WardrobeTrendsFashion managed to catch up with Mary Buffett, internationally acclaimed author and speaker on Value Investing, when she was in Singapore for the Mind Kinesis World Value Investment Fest 2015 that took place on 19 to 20 July 2015.
Being the former daughter-in-law to Warren Buffett, she had the opportunity to be coached first hand by the investing legend himself. So naturally we want to know what is the best way a person, who is not all that financially savvy, can get into the investing game and grow our money.
It is all too common to hear about markets crashing and people losing all their life savings on the stock market. So we started off the conversation with Mary wanting to know what the risks are.
Why do investors lose a lot of money in the stock market? Are they doing something wrong or is it just part of the investing game?
This only happens when people follow a herd mentality. They don’t take the time to learn about what they are investing in. For example, in the recent China market crash, we find farmers who put all their hard earned savings into stocks based on advice from their hairdressers! It’s a case of blind leading the blind.
Everybody wants to be rich overnight. But investing is not a game. You have worked hard for your money. You won’t just give away that money to anyone. Likewise, you need to know how to look for companies that are worthy of your money. So you need to invest in your education first.
What are some key characteristics of companies that are good investments?
You know a company is investment-worthy when they have recognizable brands in their industry and a history of growing profits. The only way to know if a company is a good investment is to educate yourself on the company. You can read up on the company and use a variety of online tools available that gives you overviews and financial information that helps you make an informed decision. For example, I like Jitta.com which provides information on individual companies including overviews, financial information and a simple ranking system to help you determine if it is a good company to invest.
Another key aspect is that you focus on companies that are within your circle of competence. Since WardrobeTrendsFashion is focused on fashion, you might understand the industry much better than someone who is not into fashion.
Are there any listed fashion houses that make a good investment? What would you recommend?
I’m not one to give stock tips, but if you know the brands and do your research, you might find good opportunities.
Which is better, to buy the fashion or to buy the stock?
Fashion is a state of mind. There are so many places to pick up good fashion deals, saving you money. You can always invest the money you saved in stocks so that you gain a long-term benefit with your relationship with fashion.
We are curious; do women and men bring different strengths to the investing process? What are some of the differences, if any?
Yes, men and women bring different strengths to the process. But both can be successful despite their differences. For women, we typically manage the household. We have knowledge of many of the products and brands produced by leading companies. We can use this knowledge as the first step in building a portfolio of good investments.
What would you likely to do when faced with an irresistible fashion buy?
Like any woman, I have a soft spot for fashion. Who doesn’t want to look their best? But I am also disciplined enough to forgo what looks like an irresistible buy. I was once in Venice where I saw a stunning pair of Byzantine earrings. I was faced with a choice of buying the earring, which cost a fortune, or continuing my travel to Milan. It had to be one or the other. In the end, I chose Milan.
With that, Mary left us with a powerful message. It is discipline, not stock tips; that help you succeed in investing. You need the discipline to set aside time to learn how to invest, to study companies and to map out your investment portfolio.
According to Cayden Chang, managing director of Value Investing Academy Pte Ltd and organizer of the World Value Investment Fest, investing is not as complex as most people make it out to be. There are only a few key financial concepts that need to be learnt. Everything else is based on your research of the industry you are familiar with and studying the long-term viability the company you want to invest in.