2 weeks ago, I spoke with Michelle Martin from Money FM 89.3 on our outlook for the China markets in 2022 and touched briefly on our Moneyball investing methodology.
A short excerpt of part of our conversation are as below:
What is your approach to breaking down the concept of investing and making it digestible?
The subject of investing to most investors can be somewhat fast moving, complex and opaque. And that’s understandable because investing isn’t what most of us do for a living. Or perhaps like what some may say, the financial markets are designed to be complicated.
So… what we realized is that despite knowing much about stocks, many investors are unable to profit from it and make it a joyful endeavor.
What we want to achieve is to be able to take the complex process of investing and make it simple and understandable to the average man on the streets. Just like in work or in school, there are so many things that you are taught, whether from people in the industry or your teacher, and you probably think that you understand what you have to understand, but when you are task upon to explain it to a five year old, you might catch yourself saying, oh I don’t quite know, I don’t know how to explain.
So our goal at The Joyful Investors, is to be able to bring those experiences and knowledge to the average investor in a digestible manner through our YouTube videos and public telegram channel. The good news is that when we make something simple and understandable, it then becomes much more executable. The key thing about us is that we are not just teaching investors how to invest. But rather to be empowering investors to learn how to get the most bang for the bucks they put at risk, to have less noise in their investing process and to suffer less from market down swings. These are the things that will allow the investment journey to be a more joyful and fruitful one.
The way we go about doing it is by allowing our community to learn how the financial markets really work, like what affects stock prices, who are the market participants and how to make educated investing decisions.
Tell us more about the Moneyball investing methodology? How does it differ from others?
Our way of investing is pretty much the same way a manager builds his sports team. In fact I think we can draw many parallels between constructing an investment portfolio and putting together a team of sports players.
Our Moneyball investing approach originated from Billy Beane, the general manager of the Oakland Athletics, who turned their fortune around to build a winning baseball team using statistics despite the constraint of a limited payroll. We actually found that such principles can well be applied to investors for portfolio management too. While Billy Beane is looking to buy runs, as investors we are looking to make a good return on our limited capital.
The thesis is simple. By employing simple statistical analysis on the stock charts, we are able to invest in companies that are undervalued by other market participants and sell the ones that are overvalued to other market participants. The first part of the trick is to find the right companies to do so by assessing which factors are the most significant for future outperformance. The second part is to know when to buy or sell them. In short, we exploit the market inefficiencies of such companies through stocks investing or its derivatives.
What do you think are the best stocks to invest in for newbies?
Well, if you ask me, the best stocks for anyone, including newbies, are the ones that match their investing objective. One should invest based on what they are seeking and not so much about whether he or she is new to investing or that he or she can attempt something just because they are more seasoned.
Just to give you an example, we can have a newbie, or even someone who is young and supposedly has a long runway for investing, but perhaps he is more keen in collecting dividends passively. In that case he should be pursuing an income investing strategy which focuses on dividend stocks such as our Singapore REITs which is one good option to explore. Whereas on the other hand if we have an investor who is more focused on growth investing, he should be looking at growth stocks which have capital appreciation over the long term. Because they are the companies that have revenue or earnings increasing at an average rate more than the average companies.
It really boils down to your individual investing objective.
Other topics that we spoke about include how we can position our portfolio on the back of inflation and the impending rate hikes and what we will be paying attention to in the financial markets in 2022.
You may listen to the full podcast below.
Chief trainer of The Moneyball Investors Playbook program and founder of The Joyful Investors, a financial education firm that seeks to help avid investors learn to invest better and make the journey a joyful one. I graduated with a first class honors in Bachelor of Accountancy from Nanyang Technological University (NTU) and started my auditing career in one of the Big Four. I believe that once we know how to build our wealth sustainably, we can then live our best lives ever.
This document is for information only and does not constitute an offer or solicitation nor be construed as a recommendation to buy or sell any of the investments mentioned. Neither The Joyful Investors Pte. Ltd. (“The Joyful Investors”) nor any of its officers or employees accepts any liability whatsoever for any loss arising from any use of this publication or its contents. The views expressed are solely the opinions of the author as of the date of this document and are subject to change based on market and other conditions.
The information provided regarding any individual securities is not intended to be used to form any basis upon which an investment decision is to be made. The information contained in this document, including any data, projections and underlying assumptions are based upon certain assumptions and analysis of information available as at the date of this document and reflects prevailing conditions, all of which are accordingly subject to change at any time without notice and The Joyful Investors is under no obligation to notify you of any of these changes.
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