Short Term Trading vs Investing, What's the Difference?

[Dennis Ng]

http://www.masteryourfinance.com/forum/ ... 7586#17586

Short term trading vs Investing, what's the difference?

Based on the Rich people I know, including myself, NONE of us become Rich or make millions from short term trading. We make millions by Investing, by Buy Low, Sell High based on Major Market Trends.

There are times we do NOTHING, and money sits there idly, (actually we purposely raise our Cash level to have Opportunity Fund). Becos to a Real Investor, there is a Time to Invest, and there is a time to Raise Cash and do nothing. eg. right now I have 70% of my wealth sitting in Cash.

I don't bother about inflation, becos when I deploy my Opportunity Fund, minimum returns I aim is 50%, so what is 5% inflation to me?

Becos when we invest, we don't invest like 1% to 5% of our wealth (that is what a prudent trader should limit max exposure to each trade), we may invest 50% of our wealth or even 100% of our wealth fully invested (but in different investments).

And we deploy our funds to make minimum 50% returns. So imagine, if a person has wealth of S$100,000. Investing 100% of it, and make 50% make S$50,000. While a trader has S$100,00, cap trading to max 1% to 5% of wealth to a trade, or only traded $5,000 and even if make 100%, only make $5,000.

So in this example, the Trader needs to have 10 winning trade to make as much money as the Investor making a 1 time investment. And what if the investor makes 2 rounds of 100%....well, then the trader is left further and further behind, since the Investor now would have S$300,000 (grew from S$100,000) and the Trader might have S$100,000 + S$10,000 or S$110,000 Wealth.

Trading is lots of fun, quite a lot of action, but really, look around at all the Rich people around, and you would realise that NONE of them make REALLY Big money from Trading.

Even Remiser King Peter Lim (a billionaire) cautions people that one can't make much money from trading when he was interviewed.

Asked about his comments on making money, here's what he said:
Making money

It's very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up. - Peter Lim, Billionaire, and one of the Richest people in Singapore.

[Dennis Ng]

What is the Most Important Thing to Stock Investing?

It is to learn how to invest. Learning how to invest can help you become Richer even when the stock market is not going anywhere.

Last 2 years, I have personally made over 60% in total returns on Realised Capital Gains on Stocks I invested in. And when the overall market trend turned, Investing Knowledge helped me to make the decision to sell off 95% of my stocks (now the main stock I hold is just Pertama Holdings becos it might be subject to a delisting offer again)...it enabled me to make Dramatic Change in my Asset Allocation (selling off S$1 million worth of stocks)...enabled me to realise Capital Gains instead of watching gains evaporating as the Stock Market goes down...

But even if a person bought the stocks I bought and didn't sell them away, they would still make quite a good returns despite market falling...

Cheers!

Dennis Ng

22 Oct 2011

Does knowledge of Fundamental Analysis help one in investing?

I think the answer is an obvious yes.

Despite STI falling from 3,313 in Nov 2010 to about 2,700 level now, or drop by 18.5%, some of the stocks I mentioned are much more resilient than most other stocks listed in Singapore

Just go through some of the main stocks I mentioned in this forum and you would realise that their current share price is still higher than when I first mentioned them in this forum.

The Best performer among these 10 stocks I mentioned raked in 83.5% returns, and the Worst performer is 9.2% returns.

Average returns on these 10 stocks is 33.34%, not bad at all, time frame is less than 2 years to get this total returns and is more than 15% returns a year.

Price indicated was their share price when they were first mentioned in the forum or at seminars by me:

Note: Now (closing price on 21 Oct 2011, STI closed at 2,712).

1. Breadtalk 36.6 cents now 51.5 cents. (up 41%)

2. GK Goh 60 cents now 72 cents. (up 20%)

3. Pertama 36.5 cents. now 67 cents. (up 83.5%)

4. Viz Branz 21 cents now 27 cents. (also received 1.25 cents dividends) (up 34.5%)

5. Old Chang Kee 28 cents. now 26 cents. (4.3 cents dividends received). Up 16.5%)

6. Lippo Malls (49 cents when first mentioned, but already received over 5 cents dividends) Now 51 cents (up 14.3%)

7. Suntec REIT $1.04 Now $1.185 (14 cents dividends received). (Up 27.4%)

8. Starhill Global REIT 48 cents Now 59.5 cents (with 4 cents dividends received). (Up 32.2%)

9. Starhub $1.95 Now $2.82 (20 cents dividends received) Up 54.8%)

10. Chip Eng Seng (first mentioned it was 38 cents, if we added in 4 cents dividends received, current share price still higher than 38 cents then). Now 37.5 cents. (Up 9.2%)

Cheers!

Dennis Ng

[Dennis Ng]

Thanks Dennis for keep reminding this golden phrase.

People who really know how to invest are NOT afraid of market volatility. Market Volatility is Money Making Opportunity

On the other hand, True Investors also do NOT jump in (buy) and jump out (sell) DAILY becos of Daily Market Movements. If one does so, your stock broker will be very happy, as they will become very rich from your many, many transactions.

The Simplest way to Make alot of Money is Trend Investing, that's how one can make millions.

There are people who give up their job as engineer, accountant etc to become Full-time short term trader. Without realising that all they did is CHANGING job only. They are NOT exactly becoming Richer. Why not keep your job/business and make EXTRA money from investing.

I'm a real life example. I invest and last year I made realised gains of over S$250,000 from stocks but at the same time, I also own 3 businesses, set up in year 2003, 2007 and 2010. As an Investor, I have time to do other things or other job. As a full-time Trader, you don't, you're just having a Job as a Trader, which is Active Income and NOT passive income. And I earned the S$250,000 without doing much. If a trader earns S$10,000 a month from trading, to earn S$250,000, that will take him to "Trade" (work) for 25 months!!!

And a Trader that can earn S$10,000 a month is probably a very, very, very good Trader. Then my next question to this trader is this:can you double this income this year? (double to S$20,000 a month?) Probably the answer is NO. But for an investor to double his gains to S$500,000 is quite simple, becos now his Capital already increased by another S$250,000, and S$500,000 for a person with S$3 million, is just making 16.7% returns.

The Path to making Millions is Investing, NOT Trading.

An investor can be Passive, eg. own a property and collect rental income and need to do nothing. A Trader earns Active income. If you're NOT there, you cannot make money.

None of my millionaire sifus are Traders. All are Investors.

[Dennis Ng]

Hi all,

that's why I emphasize so much that to really make BIG money in stocks, one need to have an "investing stance" and not a "trading" stance, and one needs to have knowledge in Both FA and TA.

As I said, TA can be "faked", if I'm invisible hands, I can "scare" people to sell shares through showing you some "movement" in charts, breaking support price, failure to break resistance level etc.

For instance, without in-depth FA knowledge, nobody would buy a cold stock which has low trading volume of less than 100,000 shares a day, such as Viz Branz when it was 41 cents (or 20.5 cents after 1 for 1 stock split)....yet now share price is 46.5 cents, or 127%. And if we include the 6 cents dividends given out in last 2 years, then total returns is 156%.

Similarly, now Orchard Parade Holdings is S$1.795. Whoever who sold based on TA, would the person have bought back into the stock or already out of the stock?

But knowledge of its NAV at S$2.97 and its share price at S$1.70 is trading at 43% discount to its NAV gives me the confidence to hold on to the stock despite the temporary correction in the share price of Orchard Parade Holdings.

I emphasize the importance of TA as well in helping to decide WHEN to buy or When to sell.

However, as I said, BIG money is made based on Investing, NOT short term trading. Many people like the "quick money" of short term trading, without realising that how much Richer are they from short term trading?

Well, today I have millions becos of Investing, NOT becos of short term trading, which is something I did NOT engage in 19 years of personal Investing experience.

Of course, if people like short term trading, it's their choice, I'm just sharing with you my Personal Experience. Similarly, ALL the multi-millionaire sifus I know made millions from Investing, NONE of them through Short Term Trading.

Here's a discussion thread I specially created to discuss about Short Term Trading vs Investing, what's the difference?

Anyone is welcome to have a different view and opinion. Just express your views and provide supporting reasons/info/fact about your view and opinion. That's the purpose of a discussion forum, to learn and share and exchange different views and opinion. And I have clearly shared mine.

Cheers!

Dennis ng

Just a precaution for those who bought OP just recently or wanting to chase now after price has risen so much within such short time frame.

Today's volume is extremely high and climatic in my personal opinion. It's not healthy. There's virtually no correction and price goes up in a parabolic way.

It formed a shooting star candlestick today. Price action tells me that price went up all the way high to 1.715, but it couldn't sustain and there are many willing sellers. Hence price came back down at the end of the day. (The long upper tail indicates selling pressure). Price might have reached a top and going to reverse soon. I am not saying it will crash, but likely to have a correction before going up again if the bull run is still intact.

If price cannot reach a higher high within the next 5 trading days, I will be expecting a sell down. Because there will be a lot of people buying on contra. Because of the T+5 due date, if price cannot go higher, which means those who bought today will be losing money. They will not want to hold it and will sell to cut loss.

With such a high volume, it means there are a lot a lot of transactions being done today right? There are a lot of buyers buying... which means there are also a lot of sellers selling right? So, we have to ask... who is selling? Do you really think the BBs or smart money will buy OP at 1.70? Most likely they have accumulated between 1.20-1.40 and they are unloading to the retails at 1.70.

Of course price can continue to chiong higher tomorrow but you will be taking extremely high risk if you decide to enter and buy tomorrow.

FA wise, it's still undervalued... but for those who entered late, will you be able to take it if there is a correction?

胡立阳 has a quote (if I am not mistaken): 股票怎么上去就怎么下来, which I think is absolutely right.

I think sometimes it's good to 见好就收。(purely my opinion)

Even if you are a long term investor and don't care about the noise... if haven't enter.... it's good to wait for the correction and then buy. Don't chase after stocks. :)

[Dennis Ng]

But metro Holdings volume still at the low side

to most people, this may be reason WHY they don't buy the stock.

In fact, Stock Traders do NOT buy stocks with low transaction volume, becos their Main Objective is Quick In, Quick Out, make Quick Money. So if a stock has low transaction volume, they would NOT even bother buying this stock.

To me, from my personal experience, Low Trading volume SOMETIMES means the stock remains Undiscovered by many investors, that's why very few buyers. At the same time, existing shareholders are NOT willing to sell, so few sellers as well. Thus, the end result is Low Transaction Volume.

So I actually get excited when I discovered a Cold Stock. I don't like Hot Stocks, since hot stocks one typically needs to pay High Price to buy. One simple way to make money from Investing, I always remind myself is Buy Low, Sell High. How to buy at low prices for hot stocks? You think about it.

ALL the stocks that I made over 100% returns when I bought them ALL 100% of them have Low Transaction Volume, becos they were Cold Stocks undiscovered by many when I bought them. Pokka is one example, Viz Branz is another example of such "Cold Stock". Both stocks prices have gone up over 100%.

[Dennis Ng]

Alot of people still do NOT understand why if you learn how to invest, you stand a very high likelihood of making money and getting rich. While you learn how to trade, your chance of getting rich is very slim.

Let me ask you:"if you were to challenge a Professional Golf Player, say Tiger Woods (he's just average player now, no longer No. 1), what is your chance of winning him?

Let me ask you:"however, if you know that Tiger Woods does NOT know how to play Table Tennis (Ping Pong) and you challenge him to a game of Ping Pong, what is your chance of winning him?

If you learn how to Trade, when you trade, who are you Competing Against? Yes, if you think about it, these are the Professional Traders hired by TOP Financial Institutions all around the world, such as Goldman Sachs, CITIBANK, Deutsche Bank etc, etc.

These Professional traders are PROFESSIONAL, and they are backed by Huge financial resources of their Banks/Stock Broking Firms/Hedge Funds to trade. They have Faster Access to News than you.

You as a person who just learned Trading is like a person who just got a handicap for his/her Golf and now wants to compete with Professional Golf Players such as Tiger Woods.

On the other hand, 90% of the people out there do NOT know anything much about investing. Just ask yourself, before you attend my 2-day Secrets to Making Money in Stocks, many of the things I teach in the seminar you do NOT know at all.

And now that you learn from me, and if you choose your Opponent (stock) and choose those that you have a High Chance to win, eg. High Price to NAV discount for property stocks, what is your chance of winning?

It is analogous to knowing that Tiger Woods does NOT know how to play Ping Pong and that's why you choose to challenge him to a game of Ping Pong.

Some seminar graduates Believe strongly in Trading. I'm NOT trying to say you're wrong. I just want you to think about the analogy I use above and ask yourself, whether I say makes any sense or NOT.

Look at the Top 40 Richest People in Singapore, actually it can be in any country. Go through the list and see if you can find any of them got Rich through Trading. Go through the list and see if you can find any of them got Rich through Investing, including investing into in Stocks and Property....find the answer yourself.

America's Richest 400:
http://www.forbes.com/forbes-400/

Singapore's Richest 40:
http://www.forbes.com/lists/2011/79/sin ... _land.html

Note: Richest Ng family (Property), 2nd Richest Khoo family (former largest single shareholder of Stand Chart Bank, a stock); Wee Cho Yaw (Banking and Property); Peter Lim (investment in Wilmar (a stock) made him a billionaire...why not you go through the entire list yourself and find out if any more of them got rich through Investing and how many through Trading?

Malaysia's Richest 40:
http://www.forbes.com/lists/2012/84/mal ... _rank.html

Indonesia's Richest 40:
http://www.forbes.com/lists/2011/80/ind ... _land.html

And read and re-read what I posted and then you think about whether it's higher chance to get Rich through Trading or Investing.

[Dennis Ng]

Peter Lim was a remiser. He used to make a living from stock brokerage commissions from the Stock Trading done by his clients. In fact, he was nicknamed the "Remiser King" and the TOP Remiser in Singapore. What has he got to say about Trading vs Investing?

He's also a billionaire, and one of the Richest people in Singapore, so I think what he says we ought to at least pay attention and listen to see if it makes sense or not.

P.S. Peter Lim is ranked No. 8 Richest person in Singapore with S$1.8 billion wealth by Forbes.

Singapore's Richest 40:
http://www.forbes.com/lists/2011/79/sin ... _land.html


Even Remiser King Peter Lim (a billionaire) cautions people that one can't make much money from trading when he was interviewed.

Asked about his comments on making money, here's what he said:
Making money

It's very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up. - Peter Lim, Billionaire, and one of the Richest people in Singapore.

How did Peter Lim become a Billionaire? It was from 1 single Stock Investment, NOT stock trading. He invested S$10 million into a company that later was listed in Singapore stock exchange in a "reverse takeover" and this company is NOW known as Wilmar. His shares in this company is more than 80% of ALL his wealth.

So Trading or Investing will lead to Wealth? I leave it for you to decide. I've made my choice.

[ngtfook]

How did Peter Lim become a Billionaire? It was from 1 single Stock Investment, NOT stock trading. He invested S$10 million into a company that later was listed in Singapore stock exchange in a "reverse takeover" and this company is NOW known as Wilmar. His shares in this company is more than 80% of ALL his wealth.

Interesting to learn about Peter Lim success story. One would curious to know before he become biliionaire, where did he got his $10M investment fund? Is it from commision, investing or trading or combination of all?

His shares in this company is more than 80% of ALL his wealth.

Putting >80% of his wealth into 1 basket?

Peter Lim was a remiser. He used to make a living from stock brokerage commissions from the Stock Trading done by his clients. In fact, he was nicknamed the "Remiser King" and the TOP Remiser in Singapore. What has he got to say about Trading vs Investing?

He's also a billionaire, and one of the Richest people in Singapore, so I think what he says we ought to at least pay attention and listen to see if it makes sense or not.

P.S. Peter Lim is ranked No. 8 Richest person in Singapore with S$1.8 billion wealth by Forbes.

Singapore's Richest 40:
http://www.forbes.com/lists/2011/79/sin ... _land.html


Even Remiser King Peter Lim (a billionaire) cautions people that one can't make much money from trading when he was interviewed.

Asked about his comments on making money, here's what he said:
Making money

It's very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up. - Peter Lim, Billionaire, and one of the Richest people in Singapore.

How did Peter Lim become a Billionaire? It was from 1 single Stock Investment, NOT stock trading. He invested S$10 million into a company that later was listed in Singapore stock exchange in a "reverse takeover" and this company is NOW known as Wilmar. His shares in this company is more than 80% of ALL his wealth.

So Trading or Investing will lead to Wealth? I leave it for you to decide. I've made my choice.

[Dennis Ng]

Hi ngtfook,

regarding the questions you asked (I bold and highlight them in Blue for everyone's easy reference, here are my comments:

stock trading commission (that earned from his clients), not Stock Trading Gains, (gains earned from his own stock trading) was his main source of income. Similarly, all of us work in different fields, eg. I worked 7 years in bank then 8 years as Financial Planner (before reaching S$1 million 15 years after working).

So one can earn income and accumulate Savings working in different jobs or vocations. Similarly, if I only depend on my savings, my total savings over 15 years probably is just about S$200,000...without learning how to Grow my money through Investing, till now I'll be still stuck as an average Middle Class Singaporean with cash of probably S$300,000, if deduct my Housing Loan of S$100,000, then all I can get to show after working for 19 years and saving 20% of my income is merely NET Cash of about S$200,000. I wouldn't have reach millionaire status.

Nope, when he invested S$10 million into Wilmar back in 1997, at that time he probably have about S$100 million or more, so this S$10 million investment probably is just 10% of his wealth, NOT putting all eggs into 1 basket.

However, this S$10 million investment into a Single Stock (he's just a Passive Investor, does NOT manage the company) grew to over S$1 billion...

Hope above clarifies.

How did Peter Lim become a Billionaire? It was from 1 single Stock Investment, NOT stock trading. He invested S$10 million into a company that later was listed in Singapore stock exchange in a "reverse takeover" and this company is NOW known as Wilmar. His shares in this company is more than 80% of ALL his wealth.

Interesting to learn about Peter Lim success story. One would curious to know before he become biliionaire, where did he got his $10M investment fund? Is it from commision, investing or trading or combination of all?

His shares in this company is more than 80% of ALL his wealth.

Putting >80% of his wealth into 1 basket?

Peter Lim was a remiser. He used to make a living from stock brokerage commissions from the Stock Trading done by his clients. In fact, he was nicknamed the "Remiser King" and the TOP Remiser in Singapore. What has he got to say about Trading vs Investing?

He's also a billionaire, and one of the Richest people in Singapore, so I think what he says we ought to at least pay attention and listen to see if it makes sense or not.

P.S. Peter Lim is ranked No. 8 Richest person in Singapore with S$1.8 billion wealth by Forbes.

Singapore's Richest 40:
http://www.forbes.com/lists/2011/79/sin ... _land.html


Even Remiser King Peter Lim (a billionaire) cautions people that one can't make much money from trading when he was interviewed.

Asked about his comments on making money, here's what he said:
Making money

It's very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up. - Peter Lim, Billionaire, and one of the Richest people in Singapore.

How did Peter Lim become a Billionaire? It was from 1 single Stock Investment, NOT stock trading. He invested S$10 million into a company that later was listed in Singapore stock exchange in a "reverse takeover" and this company is NOW known as Wilmar. His shares in this company is more than 80% of ALL his wealth.

So Trading or Investing will lead to Wealth? I leave it for you to decide. I've made my choice.

[Dennis Ng]

Former Remiser King Peter Lim is a stock investor, not a stock trader, this again is clearly evident in another interview he gave in year 2007. When Wilmar's share price was S$2.89, it's worth US$700 million, if share price S$5, that would be worth US$1.2 billion.

The following is a newspaper article from The New Paper on 26th August 2007. I’m re-posting it here as the article will be a learning lesson for all value investors.

Note: as a significant shareholder of Wilmar (5% stake) in year 2007, NOT that he does NOT want to sell his shares when market plunge, the problem is who can he sell it to? If he sells, will it cause share price to plunge even lower? How can he answer to Mr Kuok Khoon Hong, the major shareholder of Wilmar if he sells out his shares and cause share price to plunge lower?

Mr Kuok is ranked 6th Richest in Singapore, his biggest investment again is Wilmar.
http://www.forbes.com/lists/2011/79/sin ... _7AFC.html

Retail Investors like us have a Competitive Advantage against Big investors, we can easily sell out of a share eg. Wilmar in year 2007 when share price was high and buy it back later when share price Crashed in year 2008...we don't have to be "stuck" like major investors such as Peter Lim.

Personally, in my 19 years of investment experience, the shortest I hold on to an investment is about 1 month, I bought CITIGROUP shares in 2009 at US$1 and sold it when it hit US$4 one month ago, making 300% in 1 month. Who says investing need necessarily wait a long time? The longest time I hold a stock is about 3 years, that's all. I'm NOT really a Long Term Investors, I'm more of a "Market Cycle Investor", buying when cycle is on low side, and selling at high prices when cycle is on high side.

It's funny that people have the patience to work for 40 years of their lives but have no patience to wait 2 to 3 years to make money from an investment. Becos of the patience to wait 2 to 3 years from investing, I managed to be able to reach Financial Freedom and choose to retire 23 years before official retirement age of 62, at age 39 (3 years ago). Able to retire after working 15 years, not bad at all.

Cheers!

Dennis Ng

WHEN the Singapore stock market took a sharp dive last week, it wiped out more than $100 million of his stock’s value.

But former remisier king Peter Lim did not lose sleep over it.

Why? ‘I’ve been a stock broker for all my life – I’ve seen all the crashes, financial crisis, where really, it’s only a paper loss,’ replied the self-made billionaire.

‘Just make sure you are not jammed with cash flow.’

Mr Lim was referring to his almost 5 per cent investment in Wilmar International which saw its share price move from a high of $3.78 to a low of $2.89 in the space of a month. The share price last closed at $3.

To him, his wealth is less important than his family and philanthropy. His attitude towards money is almost casual. It reflects his philosophy on investing and wealth.

For those who feel they are badly mauled by the current share doldrums, Mr Lim has this piece of wisdom to share: ‘I used to say to my friends, ‘When you are holding stocks, if it goes up, don’t be too happy; when it goes down, don’t be too sad’.

‘Otherwise, how? Your life will also be fluctuating and you’ll die of a heart attack.

‘If you really lose sleep over it, maybe the best way is to keep the money in the bank.’

So what does he lose sleep over?

He replies with a laugh: ‘My kids. Like other parents, I worry about what they’re doing and whether they’ll pass their exams.’

On Thursday, he made his debut in Forbes’ latest rankings as Singapore’s seventh-richest man, with a reported net worth of US$830m illion.

Mr Lim revealed that he intends to give a large part of his money to society later. How will Singapore benefit?

Through his pet cause: Education.

He made this revelation quite casually, as if he were talking about the weather.

He said: ‘I think it’s very likely (that) a big part of my wealth will be directed towards education.’

‘It will be either a straight donation towards assisting educational institutions or maybe I’ll set up a foundation.’

He supports Prime Minister Lee Hsien Loong’s call at the recent National Day Rally for more Singaporeans to make charitable contributions.

Mr Lim echoed PM Lee’s views that it is happening all over the world, and especially in the US.

‘Asia is a bit behind because generally, when you have money, you think of your sons and your daughters when you die.

‘But I think it has changed a lot here, principally because now, the wealth is bigger.’

He was reluctant to reveal his charitable contributions over the years, except to say that much of it was anonymous and that in the early ’90s, he was one of the earlier donors to the National Kidney Foundation.

HELPS POOR

His friend, Mr Dennis Foo, chief executive of St James Power Station, later told The New Paper that Mr Lim not only donates money, he also takes it upon himself to deliver food, like rice and cooking oil, to needy families in one-room flats and old folks’ homes.

Why education?

Mr Lim said: ‘Education must be cheap and accessible to anyone.

‘For me, I was the son of a fishmonger, but I could still go to the best school. I had the opportunity to make money. There’s no discrimination.

‘I think this policy of meritocracy actually works. It’s very very fair and nobody can complain.’

The New Paper managed to get hold of Mr Lim last Wednesday, after his meetings and before he left for a short trip overseas.

The publicity-shy tycoon was extremely reluctant to talk about his wealth. It didn’t help that he again made news recently with his involvement in one of Singapore’s largest reverse takeover bids, with his investment vehicle Rowsley buying up a chunk of a China solar power company.

But he agreed after some persuasion. He met us at Brewerkz, which he also has a stake in, at Riverside Point two hours before his flight.

Dressed in a polo T-shirt which has seen better days, a pair of cargo pants and trainers, he certainly didn’t seem to wear his wealth on his sleeves.

Why so casual? He replied that he plans to sleep on his flight.

DOESN’T MONITOR

Ironically, Mr Lim, who was one of Singapore’s leading stockbrokers and is now a private investor, does not monitor the stock market every day.

He goes through the financial reports of companies; he watches financial news to get a summary of what is happening, but he does not track the daily ups and downs of the stock he owns.

He said: ‘I only check in intervals, depending on the company.

‘If it’s a structured company, then (I check) when the results come out. For the bigger ones, quarterly results; for smaller ones, twice a year. But if it’s a start-up, I’ll check it more regularly.’

Mr Lim made headlines in the late-’80s as a star remisier, in the mid-’90s in his divorce battle and in early 2000 for his involvement in the first instalment of the Raffles Town Club court saga.

Much of his wealth now comes from a single investment: Palm oil.

In the early ’90s, he invested about US$10 million in a start-up Indonesian palm-oil company, Wilmar. Today, his almost-5 per cent stake is worth more than US$700 million.

This is a far cry from his humble beginnings. When he was young, he said, he did not even have his own room in the two-bedroom government flat he shared with 11 others.

He grew up, with three brothers and four sisters, in one of Singapore’s oldest public housing estates, Bukit Ho Swee.

His father was a fishmonger and his mother a housewife and the size of the flat was the equivalent of a three-room HDB flat today, he said.

He slept in the living room, or wherever he could find space to lay his mattress down for the night.

On his wealth now, he said: ‘It’s no different from what it was before I had the money. It makes no difference after a point.

‘Like what they say, you can only talk louder. You can only eat so much and fly so many trips.

‘Money lets you enjoy a lot of things, but I don’t think I’ll die without money.

‘I don’t think I’m eating a lot better than when I was a lot poorer than now. I don’t really go for very special kinds of food. I’m still very local. I like my mee siam, mee rebus and lontong.’

When his father died in the late ’60s, when Mr Lim was 22 years old.

Mr Lim completed his secondary school education in Raffles Institution and was an officer in National Service.

It was then, at the age of 18, that he bought his first lot of shares.

Did he make a killing?

‘In fact, I lost money,’ he laughed.

But not much.

‘I was only paid $385 a month, so I can’t have bought, or lost, very much.’

He then went to Perth to further his studies at the University of Western Australia.

To fund his university education, he said, he worked part-time doing odd jobs as a taxi-driver, cook and waiter.

It was one of these jobs – in the Australian fast-food chain Red Rooster – that opened his eyes to how business was done.

‘I watched how they started, how they grew, and how they scaled up.’

It was also in university where he honed his instincts and skills as an investor.

He graduated with a degree in accounting and finance and stepped out into the working world.

‘My first job was as an accountant. It lasted three months,’ he said with a chuckle.

He did some tax consultancy before he went into stocks, he said.

Mr Lim is in his element when dealing with numbers. ‘It’s something I’m very comfortable with, something I understand.

‘Give me any numbers. I look at (them) and I’m happy. It can be in any industry. You give me the numbers; somehow I can figure it all out.’

His secret to investing is…

WHAT is Peter Lim’s secret to successful investing?

Prospect, he replied.

He looks at sectors.

‘Like if I think solar is good, I go into solar; if I think palm oil is good, then palm oil.

‘Share prices go up because the sector grows. So if I think this sector is going to be good in the next 10 years, then I’ll just invest in it.’

Another key reason for his success, he said, is patience.

Mr Lim, who also acts as a consultant to companies and helps them find multi-million-dollar investors, does not subscribe to buying one day and selling the next to cash in.

His advice to young investors: ‘You have to invest with a longer-term mindset. You buy a good stock, leave it there for 10 years. Come 10 years, this dollar can be many, many multiples.

‘I think the trick is really to think long-term.

‘ You may not have a lot of money, but you have a lot of time.’

‘The minimum length of my investments are five to six years, if not 10 to 12 years.’

He cites the example of his condominium.

He owns an entire 11-storey block at prestigious Ardmore Park, near Orchard Road. He and his wife, with his 85-year-old mother, live in one apartment, while three other maisonettes and the penthouse sits empty.

‘I bought it in 1994 for $13m and I just hold there and wait. With the current property market, it is worth more than $100m.’

Same with Wilmar, which he invested in the early ’90s. It was then a US$10m investment. Now, his stake is worth some US$700m.

[ilovecck]

Hi ngtfook,

regarding the questions you asked (I bold and highlight them in Blue for everyone's easy reference, here are my comments:

stock trading commission (that earned from his clients), not Stock Trading Gains, (gains earned from his own stock trading) was his main source of income. Similarly, all of us work in different fields, eg. I worked 7 years in bank then 8 years as Financial Planner (before reaching S$1 million 15 years after working).

So one can earn income and accumulate Savings working in different jobs or vocations. Similarly, if I only depend on my savings, my total savings over 15 years probably is just about S$200,000...without learning how to Grow my money through Investing, till now I'll be still stuck as an average Middle Class Singaporean with cash of probably S$300,000, if deduct my Housing Loan of S$100,000, then all I can get to show after working for 19 years and saving 20% of my income is merely NET Cash of about S$200,000. I wouldn't have reach millionaire status.

Nope, when he invested S$10 million into Wilmar back in 1997, at that time he probably have about S$100 million or more, so this S$10 million investment probably is just 10% of his wealth, NOT putting all eggs into 1 basket.

However, this S$10 million investment into a Single Stock (he's just a Passive Investor, does NOT manage the company) grew to over S$1 billion...

Hope above clarifies.

How did Peter Lim become a Billionaire? It was from 1 single Stock Investment, NOT stock trading. He invested S$10 million into a company that later was listed in Singapore stock exchange in a "reverse takeover" and this company is NOW known as Wilmar. His shares in this company is more than 80% of ALL his wealth.

Interesting to learn about Peter Lim success story. One would curious to know before he become biliionaire, where did he got his $10M investment fund? Is it from commision, investing or trading or combination of all?

His shares in this company is more than 80% of ALL his wealth.

Putting >80% of his wealth into 1 basket?

Peter Lim was a remiser. He used to make a living from stock brokerage commissions from the Stock Trading done by his clients. In fact, he was nicknamed the "Remiser King" and the TOP Remiser in Singapore. What has he got to say about Trading vs Investing?

He's also a billionaire, and one of the Richest people in Singapore, so I think what he says we ought to at least pay attention and listen to see if it makes sense or not.

P.S. Peter Lim is ranked No. 8 Richest person in Singapore with S$1.8 billion wealth by Forbes.

Singapore's Richest 40:
http://www.forbes.com/lists/2011/79/sin ... _land.html


Even Remiser King Peter Lim (a billionaire) cautions people that one can't make much money from trading when he was interviewed.

Asked about his comments on making money, here's what he said:
Making money

It's very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up. - Peter Lim, Billionaire, and one of the Richest people in Singapore.

How did Peter Lim become a Billionaire? It was from 1 single Stock Investment, NOT stock trading. He invested S$10 million into a company that later was listed in Singapore stock exchange in a "reverse takeover" and this company is NOW known as Wilmar. His shares in this company is more than 80% of ALL his wealth.

So Trading or Investing will lead to Wealth? I leave it for you to decide. I've made my choice.

Actually what I heard is that last time remiser used to be quite high paying beocs the commission for buying and selling is both 1% (long time ago, anyone can clrify?) so 1 round of buy and sell is 2% commission. The remiser just take orders and execute, so shiok. During stock mkt peak when retail investors are heavily buying and selling, its good $$$.

[Dennis Ng]

Actually what I heard is that last time remiser used to be quite high paying beocs the commission for buying and selling is both 1% (long time ago, anyone can clrify?) so 1 round of buy and sell is 2% commission. The remiser just take orders and execute, so shiok. During stock mkt peak when retail investors are heavily buying and selling, its good $$$.

yes, what you heard is true. Stock brokerage commission was 1% per trade, so if clients buy and sell, make 2%. While now commission is about 0.275% or even lower.

One of my sifus "Warren" (who taught me "Invisible hands" in stock market) was a sought after remiser and he makes high income from being a remiser but he become Rich by saving part of his income and investing into stocks.

He does NOT believe in investing into properties though. (pity, becos one can make money in BOTH Stocks and Property, provided on knows how.

In year 2000, when stock brokerage commission was cut, he decided to "retire" as he already reached multi-millionaire status from his investments by then. (he's only about 6 years older than me).

[ngtfook]

Hi Dennis,

Thanks for the insightful information.

Former Remiser King Peter Lim is a stock investor, not a stock trader, this again is clearly evident in another interview he gave in year 2007. When Wilmar's share price was S$2.89, it's worth US$700 million, if share price S$5, that would be worth US$1.2 billion.

The following is a newspaper article from The New Paper on 26th August 2007. I’m re-posting it here as the article will be a learning lesson for all value investors.

Note: as a significant shareholder of Wilmar (5% stake) in year 2007, NOT that he does NOT want to sell his shares when market plunge, the problem is who can he sell it to? If he sells, will it cause share price to plunge even lower? How can he answer to Mr Kuok Khoon Hong, the major shareholder of Wilmar if he sells out his shares and cause share price to plunge lower?

[Dennis Ng]

I think 80% of people who invest lose money as well, but the reason they lose money is becos they do NOT know how to invest.

For Investors who know how to invest, and if they practise the 2 simple Rules I use, asking what if I'm wrong, will I be financially ok and only invest when upside at least double downside, then probably 100% of those who know how to invest make money.

Cheers!

Dennis Ng

The following article maybe worth noting for traders:

A Blog about Corporate Governance issues in Malaysia and more in general about investing
Monday, 18 June 2012
80% of all day traders lose money
Behavioral-finance researchers have studied the performance of stock market traders in both America and Asia. Interestingly, they discovered that traders in both countries underperform the world’s broad markets by significant amounts. One study analyzed 66,400 accounts at a major Wall Street firm over a seven-year period. Another studied all the active traders on the Taiwan exchange.

In spite of the cultural differences, the results were virtually the same. The odds are against getting rich. Why? Due to the high transaction costs, taxes and bad decisions, the bottom line is simple: “The more you trade the less you earn.”

In fact, about 80% of all day traders lose money. In researching the Americans, one study found that the active investors who turned over their portfolios 258% annually made less than 12% on their money. Passive buy-and-hold investors, with only 2% portfolio turnover, had average returns about half again higher than the active investors.

Trading is bad for your health (and your retirement)

The bottom line is simple: Most traders do lose money. But most are also born optimists, think they’re different, above average, the exception to the odds.

Earlier Forbes reported on a study that the “North American Securities Administrators found that 77% of day traders lost money.” Bloomberg BusinessWeek says 82% of all day traders lose money. The data parallels a study by professors at the University of Taipei working in conjunction with University of California behavioral-finance professors Terry Odean and Brad Barber, the same two who researched 66,400 Wall Street accounts earlier and concluded, “The more you trade the less you earn.”

Get this: Even the traders who did make money in their trading were net losers after transaction costs were deducted. The study also checked whether past winners repeated. They did, but at a very high cost. The average winning trader did in fact repeat as a winner, netting $251 a day after transaction costs.

But overall 82% of all the traders still lost money, an average loss of $45 a day.

Rare 5% have the profile of a winning trader

Successful traders are born. My research on personality types for “The Millionaire Code” tells me most people do not have that unique profile, maybe 5-10%. But they all love the action, the thrill of the hunt, risks, gambling, the pressure, the pounding heart, sweaty palms.

Yes, they want to be heroes. They’re addicted to the adrenaline rush of living on the edge; it’s a “drug” driving them.

Decisions are made within minutes of receiving real-time financial information and signals from their programs. They may move in and out several times a day. Mutual fund investors get day-end quotes, too late to compete. For many traders, 15 minutes is an eternity. After that, breaking news is worthless. Everybody knows it.

Technical analysts, chartists and market timers may be longer-ranged, plan ahead, searching for patterns, rock-solid holding to their system. One successful trader showed me his plan for the day, the two-minute ticks, we tracked them, saw when to get out, all very rational, mechanical.

The personality type of winners is the same, they need to be in on the action, but they’re disciplined, got a system, stick to it, turn on the thrill of hunting for higher returns. It’s a fix, a high, an endless stream of instant gratifications.

[ktchin]

Caution is the watchword for now.
Too much uncertainty and trading volume is not giving clear confirmation .....


Two-tier market is a pretty sick puppy
BY
R SIVANITHY
SENIOR CORRESPONDENT

"Big stocks are in favour right now. And because they greatly
influence the performance of major indexes, it looks as if the market
is holding on well," said Mr Kahn - AP

LAST Saturday's column highlighted the main themes that have taken
shape these past few weeks - on one end of the investment spectrum, a
resurgence of speculative punting in low-priced issues and on the
other, support for Reits and other blue chips because of the market
and local currency's "safe haven" reputation.

Of course, as noted repeatedly in the past, the low volumes in blue
chips make it difficult to gauge just how enduring the "safe haven"
play will prove to be but as the saying goes, "the trend is your
friend - until it bends".

It's also worth noting that buying or selling usually occurs in the
local market before Wall Street rises or falls and not after. On
Friday, for instance, despite the release of soft economic numbers
both here and in China, the Straits Times Index rose strongly, much to
the bewilderment of most observers. Interestingly, the same puzzlement
surrounds Wall Street's rise that day - US newspaper Barron's Friday
market report said that "it's still hard to pinpoint the exact reason
for the rise . . . the market is still a pretty sick puppy, and
investors are awaiting congressional testimony from Ben Bernanke next
week for a whiff of QE3".

If the low volume in blue chips makes for an unconvincing performance,
conversely, high volumes in penny stocks and/or "microcaps" aren't
necessarily a sign of robust health. Instead, it may indicate the
opposite. After all, a market that thrives on churning low-priced
counters and little else can't possibly be described as being in good
shape.

Furthermore, having a two-tier market in which only a few large caps
and a handful of small caps generate all the business is far from
ideal.

On this point, it's interesting to ponder just how many STI components
are propping up the index. Barron's last week pointed out that
although the Standard & Poor's 500 has been able to bounce back from
bad news and weak technicals, the average large-cap stock has been
losing ground since March. Technical analyst Michael Kahn looked at
the performance of big cap stocks to see if the performance of recent
months was widespread and concluded that it was not.

"Big stocks are in favour right now. And because they greatly
influence the performance of major indexes, it looks as if the market
is holding on well," said Mr Kahn. "But beneath the surface, the
average large-cap stock is not so lucky."

However, as another saying goes "you have to be in it to win it",
here's wishing the best of luck to anyone who decides to jump into
either end of the market - speculative pennies or volatile blue chips.

Meanwhile on the external front, Europe and the US continue to lurch
from one bailout-related expectation to the next, resulting in
heightened volatility in markets all over the world.

For example, Wall Street was reportedly weak in the latter half of
last week because of disappointment over the US Federal Reserve's
silence on when a third round of quantitative easing, or QE3, might be
undertaken. This conclusion was reached after a close reading of the
minutes of the Fed's June Open Markets Committee meeting.

Europe, in the meantime, seems to have come to a realisation that
measures announced at a finance ministers' summit meeting a fortnight
ago to much fanfare might help with debt problems but are not going to
solve the continent's growth problems.

In both cases, you'd have to wonder if investors already recognise the
diminishing effect of constantly trying to stimulate economies by
pumping money into the system. This leaves them instead to simply
react to the boost that stimulus announcements give to sentiment
without actually believing in the viability or sustainability of those
measures.