Q1: Tell me more about yourself.
I am Kek Wee, Head of Investment Research with Unicorn Financial Solutions, and I have been with Unicorn for 16 years.
I work with investment portfolio managers and analysts on macroeconomic and securities analysis to construct portfolios for our clients. Together with my team, I train the financial consultants in Unicorn so they can articulate our investment philosophy and investment views to their clients, and I ensure we constantly communicate to our clients through seminars, videos, and publications. I feel fulfilled when I know our investment team is constantly progressing to take good care of our trusted clients.
Other than my work, I enjoy the simple pleasure of jogging and meditating, which brings me peace and mindfulness.
Q2: How did you start taking an interest in investing and growing wealth?
Actually, I started my financial planning in 2001. That was when I graduated from NTU. And the reason was, when I was young, I always saw my parents having conflicts over money. And I thought, “Maybe we were poor?” So, I was very thrifty. I was very conscious about saving money. That is when I have a plan which was, I did not want to have money problems. I wanted to plan to receive a recurring income of $5,000 every month by 37 years old.
So, I did my math: To receive a monthly recurring income of $5,000 by saving in the bank that gave me 1% interest annually, how much capital did I need? The answer was $6 million. Either I will never get there, or I will only get there when I am 60 or 70 years old. That is not an attractive prospect! Well, what if I switched it around? To get a 6% return with $1 million of capital. That, to me, is highly achievable early in my life. So, I did my projection and started working towards it.
Q3: This seems like the start of your financial planning journey and eventually finding your home at Unicorn.
I saw how beneficial this concept was for me and started to share it with my friends. There was a story which involved my junior college friend, now one of my clients. In 2004, he thought my concept was good, but he was hesitant because he did not know how to invest. What he did was put $30,000 with me, and I helped him invest it.
In 2006, I met him again. He was getting married, but he looked very worried because he had to pay for his wedding and HDB, plus renovations. The expenditure and his account were a total mismatch. However, I reminded him that the money he once placed with me had grown to $50,000. I saw his eyes lit up!
I never want to work for money. I want to enjoy my work. When I saw my friend’s eyes lit up, I thought how wonderful that would be if I could help people while helping myself. Back then, I did not know about this profession (financial planner) and hence aspired to help people do financial planning on a pro bono basis when I was 37 years old and financially independent.
It was at the end of 2006 that one of my previous colleagues from PwC recommended me to Unicorn. After sharing for five minutes, I knew I wanted to join Unicorn. And that is my journey!
Q4: What are the fundamental values towards investing that guides you?
Some of the fundamental values that guide my investment are:
- Know fully why I invest in something. This gives me the confidence to make the right decision when the price doesn’t go my way in the near term. For example, in 2008, the share price of Fraser Centrepoint Trust, a well-known Real Estate Investment Trust with Causeway Point, North Point and Anchor Point in their property portfolio, declined 60% from $1.42 to $0.57. I took a trip to Causeway Point and North Point to understand the businesses of those malls. I observed these malls have business as usual, with good customer traffic and almost full occupancy. Hence, instead of panicking and selling, I invested more when the share price was around $0.60. Within a year, the share price went back to its initial price of $1.42. I had a capital gain of 140% in a year and a double-digit annual dividend yield.
- Have a framework and obey it. Investing is an emotional activity; hence I need a framework to reduce making emotional decisions. When the market is greedy, I am happy to sit on cash over an extended period. When the market is fearful, I progressively invest instead of waiting to buy at the market bottom. This is what I am currently doing in the current bear market!
- Play my own game. Investing is a journey, not a competition. I plan my investment to achieve my desired returns to fulfil my own life goals, not to beat others in investment returns. This allows me to stay clear of speculative craze, which could temporarily earn supernormal returns. Hence, I have never invested in things like cryptocurrency, NFTs and SPACs.
Q5: Perhaps you can help the readers understand value investing.
Value investing is about valuing an asset and then buying it at a price below that value. The value of a productive asset is made up of its stream of net cash inflows over its lifetime, discounted back to present value. In the case of equities investing, it requires us to look into the future of the company to determine the growth and duration of its cash flows, which requires a deep understanding of its businesses. The price, on the other hand, is its publicly quoted share price. At times, there can be a dislocation between the price and value of a company. However, I observed that over a longer period, the price and value of a company tend to converge, meaning that the growth of the company’s share price mimics the growth of its cash flows or earnings.
Warren Buffett once shared that investors in the public market have a fundamental advantage over the investors in the private market because there are periods when the prices of businesses are sold substantially below their intrinsic value due to irrational fear in the market. They are hence able to buy those businesses at significant discounts to their value that are never available in the private markets. However, most investors turned their fundamental advantage into a disadvantage by being sellers instead of buyers during these periods of stock market decline. I think the reason is that most investors do not fully understand the businesses they are investing in. Without knowing the value of the businesses, it is easy to succumb to the fear of a stock market downturn and sell when everyone else is selling.
