The Value Investing Summit 2019 ended last week which saw hundreds of participants walking away with highly valuable wisdom and case study sharing from 12 veteran investors. It was a 2 day event aimed to educate the general public on how they can use value investing methodologies to simply invest safely and generate consistent results from the stock market. If you missed the summit this round, be sure to look out for it in 2020.
Among the 12 speakers that attended, 5 of them are international speakers from Australia (Jack Kouzi), China (Sarah Fu), Thailand (Dr Niwes), India (Vishal), the USA (Charlie Tian).
However, one particular speaker gave a very interesting speech on how he made his fortune “accidentally” and that is Dr Niwes Hemvachiravarakorn or better known as the “Warren Buffett” of Thailand. The man turned his life’s savings of US$ 600,000 into a portfolio size of more than US$ 200 million today over a span of 22 years. That equates to a compounding rate of approximately 30% per year!
He shared the exact steps he took to achieve that in the value investing summit last week but here are the key takeaways from his sharing.
1. Save Diligently
Dr Niwes attributed his success as pure luck but as he further explained, it was no luck.
It was a setup all along to achieve the results he got today.
In fact the most important factor in his investment journey is to save money diligently. Dr Niwes explained that he was a very frugal man and has no need to spend luxuriously on things that he does not need. Being a frugal person allowed him to save up to US$ 300,000 before taking on building his portfolio and he was very glad about it.
This is because in 1997, during the Asian Financial Crisis, besides getting retrenched, it was also a point in time when the Thai stock market would crash significantly before booming with extraordinary growth afterwards. If he had little money to invest at that point in time, it doesn’t matter if it was the perfect time to buy, he wouldn’t be able to take advantage of it.
2. Have a philosophy
Dr Niwes in his speech jokingly mentions to only buy 2 types of stocks – superstocks and super-cheap stocks. While many in the audience laughed at his joke, it was actually a sharing of his philosophy.
It is incredibly simple.
First, stick to great companies that you can easily understand. Lookout for their competitive advantages. Ensure that the company’s advantage gets stronger as they gain more customers. Ensure also that they are financially strong. Once you have found these stocks, buy them when they are cheap. Although incredibly simple, it is unbelievably hard to practice.
Many investors today do not have their own investment philosophy or methodology. Instead, they listen to advice from their friends, families, brokers or in some extreme cases, stock recommendations they got from the media. In other words, they prefer to follow the herd because they believe they are safer in numbers.
However, by doing so, you will be vulnerable when share price goes down as you do not have a concrete reason and confidence on the stock apart from a simmer of hope that it will go up in the future. Because of this, when the share price tanks, you will not know what to do. As the saying goes, “you always borrow someone’s investment idea but you can never borrow their conviction”.
3. Live Longer
Patience is one trait that Dr Niwes practiced to get accidentally rich. This is because great companies need time to produce results and grow. It takes time for them to set up in a new market or to pursue their business strategies.
However, asking an investor to remain patient is a Herculean task. Everyone wants to get richer as soon as possible. Telling them that they need to wait for at least 5 years before reaping their rewards doesn’t sound attractive to them. This is why dangerous get rich quick schemes are still popular today.
But the interesting concept brought by Dr Niwes is to instead focus on living longer. This is because only by living longer is he able to compound his wealth further. Therefore, what we can learn is instead of focusing on stock prices on a daily basis, the investor is better of focusing on taking care of his/her health so that he is able to enjoy the fruit of his efforts in the future. Focusing on the price to time an entry or exit from the stock market is pointless because one literally does not have any control over stock prices.
There you have it, 3 steps which helped Dr Niwes became accidentally super rich.
It was interesting that during the VIS 2019 whose theme was the Untold Secrets of Successful Investors, many investors revealed secrets which are actually not much of a secret – save money, invest in great companies, be patient. And those are actually the gist of being a successful investor. Unfortunately, it is often overlooked and ignored by the investment community as it is extremely boring and frustrating to practice. But hey – that is why there are very few super investors in the world today. Because not many are willing to do it.
Disclaimer: All facts and opinions presented are for educational purposes only. This is not a recommendation to buy or to sell. The author involved in the writing of this message has no vested interest in the companies. Please consult a professional for expert financial or other assistance or legal advice.