Zico, not his actual name, has been in the business for a long time, much longer than most of us, being able to recall the stock market in the 80’s.
I was harassing him, as usual, for stock tips and Zico usually has a stable of them, although his are purely based on fundamentals which was why we missed out on the Ramba Energy run last month on one of my tip offs.
Being in the business of managing money, he says the primary concerns of his wealthy clients is not so much the windfall gains but the capital preservation and growth aspect of it.
That is not to say its all about blue chips. I regret not following him on the Prince Frog recommendation or the Good Baby lead, both HK stocks which rose a fair bit since Mar this year.
I asked him on his thoughts on the STI these days. He says he is in a hurry to get out for he sees valuations pretty unappealing.
Reits ? He says he has to hold some in his portfolio to generate the fixed income portion of it. I asked if Reits have failed him before ? He said once they were held to ransom for the AMP rights issue during the crisis, as an investor, they were bailed-in.
What else ?
His eyes are on the US these days. Focusing on healthcare.
He is also particularly keen on mass market luxury brands like the LV’s and H&M.
Sensing my skepticism, he urged me to go home and chart something which I am going to share with you now.
He asked me to plot a simple historical chart of Mcdonalds or IBM against the MSCI Asia Ex Japan graph. He says, so much for your brokers and their hype about the EM boom story, if you had invested in Mcdonalds or IBM 20 years ago, your returns would have quite outstripped the returns on a MSCI Asia Ex Japan Fund or unit trust.
MSCI Asia Ex Japan +47%
MSCI Asia Ex Japan Small Cap +102%
Stock picking is an art but there are not too many Warren Buffets left and Buffet would not be sharing his ideas with little old me for sure. It is an ETF world of sub par returns and basket trading ala fund style.
Zico is spending some time understanding the genetic research business these days, like he did on biofuels a few years back. He wants to get a real feel of the businesses and its potential. He is interspersing his time between that and research on population statistics, gleefully informing me that the US will have a much larger percentage working population in the next decade which is a bright spark for consumption.
I realise what sets Zico apart is his extraordinary zest and willingness to get his hands dirty so that he can fully understand every investment decision he makes. He intends to get back to work soon, to privately manage money, at the behest of some of his long time clients. Till then, we can continue to pick on his brains, hopefully, because I intend to ask him about this new Hyperloop (a cross between a railgun, air hockey table and Concorde – source : Reuters) concept that Tesla is sounding out.