I recently got recommended by YouTube a video by on Bill Ackman’s (an investor that I like) view on the recent US bear market.
After watching that video, I ended up watching a bunch of other videos of him that I missed over the years.
That suddenly got me thinking: what happened to the version of me that wanted to start a hedge fund after being fascinated by the stock market.
I figured I should pen down my whole journey and see how much I have grown (or ungrown).
So, this is the story of my financial journey, and it is going to be lengthy.
From a kid interested in getting wealthy to learning about investing; to eventually trying to launch an index fund and a startup; before finally becoming just another guy on the streets.
This is my story.
Enrolled in Ngee Ann Polytechnic Banking & Financial Services Diploma Course in 2011
I got interested in investment after graduating from secondary school.
Thought it was only logical for me to double down on my interest by enrolling in business school to learn more about investing.
Some say Ngee Ann Polytechnic’s (NP) business school is the best, maybe it is.
There is no basis for comparison, so I can’t tell.
But I learnt quite a lot from the lecturers there.
The thing that I benefited most from my NP education was the access to its library.
A wide selection of investment books often not available or borrowed in our public libraries were all available there.
I probably spent way more time there reading the books than I spent on my Diploma; I would say it was worth it.
Most of the things about finance and investment I know today, the majority of them probably came from books kept in that library.
I started investing my own money in the stock market in 2012, making some good returns over the years while learning to become a better investor.
I was a true-blue Buffett student/follower, adhering to his investment philosophy of buying only great businesses with moats at reasonable prices.
Warren Buffett used to say as an investor; he was “85% Benjamin Graham, 15% Philip Fisher”.
I would say I’m 80% Buffett and 20% Ken Fisher (Philip Fisher’s son).
Invested in Hanwell Holdings Limited (DM0.SI)
Halfway through my investment learning journey, I got interested in Activist Investing.
‘Activist Investing’ is a form of investing where one invests in companies and try to influence change into it, often because the existing management teams mismanage the companies.
I thought that was an exciting part of investing, particularly with the lawsuits, boardroom fights, and the need to outwit the existing management.
These activist investors tend to invest in undervalued companies that have the following characteristics:
- Huge cash position relative to share price
- Operates less efficiently than its competitors
- Has valuable assets that can be sold off or monetised
Since I don’t have any business experience at the time, I definitely won’t be able to do point 2 and 3.
Still, I figured it shouldn’t be too tough to find a company that has a huge cash pile and demand them to pay it out as dividends to shareholders if they have no use for it.
So that was the kind of companies I set out to look for on the Singapore stock market.
In 2014, I found an undervalued stock (Hanwell Holding) that had a huge cash position relative to its share price and invested several thousand dollars into it.
It had about $119 million in cash and a market capitalisation of about $140 million: about 83% of its market capitalisation was cash.
It had a net asset value (NAV) of $0.47 and a share price of $0.25.
I felt that a lot of value could be unlocked if management just distributed the excess cash they had hoard.
Hence, I had planned to attend its AGM and nudge the management to declare a one-time dividend payout of half its cash pile.
Well, if you didn’t hear news of a kid (I was 20 years old then) making noise during a public company’s AGM, it’s because it did not happen.
I overslept, and I proceeded to sell my entire holdings the next week since I no longer had the opportunity to make management increase dividend payout.
The stock was trading then at its upper price range, and I figured that was a good enough time to cash out.
I made a small profit from that investment, although I would love it more if I managed to get the management to give a hefty dividend payout.
Time To Start A Index Fund
Well, if I can’t be an activist investor, maybe I can try and be an index fund management firm.
So in the same year (2014), a couple of my friends and I got together to try and start a low-cost index fund company in Singapore.
What we had in mind was simple: we will get our investors to invest a fixed amount every month into the Straits Times Index (STI).
Instead of timing the market, we would dollar-cost-average and build up a long-term retirement portfolio.
Yup, this is the Regular Shares Savings (RSS) plan we know today.
Back then, it was costly to invest a small capital every month into the stock market.
So we wanted to allow investors to invest every month into a broadly diversified portfolio of companies without paying high brokerage cost.
We went to consult a law firm on the regulations surrounding starting a fund in Singapore, and we left the meeting no longer adamant in pursuing the idea.
We needed a bunch of licenses, processes, systems.
Still, most importantly, if we proceeded without a license, it was a chargeable offence.
Ain’t no 20-year-old kids going to risk huge fines or going to jail for a startup.
On hindsight, from that experience, I learnt a couple of things:
- Timing is the most crucial ingredient in creating a successful startup. If we went to the law firm a year later, maybe we could have been the next Stashaway or Smartly.
- Packaging probably could help. If we had added the word “technology” into our pitch to the law firm, maybe we might get the go-ahead.
- The right connections could jumpstart your career/business. Maybe we should have gone to a bank or FI instead of a law firm. Perhaps we would have gotten a different answer, like how many banks these days are assisting FinTech startups by “lending” them their licenses.
- If it is good, just do it! Uber broke all rules before rules changed for them, same for Airbnb, and AliPay. Maybe the way forward is to break the old rules that don’t make sense so that the world can progress forward.
We could have started an excellent FinTech fund company, or we could have flopped.
We will never know, and that doesn’t matter because we have to keep looking forward.
But that was a pretty interesting chapter on the whole journey.
Then Came Investment Stab
After two flopped attempts at starting businesses related to investment, maybe it’s time to call it quits?
Then my friend called and asked if I want to start a financial blog with him and share our investment ideas with the public.
I thought it was a good idea since I could publish my investment thoughts on the blog.
Most activist investors have websites to share their investments and why certain things within the companies need to be changed, and I thought I should build the same thing too.
So if you ever went back to read our first few articles, it was about Yahoo!, how its shares were undervalued and how value could be unlocked.
I wrote them because I invested in Yahoo! at that time and I hoped Yahoo! investors would read and pushed for these changes.
Why did we give ourselves the name “Investment Stab”, that is a story we will leave for another day.
NS and University
I went into NS towards the end of 2014.
Life goes on as per usual in my NS and university life.
I continued to invest my own money and continued blogging.
My investment returns were pretty decent, and the number of readers and readership grew nicely over the years.
We expanded our blogging topics to include personal finance and CPF.
Today, we have both graduated from university.
My partner has found a job while I’m still looking for one amid this COVID-19 situation.
My investments are not enough to allow me not to work and we failed to monetise our blog to sustain us either.
Blogging is now a hobby to us, to share our thoughts, to share our views, to share tips that we found were useful and think it will also be helpful to our readers.
There were times we wanted to call it quits but continued because of you, our readers, who continued to support us throughout our six-year journey, we persevered.
It’s been 8 years since I started investing and 6 years since I started blogging.
I still got the drive to create a startup, though I can’t think of any brilliant ideas like Uber or Airbnb.
Watching the videos of Bill Ackman made me think that maybe I should try and start my hedge fund.
He started his first investment firm when he was 26, which is my current age, so maybe that’s a sign?
Starting an investment fund in Singapore legally is tough.
You need either a Capital Markets Services (CMS) license or a Chartered Financial Analyst (CFA) certification before you can ask for funds.
Then again, I can probably start a small fund with friends and family members’ money.
Though I can’t make millions from fees and profit-sharing, at least it brings in some extra coffee money.
That while I continue to look for a job, and save my pay, and invest for the long-term.
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