CaiJin

Getting enlightened on investing

Honest advice from top investors is often more educational than any analyst report

Survey after survey by well-respected financial institutions such as DBS Bank attest to our fears that we may still not have squirrelled away enough retirement savings because we are all living longer.

The problem for many of us is not that we squander whatever we earn each month and not save a cent. In fact, a study by CIMB Securities two years back showed that a high proportion of households here do save part of their monthly income.

The real problem is a dearth of good investment ideas to invest our savings fruitfully. Caught as we have been for many years in an extremely low-interest rate environment, we find that we have to turn to investing in riskier and riskier assets to get even a modest return of 4 per cent, but this could lose us part of our nest egg if we are not careful.

It explains why some people are willing to spend thousands of dollars on courses developed by so-called investment experts to try to get more "alpha" - jargon for high returns in the investment world.

Given the angst we face over our investment decisions, many of us would give an arm and a leg to have a gifted investment guru like Warren Buffett in our midst to guide us on our way.


People travel to the US from as far away as China to attend the annual meeting of Berkshire Hathaway just to catch Mr Warren Buffett's (right) words of wisdom. At these marathon meetings, Mr Buffett and the company's long-time vice-chairman Charlie Munger take on a wide range of issues for five hours.PHOTO: REUTERS

Moved by the ability of Mr Buffett and Mr Munger to undertake such a marathon meeting that would floor men far younger, one writer noted that it was a pilgrimage worth making at least once in a lifetime. What was memorable for him was the unscripted manner in which the 50-odd questions were asked and the candid and honest manner in which Mr Buffett and Mr Munger answered them.

This may explain Mr Buffett's growing popularity worldwide, with even young Chinese straight out of the mainland who have difficulty understanding English travelling to the United States to attend the annual meeting of his company Berkshire Hathaway just to catch his words of wisdom.

The truly devout even queue as early as 4am just to get seats near the podium where Mr Buffett, 85, and long-time vice-chairman Charlie Munger are seated during the meeting to take questions.

And they would be richly rewarded for their efforts, getting a good view of the proceedings over the next five hours as the two elderly gentlemen tackle a wide range of issues, not just on Berkshire Hathaway, but also on subjects as disparate as the US presidential election and the outlook on the stock market.

Moved by the ability of Mr Buffett and Mr Munger to undertake such a marathon meeting that would floor men far younger, one writer noted that it was a pilgrimage worth making at least once in a lifetime.

What was memorable for him was the unscripted manner in which the 50-odd questions were asked and the candid and honest manner in which Mr Buffett and Mr Munger answered them.

Maybe it's the vibrancy he saw in Mr Buffett's bonding session with his shareholders that reminds me of how sterile a lot of meetings have become, whether presentations by analysts or shareholders' meetings hosted by company management.

Such meetings are often a big turn-off as there is usually a dearth of ideas to quicken the heart rate. Worse, the presenters often lapse into vague and general replies when questions veer off the script, much to the frustration of those attending.

And unlike Mr Buffett, who is quite prepared to call a spade a spade in his usual folksy fashion, most speakers would be afraid to commit themselves. The colourless manner in which they handle discussions does no justice to themselves or the organisation they represent.

But I have also encountered company bosses who are not only good at doing business but very articulate in engaging their listeners - a rare trait that wins them kudos and puts their firms in a good light with investors.

One such encounter was at the DBS Group's AGM at the end of April where I learnt more about how a modern banking business operates in the 30-minute question and answer session between chief executive Piyush Gupta and shareholders than from the numerous analyst reports I have received over the years.

More importantly, Mr Gupta's answer to a question on how local lenders finance the loans on their Chinese business laid to rest the accusations by short-sellers that this may put Singapore in financial jeopardy if China's economic woes deepen.

The insights from Mr Gupta were so interesting that shareholders continued to crowd around him after the meeting, peppering him with further questions.

Indeed, there was not even a murmur of complaint about the modest offering DBS had put on for shareholders - a goodie bag with some snacks and a bottle of water, a far cry from the sumptuous buffets that await investors at some other AGMs.

But it was a pity Mr Gupta confined his topic of discussion mostly to DBS and the banking business. As a great communicator of ideas, his insights on other subjects would have been useful too, given his decades of banking experience.

While Mr Gupta has a far different background from Mr Buffett, he would have rubbed shoulders with many rags-to-riches entrepreneurs and business folk in the course of his career and developed insights into how they struck it rich.

That is not to mention his own achievement in growing DBS from strength to strength since he took over the helm more than six years ago. In that period, DBS had become twice as profitable while almost doubling in asset size at a time when many global lenders were hobbled by declining profitability and shrinking asset bases.

Investors would therefore relish any insights Mr Gupta can offer, whether it is on life lessons or investments in the broad sense of the word.

So, it is with considerable delight that I learnt that he will be attending the talk I am holding this Saturday afternoon during the Singapore Coffee Festival hosted by The Straits Times.

What is gratifying is that Mr Gupta will take questions. This makes the talk a wonderful opportunity for investors to learn more about his investment philosophy, as compared to many of the other forums he attends where the discussions focus on how DBS or the economy is faring.

Another useful takeaway for investors should be the exchange of ideas that emerges in such an unscripted discussion, as seen year after year at those Berkshire Hathaway annual meetings.

Many of us are thirsty for more knowledge in order to make better investment decisions. But we are at a loss as to how to get it.

If only more successful company bosses would step forward like Mr Gupta to share their life experiences and how they are coping with their own investment challenges, we would all be the richer for it.

  • Goh Eng Yeow will be hosting DBS chief executive Piyush Gupta to a chat on investments at the Singapore Coffee Festival on Saturday, June 11, at 4pm. Venue: F1 Pit Building
A version of this article appeared in the print edition of The Straits Times on June 06, 2016, with the headline 'Getting enlightened on investing'. Print Edition | Subscribe