Among the few talks that I managed to attend on the second day were those by Costas Paris, South East Asia Bureau Chief of Dow Jones, Ken Chee, CEO of 8 Investment Pte Ltd and Leong Sze Hian, president of the Society of Financial Service Professionals.
Here are a few selected points from their presentation:
Market Outlook by Costas Paris
What the bulls are saying
- Banking crisis over
- US Economy showing signs of stabilization
- Chinese domestic demand robust
- Corporate earnings are recovering
What the bears are saying
- Earnings recovery driven by cost cutting, not growth
- Government stimulus only short-term
- Market overbought on techincals
- Risk of double dip recession
- Unlike 1998, no exports to rely on
Key themes in local Singapore market
- Commodity plays tend to be volatile with high beta. Good proxy for economic recovery. Trading sentiment driven by oil prices.
- Pick up in residential segment but worries over government intervention.
- Commercial property outlook still cloudy.
- Confidence of S-chips rocked by accounting scandals.
Ken Chee on How You Can Generate the Highest Returns with the Maximum Amount of Safety in the Equities Market
Basically, Ken shared with us some of the insights he gained from Warren Buffett when he attended this year’s Berkshire Hathaway AGM.
- Value shouts at you and if you need a computer to calculate the numbers, don’t invest. Keep it simple.
- If you think you are very smart in investing, you are headed for trouble. Always stay within your circle of competence.
- Investing is simple but not easy because of our emotions.
- Leverage can cause you to go broke.
- While Warren Buffett advocates a long term horizon, there are a few reasons why you would want to sell a stock:
- Economic advantage of the business is eroding.
- Management quality goes down.
- Initial decision not valid anymore.
- There is something more attractive that you can invest the money in.
- To protect against inflation, you can either increase your earning power or invest in a great business.
- Banks and financial institutions are too complicated to be valued by the average investor. Avoid if you do not have the time.
- Energy is one of those upcoming investment trend.
- If he has to teach a course about investing, Warren Buffett will cover these two things:
- How to value a business
- How to think about markets
Leong Sze Hian on Managing Wealth in Turbulent Times
- Market timing and prediction is next to impossible. It is far better to use a simple asset allocation strategy and rebalance it on a quarterly basis.
- Focus on risks, not returns.
- According to statistics published by CPF, 75% of investors who invest using their Ordinary Account (OA) do not beat the 2.5% p.a. return. This is based on numbers as of 2005, 11 years after the CPF was allowed to be used for investing.
- Be cautious of the claims of some trainers. Eg. “Attend a few days of training, pay a few thousand dollars, and you can make a few thousand dollars a day.”
- When you need money, sell those that have gone up the most.
- Be robot, not human, when it comes to investing.