Somewhere in the tropics, in a corner of the city where two rivers meet, an aspiring fund manager sitting in front of his computer is fretting over the drop in the prices of the glove shares in his portfolio. Wringing his hands and tearing his hair (or what’s left of it), he stands up in his cubicle and notices that it’s lunch time, as the office has emptied out.
What should I have for lunch? he wonders. He’s too stressed to eat and decides to visit his crystal ball-gazing friend to let off some steam and maybe get some advice.
So, off he goes on his Honda Super Cub, whizzing through the labyrinthine backstreets of the humid, muddy city to the dark cave-like abode of Crystal Ball Gazer located on King of the Ocean Boulevard.
“Hello, bro, how lah? The glove stocks all jatuh! What’s going on? Got vaccine, drop; vaccine delayed, also drop,” he cries out to his friend as soon as the door to the dingy apartment opens. “I didn’t have them in my portfolio earlier, then they go up and up. But when they corrected last week, I went in, but now they jatuh lagi. Haiyo, die lah, the investment committee will sure question me left, right and centre.”
“Chill, bro. Why so stressed? Calm down,” says Crystal Ball Gazer.
“Haiyo, how to calm down? I’m in the red now. Should have bought earlier lah; my timing always suey one. Can you look into your crystal ball and tell me what’s going on? When will the selling end, ah?”
“Well, trading is essentially a zero-sum game. In every trade, there’s a buyer, there’s a seller; someone wins, someone loses. Unless you buy a stock and hold it long enough, you earn dividends, the price goes up, then, that’s investing,” says the sage. “That’s the name of the game, bro. And remember what the Oracle of Omaha said?”
“No, what? What did he say?”
“Never chase after fads or hot stocks. Well, he may not have said these exact words, but his investment strategy reflects it. And, you must know about bubbles?”
“Bubbles, the character in The Powerpuff Girls?” asks our clueless friend.
“Huh? No lah, ‘bubbles’ as in stock bubbles, property bubbles, the Tulip mania!”
Crystal Ball Gazer goes on to talk about the Japan asset price bubble, the dotcom bubble and the mother of all bubbles: the mania over Dutch tulip bulbs in Holland during the early to mid-1600s.
Our clueless friend listens intently and, after what seems like an age taking it all in, he asks, “But, bro, what do tulip bulbs have to do with gloves? Can you eat the bulbs? Gloves are saving lives everywhere in this age of the coronavirus!”
“Okay, maybe it’s an unfair comparison, but the bottom line is the same — overspeculation, my friend. There’s been too much froth.”
“Right. Fine, whatever. What should I do now? I’ll be ikan salai soon if glove stocks don’t rise again,” our friend cries.
“Well, value investing is also a bit like love — that’s according to me, not to any oracle, haha … But, again, the principles are similar. Don’t go after fads, that is, don’t curi curi on the side. You must be disciplined — be faithful — and invest according to fundamentals, not momentum, which means having a good fit in terms of character and personality. What are the growth prospects? Is there a future together? But, of course, some people like excitement; so, they live and die by the sword.”
“So, you mean, I should go back to value investing?”
“I’m just saying, not telling you what to do. That, you or your boss or whoever pays your salary will have to decide,” says the Crystal Ball Gazer, looking at his watch. “Eh, the afternoon session’s going to start already.”
Our friend grunts and takes his leave.
“Oh, bro, remember this too ... Even a broken clock is right twice a day,” says the guru of sorts at the door.
The aspiring fund manager scratches his head but decides not to ask further, or he might get caught getting back late from lunch.
So, off he goes on his Honda Super Cub, ready to take on the afternoon trading session.
The wise reader will know the above is entirely a work of fiction