investment grade. So, you wouldn’t expect massive growth from these kinds of investments, right? So, as an investor, I would look at most categories, probably the things that I do personally, I avoid – that’s because of my risk assessment, I typically avoid startup, right? Which is number six, I avoid sunset companies, for obvious reasons, right? And these are the two major ones that I avoid and what I do, I look at very little bit too, I clicked the wrong companies.
Stanley: Right! Okay. Yeah, you mentioned about the next three categories, which is a turnaround companies, sunset companies and startup companies. but before we go more into detail in that three categories, why don’t we start from investment grade; what is the type of company, you say on Bursa right now, that you deem as an investment grade, and why do you deem it as an investment grade?
Alvin: So, one of the companies you know, I’ve been a longtime investor in, you know actually since 2008, it’s actually been Nestle, right?
Alvin: So, I’m not talking about pricing yet, I know it’s gone up like crazy, right? You know, when we first looked at it, it was 26, 28 dollars; that was that range, right? It fell from $33 to $26 that was the lowest in a financial crisis. Now, but if you look at the business itself; Nestle is a very clear example of investment grade stock, right? It’s been continuously profitable since it was listed on day one. So, 24 years continuous profits and it’s been paying dividends continuously for last 24 years, for 24 years, right. So, when you have something like that, it almost creates a very clear predictability that look this year, there’s a very high likelihood unless the business model changes dramatically, they’re still gonna make profits, and they’re still gonna pay dividends, right? Yeah! So, Nestle we’ve won, but I’m not saying that it’s necessary very cheap right now.
Stanley: Yeah! Of course, these six categories are just category of stock, regardless of the valuation. Now, we’re talking about the business fundamentals of these stocks, right?
Stanley: That’s what you’re getting at. Okay! So, Nestle is a good example of a Investment grade; if I can summarize, it’s basically based on having a very long history of the company, and along consistently growing, and profitability, and of course, having good dividends as well. So, these are some of the things you look at, so maybe for emerging grade, how would you categorize with actual example, what kind of company do you see as emerging grade, and then why is it that case?
Alvin: Yeah! So, emerging grade would be you know a company where – so one of the things that we have to be very clear about is, when we say we invest in a business, we need to understand the business, right? So, a lot of times right now especially you know, we’re seeing more and more companies being disrupted, right? In fact, not so much their products being disrupted, actually the way that it’s being done is being disrupted, right? The business model itself. So, one of the emerging companies that I personally invested in is actually Air Asia, right? Air Asia is very clearly in an emerging grade category, if you look at its counterpart also in Malaysia, we – you know our famous airline has been in business for more than 50 years, right? Of course, it’s no longer listed, it became private, right? Talking about none other than Malaysian Airlines, they are both in the same sector. However, I would classify it they are still listed, right now it’s trying very hard to turn around, or possibly in a sunset business, because they are both – they move in the airline business. So, they both ferry passengers, right? That’s their business model or that’s their business, but the business model is very different. Yeah! So, if you dig deep into the details, right? Air Asia only does 4 hour flights, very short haul, which means that their turnaround is fast, and you know, they don’t sell one seat, but their one seat equals to possibly five seats a day, depending where they fly to. So, their business model is vastly different, right? very vastly different, and you’re seeing the emergence of a clear trend in Southeast Asia, where more people have the propensity to travel, or they want to travel, especially short distances of what is a very nice – it’s already comfortable you know, it’s not too long and quite comfortable seat, yeah you know, and you willing to pay for that, at a much lower price, right? So, we’re seeing the trend, and I personally believe that you know, it’s an emerging category that they have.
Stanley: Right! Okay! So, a company that is in a you know maybe disruptive industry, or in the industry that’s still growing very rapidly, you talk about Air Asia, we have quite a number of investor from Singapore on our audience, and maybe – yes, Malaysia airline is no longer listed, but Singapore airline is, right? So, maybe we can talk a little bit about that one, I know you’re not very familiar with the Singapore market, but Singapore airline basically, they have the traditional business which is Singapore Airlines, but they also have a budget airline right now with scoot. So, it’s a mix. When you see this kind of company, how do you categorize it; is it – can one company be in two category at once, how do you look at it?
Alvin: Oh! I think that’s a very interesting question. I think clearly if you look at where Singapore Airlines is, I think obviously this not their first budget that they’ve started you know, this is after tiger, this is what – I would imagine their second time at it, very clearly they see the trends there, very clearly they are trying to disrupt themselves. Right? They know that consumer – So, one of the biggest things that you need to look for, especially when we talk about disruption is actually consumer behavior. This is all driven by consumer behavior, right? and if you look at them right now, what you need to first figure out is, where would I put them under, but a large part of their business right now is still very traditional way; in that sort of long haul, premium segment and scoot is still very new, right? However, because they are a bit late in the game, they’re gonna be playing underdog for a while, right? Now, the reason is very simple. So, when we look at companies, one of the things that we’re – fine equity strength is very important for us, is to be data-driven, right? So, we need to look at the data, because when Air Asia started more than 14 years ago you know, our CEO Tony had said that they were gonna buy a hundred Airbuses A320. Very early on, he already set that strategy, they put massive billboards, and so if you guys come to — you can see this massive billboards. It was well more than 10 years ago, right? Today he’s increased that number to 500, right? Now, what has happen is that, because he got the first mover advantage, he’s basically almost bought up a main bulk of the capacity of the Airbus, right Airbus A320. So, scoot will have to play a serious catch-up game, because from my last count, I think they only have six to seven planes, Air Asia has close to about 200 planes, right? So, it’s gonna be very difficult to get the same economies of scale, plus I think for Singapore Airlines, they stick to legacy, very high-paid premium, they’re used to it. So, the culture is vastly different right, from what Air Asia from ground up, that was how it was built. Yeah!
Stanley: Okay, maybe you’re too kind to say it, but from your tone, it kind of sees that you’re not very optimistic about Singapore Airlines.
Alvin: You know, I would be optimistic of any full fare Airlines today.
Stanley: Okay! Yes, that’s fair enough, I like how you said that in equities tracker, you guys are data driven, and maybe for some of you who are not familiar with equities tracker, they are one of the largest financial educator provider, and also data provider. I’ll just put a link up right here, on equitiestracker.com; you can see that they provide a database for all the companies listed on Singapore, and also on Malaysia. So, that’s their website right now, you can see that I have the page of Nestle on, and the ten-year record of Nestle. So, that’s what equities tracker is doing, and going back to the next three categories; the turn around, the sunset, and the startup. Why don’t we talk a little bit about the turnarounds, what kind of company is considered turnaround, and how do you look for turnaround in the stock market?
Alvin: Well! Turnaround companies you know, probably my personal track record you know, of simple all that we’ve invested in. so, turnaround basically of companies that have done really well for some reason, and they come back down right? So, they’d been disrupted, and they try to turn their business around. My muscle track record has not been fantastic for turnarounds, now in fact of the four that I picked, three have gone belly-up, right? One is still waiting the turnaround. Okay, because it’s very high risk, right? So, how do you look for them, they are typically companies that have done well before, but they’ve been disrupted, right? I mean we look at a very classic example, Amiens today, after five six years still trying to turn around.
Alvin: Yeah! So, it’s not easy, it’s a very momentous task to do major turnarounds, and it’s probably very you know, I’ll put it as a very high risk, but the ones that have turnarounds especially in Malaysia, that have done really – when you get the right turn around, you just gotta hang on to them, because once they’ve got that strategy right, it’s all about execution, and if they can execute it well, you’re easily looking at ten baggers there, right?
Alvin: So, what we do is, yeah! We know there are ten baggers potentially, so what we do is, we allocate a very small percentage for the same sample one percent, because if they do well at ten bagger, that’s ten percent, which is very good. But if they do turnaround and they go belly-up, even if you cut loss at fifty percent, you lose point five percent of your portfolio.
Stanley: Okay! Yeah, fair enough but can turn around be a cyclical company as well, because if you look at the oil and gas industry right now, they have seen their lows, maybe if I want to buy into oil and gas company, could I see it as a turnaround, what’s the key difference between a turnaround in this case, and a cyclical company?
Alvin: That’s a good question, so in Malaysia right, [Unclear 17:29] especially. So, within the oil and gas industry, you can see a lot of them were hit extremely badly during 2015, right? When oil prices came crashing down, of course now its inched back up. Now, what happened during those two to three years, some companies found it very difficult to sustain themselves, right? So, in one particular one, we actually identify Dialogue as an investment-grade, but in a cyclical business, that makes sense, right? So, their profits were down, but even at the down period, they were still making money. So, they were very clearly a cyclical business, because their business – so just to give an idea, so a lot of the business models in the oil and gas industry, especially in Malaysia, they are all very contractual based, right! So, which means that you know, I got a big job, to build an oil rig, or to build something, and to supply, but their business is a bit – so they pivoted their business you know, it’s 30 percent project-based, 30 percent was basically in oil storage, which is right down neighborhood of Singapore boiron, and that’s a rental business, right? So when the oil prices go up and down you know, it doesn’t really affect them that much, because it’s still based on, people are still using oil in a sense. So, you need storage, and their 30% was actually maintenance, right! So, two-thirds of the business was quite in a way not very badly, massively impacted, right! Because when oil prices came down what happened was capex dramatically slowed down. So, the companies that were in the capex business, they suffered a fair bit. So, you need to look at their income streams, or their revenue streams.
Stanley: Right! Okay, that’s the interesting. So, you sort of mention, right? A company can be in two categories; company like Dialogue both as a cyclical, and also as an investment grade type of companies. Yeah! we moving on is sunset industry, I think this is more or less like most people would understand you know, you talking about your traditional airline, maybe your media print type of companies, maybe even the television company like, Media Prima in Singapore that’s SPH, would you agree that this kind of companies are considered like the sunset industry?
Alvin: Yeah! Absolutely right, like what you mention is spot on, so like you know what I’ve said earlier about looking at consumer trends, people spend more time on their phones than they do with any sort of print media, alright! If you look at yourself, look at myself, first thing in the morning, you don’t think of news, right? If I say you know, you open your phone you know, switch on you know, you get on the Facebook, you can on Twitter, and so on, right or any website. So, in that sense if you purely already look in numbers without that context, which is very important! So, if you look at in Malaysia so equivalent speech should be Star newspaper. I mean you know, it did really well in the 90s, 2000s probably peak just before 2000 right, but if you look at last 10 years, it’s revenue has been pretty much flat. It’s got a lot of cash, it’s almost gone not debt. So, it looks almost like your classic pen shipping room you know, buying a dollar for 50 cents, if you look at a balance sheet, but what is very important is that you need to – it’s right now, their business is in you know I would say in massive danger of decline, if there’s no shift of people in their business strategies, right!
Stanley: Okay. So, are these kind of companies that you will want to avoid, with the say use like a Benjamin Graham type of investor, can you still find value in these kind of companies?
Alvin: So, I did that before and you know, it hasn’t worked out really well, because such as you know an example, one of the companies that I think it was probably five years ago, what was in decline, and you look at consumer products, was actually hard disk drives. So, in Malaysia we got two three major guys that supply the hard disk industry, so when you look at actual physical hard disk you know, it’s something with its rotating, it’s a mechanical thing, right?
Alvin: And if you will buy laptops today. first of all, there was a massive decline in the PCs. So, PC shipments were down, tablets and laptops are on the way up right, and if you look at a tablets or phones today or even mobile phones, there’s nothing mechanical inside it, it’s all – they run on SSDs right, for storage. So, I invested in one company, I was hoping for it to turn around, because it looks fantastic on the balance sheet, right! The balance sheet and assets were looking like a dollar, or one dollar 20 cents, and it was selling for say 40 cents, right! They look fantastic right of course, it’ll become a little bit, and it’s come back down. So, from that lesson you know, I was hoping that it will go up you know, but we just got to be honest with ourselves sometimes and say, look you know, it was a bad call, and hope isn’t data driven.
Stanley: Yeah! Definitely, I like that tagline. Okay, Wow! Our comment is filling up. hi to Grace and Ironnie, I’m sorry if I pronounced it wrongly, and we could talk about the startup right now, this category I think Ironnie has a good question on it as well. So, when you look Air Asia right, and when you look at Air Asia X. so, what would you consider Air Asia X as a startup? You know, Air Asia is an emerging grade, and what’s the key difference between the two of them, and why one is in startup one reason emerging?
Alvin: I think that’s a very good question. In fact, I also invested in Air Asia X. so, Air Asia X as you know, was a spinoff from Air Asia right, but both their bus – although they carry almost the same name, their business models are very far apart. Why I say this is this right, Air Asia X flies anything above four hours right. So, which means what straightaway changes their business model, you’ve got to start thinking because we only have 24 hours a day. so I travel to Malcolm quite often, and I always take Air Asia X as part of being a diligent value investor, to make sure I know the business that’s in, and I know what they do, and what I do is, I always try and see their load factor. Now, even if they kept a load factor very high, and understand this, this is their almost the first low-cost long-haul business, it’s not proven, but the management seems to be very humble and positive about it. Where’s the short haul low-cost model is proven right, its 40 50 old model from the US, and in Europe, right? So, if you look at Air Asia X, I will consider them a startup, number one because they wouldn’t be listed for five years now, and I think right now, where I will put them under is a turnaround category, because if you look at two years ago, they did a four hundred and fifty million dollar rights issue, because they were undercapitalized, and they installed a new CEO right, and very most recently Tony Fernandez now is now the CEO right, and obviously it needs a lot more care and attention, to show or prove that this model does work, right! The main difference is this, say example if I only have 24 hours in a day, and I do an eight-hour flight, technically if I do, I fly there, and I turn around at 16 hours, right? That’s excluding any time I spend on the ground, and any shift change I have to do right. So, really if you look at it, I can only probably sell that one seat twice in a day. If we compare to say Air Asia, Let’s say I fly to Cal Singapore, which is an hour, right? If I fly for 15 hours a day technically, if you think about it, I can sell that one seat over ten times. So, you can see where the big difference is, so it’s almost like a budget hotel model. Well! Which in Singapore, which is I think like fragrance, or 99, right? Hotel 99, that’s a – hotel, 88 sorry, where they do hourly rates, right? that’s really what it is right, and versus a full fledge premium hotel, where they don’t do hourly, and they only do — so if your capacity is say for a full-service hotel, let’s say their 5 rooms, in one day, they can only sell five rooms, right. Well! If you look at a bunch of 10s, that’s all the example. look at the business model right, if they have a hundred rooms, if they can turn it over five times, they can be as big as capacity of a full-service hotel.
Stanley: Right! Okay, that’s a good explanation. maybe now we go more deeply into specifics right, I think Alex asks a question, what are some of those stocks you personally invested in, or maybe I can turn the question back to the six category, which are the categories that you most focus in, and why, and maybe what are some of the companies that you consider it inside that category?
Alvin: Okay! So, when we talk about categories, how I look at it is really how to structure a portfolio. So, an example, let’s say a hundred thousand, or building a hundred thousand portfolio, depending on what kind of returns you are looking for, alright. Okay, so I give you some break stream examples right, if I’m looking for five, seven, eight percent return portfolio, I will almost put almost everything in an investment grade stocks right, or maybe a ten percent allocation for emerging risk, well if I was saying look, I’m trying to look for a twenty, thirty percent compounded return portfolio, which is even better than Buffett by the way, okay. I obviously need to take more risk, right? So, I you know, in the investment grade allocation will drop dramatically down to say maybe 20, 30 percent. The rest spread out between your emerging grade, some startups, right? Some turnaround, hopefully not feeling stocks, okay. If that makes sense to you right. So, it’s about allocation of that category.
Stanley: Okay! So, you use the six categories to sort of a build your portfolio around them, that’s a good way to do it. I think grace is asking a question you know, when you say startup companies, are you just referring to their history as a listed companies, or how do you define them?
Alvin: That’s a good question, I personally define them as when they get looks – say it was a 50 year old company, and they just got listed, I always consider them a startup, all right. Why? Because I’m just a bit more prudent that way. Okay!
Stanley: Yeah! Definitely! So, startup are companies with less listing history, cool.
Alvin: Let me the reason why, the reason why is that when a company’s private and public, they’re both very different animals.
Stanley: Okay! Yeah, can you explain a little bit more, why?
Alvin: So, see if you’re privately owned, you know you do whatever you really like to do, right! but when you become public, one big question is, how do I even know that this company is gonna pay any dividends, for example, we don’t know right, neither do we know, if yeah they’ve been profitable before, but were they profitable before because management was under paying themselves, and now they become public, they follow everything correctly. I mean not to say follow everything correctly, but they go back to market rates, you don’t know right? So, though you’re best friend is really time, right to really give you an idea of a track record.
Stanley: Yeah! Cool! Okay, I understand now right, because you never know how the management’s gonna behave as a private company, and a public company. I like this question from Karina, I think she’s very forward, she say can you share your best of ideas today, or maybe put in a better way, is there a company that you recently bought into, and maybe you share with us, your top process and why you invest in that company.
Alvin: Okay! Yeah, I have a few, so I don’t know how much time we have.
Stanley: We can just share one or two is okay.
Alvin: So, one of the one of the companies that I recently bought into, was an electronics company called Group Tronics. So, why? Let me tell you the why, the process first. So, I’ve been watching this company for a long time, and they fall very clearly, if you look at the data, they’ve been continuously profitable for lasts you know 15 years, they pay dividends every single year, they’ve got a good management, and they’ve got good balance flow you know, they’ve got cash flow. In fact, they in a net cash positions, I’ve got cash versus their debt, so that’s why I consider their net cash position. Okay, and because of Donald Trump recently, we got to thank him really, it’s a tariff war that they were gonna have. So, a basically every single stock that was anything linked to technology or semiconductors got hit, right? Their price came down almost 50 percent.
Alvin: Yeah, and you know, if you look into what they do, they actually develop sensors, or they manufacture sensors, and if you look at consumer behavior today, more and more – your phone is you know, every new version has more and more sensors. Just to give an idea of what a sensor would be like, so it’s an example of proximity sensor, do you realize when you’re on your phone, the screen switches off? But then when you say; oh! I need to go and check something on my phone, while I’m on the phone, and I put it that way straight away, the screen comes back on. So, then that is run by a sensor, so their stock price came down 50%, I thought it was absolutely irrational that’s why we have investors, and yeah we started buying into this stock. of course you know, we don’t know where the bottom is gonna be, so get low just average down right, and if you look at what the implications were, because everyone was afraid, that oh you know all the tech stocks are gonna go, and but if you asked me today. If Trump was gonna install terrorists onto any you know, most of the electronics are manufacture in China. I think it’s very well, it’s very clear on that, it would hurt them quite a bit, if they had to pay more tax themselves on stuff that they made themselves, right? Now, so see that even that comes into effect, markets or businesses are quite smart in a way, where they will just find new places they would export from. So, if you look at massive places outside of China with capacity for semiconductors, and I think Malaysia is easily top five right? a group in terms of SEMICON its fact 50% of our exports is in semiconductors, or electronics right? It’s bigger than all palm and crude oil itself, it’s double they’re both combined. So, how big is it, right? So, even if that comes in effect you know, manufacturers just move their base to where it already exists, right? So, it’s not easy to set up a hub for electronics right, because you need the people right, you need engineers, you need the infrastructure, you need people experience right? You can’t just pick a spot, and say yeah let’s start it here, and that’s gonna happen right, you need port facilities, you need all that, and most of it’s based on the Penang, in Malaysia itself. So, I thought look, even if that was gonna happen, they may just have to export out of Malaysia, right? Is at no tariff right, and business people are smart right, they figure out a way how to get around some of these loopholes. So, I and if you look at consumer trends, people are demanding more and more of electronics, and electronics have a lot of sensors in them, in fact cars are the next big ones, where you know massive components are getting to. In fact there’s one stop that is in that space in Malaysia; it’s called KESM, so it sounds saturated. So, K for Korea, England right, Singapore and Malaysia.
Stanley: Okay, I’ll comment it down on the comment.
Alvin: You can comment down, in fact, the holding companies is listed in Singapore a Son right, sir yes you know both sides you guys here look at.
Stanley: Okay, interesting – yeah definitely. Yeah! We are both not stock advisor, so do your research before you buy any stock. Okay! Yeah! Interesting, and I guess a lot of Malaysian investors right now is worried about the election, and I guess this question always comes up during election time, but maybe can you from your own analysis, how do you see if either side wins, what is the pros and cons, and what kind of companies could be affected in this case?
Alvin: So, one of the things that I personally avoid, are any politically linked companies, because I am politically party agnostic, right? So, what happens that when you have political companies, typically they make a lot of money, or they lose, or they have no contracts right, and a stroke of a pen. So, that’s a risk that you know, that I don’t want the take, right? So, at the risk of pen, either you become you know, the next big thing, or you are nothing, right? So, because of such major dependence, I typically avoid any political politically linked stocks, right? regardless of the result, the Malaysian economy is still very resilient, in my opinion – in fact, I gave an interview just end of last year, and I was you know, and everyone’s been pessimistic on the Malaysian Economy. In fact, the strengthen qualify bid against the greenback, in fact you know two years ago, we dropped to 440, or 452 to the greenback you know, that was really in a way, if you asked me, did not reflect the fundamentals of the economy you know, we still grow at least 5% a year, and because you know, we always try to compare Malaysia with Singapore right, but we are feeling a much peace right? So, it’s a lot easier for us to attain 5%. So, say Singapore you know, you guys have a very strong economy, and to inch up that 5% growth is very tough. So, if you go the way the fishes are, it will be easier to fish.
Stanley: Okay! So, basically to avoid any risk, just avoid political link stocks.
Alvin: Yeah, just nothing is gonna happen to say like Nestle, regardless of the elections, people are still gonna be eating Maggi, drinking milo, and life still goes on right?
Stanley: Yeah! Definitely! Okay, and maybe we talked a little bit about the market condition now, i think since the beginning of last year, many people are talking like the market is evaluation is relatively high, I know the chaos here has come down a bit, and but how do you gauge I say the valuation of the market, and how do you control your risk against that?
Alvin: So! Basically, I guess the question is around market timing, right? Okay! Yeah, I think market timing is probably one of the most difficult things to predict, I try myself to avoid trying to predict markets, why? Because I’m a long term investor, therefore you know, my portfolios at least lasts more than five years. So, you know, once I put money in, it doesn’t come off for at least five years. So, we know that markets go up and down, I think you know, since the age of time, every investor has been trying to predict markets you know, they might get it right once, but I don’t know anyone who’s got in the last four or five recessions to the T in terms of timing, correct right? So, if you’re running your own personal portfolio, and you’re invested over a long term, market timing should not that much weigh in on your decisions to invest. because we are looking at a bit more of a micro level, where we’re investing in individual companies, we know for a fact, if you want to be very safe, you can buy companies that have been around for a long time, and me look at Nestles, right? It survived pretty much almost all Prime Minister’s, all anyway right! Yes! In the short term, it may have been impacted, the pricing right now but that’s only opportunity, on a long term it will still continue to grow, right! So, that will be my answer in terms of market timing. I try to avoid, putting very big potential market timing.
Stanley: Yeah! I think our philosophy is very similar, and it’s just buying good companies, and then hold it for the long term, right? Thank you so much Alvin, for your time. I think it’s extremely valuable to many of our audience. Now, I believe that you guys have some free gift for our audience, maybe you want to spend some time to talk about what you’re giving us.
Alvin: Yeah! I think we – you know, Thank You Stanley for having me, and all the audience for signing in, on a Wednesday, especially during lunch. So, what we like to do is, to give everyone access to equities tracker, and to have a look at some of the data, that you may need for investing. So, I’m gonna give everyone so gonna get I’ll give you a link, where you can just give us your name, and your details, and we’ll send you a log in for free for 30 days, and that’s only for readers of Value Invest Asia.
Stanley: Wow! Thank you so much Alvin. Yeah! I’ll share with you guys the link, where you can sign up for it, and you get a free 30 day trial on equities tracker, and you get database I think for Singapore, Malaysia and you guys even have a starting Australian database as well, right?
Stanley: Okay, that’s perfect, I’ll share the link down with you guys, and thank you so much Alvin, I hope to have you on our show again soon.
Alvin: Thanks Stanley, thank you very much. Thank you everyone for watching.
Stanley: Yeah! Cheers.
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