This article was written in partnership with IG, the world’s No.1 CFD provider (by revenue excluding FX, February 2018). All views expressed in the article are the independent opinion of DollarsAndSense.sg
After more than 25 years living and working in financial markets across ten countries, including Spain, Russia, Sri Lanka and the United States, and in various of roles – from stock analyst to hedge fund manager to political risk analyst – Kim Iskyan (and his family) moved to Singapore to launch a financial publishing company.
Stansberry Pacific Research, previously known as Truewealth Publishing, launched in 2015. Its free daily e-letter has hundreds of thousands of readers, and the company’s four paid products have had upwards of 20,000 paying subscribers.
Kim aims to deliver to readers actionable, profitable, investment ideas that will help them grow their wealth and avoid costly mistakes.
In this edition of #myfirsttrade, we spoke to Kim about what prompted him to relocate to Singapore, what he has learnt about the financial markets in Asia, and some common mistakes many investors make.
DollarsAndSense (DNS): We like to start off every interview with this question. It’s probably a really long time ago but can you still remember your very first trade, and how did it end up performing for you? #myfirsttrade
Kim: My first trade was a big mistake, a million-dollar mistake.
I was 22, fresh out of university, when my father gave me US$5,000. It was left over from a college savings account, and the one condition of the gift was that I invest it.
At the time – this was the early 1990s – the shares of personal computer companies were the high-growth tech darlings of the market, the FAANGs of the period. A college buddy IT whiz told me about a company called Zeos International.
After making its first PC in 1987, Zeos had become one of the fastest-growing public company in the U.S. It had beaten large-cap industry heavyweight Dell to the punch in rolling out laptops using the latest chip, and even had a palmtop pocket PC on the market. What’s more, it was a huge advertiser in the computer magazines.
I figured that was all I needed to know. I put my $5,000 into Zeos and sat tight.
But I was wrong. It turned out that even though Zeos was innovative, their computers were actually not. The company was the pits in terms of reliability and service. It steadily lost market share in a highly competitive market. By late 1994, the shell of Zeos was bought out by another computer maker. My shares were worth pennies by then.
What made it even worse was that had I focused on quality – instead of trying to be contrarian – I could have done a lot better. In late 1991, shares of Dell Computer were trading at a (split adjusted) US$0.25 per share. By the end of the decade, the stock was changing hands at US$50. Had I done the obvious thing – which wasn’t obvious enough for me – my initial investment would have been worth US$1 million by the end of the decade.
DNS: You graduated from university with a degree in international relations, and a graduate degree in history. How did you end up spending your entire career (more than 25 years thus far) in finance?
Kim: When I finished university at the age of 20, I had little idea of anything – least of all, what kind of career I wanted to pursue. So I went to Mexico to teach English, I took some accounting classes, I worked at a ranch in the southwestern U.S., and then went to New York to find a job.
I liked the idea of investing, I liked writing, and I liked reading, so I figured I’d find something in publishing, or marketing or finance. At the time, I didn’t appreciate how ridiculously vast and diverse those fields were.
I spent a few months sleeping on a friend’s floor and calling up alumni from where I went to college, to ask them to meet me for coffee and for the opportunity to pick their brains about what they did, and how they got there. (Do people do information interviews anymore?) This was before the internet – to say nothing of LinkedIn – and it was a different world.
Eventually, I met with the colleague of someone I’d met with who worked on the trading floor of a mid-tier investment bank on Wall Street. At the time, the stock markets of some of the Latin America countries were going through the roof, in an early-stage emerging markets mania. Her sales assistant had just left – and she needed a replacement, immediately. I happened to walk in the door that day. It helped that since I’d grown up in Spain, I spoke Spanish, so I was the go-to person for any Spanish-language issues on the floor.
I spent a year and a half sending faxes, checking share prices on the Quotron, answering phone calls and soaking up everything I could learn from being immersed in the front line of finance and investing. I listened to the traders while they executed orders, attended morning research meetings and learnt social skills as I observe how my boss interacted with clients. I turned on the squawk box to hear what the salespeople were saying. It was fascinating, and from then I knew that I wanted to be in the world of investing.
DNS: Having spent many years in years as an investment research analyst around the world, what got you interested in exploring Asia for investment ideas?
Kim: All the talk of the so-called Pacific Century – how growth in Asia is going to be the driver of the global economy – is an investment cliché. And it’s also the dead truth.
See, if you’re from this part of the world – broadly speaking – it’s easy to overlook the fact that you’re in the midst of one of the greatest economic stories of the past century. I’ve spent a lot of time in other parts of the world, 12 years in the former Soviet Union, upwards of 15 years in the U.S., and more than 10 years in Europe where things are falling apart. I’m not talking only about infrastructure – but I’m talking about an entire way of life, of creating value, of economic activity. In many countries of the world, the prevailing attitude is something like this: We’ve worked hard, and now we can coast. It might take a few generations, but that attitude will – already is – catching up to those parts of the world.
In much of Asia, though, there’s a very different dynamic. Again, at the risk of massively overgeneralizing, in many parts of Asia, there’s a different kind of attitude where people are hungry for progress. They want to build, create and make a better life for themselves. Innovation doesn’t always come easily, and requires a lot of trial and error, but people are striving.
A number of years ago I was in Blagoveshchensk, a city in the Russian Far East that borders China. It was a typically dull, sleepy, dilapidated post-Soviet city where not much was happening and you could almost feel the stagnation in the air. But just across the border in China – we’re talking about a pretty remote part of the country – it was booming. There were bustling markets, traffic jams, construction, it was a beehive of activity. I don’t want to oversimplify, but that’s the distinction of Asia (or at least many parts of it) in a nutshell.
And from an investment perspective, it’s much more exciting. Of course there’s a lot of blacktop between that concept – and finding good shares to invest in. But it’s a great start. And that’s why I came here.
DNS: What were the specific reasons why you decided to base yourself in Singapore?
Kim: I first passed through Singapore in 1990, when I was 20, with a group of a few dozen elderly Dutch people. My grandmother, who was from the Netherlands, had asked me to join her on a three-week tour of Indonesia, and we stopped for a day in Singapore. I have vague memories of Orchard – very, very different from today – and of going for a jog in the Botanical Gardens while listening to George Michael on my Walkman. But from that moment, the heat and the food and the dynamism and the exoticism (it was the first time I’d travelled in Asia) had me hooked on Singapore.
Years later – after a dozen or so trips here for work and leisure, and after living in the tropics of Sri Lanka for a few years – I had the opportunity to move to this part of the world. I needed to be in a financial hub to launch my business. Singapore is a lot easier for families (I have two children) than Hong Kong and unlike Hong Kong, you get more living space than a large closet, for less than a king’s ransom.
Singapore is great in so many ways. It’s safe and efficient and clean. There’s no traffic. The food is great. It’s always warm. So I’m always amused at people here who complain when the MRT is a few minutes late, or when there’s a jam that lasts more than five minutes. It often occurs to me that many Singaporeans have no idea how great they have it here – at least in terms of quality of life. The Disney-meets-1984vibe can get a bit wearying but on the balance, it’s a fantastic place to live with a family.
DNS: Since coming to Singapore, what are some notable things you have learnt about the financial markets in this part of the world?
Kim: I’ve worked in U.S. markets, Latin American markets, Eastern European markets, other emerging markets, and I’ve wandered through frontier markets from Iran to Venezuela to Myanmar. One thing that I’ve learned is that financial markets aren’t all that different, across time and cultures and levels of development.
They’re all on a spectrum of development and evolution. Of course there are always local or regional differences that have evolved in response to local situations, regulations and rules. But the whole notion of exceptionalism – that (say) markets in one country or another are “different”, or that one country’s model of development breaks the rules – is 90% silly.
All that to say, of course there are some differences between various financial markets. And some of the less developed markets over here are just a few – or more – years behind where, say, Russia is today.
The exciting thing to me is to find those opportunities where you can see change happening – and where you can see how a country or market is going to advance on that spectrum of development. A few months ago I went to Uzbekistan, in Central Asia, where I hadn’t been in 25 years. The economy there is just opening up. Companies are just starting to raise capital on the stock exchange.
It’s like children drawing with crayons compared to the (relative) Picassos of the Hong Kong or Singapore markets, of course. And the Tashkent stock exchange probably won’t ever come within a football field of the level of development of Singapore or Hong Kong. But you can see how it will advance and develop. And because it’s in such an early stage, there are potentially enormous gains to be made. But in the big picture, it’s not really all that different from anywhere else.
DNS: Are Singapore investors any different from retail investors around the world?
Kim: I’ve found that investors in Singapore are a lot more willing – than investors in many other markets – to look outside their home market for investment opportunities. Since the Singapore market is relatively small – and the historic returns of the SGX compared to other markets (especially the U.S.) isn’t high – that’s essential.
One of the most tired maxims of investing is to “invest in what you know”. If that means that you don’t look beyond the end of your nose, you’ll be a terrible investor. In part because Singapore is small, people travel a lot, and thereby extend the “what you know” well outside of the borders of the country.
I compare that to the U.S., where two-thirds of the population doesn’t even own a passport. Of course, the U.S. is a big country, and their markets comprise around half of total global market capitalization, so the comparison with Singapore breaks down pretty quickly. But it’s still relevant in that Singaporeans are, compared to investors in many other markets, more open to investing outside their immediate comfort zone – and to expanding their comfort zone.
DNS: After more than 25 years of experience in the investment field, how would you describe your investment philosophy today?
Kim:
1. Invest, first of all, in yourself. I’m a big believer in taking a big-picture view of all of your assets, not only financial assets. It’s critical to assess your “personal equity”, like your network, your education, your experience, the languages you speak, the places you’ve lived – in a holistic sense. Your financial assets are only part of your picture.
2. Every day, evaluate what you own. What your money is busy with right now represents your opportunity cost. The cash you have tied up in shares… the bank… your car… your house? Every day, you’re “buying” those assets because you could be using the money elsewhere. Ask yourself: Is that the best use of my money, today?
3. Know what you know. I firmly believe that you should only invest in what you know. But before you invest in what you know, well… you have to know something. And being an expert about anything – knowing a sector, economy, market, whatever – requires a lot of time and effort. Most importantly, don’t think you know more than you actually do.
4. Listen to yourself, first of all. Don’t follow the crowd, but don’t reflexively ignore it, either. Being a contrarian just for the sake of being different is silly. Following what everyone else is doing just for the sake of being “safe” is silly too. Your path needs to be your own.
5. Buy cheap assets that are out of favour when their price is in the process of recovering. Finally… about investing. Overpriced stocks may go up further in price – but usually, not much further. Cheap stocks can remain cheap forever. If everyone is buying something, who are they going to sell it to? It’s much better to be an early buyer and an early seller, instead of a late buyer and a late seller.
DNS: Final question. Share with us two major misconceptions about investing that you think investors are prone to making, and what can we do about them?
Kim:
1. That cash is bad. Cash is safe, and cash is potential. Wait until you find something worth investing in. And before then, it’s all right to wait. Buying the wrong thing at the wrong price is a lot more expensive. Legendary investor Jim Rogers once wrote, “The way of the successful investor is normally to do nothing – not until you see money lying there, somewhere over in the corner, and all that is left for you to do is go over and pick it up.”
2. That anyone has the answers. Markets are complex, organic, dynamic, living things that exist at the intersection of the beliefs, desires, misconceptions and ambitions of their participants. No single person, or group, can possibly interpret “the market”. Yes, anyone can have a potentially valuable insight on aspects of the market. And plenty of people can make money by having real insight on very specific corners of the market. But ignore those people who try to come across as knowing it all. They don’t.
Look Overseas, Read A Lot And Be Ready
During our interview with Kim Iskyan, three things really stood out for us.
The first is just how macro a view Kim has about the financial markets. Rather than to be constricted to just a few markets, Kim takes a worldview when assessing the best investment opportunities.
The best way to get started on this is to stay up to date with markets around the world. You can do so by following sites like IG which offers both traders and investors a quick and simple overview of financial events and economic calendar. You can also share and discuss investment or trading ideas that you have with other like-minded individuals in the IG community.
Reading helps. As shared by Kim, the desire to obtain consumer knowledge is something that is important if you want to be a knowledgeable investor. There are many free resources out there such as content on DollarsAndSense.sg. If reading is not your cup of tea, you can also consider watching videos or webinars or even attend events to increase your knowledge.
Last but not least, be ready. One thing that you can be certain of when investing is that you are going to see ups and downs in the financial market. Don’t panic as this is the norm, rather than the exception. You should have adequate risk management processes in place so that you are able to comfortably ride out the volatility in the financial markets.
You can also learn more about what you can do to navigate through a volatile market through the e-book which is jointly produced between IG and Bloomberg. You can download it here.
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