The purpose of AIN Member Highlights is to share knowledge with other investors, discuss different investor experiences, and encourage other AIN members.
Kelvin Seetoh shares his investing journey and tips for our latest feature!
Tell us a bit about you!
I love traveling and nature a lot, my favorite countries are the USA and Taiwan. Also a huge foodie (thanks to my Asian background!). I am currently a full-time investor, specializing in finding high growth stocks.
How did you get into investing? How did you come up with the initial capital?
Coming from a middle-income family, I grew up in a regular neighborhood school that had a lot of students coming from wealthy backgrounds. Inevitably, I started comparing myself with them. But I knew that I had two choices: Whine or do something about it!
So I started flipping clothes I bought from the USA and sold them in Singapore for a couple of months and made close to $20k. Even though I was making good money, I still felt something was missing… It was way too much hard work!
I was incredibly mischievous and my education path took longer than most people. By the time I hit 17 years old, I decided to be competitive in my studies instead. After all, good results = bright future right?
I wanted to become the top student in class, but… there were always people smarter than me. My business lecturer told me something which would change my life forever. “If you cannot win in this area, play in an area where there are fewer competitors. Why not start investing right away while your peers are just studying it?”
He told me to read this book called “One Up on Wall Street” by Peter Lynch. The book made perfect sense to me. It gave me the confidence to start investing too. My mother trusted me (thank god) with her brokerage and I embarked on my investing journey. I dipped my toe using my capital from my clothing hustle and started investing roughly $1,600. With some luck, I made 20% gains (or $360) within a month.
It completely blew my mind that I could make money by doing proper research and valuations! It was a far cry from those days where I worked my hours in a restaurant. That empowering moment completely changed the game for me.
What’s your investing philosophy? What does success in investing look like to you?
As investors, we’re privileged because we have a big number of companies to choose from. It’s just like dating someone, you need to assess their suitability.
Why settle for less when you can invest in the best-of-breed companies? I tend to have very high standards for any companies I’d like to buy.
The companies must be able to provide:
1) strong value propositions to its end users
2) visionary management who is mission-driven and purpose-led
3) products/services that disrupting incumbents
4) a long runway for reinvestment and growth.
I also do not mind concentration. I believe risk can be eliminated by choosing good quality companies, not by adding more names to my portfolio… thinking that I have eliminated risk altogether.
Success in investing isn’t just about the gains. Investors are naturally curious creatures, I like it when I am able to connect the dots and improve on my pattern recognitions on emerging companies.
Success is also having more friends doing research and having fun together. If money was my definition of investing, I’d find investing very tiring and mundane.
If you were to give high level tips on investing – the advice that provides the greatest results, what would it be?
1. Be open and choose to be vulnerable.
We tend to have this mentality where investing is a very individual activity. I find that once I decide to share more about my ideas and I crowdsource opinions…
I tend to make great decisions and reduce my errors. If I throw out an idea out to 5 – 8 competent investors, I’m likely going to see my blind spots.
2. Ask, ask, ask. Never shy away from joining an investing community.
To earn more, we have to learn more. Learning takes place in an exponential fashion when you join an investing community or pay a mentor to teach you.
Humans are weird in a way where we refuse to pay to learn but we are perfectly fine with losing money in the stock market. I regretted not paying to learn from others because I could leverage on their experience and their results to supercharge my own investment results.
If I could boost my returns by 20 – 40% over a period of 5 years, the course would pay for itself easily.
How do you analyze investments? How do you decide what to invest in?
Over the years of analyzing companies, I’ve refined my process to keep it short and simple. I think analysis of companies is not complicated. Numbers are simple and as long as you have a Bloomberg, you can push out the numbers any time.
That’s not where the edge lies.
The edge lies in understanding the value proposition in business models. First, ask yourself, what value is this company providing to its customers? What can this company do that others cannot compete or copy?
Like what billionaire Peter Thiel said: “All failed companies are the same: they failed to escape competition.” If this business were to disappear one day, would life regress backwards for its customers? What if Facebook and Amazon were to disappear, how would your life be different?
I cannot be a master in all sectors so I decided to narrow down my focus to a few: consumer marketplaces (e-commerce), software and fintech. These represent one of the largest opportunities currently because there are structural forces beneath these sectors that will propel high growth rates for years to come.
What’s your philosophy about risk in investing? How do you manage risk?
Most people think of risk as volatility. Volatility is not risk. Volatility is helpful because it offers great prices for investors to buy their shares. Again, let the market serve you, not control you. Please do not lose sleep over short-term volatility.
Risk could be described in a few ways: competitive forces, fraudulent numbers, customer concentration risks, regulation risks, or execution risks. To manage risk is to simply avoid it.
Like what Charlie Munger said, “All I want to know is where I’m going to die so I’ll never go there.” This means avoiding companies where you don’t feel certain.
Look at track records of management teams. Spend time understanding the company. Chat with the management team, employees and its largest shareholders. Buy your position in tranches to feel comfortable over time.
There will be unknown risks but that’s how it is when you invest, you cannot eliminate all kinds of risk and you have to feel comfortable over it. But what’s risky to me is buying into companies that are being disrupted.
What are some mistakes you’ve experienced during your investing journey, and what are the lessons you learned from them?
1. Staying Humble
It is common for any investors (including myself) to start losing rigour in our research process after we have made a huge win in the stock market. I might get overconfident and make silly mistakes. I remind myself to always have a productive paranoia.
2. Learner’s Mindset versus a Knower’s Mindset
During the first few years, I was very hungry to learn investing from everyone. As the years progressed on, I started to realise I lost my enthusiasm and I would shut my mind off whenever someone spoke about a familiar topic.
This caused me to have a knower’s mindset which prevented me from learning investment concepts from different perspectives!
Today, I keep my ears open continuously because there are so many things to learn when they are explained from different perspectives.
3. Never have a pre-conditioned mindset
In life, people would tell me it is hard to achieve more than 30% returns. I should avoid loss-making companies. Some people even mentioned ridiculous things like I should sell in certain months and buy back in certain months.
What I need to understand is these people have their reasons for such thinking. For myself, I should never take their advice wholesale but I should seek the truth for myself by experiencing and understanding it.
That’s how success is created.
If you could go back in time and advise your 18-year-old self, what advice would you give?
Spend more time learning from experienced investors.
Pay for their mentorship if necessary – the results will pay for itself over and over again. This is one of my biggest regrets. If I started earlier, I could have hit a 7-figure portfolio much earlier.
Don’t feel shy approaching people. The world is a kinder place than you imagine. Never let your age be an excuse not to learn! Read more and write more because that’s where you get the most feedback.
What’s the best way to get started as a newer investor?
Tony Robbins once said “if you don’t have good models, find someone who is the best in your chosen field and emulate them. You don’t need to reinvent the wheel.”
Find someone who is already successful and ask them to mentor you.
When we are new investors, there are countless things which we do not know. Some investors believe that it is normal to pay “tuition fees’ in the stock market. It’s not necessary if you have a coach or someone to guide you from the start.
Instead of journeying through a maze, you have a coach who will tell you how to get the results you want in a shorter time frame. When I looked back into successful people, all of them have mentors.
This is such an important truth to understand to grow exponentially. No matter where we are in our lifetime, it is the RIGHT time to start.
Connect with Kelvin through his blog at Kelvestor.com. You can learn more about his investing principles and lessons through his postings on Facebook.com/kelvestor.