IN THE SPOTLIGHT | 26 MARCH 2010
Mastering The Art Of Value Investing
Simply put, the essence of value investing lies in buying stocks at less than their intrinsic value. The discount of the market price to the intrinsic value was what Benjamin Graham, father of value investing and Warren Buffett’s mentor, referred to as the ‘margin of safety’.Just like Buffett and Graham, Ken Chee and Clive Tan, co-founders and trainers of the increasingly popular Millionaire Investor Program, strongly believes in the beauty of value investing. More importantly, it was this common passion that brought them together on their value investing journey when they met at an entrepreneur program 4 years ago.
“Back then, we used to form a mastermind group of 8 and meet up once a month to study chapters after chapters of various investment books and subsequently put what we have learnt to use by analysing different companies,” Ken reminisced during an interview with Shares Investment (Singapore).
According to Ken, who has attained financial freedom at a tender age of 34, one of the most important reasons for developing the Millionaire Investor Program was to help create as many enlightened millionaires as possible via the platform of value investing. “Also, we have discovered that in order to retire comfortably at the age of 65 in Singapore, one should have an average of $1 million in cash, and hence its name,” he added.
Highlighting the fact that the Millionaire Investor Program is no get-rich-quick scheme, Ken said while there is a certain group of people yearning to make quick bucks in the equity market, there is also another group of individuals wanting to learn the proper way of investing. He further mentioned that a lot of people could not differentiate between trading and investing. “Trading is for institutions. It is not meant for retail folks, as most of them just do not have the technology and temperament to succeed,” Ken commented.
Gaining popularity amongst the investing public
Focusing On Fundamentals
A 3-day course from 9am to 9pm, the Millionaire Investor Program allows participants to better understand and grasp the key concepts of value investing through interesting games and tools. More specifically, the Millionaire Investor Program teaches participants on how to analyse real companies through interpreting financial statements not from the point of view of an accountant or an employee but from the point of view of an investor or business owner. To find out more about the program, you can visit their website at www.millionaire-investor.com.
“Accountants will treat assets as assets. However, based on our experience in managing businesses, we realised that some assets may not necessarily be assets, while some liabilities may not be liabilities,” explained Clive, who was a former high school teacher. Apart from the Millionaire Investor Program, Ken and Clive also own a branding consultancy company and a childcare business respectively.
And things don’t just stop there after one completes the 3-day program. There will be quarterly networking sessions, where graduates come back for reviews and discussions. Occasionally, the management of the listed companies will be invited down to share about their businesses and investment merits. “We also have plans to organise plant visits in the near future,” Clive remarked.
As fittingly put across by Ken, the strength of the Millionaire Investor Program lies in its weakest link. That is to say, for someone who practically knows nothing about equity investing, he or she will be able to understand the true meaning behind financial jargons such as profit and loss, assets, liabilities and PE ratio, to name a few.
Gone are the boring and dry lessons
In The Pipeline
Having established a firm footing on local shores, Ken and Clive are looking to bring the Millionaire Investor Program into regional markets. Notably, they will be holding their maiden program in Ho Chi Minh around April or May. Jakarta is another city that they are currently exploring.
On whether he believes in technical analysis, Ken pointed out that although technical indicators do provide a glimpse of market sentiment, more often than not, one could get confusing signals from various indicators.
Preferring to stick to analysing the fundamentals as opposed to predicting future market directions, Ken personally likes VICOM, citing the company’s ability to generate sustainable cash, low capital expenditure and lack of competitors as key reasons. “Another company worth looking at is Asia Pacific Breweries. If you had bought its shares in 2001 at around $3, you would have gained an annual compounded return of 20%,” Ken exclaimed.
I guess for Ken and Clive, as well as other proponents of value investing, nothing beats buying into an undervalued company with a solid business model and watching its share price shoot through the roof. That, I suppose, is the beauty of value investing.
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