Coffee With Sudhan And Brian Feroldi

Brian Feroldi is an investing advocate with over 361,000 followers on Twitter. Here’s an interview with him.

Brian Feroldi is a financial educator, author, speaker, and YouTuber. He has an MBA in finance and has been investing since 2004.

Brian is the author of the best-selling book, Why Does the Stock Market Go Up?

Brian’s career mission statement is “to spread financial wellness.” He loves to help other people do better with their money, especially their investments. He has written more than 3,000 articles on stocks, investing, and personal finance for The Motley Fool.

You can connect with Brian through his website and Twitter account.

Sudhan P (SP): At what age did you get started in investing? 

Brian Feroldi (BF): I started investing at the age of 22 and I’ve never looked back since. Now, I am 40.

SP: How did you get interested in investing, and who inspired you to get started?

BF: I first got interested in the world of finance after reading “Rich Dad, Poor Dad” by Robert Kiyosaki back in 2004. That kicked started my fascination with money and investing.

SP: What was your life like before investing and how is it now?

BF: Investing has literally changed my financial life. My investments have allowed me to pay off all of my debts. It has also become my career.

I simply love investing.

SP: How do you choose the stocks to invest in? What are some of your strategies?

BF: I keep a giant list of potential stocks. From there, I take them through my investing framework. I then buy the ones that score the highest on my checklist at the best valuations.

I plan to rinse and repeat for decades.

Some of the stocks I own are Adobe (ADBE), Fiverr (FVRR), and Zoom (ZM). The full list of stocks I have in my portfolio can be found in my The Motley Fool profile.

SP: What are some of the investing mistakes you have made and what are the lessons learnt?

BF: I have made many mistakes in the past and I’ve compiled them in a Twitter thread. Do check it out!

SP: What led you to start your own social channels (Twitter, YouTube, etc)? 

BF: Twitter was started as a way to share my investing philosophy with the world. YouTube was started because I wanted an excuse to talk to my business partner, Brian Stoffel, each week. There was no grand plan at the start. It just happened and I’ve been consistent with both.

SP: What advice would you give to beginners who want to start investing?

BF: Stock prices and business profits are not at all linked in the short-term, but they are 100% linked in the long-term. Watch the business, not the stock.

And “do nothing” is almost always the right move.

I’ve compiled those tips and more in a Twitter thread that beginners should read.

SP: What do you think is the biggest misconception people have about money?

BF: That it’s either all that matters or that it doesn’t matter at all.

Money hugely impacts our lives, so you should take the time to learn about it.

But, it’s far from the only thing that matters. It’s important to develop a healthy appreciation for money, but maximizing a number on a spreadsheet shouldn’t be your #1 priority in life.

SP: If you could summarise your whole life in one word, what would it be?

BF: Grateful

SP: A parting shot for the readers…

BF: When it comes to investing, we should bear in mind to think for the long term.

Coffee With FFN and Pauline


Pauline graduated from the Nanyang Technological University with a Master of Arts (Instructional Design and Methodology). She is a certified facilitator for “The 7 Habits of Highly Effective People – Introductory for the Associates” and a certified Image Consultant by the First Impressions UK. She is currently the Director (Education & Training) with 8 Investment Pte Ltd, focusing on the design and development of Value Investing programs. In 2012, Pauline published her 1st value investing book titled “Value Investing for Women”.

FFN: At what age did you get started in investing? 

Pauline: I started investing properly when I was 32 years old. Before that, I was merely speculating.

FFN: How did you get interested in investing and who inspired you to get started?

Pauline: I started buying unit trust through my financial planner since 2000.  The result from my unit trust from 2000 to 2009 was -40%.  I was very upset with this result and thought enough is enough.  I felt I should take responsibility. Thus, I went to source around to see how I could improve my results as I had lost nearly half of my hard-earned savings over past 10 years.

In Jan 2010, I heard Ken Chee, Founder of 8 Investment, talk about Value Investing.  I was bought into the idea after the one hour speech by him. After hearing Ken’s speech, I signed up for his Millionaire Investor Program (MIP) in Mar 2010.

Value Investing changed my whole idea of what investing is all about.  Not only that, Ken corrected my thinking about investing in equities.  I had been brought up with the idea that those people who trade in stocks are gamblers because that was how people around me behaved. They all speculated in stocks and saw relatives losing their fortune in the stock market.

After the program, I worked hard to speed up my learning curve as I was very eager to make back my 40% losses.  The more I studied about Value Investing, the more confidence I gained and more interesting it became.

FFN: What was your life like before investing and how is it now?

Pauline: My life before investing was like any other typical Singaporeans. Since young, I worked hard in school to gain myself an entry to the local university.  With a degree, I found a decent job in the public sector, got married and my life has been work and family. And since I did not have any investing knowledge, I decided to outsource this job to my financial advisor, only to realize that it was more expensive to outsource than to get myself educated.

FFN: How do you choose which stocks to invest in? What are some of your strategies?

Pauline: I practice a 3R concept: Right Business Model, Right Management and Right Valuation Price i.e. the business has an excellent business model, run by management with integrity, and the market price offers me 50% discount from the valuation price.

I have a systematic strategy for investment.  Investment strategy is not just about investment but also money management strategy.  This is the strategy I use:

  1. Allocate my income into different jars

Financial Freedom (Pay Myself First) – 30%

Education – 5%

Play – 5%

Charity – 10%

The last 50% will be used for your daily expenses such as transport, insurance, food and children’s expenses.

Expenses – 50%

  1. Cover myself with hospitality and accidental insurance
  2. Accumulate 6 months’ worth of living expenses
  3. State the criteria I want for my investment:

The company that I invest must have a 15% growth in business and minimum 5% dividend yield.

  1. Create a list of companies that meet the 3R and your criteria
  2. Create my baskets for investment

Basket 1: 30% of the Financial Freedom Account

For any companies which are undervalued regardless of market situation.

Basket 2: 30% of the Financial Freedom Account

Invest when there is a mini crisis. During this period, some of the companies that might be overvalued when the market was bullish have thus became undervalued. So this would be a good time to invest in these companies. This is also the time to allocate more funds or reinvest the dividends from those companies that you have invested in with the first 30% because the buying price is more attractive now.

Basket 3: 40% of the Financial Freedom Account

Invest when a major crisis happen, e.g., subprime. You never know when it will happen, maybe 2 years later, 5 years later or even 10 years later.

Every month, the 3 baskets will be topped up. For example, if I save $1,000 every month for financial freedom account, I will allocate $300 to basket 1, $300 to basket 2 and $400 to basket 3. The above method which I practice ensures that there will always be funds available for investment even during the crisis periods.

  1. Monitor by reading quarterly and annual reports, and attend AGM
  2. Sell when my investment criteria no longer hold for that stock

FFN: What are some of the stocks in your portfolio currently?

Pauline: As of Mar 2013, they are CapitaComm Trust, Boustead and BreadTalk.

FFN: Where and how do you look for companies to invest in?

Pauline: I look within my circle of competence, i.e. the business that I understand. Also, after joining MIP, there is a network of investors where we will share with one another when we unearth undervalued companies.  The network helps. I unearthed Transpac Industrial via the MIP network. I sold this stock off already as it was way overvalued in early 2013.

FFN: What are the mistakes you have done pertaining to investing and what are the lessons learnt?

Pauline: Two major mistakes I made were:

The first major mistake was the unit trusts I bought over 10 years. The lesson I learnt was that it is important to have financial education.

The second mistake I made was in a shipping company that I invested. It was a cyclical company and I did not know the company well, bought it when the cycle was quite high.  I sold it off at a 50% loss in 2 years.  Fortunately, the rest of the 6 stocks I invested have a good percentage return. Overall, my portfolio is still very healthy. The lesson I learnt was that I needed to understand more about cyclical business and that diversification into different types of businesses is essential. Just to highlight that diversification is not about spreading all your money into 20 to 30 stocks. And this mistake was different from the first mistake.  For the first mistake, I do not know how to cut loss and was at a lost what to do.  But this time, I know what went wrong and was able to make a decision.

FFN: What psychology do people need to succeed in investing?

Pauline: I heard this from my other investment mentor, Clive Tan, co-founder of 8 Investment: “You are right not because others say so. You are right because the facts and reasoning are right.”  I remember my aunt, who has been trading in stock market for 20+ years, warning me not to touch the stock market during Euro Debt Crisis.  While, clearly I did not seek her advice because I was clear what I was doing and fear did not set in even though I bought during crisis.

FFN: How has the investor in you evolved over the years?

Pauline: The transformation for me is great.  From a novice investor in 2009,  who knew nothing about the equity market to making value investing a hobby in 2010 to making it a full-time career, inspiring others to take charge of their financial health. And from 2011 onwards, I have touched lives through talks and a book that I’ve written, “Value Investing for Women”.

FFN: What advice would you give for beginners who want to start investing?

Pauline: Seek the right financial education or get a credible mentor to mentor you before investing.  The major loss in investment is not only the monetary loss but the time loss to compound the money.  You can make back your money but you cannot buy time back.  It is very painful to realize that I made a mistake only after 10 years.

Also, I would like to correct this thinking for beginners because I used to have this thought.  Many people thought they are investors by putting money into an instrument for long-term and praying hard that the price will go up in future.  That is speculating, not investing.

FFN: How was your experience writing a book, especially for women?

Pauline: Doing research was fun. It was then stressful to write. It was also tedious to check through my work. However, it was very rewarding when I saw women coming to my talk because they were inspired by my story.

FFN: It can be said that women are generally not interested in investing. They rather leave it to the men (their husbands or partners). What is your take on this?

Pauline: I agree with you.  Many women generally are not interested in investing.  That’s the reason why I decided to write a book “Value Investing for Women” to encourage more women to take charge of their financial health.

FFN: However, it has been said that women generally are better investors than men as women do not over trade and are not overconfident of their skills. As a person of the fairer sex, what are your thoughts?

Pauline: Yes, I think so too. I think I’m a good example.

FFN: Which female personality do you look up to and why?

Pauline: My mum.  She’s someone who will do the best for her family, including sacrificing her life.

FFN: What do you think is the biggest misconception people have about money?

Pauline: Just save and put the money in fixed deposit because the interest and principle are guaranteed. They do not know that with inflation now at about 5%, the loss is also guaranteed!

FFN: What is the one thing, in your opinion, do people need to succeed in investing?

Pauline: Be humble to learn from a credible mentor.

FFN: How did your personal financial planning change after a big change in your life eg. marriage, having kids, buying a house, buying a car?

Pauline: I do not own a car, live in a HDB where CPF pay for it. So my financial planning only needs to make sure that I am not a financial burden to my kids in future.  I make sure I can live purely on passive income when my physical body does not allow me to work for an active income.

FFN: What are the habits one must follow to have a sound financial life?  

Pauline: Firstly, pay yourself first. Secondly, live within your means. Thirdly, learn the proper way of investment. Lastly, take action to compound money at least at a rate higher than inflation.

FFN: A parting shot for the readers?

Pauline: Seek continuous education, join credible network and take action!

Coffee With FFN and Victor Chng


Victor Chng is an investment analyst at 8 Investment Pte Ltd. He specialises in unearthing high-growth, small-capitalisation companies. Currently, he co-manages a private equity fund of over $7 million. Victor also represented Singapore in the 2008 TAFISA World Games in Busan, South Korea and was the 2008 IFMA World Muay Thai Championships bronze medallist, kicking some serious ass along the way.

FFN: At what age did you get started in investing? 

Victor Chng (VC):I found out about value investing when I was 20 but I only started investing when I was 23.

FFN: What/Who inspired you to get started?

VC: During my polytechnic days, my family got into financial issues. This really woke me up and I started to think what I could do to be financially free. So I started to read books on why certain people are successful and rich in life. I found three common things: They own businesses, invest in properties and equity. I started to ponder which one was most suitable for me.

I had no idea how to start a business and I didn’t have enough capital for property investment. This left me with the last choice – equity. At that time, stocks equaled trading to me, so I started to read books on technical analysis but I couldn’t understand how it worked. It was rather confusing so I gave up in the end.

It was only in 2006 when one of my friends told me more about the world’s richest investor, Warren Buffett. I went to research more Warren Buffet’s investing methodology. I discovered it was value investing and it made so much sense to me. Later I sought mentors to guide me further on value investing and I came across the Millionaire Investor Program by Ken Chee and Clive Tan.

FFN: What was your life like before investing and how is it now?

VC: My life before investing was rather aimless and I did not know what to do with my life. After discovering value investing, it really changed my life. Now I’m working in a private fund where I spend most of my time analysing stocks and reading numerous investing books. I feel blessed to have found my passion early in life. I get to meet CEOs and board members of listed companies, locally or overseas, and sometimes even visit their plants to understand more about their business.

FFN: What are some of your strategies when it comes to investing in stocks?

VC: My investment strategy is focus 50% of my portfolio on fundamentally strong businesses with low debt. 30% on distressed industries and turnaround companies and the remaining 20% is held in cash at all times in case opportunity arises.

FFN: What are some of the stocks in your portfolio currently?

VC: I invested in Super Group in 2011 at $1.31 when I noticed their ingredients sales segment doubling up almost every quarter. Now, Super Group is more than $3.

FFN: Where and how do you look for companies to invest in?

VC: I have many sources: Newspapers, stock screeners and analyst briefings.

FFN: You have co-written a book entitled “Value Investing in Growth Companies”. Please share with us some of your experiences with regards to writing a book.

VC: Writing a book is not easy. Rusmin and I really took a lot of time doing research to ensure the facts are presented correctly in the book. In writing the book, it also increased my knowledge on value investing while I was doing the research and it gave me further distinctions on how companies should be analysed and looked at.

FFN: What are some of your financial goals and how are you going to achieve them?

VC: My financial goals are to make a million at age 32 with $10,000 passive income every month. I am going to achieve it through investing in the stock market and by managing a private fund.

FFN: What are the mistakes you have done pertaining to investing and what are the lessons learnt?

VC: One mistake I made was not studying an industry’s macro factors when investing in commodity products or businesses. For instance, dry bulk shipping. I bought into a dry bulk shipper too early when macro factors pointed out a down-cycle and I lost more than 50% of my investment. Later I studied deeper about the industry and found out if I had done this earlier I would have avoided this pretty expensive mistake.

FFN: What psychology do people need to succeed in investing?

VC: I think people need to have courage and faith when it comes to investing. When the stock you invest in keeps dropping in price, you must have the faith in your research and reasoning that made you invest in that company in the first place – provided your research is diligent enough!

FFN: How has the investor in you evolved over the years?

VC: Over the years my investment style has evolved from just looking at the numbers to focusing more on a company’s business model. Good numbers are the by-product of a good business model.

FFN: What advice would you give for beginners who want to start investing?

VC: There are many different value investors out there in the world. Everyone has different ways of investing but only a few are able to generate at least 15% returns on average annually for their shareholders after netting off fees. Go look for those investors, see what they have in common and model their techniques.

FFN: What do you thing is the biggest misconception people have about money?

VC: People always think that money is scarce. To me money is abundant, everyday trillions of dollars are being transacted in the markets. The money is out there, you just need to know how to earn it.

FFN: What is the one thing, in your opinion, do people need to succeed in investing?

VC: A good investment process. People should focus on the process of finding good companies and generating good returns. If your process is right you can consistently get the same results.

FFN: What are the habits one must follow to have a sound financial life?  

VC: Be frugal and humble.

FFN: A parting shot for the readers?

VC: Time is scarce, so start investing now!

Coffee With FFN and Wei Lin


Wei Lin is a simple guy who is happy with the little joys in life. He focuses on deriving long term, sustainable happiness and he thinks there is no better way to live than to devote his life to the service of others. In his opinion, investing is more of an intellectual pursuit rather than a financial one. He says that if there is any reason to invest at all, it is to amass wealth that can be re-distributed to help those who are dealt the short straws in life.

FFN: At what age did you get started in investing? 

Wei Lin (WL): I got started on my 21st birthday by opening my first discretionary stock management account with Philip Securities Pte Ltd

FFN: What/Who inspired you to get started?

WL: My first book on money is “Secrets of a Millionaire Mind” by T Harv Eker. The book inspired me to look for the differences between rich and poor in terms of the way they think and act.

As I had some spare cash then and I did not have the necessary skillsets to start investing, I decided to leave it to the “professionals”

Also, I did the math using some simple financial formulae and realize that it will really pay off in the long run if I got started early.

FFN: What was your life like before investing and how is it now?

WL: Before I started investing, I basically saved with a local bank. Well, looking back, it wasn’t exactly a bad thing since it gave me a cash pile to begin my investing journey.

After I started investing, the way I viewed money went through a major change. I cherished it more because I saw the opportunity cost of a dollar spent today versus a dollar invested. Now, I feel in greater control of my life because of the way I plan my budget and my 10 year financial plan.

More importantly, I saw the true power of money. Money, like power, if used appropriately, can be used to improve the lives of countless individuals. On one of my service learning trips to the Philippines, I learnt that it costs around USD120,000 to build a community of houses which can be used to provide shelter and electricity for the homeless. In Singapore, that amount is barely enough to pay for a sports car. I never really understood how some people valued their egoistic pursuit of material gains more than the well-being of others, who might not even have access to basic necessities like food, clean drinking water and shelter. I think there are essentially two types of happiness, the instant but temporary type which we derive from the purchase of goods and services and the more lasting type which can only be derived from our involvement in activities that helps a third-party. Consumerism and materialism might be very helpful in the progress of a nation’s economy, but it does have its repercussions on our values as a society.

In terms of the way I spend, I don’t think it changed much. I think I’ve always been frugal, I don’t really buy clothes or gadgets unless I absolutely require them (or if my Mum nags at me). My previous watch which my Dad bought for me as a gift lasted me 14 years. It got quite badly scratched over the years and the strap broke a few times (I got it fixed thanks to a local watch shop). Eventually it got really worn out and I bought a new one recently at a night market in Taiwan which costs around S$20. I really hope this one lasts longer.

I do enjoy travelling the world with friends so I guess investing just gave me more freedom in terms of my travel choices. Sometimes the air fares can be really expensive so I’d wait for special promotions before booking my flight tickets.

FFN: What are some of your strategies when it comes to investing in stocks?

WL: I take a bottom up approach when looking for businesses to invest in, my philosophy ties closely with that of value investing

I believe Buffett’s quote pretty much summarizes my strategy: “Your goal as an investor should be simply to purchase, at a rational price, a part interest in an easily understood business whose earnings are virtually certain to be materially higher, five, ten, and twenty years from now”

I don’t speculate as it is mathematically unsound. I never really figured out why people are perfectly fine with gambling with small money but felt risky to do so with larger amounts. Isn’t the odds the same? If so, isn’t the expectation still negative? I don’t think trading based on hearsay is any much different from buying 4D and TOTO.

Neither do I attempt any form of forecasting or use any economic or finance models because the underlying assumptions are theoretically sound but practically useless. If these models really work, my professors would be secret millionaires who are keeping some key information to themselves.

FFN: What are some of the stocks in your portfolio currently?

WL: I own Cambridge Industrial REIT, Second Chance, Chip Eng Seng and a few others.

FFN: Where and how do you look for companies to invest in?

WL: Scuttlebutt!

There is nothing more fun than a gathering of close friends from different industries, discussing what we have been doing and how busy we’ve been. Their stories never fail to impress and interest me. Also, some friends will discuss about the latest products that they bought and I’d ask which companies were producing these products.

Another great way to look for ideas is from our shopping receipts! Let me share with you a story. About a year ago, my gas cooker broke down and I followed my Mum to the Ubi Industrial Park to shop for a new one. The supplier’s shop was located deep within the industrial park and I was shocked by the sheer amount of inventory they had. So I thought to myself, if the landlord increased their rent by a small percentage from time to time, the gas cooker supplier probably wouldn’t shift since the cost and inconvenience of shifting would be quite high. As we walked around the industrial park, I realized that most of the tenants had pretty heavy inventory, similar to that of the gas cooker supplier. I got really interested to become a landlord in the Ubi area, so I researched and found that Cambridge Industrial REIT owned many of the properties in that area. On top of that, it was selling at a huge discount to Net Asset Value (NAV) and giving me a dividend yield of more than 8% based on my buy in price. Pretty ridiculous eh?

FFN: You are someone who has planned for his finances quite well. Please take us step-by-step on how to plan our own personal finance.

WL: The clarity of our financial plan depends on how well we know what we want in life. The key issue with many of us (who are still unsure with what we want) is that we have not gone through enough in life. This is especially so in Singapore since most of us live pretty sheltered lives. I believe that the onset of crisis triggers the hibernal part of us. When we go about our daily activities, we tend to forget who we are and what our purpose of life is. Upon a significant and impactful event, we rediscover ourselves and we stop living from day-to-day (though some people have a unique ability to place themselves in higher orders of thinking despite their current state of comfort, Ghandi is a great example)

So why did I put forth these ideas? Well, as they say, for those who know not where they are going, it doesn’t matter where they go. Hence, the focus should be on discovering our purpose and direction in life.

After which that is done, financial planning is easy. You basically just draw a timeline and list down your major financial goals, attaching a dollar value to each of them. Google helps!

For an idiot proof way of planning your retirement, please refer to CPF’s retirement calculator

FFN: Please tell us a thing or two about saving.

WL: I think in general, people in Asia are net savers, which is wonderful! The first step to investing, other than acquiring the necessary skillsets and mind set, is building up a cash pile.

However, with increasing globalisation and influence from the mass media, this wave of consumerism is hitting Asia like a tropical storm. I see many of my peers spending nearly every dollar they earn once they start work. I can understand how difficult it is to go against the crowd, especially when you see your colleagues start buying branded products and going on luxurious tours.

Consider this true story. At the age of 25, Sir John Templeton married his wife Judith Folk and they made it a goal to save 50% of their income. Being awfully frugal, Sir John Templeton managed to open his own firm and invest their hard-earned money.

FFN: So, how then should we save?

WL: I am against the typical savings plan offered by banks and insurance companies in Singapore. Firstly, the commissions paid to the agents are too high.

Secondly, I feel like there should be an optimum amount to keep in cash at any given point in time.

For example, a young couple saving up for marriage or their first house should have sufficient savings to pay for their honeymoon, downpayment for house, renovation etc. On the other hand, a married couple whose children are financially independent and debts almost fully paid for do not need as much liquidity. It all depends on which stage of life they are currently at and of course, their financial situation.

The financial planning rule of thumb is to keep around 3 to 6 months’ worth of your current monthly expenses as an emergency fund. This pool of money will be helpful to the individual should he get retrenched or decide to make a career switch etc.

Lastly, the key issue with a savings plan is that over time, we tend to save “too much”. The excess cash should be put into long-term investments, else the opportunity costs are simply too high. I think holding too much cash is risky.

I would strongly recommend that we save our cash in a Money Market Fund (MMF), for example, there’s one by Phillip Securities Pte Ltd, which can be automatically activated by using their trading account, POEMS. I use this fund. MMF provides the individual with a higher interest rate as compared to most savings accounts offered by banks. On top of that, there is no lock in period.

(FFN: Do note that Wei Lin does not receive any commission from Phillip Securities Pte Ltd for talking about MMF. He is just sharing his personal experience.)

FFN: How much of his monthly income should a person save?

WL: Now, this really depends on the comfort level of the individual and his current financial obligations. Obviously, singles are able to save more than say, a couple with young children and elderly parents to take care of.

We need to think in terms of income allocation and discipline of saving. I suggest that individuals have an automated function in their bank account which channels a portion of their income into a separate account. This will force them to set aside savings every month (for salaried employees). As for self-employed individuals or business owners, they need to plan their cash flows in advance, preferably at the start of each year.

We have to be prudent in our spending and build healthy financial habits over time. Like in the story of the grasshopper and the ant, the grasshopper might have had a lot of fun in summer but eventually, winter will come and it is the ant that has been piling up the grains, who will survive the cold.

FFN: What are some of your financial goals and how are you going to achieve them?

WL: I’ve bought my first property, saved up enough for marriage and I don’t intend to buy a car, so my next financial goal will be to achieve financial freedom.

I intend to achieve this through my investments. If my calculations are approximately correct, I should be done by age 35.

FFN: What are the mistakes you have done pertaining to investing and what are the lessons learnt?

WL: I’ve made plenty of mistakes and I don’t suppose you have enough time and energy to read through it if I made a whole list, so I’d probably share my biggest mistake

My biggest mistake is placing too much trust in “professionals”. I thought that since they were so “in touch” with the market, they got to know best. Besides, what can go wrong? They have an entire team of analysts from the top universities in the world. On top of that, they have access to the most updated information and can make instant decisions based on that.

Big, big mistake. I believe Peter Lynch has explained the conflicts of interest and other issues in the fund management industry very well in his book “One Up on Wall Street”. Just to summarize, fund managers pretty much have their hands tied due to regulations. Also, depending on their commission structure, their interests might not be aligned with that of their clients. Last but not least, fund managers might not be value oriented. As they say, it’s hard to get fired buying IBM.

FFN: What psychology do people need to succeed in investing?

WL: Ask Ser Jing :P

FFN: How has the investor in you evolved over the years?

WL: I don’t think I ever swayed from my value oriented philosophy. The key evolution is probably the choice of industries or types of businesses I’d rather deal with.

Basically, I’d much rather stick to businesses with not too many business segments or subsidiaries. The more complex a business is, the tougher and more time-consuming for the investor to follow-up with its story.

I continue to hold dear to the following principles for retail investing:

We do not need to understand or follow macroeconomic predictions, neither do we need a formal degree in business or finance (in fact, we might be better off without one)

If we wish to beat the market consistently and want to do so with relative ease, we should own a concentrated portfolio of stocks rather than a diversified one. That being said, the level of concentration should depend on the investor’s personal appetite for risk (or in layman terms, his ability to sleep soundly at night)

Start as young as possible. Just by starting earlier than others, you give yourself a lot more room for error and learning. Also, you allow more time for the powers of compounding to work in your favour.

FFN: What advice would you give for beginners who want to start investing?

WL: Read widely and think critically about what you’re reading

Then act upon your thinking, don’t just keep talking the walk. Do it.

FFN: What do you thing is the biggest misconception people have about money?

WL: Most people think having more money is the key to riches. I think better money management should be the focus.

I get very confused when people tell me things like “I’ll learn how to manage money when I have more money.” Shouldn’t we learn how to manage in the first place so we have more?

Consider an overweight man saying, “I’ll learn how to stick to a diet when I’ve slimmed down.”
Sounds pretty ridiculous right?

FFN: What is the one thing, in your opinion, do people need to succeed in investing?

WL: The ability to be contrarian.

FFN: What are the habits one must follow to have a sound financial life? 

WL: Spend less than what you earn, invest for the long-term and do not leverage (at least for stocks)

FFN: A parting shot for the readers?

WL: “You need to balance arrogance and humility…when you buy anything, it’s an arrogant act. You are saying the markets are gyrating and somebody wants to sell this to me and I know more than everybody else so I am going to stand here and buy it. I am going to pay an 1/8th more than the next guy wants to pay and buy it. That’s arrogant. And you need the humility to say ‘but I might be wrong.’ And you have to do that on everything” – Seth Klarman