Saturday, June 14, 2014

Review of Invest X congress

When I was invited to the Invest X congress and do a review on the event, my first reaction was:” Wow, do I get free admission?” Kenji laughed and replied: “Yes”. After the whole event, I was a bit loss of what to write, as I was “paid” to do this review, I thought I should put in some serious thoughts and efforts in this review. I ponder on what to write, in the end, I guess they invited me for my candid view, so here goes, hope my candid views do not offend or disappoint anyone. View expressed are purely my personal.
The first thing I did when I reached the place was to scan the profile of the audience. It was 80% male, age group range from late twenties to perhaps early sixties. The majority should be in the forties. When the speakers were speaking, I keep observing the audience, from their body language and actions, I could guess the audience has very varying prior financial knowledge. Some folded their arms and listen, some just nod their heads in approval, and some were frantically taking photos and copying notes of some rather basic knowledge. As such, I guess it is very difficult to pitch the whole seminar at the right level, but the organisers did well, in the sense they have a little something for everyone.
The first speaker, Victor, did an introduction of his investment quadrant, made up of 4 components: Numbers, Valuation, Business and Management. He also did a practical on how he apply his investment quadrant in his stock selection. The quadrant is nothing new, the concept can be easily found in investment books, but Victor took pains to explain the concepts slowly. The framework was later used by the last speaker Rusmin too.
Numbers and Valuation are the easy part, just google it, and you will find what you need. In the case study, Victor show how he looked at peers from the same sector, and ask why they did badly, what are the mistakes made. He then show how his choice of company, could escape the fate of his competitors/ peers because of the slightly different business model. When I compare competitors, I usually just compare numbers, Revenue, Growth, Margins, ROE, etc. He show a qualitative comparison of business model, which I found highly enlightening. I was a little disappointed when the management part of the analysis did not go beyond remuneration and dividends.
Victor did not have very complicated valuation method, he used historical industrial PE range for strong business he identify, and he quantified the growth range that should materialized, and show the potential gains.
The next part of the presentation is about fraud detection. I can’t remember the Speaker’s name. Coincidently, I was reading about fraud detection from a book, and I found what the speaker says, overlap quite a bit with the book. “Why fraud takes place? How can fraud or cooking of the accounts be done?” are some of the questions addressed by the speaker. I was getting a bit impatient and was hoping that he tell us how to detect frauds than going through the background knowledge. When I got what I wished for and it blew my mind! The Beneish Model to detect funny accounting business looks like university Mathematics. I really feel like I am taking exams again. True to be told, I only understand 30% of what is said, it really is quite technical. But well, guess, they have a little something for everyone, for the advanced investors. But I think that model is really a bit over the head for most people. I though some simpler ways of red flags detection would be good, or if they really want to show that model, show us how to insert the various variables from the financial report into the equation, would help me remembered better. If Tok from The Aggregate Value Fund, the following speaker, claim he cannot understand it too, I guess less than 10% of the audience get it.
After lunch, we had Tok from The Aggregate Value Fund sharing with us. The initial part of it was rather repetitive, as it already appeared in the papers, but I guess a refresher is good for everyone. Given that Tok needs to pitch it in such a way that it does not sound like canvassing for funds or trumpeting his funds’ performance, he did a very good job in introducing the concept of withdrawal rate for retirement. The figures used by him were mind-boggling for me. He used 10K per month for retirement, and show how it is achievable with compounding interest of 12% and the number of years and initial capital needed. Frankly, I was a bit demoralized, and I thought I can’t never attain the level. But, just for fun, I used a 2K per month withdrawal rate for retirement, and I think I can get at least 1K from CPF annuity. 3K per month do not seem comfortable, but I guess I need not go hungry. Assume 6% return, I need at least 400K at the point of my retirement. I did not use his 12% return, but a 6% return, something I think I can achieve. I am surprised that assume I do not add on anything to my portfolio of 50K now, with compounding effect, my 50K should become 200K in 24 years’ time, and before I turn 59, several of my endowment policies would have matured giving me another 150K to invest. Hmm.. Look likes my future is not that dark after all, if I stick to the compounding effect and do not get distracted so easily. I am also quite sure, I will be able to add to my portfolio as my savings grow. That talk in particular, really set me thinking since I invest mainly for retirement, and it answered many of my internal questions of how much to keep for warchest, when and what to invest and divest.
​After Tok, we have our most entertaining segment of the show, AK’s segment. I think AK’s presence is not so much intellectual than inspirational. During the toilet break, I heard one participant telling his friend that knowing someone who is just like him make it is really motivating. Hey AK, pardon my candidness, but I agree with you when you say:” readers of my blog, you can go for your extended toilet break now, as what I am going to say now, you would have read it anyway.” I thought you could zoom into the inspirational part, how you cope with your lifestyle, how discipline made it work, etc. As I said, I think the audiences has varying prior financial knowledge, and you did not emphasized on the risks of reits investing. (Capital loss, Dilution, refinancing risk and interest rate sensitive), I was a bit worried when the lady beside me jolt down “invest in Reits”, “rental income”, but missed the most important, yet funny part of “take a look when there is blood on the street”.
​The last speaker,Rusmin, talk about the importance of recurring revenue and predictability in business model. The counter he shared is interesting, beside the quadrant, he also emphasized growth, moat and risks. Just find the businessmen quote in his example unscrupulous. But this is just my personal view.
​In conclusion, it is worthwhile day spent. It is value for money. If I could give my 2 cents worth, I think the concept of risk can be further emphasized. Also, they could be a theme stringing out the whole talk. Perhaps, “anyone can build a comfortable next egg” is one such possible theme. Start off with Kong, talk about how attainable is that 12% since most of you did it. Show how even with 6% compounded over time, it work magic. Used that to emphasised discipline, risk management and stock selection skills. The discipline part, can be covered by AK, a living example of “I can do it, so can you”, Victor can share about his skills of stock selection and business analysis. Thereafter, preventing complacency in pursuing growth, be wary of the “golden boy” of stock market, when everything is too good to be true, check for fraud (That is when the HSBC guy can come in). I think with a theme and better coordinating and sequencing of the various speakers, the sum of its parts can be greater than the total.
​Lastly, this is my personal opinion only, do not throw eggs at me, or hack my blog, with message like “AK forever, down with Sillyinvestor”

24 comments:

  1. Hi Mike,

    3 cheers for the review! I like it! I hope the guys at The 5th Person read this. You have provided them with food for thought especially the bit about how to line up the speakers with different topics. :)

    I am glad you agree with this: ”readers of my blog, you can go for your extended toilet break now, as what I am going to say now, you would have read it anyway.” AK tells the truth. LOL. ;p

    Jokes aside, I have to agree with you that I could have done better. The problem primarily is that I tried to cover too much in too short a time and I had to leave out quite a bit of stuff to try to stay within the time limit. In the end, I still went overtime. I will have to try to be less ambitious or ask for more time if I should be invited for next year's event. Some readers told me they would have liked to have some Q&A time. Some asked for photo taking time. All points noted. :)

    I meant to talk a bit more about everything that I talked about. In the end, I talked about a bit of everything mostly. :(

    For examples, I had wanted to talk about alternative assets which people invest in for income as well as whether it is possible to invest in real estate with little or no money down as well as how we could lose money investing in real estate and REITs (like you said) but I was like an old locomotive pushing to go as fast as possible (and wobbling all the time too; kept getting side-tracked and losing my train of thought).

    Now, you got me worried about the lady next to you. -.-"

    I can only take comfort in the fact that my blog is there all the time and I now hope that members of the audience would make the effort to read the related blog posts which took tens (maybe hundreds) of hours to pen and are definitely more comprehensive than my 1 hour presentation yesterday. Reading my blog posts would also show them that AK is fallible. I am just a regular guy. I am no guru.

    Thank you so much for the thoughtful and honest review. I really appreciate it. :)

    ReplyDelete
  2. Many investors are still confuse or being confused by the "Gurus" . There is great divide and huge difference between compounding interest on saving and compounding investment return on investment portfolio.

    Compounding investment return can be NEGATIVE!

    Every re-investment of dividends collected and realized gains are potentially at risks of negative compounding return. There is no such thing as bao jiak re-investment. Sure huat.

    Always remember that "Gurus" make their course fees or money from their training courses and they will point out to you and tell you that compounding investment can be NEGATIVE and you may actually end up poorer in the end.

    ReplyDelete
  3. Only real people , real retail investors will tell you the Hard Truth. Never trust compounding investment return will make rich!

    There is no free lunch here. For compounding investment return to make you rich; you have to get your hands dirty and improve your investing skills over a few market cycles to reach their investing goals of becoming financial independence.

    ReplyDelete
  4. hi mike
    The speaker from Aggregate is the other co-founder, Kevin Tok, not Eric Kong. I thought AK spoke fluently and confidently, doesn't look like someone to speak on stage for the first time.
    In my opinion, Rusmin's quoted Victor and Kevin in most of his sharing as the information are overlaps and he tend to jump here and there on the points he made and may confuse the audience on the exact message he want to deliver, therefore out of the entire 1hr, i felt that only 40% is useful. He is still very young, I am sure in time to go, he will be a better speaker. :)

    The organisers may wish to review their contents for future events and avoid quoting each other too frequently

    ReplyDelete
  5. CW,

    I have lots of respect for Tong, he did not say the value of investment won't fall, he is trying to explain the concept of rate of withdrawal in retirement. He show how the 7 crisis of the last 3 decades would have cause your portfolio value to plummets and depending on your withdrawal rate, and if u stayed vested how u would still recover and turn out fine. He did mentioned if the withdrawal rate is as high as rate as rate of return, the person fund will last only 20 years if he is vested since the crisis in the 70s. Can't remembered the crisis, should be in 1979.

    I am quite confident of getting 6% return in terms of dividends from
    Portifolio. I dun have to start big and start building on it. I can leave it as a small 50k an let the dividend compound it. I can then focus on building cash opportunity fund to wack with higher Mos only when opp arises. I felt more confident after the talk.

    If I have a workable plan for 6%, I believe it is not a tall order for them to hit 10-12%. It is not a straight line always in terms of port value, but it is workable in you stayed vested.

    Their investment required companies with strong div records, so there got ensure a strong flow of payout. I think I figure out a feasible plan that address a lot of my nagging questions. That talk has the same enlightening effect and the ah huh effect from reading the intelligent investor.

    I am not sure of their plan for 12%. But they are definitely not confusing investors. Maybe u are confused without hearing what they got to say

    ReplyDelete
  6. Wow,

    You are there too. Rusmin, I think is still a bit handicap by his English. Hmm, true about the cross-quoting, I didn't find it such a bother but view it as a reinforcement of the quad concept. Scaldfolding of prior knowledge.

    But he did overrun a bit.

    Oh no, I confused the names. Thanks for pointing out! I hope he dun mind.

    ReplyDelete
  7. AK,

    Glad u find the review candid and useful. I already email Kenji the review as I email u.

    Cheers, so far no deface.. Phew...

    Although as expected, many will come to your defense. Haha

    ReplyDelete
  8. AK forever, Down with sillyinvestor....

    So, I've said it.... Happy? You asked for it mah! :p

    But seriously, this is my personal review of your personal "paid" review, don't throw eggs at me hor, throw your nest eggs I don't mind, and don't hack my blog cos I don't have one at all, but I'm fine with "AK forever, down with AK".... :)

    Firstly, if you accept an "invitation" to do a review, other than asking if you get "free" admission or are they "paying" you for the review, I would suggest that you clarify before acceptance what they really want you to portray. For accountability and conscience, you might want to offer to pay for the admission if you accept the assignment, so as to show objectivity and trustworthiness of your views. Don't get me wrong, I'm not saying that your review is not objective, on the contrary, I like what you've said, it is personal, direct and honest. Keep it up, you're doing fine! :)

    On AK's segment, I agree with you that AK should offer insight on matters outside of what can be obtained from his blog. Why should people pay to hear what AK has already said in his blog and saying it word-for-word in person? I suspect most of them are there because they are curious how AK looks like and they must be quietly disappointed with his appearance, or rather lack of. I agree that it would be more inspirational and motivating if AK can relate how he first started and what adjustments and changes he has made in his life, to achieve what he has now.

    Other than relating what the speakers said during the talks, you have injected your own personal observations, opinions and examples of how and what they can do better to make it a more conducive environment for better understanding and cohesiveness of the topics covered. Great job!

    On a side note, the speaker who used the 10K-per-month example sounds really scary at first, but if you think deeper, you would see that it is not far-fetched or unreachable at all. I assume you're about 35 now, it would be 30 years before your retirement. A bowl of noodles in an air-conditioned foodcourt 20 years ago cost about $3.00 and now it's $5-$6, and we know it as inflation. So what needs 2K per month now might need 10-15K per month in ? Years. A bowl of noodles for $30 anyone? :)

    ReplyDelete
  9. AK63,

    Hahaha, the one I least expect to Chant down with sillyinvestor.

    Hmm... U are right, thanks for the advice, if such an invitation for another seminar come, I will clarify. I assume I can write whatever I like, AK mentioned they are really nice and kind people, and when Kenji email me, he sound really like that too. Never cross my mind that I have to write in a certain angle. But better be careful, maybe next time I just pay or give it a miss.

    Hmm.. Jut when I thought 3k is attainable, now I am going to depression again, how to plug the 400% gap?!!

    ReplyDelete
  10. I also believe 6% return per annum is not difficult to achieve for any serious investors.

    You think 6% compounding return (CAGR) through re-investing of dividends cllect and realized gains over several market cycles is not difficult to achieve too?

    ReplyDelete
  11. Hi CW,

    I haven done it. Dun know what will happen when I execute it. But I think if I keep my port as it is, I am already collecting more than 6% yield, not accounting paper gains. Of course, the gain will become loss when bear come, so I think there is no need to account for those paper gains.

    Of course, yield will fall too when bear come, a big bear will offer good bargain prices, and that is when my opp fund should come in handy.

    I assume not adding to the portfolio and just reinvesting dividends for 24 years. Very unlikely, I will most prob add money to the portfolios when I see a value proposition. But now, I will be more stringent in my value proposition to take care of my core.

    Assume add 50k every 12 years, I think I can grow my opp fund and port, I think I can hit 400k without taping on my endowments. Some my endowments can be my pocket money to travel or little indulgences.

    I hope inflation dun skew the equation and I dun make any serious mistake

    ReplyDelete
  12. Hi SillyInvestor,

    Appreciate your input. I can't agree more that there is an insufficiency of illustration and explanation on Beneish Model. Will take note of that. A few key issue which I found myself lack of are as follows:

    No outline of take-aways
    Insufficient simulations and walk-throughs
    Insufficient case study and examples
    No real life application of the Beneish M model

    I would really appreciate it if you could highlight any short-coming which I may have exhibited on stage that may deter the audience of their takeaways and experience. :)


    Sincerely,
    Edwin Ng
    Speaker of Fraud and Forensic Accounting

    ReplyDelete
  13. Hi Mike and AK63,

    I have done reviews for events organised by Kenji before. He would never tell me how I should write these. So, it has always been up to me. He wouldn't have it any other way, anyway. So, I won't worry about it. :)

    Actually, Kenji's idea is to get more "non-gurus" who have been investing for a while and who have achieved some distinction to share their experience and ideas with others. That was how he pitched it when he asked me to consider talking at the event. I was taken aback really and quite quickly declined the first invitation.

    Over time, I got to know Kenji better and I began to trust him more. Although I again felt like turning down another invitation to appear in front of a live audience, I said I'd do it if I were to go in disguise and that was the AK you saw yesterday. ;p

    I will take both your suggestions to heart to be "more inspirational and motivating" but I am not sure about sharing more of my personal history. Would be quite uncomfortable for me but you might be interested in this: http://singaporeanstocksinvestor.blogspot.sg/2010/02/excuse-me-are-you-investor.html

    Now I am going hide behind a defence. I have always believed in not misrepresenting. It is not just an issue of legality but also one of morals. So, in my blog post in April, I told readers not to go to the event if their sole purpose was to see me. LOL.

    "Now, I know that probably quite a few readers will want to go to the event because I am going to be a guest speaker. If that is your motivation for going to the event, please consider not going. Why? The reason is quite simple.

    "I won't be saying anything you have not heard me said in my blog for the last 4 and a half years. I would be surprised if you have not grown tired of me repeating myself once every so often."
    http://singaporeanstocksinvestor.blogspot.sg/2014/04/investx-congress-2014-aks-first-public.html

    Of course, many readers would still turn up at the event nonetheless and I want them to turn up because of the other speakers. I was very sure that at $79 per ticket, this event would give a lot of value for money (other than my segment). Well, maybe, those in the audience who were not my readers found my segment useful. I hope. :)

    OK, enough of excuses for myself. LOL. Definitely not easy being a guest speaker. As I was driving back after my speech, I started having thoughts on how I could have done better going through my head and it will probably last for a few more days. -.-"

    ReplyDelete
  14. Hi Capricon,

    Oh, dear. A pall of suspicion has fallen on me. LOL.

    Well, I had some experience as a stage actor for 4 years of my student life. That was more than 2 decades ago. Now that I jog my rusty memory a bit, I was also an instructor for a while when I was in the SAF. However, to give a speech like the one yesterday was a first for me. :)

    Actually, I am not very pleased with how my presentation went but it seems that most find it OK. I also received useful feedback from people like Mike and AK63. However, I have not heard from people who think badly of my presentation. Maybe, they are just being polite. LOL.

    I knew that my readers would not have picked up anything new from my segment but for anyone who had never read my blog before, I hope my segment was not a waste of time.

    Thanks for turning up and I hope you enjoyed the event. :)

    ReplyDelete
  15. Hi Edwin,
    Thanks for the sharing yesterday. You had already done a candid review and identify the gaps and I agreed your views that there is no outline of take always. Fraud is a interesting topic but general audience have limited knowledge and may not comprehend the technicals. Also, it is also hard for retail investors to go into such due diligence, however, it is good to understand how the numbers can be inflated by accounting and reminding retail investors to be mindful that things might not be as rosy as reported by a company management. Hence I am very agreeable with Kevin Tok that only invest into companies that pay dividends and listed for at least 5 years, some form of due diligence too.

    I am not sure how frequent you speak to such a crowd, I can sense that you are a little tense and hence seem to be forcing out the words out of your mouth. May be some deep breathing would help. But there is always a first time in anything we do, only practice can perfect it. I may do worst than you. :)

    Do not be offended and keep up the efforts.

    ReplyDelete
  16. Oh ya, missed out something very important that is tackled by Rusmin, the last speaker. The concept of momentum switching. Not sure if I got the term right?

    Nope, it has nothing to do with TA, it is about a sudden upsurge of demand that is sustainable.

    My own understanding is "disruptive technology", an upsurge in demand following by making the competitors obsolete.

    Wish u heard more, go join them if they orgainsied it again next year

    ReplyDelete
  17. Hi there,

    I am writing in hope to value add the feedback to the organiser on the event. I must say I agree alot with what sillyinvestor had mentioned about it.

    To be make it easy, my feedback as follows:
    1) A brief agenda with some summary points would be good to the audience.
    2) the fraud topic is really too technical for many of us. (I work in a finance background and together with me, a friend who comes from accounting background also finds it hard to understand)
    3) Tok, interesting topic on the compounding interest with data to back it up. I also like the redrawal rate with the data being back up.
    4) AK, the best presenter so far not because I am bias although I follow his blog. He did it in a way that manage to engage the audience like how he did it on his blog. This is a crucial presentation skills that presenter must acknowledge and know. I also agree that that downside risks were not properly mentioned during the presentation which may harm novice investors.
    5) i can see that the last speaker is trying his best to let the audience understand his points and investment methodology. however i personally feel that he shouldnt quote too much and also jumping the points around. If need to, the slides should always be the aid for him rather than writing on the white board as many at the back would not be able to see what he is writing. Nevertheless with more presentations that he will be presenting, I am confident that his presentation skill will be polished very soon :).

    Just my personal mini cents worth.

    Kind regards

    ReplyDelete
  18. Hi Capricon,

    This is my 1st time addressing such a big event. Indeed, I only had 3 rehearsal before the speech and are indeed tense.

    Wish to clarify a little on the due diligience portion: data are all available online, all data required are actually from annual report. Because the test itself would reveal whether numbers given are manipulated. (But it is my side of negligence to indicate or show where the numbers are extracted from)

    I will buck up and improve on my presentation.

    Edwin Ng

    ReplyDelete
  19. Hi Grummy,

    Yes, Fraud and Forensic is an advance accounting topic. Which is partially a reason why I spend quite a bit of time on POA and Accrual base Net operating Asset as foundation laying. But I guess I should use simulation instead of dry numbers. Thank you for the feedback.

    Regards,
    Edwin Ng

    ReplyDelete
  20. Edwin,

    I think we all understand the model and its purpose, but I am not too sure how to insert the values.

    Also, is historical "jump" in the value more worrying or a peer that has a value that is outlying more worrying?

    Is it possible that a company had a jump in a particular year, due to lumpiness of record of rev, profits etc, like property developer and is perfectly alright ?

    Lastly, in a case of outright fraud, that means all the invoice and sales are fake to begin with, it is just a empty shell of web of companies. Will the model
    Still work?

    Thank you for your answer in advance

    Do not be too hard on yourself. It is no fault of yours or the model, it is the audience that didn't had the prior knowledge...

    ReplyDelete
  21. […] To read reviews and comments about the event, check out this, this and […]

    ReplyDelete
  22. thank you , now I know if I'd attend the congress next year :)
    what is the "businessman quote" by Rusmin?

    ReplyDelete
  23. Hong Gang, can't remember the company name thou.. Just remember the business

    ReplyDelete
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