This article first appeared on Dollarsandsense.sg
Making mistakes are part and parcel of our investment journey. It teaches us not to be complacent and to learn from our mistakes so that we can become better investor in the future.
As part of their vision to educate and engage the investment, the Securities Investment Association Of Singapore (SIAS) held a “Get Savvy With Investing” talk on 4 March 2017.
The talk, which was meant for adults and youths aged 35 and below, featured a panel discussion with three industry veterans, Piyush Gupta, CEO Of DBS Group, Loh Boon Chye, CEO of SGX and Lim Kok Ann, CEO of DBS Vickers Securities.
The three high-powered executives who are no stranger in the investment community collectively shared a wealth of insights, including personal investment mistakes that they made when they first started out.
DollarsAndSense.sg was present during the event and here’s what we pick out from the discussion.
Piyush Gupta, CEO, DBS Group – Investing Based On A Rumour
Now 57, Mr Piyush Gupta, started his own personal investment journey about 30 years ago after he had accumulated enough savings from a few years at work.
He decided to make his first foray into investment based on a rumour then that was floating around that on a particular company in Singapore was going to benefit significantly from the budget that year.
Further conversation with other investors and brokers seem to affirm the authenticity of the rumour leading Mr Gupta to make the investment.
As with many rumours, this turned out to be a poor decision. Mr Gupta lost about two-thirds of his investable savings at that time in the investment.
This made him realise that in order to be a successful investor, he needs to be responsible in ensuring that he understands for himself the risk he is taking for each investment, rather than to simply rely on what others are saying.
Mr Gupta also expanded this approach to investment products offered by financial institutions. He shared that most people who buy investment products don’t ask themselves enough questions about the risk and returns of products that they invest in.
He shared that investing is always about the risk and reward equation and that investors need to think about the risk they are taking for the returns they expect to get.
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Loh Boon Chye, CEO, SGX – Punting Instead Of Investing
When he first started, Mr Loh Boon Chye likened his investment approach to that of a short-term punter, instead of a long-term investor. The general idea for punters is to buy stocks that they think will go up, and to make a quick profit when it happens.
Mr Loh advises for investors to first understand their investment objectives and to do their homework on the stocks they wish to invest in. As a start, he suggests using local advantage by investing in the stocks of companies you can see around you. This gives an investor better visibility on how the company is faring.
In addition, Mr Loh encourages more investors to think about the downside of their investment, rather than to only focus on the upside.
Simple questions investors should ask themselves include their capital-at-risk and whether they are looking for capital preservation in their investments. These things matter; as they ultimately would determine the investment and risk that investors should be taking.
His last words for young Singaporeans would be to start investing young, know your objectives, and to remember that with fear comes opportunities, and with greed comes risks.
Lim Kok Ann, CEO, DBS Vickers – Trading Instead Of Investing
Similar to the other two panellists, Mr Lim Kok Ann started his investing journey looking more like a trader. After losing some money, he quickly realised that the trading approach that he was adopting was not going to make him a successful investor in the long run. He went back to books to start educating himself on how to invest right.
One of the books that left an impact on him was Security Analysis by Benjamin Graham and David Dodd. The investing principle shared in the book helped him to become a better investor, and taught him the importance of differentiating between investing and speculating.
For young investors, Mr Lim shared the importance of knowing one self and to adopt the right mindset. An investment mindset must be adopted for investors while a trading mindset is adopted for trading. For example, an active trader who makes wrong trades need to cut their losses quick. Otherwise, they end up turning what was meant to be a trade into a “long-term investment”
Mistakes Are Part Of Learning
Compared to the past, all three CEOs are a lot wiser today when it comes to investing. An interesting observation that we noted during the panel discussion was how often the panellists agreed about the importance of understanding macro economic factors when making long-term investments into the financial markets. For example, Mr Gupta himself is bullish about the long-term growth opportunities in both China and India.
The other observation we pick out from the discussion was the importance of global diversification. While taking the first step in your investment journey by investing in local stocks make sense, expanding your portfolio to include overseas investments is also important in order to be adequately diversified.
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