Category: Interviews

Last week, on 31 March 2023, I was invited for a short interview on Money FM 89.3, Singapore’s first business and personal finance radio station. My friend Willie Keng, the founder of investor education website Dividend Titan, was hosting a segment for the radio show and we talked about a few topics:

• Alibaba’s recent announcement that it would be splitting into six business units and what the move could mean for its shareholders
• What investors should look out for now when it comes to China’s technology sector
• The risks involved with investing in technology companies

You can check out the recording of our conversation below!

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. I have no vested interest in any companies mentioned. Holdings are subject to change at any time.

I was recently interviewed by Timothy Ho, co-founder of the personal and business finance online knowledge portal Dollars and Sense. The interview is part of Dollars and Sense’s #TheNewNormal interview series. With permission, I’ve reproduced my conversation with Timothy here. We covered a number of topics, such as the recent divergence seen in stock prices and economic growth, and whether I’m invested in other asset classes beyond stocks. You can  head here for the original interview.

Interview

Timothy Ho (Timothy): As a writer yourself, you wrote on your blog about how this current disconnect between Main Street and Wall Street isn’t the first time that stocks did fine when the economy fell apart. What makes this recession experienced by many countries different from past recessions such as the GFC and the Asian Financial Crisis?

Ser Jing: You mentioned the GFC, and I have looked at how stocks recovered during the crisis. Interestingly, it follows a similar pattern to what I wrote about in the blog post that you referenced. Although the S&P 500 reached a low in early-March 2009 during the GFC, many individual stocks bottomed months before that, in November 2008. And it turned out that the US’s GDP and unemployment rate continued to deteriorate for months after these individual stocks reached their crisis-lows. I wrote about this in a blog post linked here. So, I think a takeaway here is that stocks tend to – though not always – look ahead into the future. While things may look bleak today, stocks may already be racing ahead in anticipation of a better tomorrow.

This COVID-19-driven recession has caused pain to many economies around the world. In response, central banks in these economies have at times intervened in unprecedented ways. Some market participants may point to these interventions as the reason why stocks have risen so much from their pandemic lows. But I want to point out something interesting. In my blog post that you referenced, I wrote about how US stocks did during the Panic of 1907. This was a period of immense economic pain for the USA and was one of the key reasons why the US government decided to set up the Federal Reserve (the US’s central bank) in 1913. During the Panic of 1907, the US economy was still in shambles even in 1908, but the US stock market had bottomed in November 1907 and then started climbing rapidly in December 1907 and throughout 1908. And here’s the interesting thing: The US central bank was not even established back then.  So perhaps there’s more to the recovery in stocks from the pandemic lows that we’re seeing today than just the actions of the central banks.

You also asked what makes the COVID-19-driven recession different from past recessions such as the GFC and Asian Financial Crisis. One key difference is that most past recessions were the result of excesses in the economy (both the GFC and Asian Financial Crisis were caused by excessive borrowing – on the part of households and financial institutions in the case of the GFC, and on the part of countries in the case of the Asian Financial Crisis). The COVID-19-driven recession, on the other hand, was caused by disruption to our daily work and ceasing of many economic activities to halt the virus’s spread. It was not caused by excesses in the system. This is a point that Howard Marks, an investor I deeply respect, has made. So, I think a lot of the playbooks that investors have developed based on the lessons from past recessions may not be very applicable in today’s context.

Timothy: It will be easy for us to simply say that investors are starting to realise the importance of investing (or investing more) even during a recession. But is there an element of FOMO (fear of missing out) that is creeping into many retail investors? For example, we see meme stocks, NFTs and cryptocurrencies being incredibly volatile, not to mention, speculation of many pump-and-dump tactics at work. Are these factors contributing to this surprising bull run?

Ser Jing: It’s hard to tell what are the psychological factors that contribute to the current bull run in stocks. I don’t have a good answer. But I do think it’s clear that there are speculative actions being seen, as you rightly mentioned, in some corners of the financial markets. If these speculative actions lead to excessive, widespread optimism about stocks soon, then another crash may be around the corner.

Timothy: While it’s good to see people getting interested in investing and trading in the financial markets, I realised that many new investors I met these days are more open to investing or trading, even when they recognise that they don’t have the knowledge they need. It’s like the desire to get started on their investment journey outweighs the need to learn first. In your opinion, is this good or bad?

Ser Jing: Great question! My answer is “it depends.” If the new investor is young, with decades ahead to make full use of his/her human capital, then getting started on an investment or trading journey even without the requisite knowledge is not a bad thing. The best teacher for such lessons is the mistakes we make ourselves. By starting early, the new investor gets to make the important mistakes, when her capital for investing is small and when she has plenty of time to recover from her mistakes by making more money in the future from entrepreneurship or employment. On the other hand, if the new investor is approaching retirement, then starting to invest or trade without the requisite knowledge is a bad idea.  

Timothy: What are some things about the stock market that have surprised you over the past 18 months?

Ser Jing: I am generally not surprised by what happens in the financial markets, not because I can predict the future (I absolutely cannot – I have no crystal ball), but because I am aware that surprising things happen all the time in the financial markets. But I am still in awe at the magnitude of the rebound in stock prices from the pandemic lows.  

Timothy: With decentralised finance (DeFi) taking center stage (pun intended), do you personally expect to see a financial world in the future where prime assets to hold go beyond just stocks and properties, and include other asset classes like NFTs and cryptocurrencies?

Ser Jing: I am still very much a novice when it comes to NFTs, cryptos, and blockchain technology. I am still learning, and it’s a fascinating area. I don’t know what the chances are that NFTs and cryptos will become prime assets in the future. But I’ve seen some forward-looking venture capitalists compare the state of NFTs, cryptos, and blockchain tech today to what the internet was like 20 years ago. Back then, the internet seemed mostly like an object of curiosity but look at what it is today. For now, I am watching developments in the blockchain space as a highly curious and interested novice.

Timothy: Beyond just individual companies, do you look at other traditional asset classes like indices and bonds in your investment portfolio?

Ser Jing: I don’t have my own personal investment portfolio. I set up Compounder Fund with Jeremy to invest in a way that we would for our own capital. The short answer to your question is that I don’t invest in other traditional asset classes for the fund.

Now for the long answer. First, when it comes to indices, I think it’s a great starting place for an investor who’s new to the financial markets. But for someone with expertise (and a very important part of the expertise involves having the right temperament), investing in individual stocks can generate much higher returns than investing in indices. There’s no guarantee that Jeremy and I have the expertise. But at the very least we have discipline – we’ve written about our investment process and methods in detail, and we intend to stick to what we’ve discussed. Second, when it comes to bonds, I don’t think I know bonds well enough to be able to form an investment opinion on them. I only want to invest in things that I understand well – and for now, it’s only stocks.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, I currently have no vested interest in any of them. Holdings are subject to change at any time.

On 24 June 2021, I recorded an episode for The Financial Coconut’s podcast series, TFC Stock Geekout. I appeared in the episode together with The Financial Coconut’s founder, Reggie Koh, and we talked about ASML (NASDAQ: ASML) for nearly an hour. We discussed many aspects about the company, including its revenue streams, growth prospects, risks, and more.

ASML is based in the Netherlands and is a company that’s in the portfolio of the investment fund that Jeremy and I run together. It’s a fascinating company to me because it is currently the only company in the world that can build an extreme ultraviolet (EUV) lithography machine. Lithography is the process of using light to create tiny, tiny structures (called transistors) on a silicon wafer to produce chips. EUV lithography is currently the most advanced lithography process and it uses ultraviolet light of an extremely short wavelength of 13.5 nm. In a world that is increasingly going digital, there is a need for a chip to contain more and more transistors because this improves a chip’s cost and performance. This is where EUV lithography machines shine. Because they use light with such a short wavelength, they allow chip manufacturers to produce chips with transistors that have mind bogglingly small sizes. (How small? Listen to the podcast to find out!)

The podcast episode that I recorded with Reggie was released recently and you can check it out below. I hope you’ll enjoy it!

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, I currently have a vested interest in ASML. Holdings are subject to change at any time.

In early October this year, I recorded a podcast with Kelvin Seetoh, co-founder of Growth Investing Mastery, an investment education services provider. The podcast is for GIM’s recently-launched podcast series, Growth Investing Secrets. I’ve known Kelvin for a few years and he’s one of the brightest young investors I know. The title of this article is the title that he gave for the podcast.

During our conversation, we covered a lot of ground, including:

• How I became so passionate about investing
• How I developed the confidence to be a stock picker
• What it means to be “active” vs “passive”
• The underappreciated traits of good investors
• How I think about my geographical exposure in my investing activities
• A deep dive into my investment framework
• Why “copying” others is important
• How to think about loss-making companies
• My guiding light for portfolio construction, which is a phrase from David Gardner:  “Make your portfolio reflect your best vision for our future.”
• How I think about which industries or sectors to focus on
• How I navigated through the COVID-19 crisis

All credit goes to Kelvin for leading the conversation masterfully! You can check out the podcast here, which was published yesterday. I hope you’ll enjoy the session with Kelvin – I absolutely did! 

Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. I may have vested interests in the companies mentioned during the podcast.

I was recently interviewed by Timothy Ho, co-founder of the personal and business finance online knowledge portal Dollars and Sense. The interview is part of Dollars and Sense’s #MyFirstLoss interview series. With permission, I’ve reproduced my conversation with Timothy here. We covered a number of topics, such as the losses I’ve made in investing, and why I decided to start The Good Investors with Jeremy. You can  head here for the original interview.

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Interview

Timothy Ho (Timothy): We always start this column with the same question. Do you remember the first time you made a loss in your trades? #MyFirstLoss

Chong Ser Jing (Ser Jing): I remember all the losers in my portfolio. My first-ever transactions in the financial markets were made in October 2010 for my family’s investment portfolio, and they were the purchases of six US stocks. Even back then, I invested with the mindset of a long-term business owner. I saw, still see, and will always see, stocks as partial ownership stakes in actual businesses.

From October 2010 to June 2020, the portfolio of the six stocks expanded to more than 50 with regular capital infusions. But the selling happened rarely. I only sold eight stocks, and only two of these sales were voluntary – the rest of the sales happened because the companies were being acquired.

My aversion to selling is by design – because I believe it strengthens my discipline in holding onto the winners in my family’s portfolio. Many investors tend to cut their winners and hold onto their losers. Even in my earliest days as an investor, I recognised the importance of holding onto the winners in driving my family portfolio’s return. Being very slow to sell stocks has helped me hone the discipline of holding onto the winners. And this discipline has been a very important contributor to the long-run performance of my family’s portfolio.

I think it’s important that investors focus on portfolio-level returns instead of the gains and losses produced by individual stocks they own. It’s a guarantee that we will make mistakes when investing. But the key is to make sure that the decisions we do get right can significantly outweigh the ones we get wrong.

Timothy: You have been writing full-time since 2013. Was the motivation to continue writing the reason why you started The Good Investors after the closure of The Motley Fool Singapore?

Ser Jing: When I was in university, I realised I wanted a career in the investment world. I have a deep passion for investing. I see the financial markets as an intellectual puzzle to solve, and by learning about companies, I get to have a front-row seat to observe how the world is changing. For example, there’s a company in the USA that is currently applying electric fields to the human body to treat cancer – how cool is that!?

But at the same time, I wanted my involvement in the investment world to be something where I could positively impact as many lives as possible. This mindset has not changed, and it was a big reason behind my motivation to join the Motley Fool Singapore in January 2013. The Motley Fool has a strong purpose that its employees believe in. Back then, the Fool’s purpose was to help the world invest better. Today, it is to make the world smarter, happier, and richer. Both are wonderful.

During our careers at Fool Singapore, Jeremy and myself experienced first-hand how important financial education is for Singapore’s public. Many people do not understand investing and bumble their way through the financial markets, leading to a deterioration in their financial health – and the scale of the problem was larger than I thought before I joined the Fool. When Fool Singapore closed, Jeremy and I felt that we still have plenty to offer in terms of investor education and we needed to continue doing our part. We just think it’s the right thing to do.

Timothy: Besides the website, you also started the Compounder Fund for accredited investors earlier this year. What was the reason for doing so?

Ser Jing: For many years while I was at Fool Singapore, I had been exploring a fund management business. My vision was to help spearhead a fund management business for Motley Fool Singapore. At the Fool, I thought we were excellent at serving the DIY (“do it yourself”) investors – we provide investment research and ideas, and these DIY investors can make their own decisions. But I also believed (and I still do) that there’s an even larger group of investors in Singapore who require a fully-outsourced investment solution because they do not have the time, energy, capability, or interest to invest by themselves. It’s true that there are many investment funds in Singapore, but it’s rare to find one that I think is investing soundly (global in nature, and invests with a focus on long-term business fundamentals). This is why I thought it’s essential for Fool Singapore to build a fund management business in Singapore – but nothing concrete on the front ever got started when I was with the company.

When Fool Singapore closed, I thought, “Why not try it out on my own?” I approached Jeremy and shared my ideas and he was on board from Day 1. To Jeremy and myself, Compounder Fund is more than just a business – there are strong social objectives we want to accomplish too, such as having fees that decline as assets under management grow, and running the fund very transparently to play our part in investor education. These objectives will be hard for us to meet in a commercial setting (there will be commercial pressure), so it’s better if we did it ourselves where we had only ourselves to answer to, and where the measurement of success of the fund goes beyond how much fees it can generate.

Timothy: As someone who has been writing about investing for so long, and also manages investment monies on behalf of investors, what are some common mistakes that you see investors and traders making?

Ser Jing: I think one of the common mistakes that investors and traders commit is not putting in the effort to understand market history.

If they look at market history, they will realise that stocks are volatile creatures. Volatility is in their nature. But crucially, this volatility has occurred even when stocks have gone on to generate fantastic returns. A great example is the energy drinks maker Monster Beverage (which Compounder Fund does not own). From 1995 to 2015, its stock price grew by 105,000%. But in those years, its stock price fell by 50% or more on four separate occasions. If they understand that volatility is part and parcel of the game, then perhaps they wouldn’t be so stressed out over short-term market declines.

Also, if they looked at market history, they will understand that the world is always in a state of crisis. As the saying goes “History is just one damn thing after another.” Uncertainty is always around. But how many times have you heard someone say that they prefer to wait for the dust to settle before they invest? The thing is, if you wait for the robins, spring will be over. Peter Lynch also once said that “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

Timothy: What should investors or traders be mindful of during this volatile COVID-19 period?

Ser Jing: I think it’s important to be mindful of our own emotions. As I alluded to earlier, volatility tends to bring out harmful emotionally-driven investment behaviours. Put in place a system where decisions are made based on business developments and not stock price movements.

Another thing to be mindful of would be companies with weak balance sheets. Antifragility is a term introduced by Nassim Taleb, a former options trader and author of numerous books including Black Swan and Antifragile. Taleb classifies things into three groups:

• The fragile, which breaks when exposed to stress (like a piece of glass, which shatters when dropped)
• The robust, which remain unchanged when stressed (like a football, which does not get affected much when kicked or dropped)
• The antifragile, which strengthens when exposed to stress (like our human body, which becomes stronger when we exercise)

Companies too, can be fragile, robust, or even antifragile. The easiest way for a company to be fragile is to load up on debt. If a company has a high level of debt, it can crumble when facing even a small level of economic stress. On the other hand, a company can be robust or even antifragile if it has a strong balance sheet that has minimal or reasonable levels of debt. During tough times (for whatever reason), having a strong balance sheet gives a company a high chance of surviving. It can even allow the company to go on the offensive, such as by hiring talent and winning customers away from weaker competitors, or having a headstart in developing new products and services. In such a scenario, companies with strong balance sheets have a higher chance of emerging from a crisis – a period of stress – stronger than before.

Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life.