Sunday, July 30, 2017

Aftermath : Investor Exchange 2017

Yesterday, BIGScribe had our biggest event for the year and we sold out all 250 tickets for the event. Although I did speak for 20min yesterday, I attend these events as a fan boy myself and would generally try to follow-up on them on this blog. Here are the comments I have on the event.

a) Optimal search for Real Estate properties

This is just my personal opinion on Vina Ip's talk. While I know very little about the actual purchase of real estate, I am quite sure that only a small minority of real estate investors can review 100 pieces of real estate before making a solid buy decision. I'm not even sure if the sales person would get fed-up and stop working with the buyer after the 60th viewing. But that being said, I buy homes to stay in and do not make money from buying and selling properties.

But I do have the aid of Computer Science via this concept known as the Secretary's Problem.

If you have 1 year to find a piece of real estate, spend 37% of the time building a database of searches just to know your own preference. After around 4 months of viewing property, you have a pretty good idea of price and the value of the property you are searching for. The scientific advice to minimise regret is to find the next piece of real estate that is better than the 37% database you have built earlier. In this case, if you have a few years to buy real estate, you might really end up going through 100 pieces of real estate but you certainly do not need do this if you have to buy a house in 6 months.

( This is the same mathematical model computer scientists used for Tinder matches and blind dates )

b) Marubozu's three considerations when buying REITS.

I really enjoyed Kenny's talk about cautioning REIT buyers on gearing and Price/NAV. Over the next few weeks, I am going to empirically verify his talk and see if there is a way to come up with better performance when screen REITs with a gearing lower than 40% and NAV/Price above 1.

If it returns over 10% backtested over 10 years with a low semivariance, I would adjust my margin strategy to accommodate this framework.

c) Teh Hooi Ling's super-duper awesome talk.

I am a gushing fan-boy when Hooi Ling started talking about her investment ideas. She is my senpai in the MSc Finance programme in NUS. We have very similar training in finance but it was obvious that I am just an amateur and she the astute investing professional.

The gem of Hooi Ling's talk is the idea that you can construct some kind of indicator to figure out when the game is up and we may be staring at an economic downturn. This involves the process of creating a value screen that returns the number of stocks that meet criteria. When the number of deep value bargains drops to a low number, it may be time to leave the market.

The question is how should such a screen look like?

I have constructed deep value screens before using P/B and P/E, I need a third criteria to create this screening prototype and may have the exact research journal paper from the Financial Analysts Journal to get this task complete.

If I do successfully construct a cheap and dirty screen for retail investors, I would possibly do a talk on it next year.

BIGSCribe is currently collating the feedback on the event and I might talk about it again over the next few days.

Some fans told me that they did not like my 50 Shades of Grey theme but judging at the body language and interaction of the audience, I know that you secretly enjoy talks like this.

Just remember to have a safe word !


TheValueFund said...

You are modest. Your segment was also interesting and inspiring although touching on leverage raised a few eyebrows. I thought your approach is similar to Hooi Ling's new value fund.

Christopher Ng Wai Chung said...

Give me about a year to play out my leverage strategy. I might be able to talk about it with more confidence.

I must get the maths right first.