I attended BIGScribe Investor Exchange recently held at DBS Auditorium. It was a content-packed afternoon with different speakers, including Stanley of Value Invest Asia sharing their unique strategies and personal experience investing in the equity market.
For the uninitiated, BIGScribe is a group of influential financial bloggers who banded together with the aim of providing unbiased content to the information-hungry public, and linking financial bloggers/influencers to the right brands. More info about BIGScribe can be found here.
There were five speakers at the event. In order of speaking sequence:
An Overview of Each Speaker’s Talk
Every speaker brought with them their unique stock investment strategy built upon many hours of research, testing, refinement, and implementation. Taken together, it enabled audiences to gain new perspectives and help improve their investment process.
First up, Stanley shared about how investing in quality growth company can be rewarding in the long term. The key is to identify strong business with consistently growing revenue and earnings, buy the company share and hold on to them for an extended period. He shared a few examples whereby a seemingly more expensive company based on the PE ratio outperform a cheaper share with a lower PE. He touched on how economic moat fends off competitors and keep customers coming back. Lastly, be a ‘Stock Collector’ instead of a ‘Stock Investor’ was his parting remarks.
Brian dives deep into the world of dividend investing and presented how he frames potential stock investment as an equation that comprises capital returns and dividend returns. He illustrated examples of how a varied proportion of capital and dividend returns can give a total return of 10% per annum. It was further supplemented with companies at different growth stages that fit the characteristics of ‘low/high capital + high/low dividend’. Brian also introduced some accounting concepts such as maintenance and growth CapEx that was technical yet refreshing.
James Yeo talked about the merits of investing in small and mid-cap stocks with strong growth potential. The strategy of Growth At Reasonable Price (GARP) is a hybrid of pure Value Investing and Growth Investing has the potential to select multi-bagger returns. However, it needs much research and a deep understanding of the company fundamentals, given that mid or small-cap stocks are of higher risks. He also presented a checklist of qualitative factors to help identify strong companies.
Rusmin gave an interesting personal account of how he focuses on three factors to identify companies that give a consistent stream of dividends. These are predictable business, consistent cash flow, a stream of dividends. He further broke down ‘Business Predictability’ into a function of ‘High Recurrence’ and ‘Low Variation’. Lastly, he stressed the importance of portfolio management and advised strongly against market timing.
Christopher started his segment by describing how the general public is stuck in jobs that they do not enjoy. He further introduced the Life-Energy Exchange concept by including the total time spent related to work when calculating real salary per hour. To resolve the conundrum, he shared about ‘Freedom Unlimited’ Money the cash flow approach – figuring out how much dividends one need for living expenses and in turn derive a portfolio amount required. There is also a more superior strategy to buying the STI – investing in cheapest 50% of STI stocks based on PE, which was interesting. His segment was broader and covered personal finance portion as well.
I saw much common, underlying themes between Stanley’s, James and Rusmin segments. All three emphasized the importance of picking quality businesses that can withstand competition and grow over time. However, the approach is slightly different: Stanley advocates quality overvaluation; James prefers small mid-cap with multi-bagger potential; Rusmin believes in predictable business with strong cash flow. These are the just different manifestation of the same concept.
To apply this knowledge into actual stock investing requires efforts in understanding the company and industry. The deeper we understand the company’s business and the industry dynamics, the better our reasoning and analysis are, and the higher our chances of picking solid companies.
There is one issue touched on by Rusmin which I thought can be implemented in other segments too – investor psychology. It is such an important aspect of investing, which can ruin our performance when not properly managed. Unfortunately, it is easy to illustrate, intuitive to understand, but hard to master. And it usually comes with experience after many years immersed in the market. So I guess an individual investor has to self-help in this area.
Some Deeper Food for Thought
Christopher’s talk was thought-to provoke. He sought to challenge the practicality of the Singapore Dream – get a good degree, gets high-paying jobs, buys an investment property to boost wealth, that has been so ingrained in the Singapore DNA.
Personally, I strongly agree with his views. I find that we need new narrative and definition of a ‘Successful Life’, that goes beyond material wealth, or for students, good grades, given that the age of exponential wealth growth via a property is probably over, and technology advancements that are very likely to disrupt the traditional jobs.
His suggestions of Freedom Unlimited Money and alternative lifestyle design such as part-time work and moving to a lower cost country are worth pondering.
Overall, it was an enriching session and I walked away with valuable knowledge. Look forward to the next year’s edition.