Investing in stocks can be both risky and rewarding. Having the right knowledge and investment acumen is crucial for long-term wealth building. Whether you have a financial background or not, navigating a company’s financials and staying updated on macroeconomic news can be overwhelming and time-consuming.
This is where local stock-centric site SmallCapAsia, founded in July 2015 by James Yeo, aims to value-add. Unlike most sites that focus on large-cap companies, James specialises in uncovering small-cap stocks with strong fundamentals and near-term catalysts in Singapore and Asia.
James, who began his career as a freelance writer in 2013 with the now-defunct Motley Fool Singapore, has written over 1,000 articles on individual SGX-listed stocks and investment special reports with various other publishers over the years, including DollarsAndSense, before starting his own website.
In this edition of #theeverydayinvestor, a content series produced by DollarsAndSense that features everyday investors, we talk to James about how he started in stock investing, what motivated him to turn his stock-picking hobby into a full-time career, and his tips for helping other investors shorten their learning curve.
Shashi Kumar (Shashi): As you approach nearly a decade of running, SmallCapAsia, could you share what inspired you to start this Singapore-centric stock website? How has the journey been so far?
James Yeo (James): SmallCapAsia began from a mix of passion and identifying a market gap. As an investor in the Singapore market, I struggled to find consolidated, insightful information on small-cap stocks. These stocks have the biggest potential for multi-baggers but are often overlooked by mainstream financial media and analysts due to their size and perceived risk.
This realisation led to the creation of SmallCapAsia. By focusing on the Singapore market, I aimed to serve a niche audience interested in the growth potential of local companies.
The journey has been both rewarding and challenging. What started as a side project became my full-time focus in 2023, and I’m excited for what the future holds.
Shashi: What made you decide to take SmallCapAsia from a side hustle to a full-time venture? How has this shift changed the way you run the website and engage with your audience?
James: Taking SmallCapAsia full-time wasn’t an easy decision, especially with rising household expenses due to inflation. However, the Covid-19 pandemic was a game-changer. It gave me more time with my family and reinforced my desire to balance building something of my own and being present for my kids while they still need me.
Committing full-time to entrepreneurship also allowed me to expand the site’s reach through different mediums, such as launching my YouTube channel. I aim to use this platform to share my passion and make learning about investing both informative and fun.
Additionally, after attaining my ACLP cert, I became a SkillsFuture-approved Trainer for a value investing workshop catered to beginners. This initiative is particularly meaningful to me, as it enables me to contribute to someone’s financial literacy journey in a structured, government-subsidised setting, making value investing principles accessible to everyone.
Shashi: Many local investors prefer investing in large cap US and China stocks. What made you focus on local small cap stocks instead?
James: That’s a great question! I actually discussed the benefits of small-cap stocks in my blog post here. Personally, I started investing with Singapore stocks, and I’ve found our blue-chip stocks are often mature companies with little growth potential due to Singapore’s small market.
In contrast, smaller companies like Marco Polo Marine and iFast have the potential to grow multi-fold before reaching the level of larger companies like Yangzijiang Shipbuilding and DBS Group. Hence, I prefer small-cap stocks. I also understand the local market better and see significant growth potential in these companies, given the right multitude of factors, such as a strong management team and good growth prospects.
Shashi: How would you describe your investment style?
James: My investment style is a blend of value and growth investing due to my higher risk tolerance and desire to analyse the company’s financial figures. The influence came about from Peter Lynch’s focus on faster growers, which he details in his book, One Up on Wall Street.
Personally, I believe in targeting smaller companies rather than blue-chip stocks because they offer faster growth potential. To achieve better results, you often need to take a contrarian approach.
Shashi: What has been your biggest gain to date from investing in small cap stocks?
James: I bought iFast Corp at around $1 during the Covid-19 period and sold it for around $4+ after two years of holding. It netted me more than 400% returns.
Shashi: Looking at a company’s fundamentals and financial reports can be daunting for people without a finance background. What tips will you give to investors to overcome this challenge?
James: Examining a company’s fundamentals and financial reports is a lot of work. It can be overwhelming for anyone to think about going through the company’s annual reports and analysing the financial numbers, especially after a long day of work.
Personally, I spend 1-2 hours digging into each new stock I encounter for the first time, and on some occasions, I can spend up to half a day if the stock piques my interest further.
One tip is to focus on companies within your circle of competence. Are you knowledgeable in one or more sectors? If so, start researching stocks in that field to gain an edge over other investors.
Shashi: Are there any other books that you would recommend to budding investors interested in becoming value-growth investors like yourself?
James: Besides “One Up on Wall Street,” I would recommend another book called “The Warren Buffett Way,” which is easy to understand and provides 10 tenets that every beginner investor can follow.
Shashi: What were some of the challenges you faced at the start of your investment journey that you would advice new investors to avoid?
James: Whenever I introduce myself during investing webinars, I often share my investing mistakes, such as blowing up my Forex account, investing in S-chips like FerroChina (which has gone bankrupt), and attempting to time the markets.
I think new investors should kickstart their investment journey by gaining basic investing knowledge through courses. Also, they should start with a small investment sum, which allows them to gradually build confidence and expertise to navigate this “shark-infested” investing world.
Shashi: Investing doesn’t just apply to financial investments. What are some non-financial investments you’ve made?
James: Another area I’ve deeply invested in is continuous learning. As the Chinese saying goes, “Live until you’re old, study until you’re old”. This pursuit has led me to undertake the Skills-Future trainer cert and delve into broader topics surrounding entrepreneurship like digital marketing and video editing.
In essence, investing in personal growth has been as pivotal to my success as my financial investments. To quote Warren Buffett: “The most important investment you can make is yourself,” and I sincerely believe in it because it enriches not only your life but also the lives of those around you.
Taking The Road Less Travelled
Unlike most investors who flock to large-cap overseas companies, James diverged from this trend early in his investment journey. Instead, he focused on small-cap Singapore stocks uncovered through his research.
This also led him to pursue entrepreneurship, allowing him to share his insights on small-cap stocks, which rarely receive mainstream coverage. Eventually, he was able to turn his hobby into a full-time career that offered both financial rewards and the flexibility to prioritise family time.
Like James, we don’t have to stick only to conventional investment paths. Instead, we could explore other niches or investment approaches that align with our temperament and objectives. While there’s no shortcut to finding good investment ideas other than doing the necessary legwork, investment courses could help to shorten our learning curve and give us a structured methodology.
Just as James continually seeks to enhance his knowledge and skillsets beyond the investment realm, we too should strive for self-improvement in other areas of our lives to improve our earning potential.
Read the other articles in our #everydayinvestor series.
Why Jeraldine Phneah Believes That Every Millennial Needs To Care About Their Investment Journey
How This Full-Time University Student Finds Time To Study, Work, Invest & Go To The Gym Regularly
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