Sunday, November 12, 2017

In memory of Dr Michael Leong, founder of ShareInvestor

This is a very belated post. Dr Michael Leong died on 12Feb2016 after battling colon cancer for more than a year. I still remember him for his helpfulness to his online readers.

I have never met him in person but he was kind to an online stranger like me. When I was jobless in 2012, he sent me an email to extend help.

Hyom, I read about your retrenchment in your blog. I understand that you
are from the electronics industry and from the way you write, I assume that
***. Sometime back I was told that *** maybe
on the lookout for ***. If you are keen, do let me know and I
will try to put you in touch with them.

I was touched because he was a man of reputation in the business world. He puts his own reputation at risk when he makes a referral for someone whom he has not even met face-to-face. He could have looked like a complete idiot. I did not take up his offer because I already found a job. To this day almost 2 years after his death, I still remember him for his kind act. The least I did was to send him a wreath on his funeral wake, together with a group of grateful ShareInvestor customers who benefited from the community that his company ShareInvestor created.

It was in Dr Leong's DNA to share his investment insights freely and generously. He had no financial agenda in sharing. He had already achieved financial freedom through investing in the financial markets before he sold his successful company (Shareinvestor) to SPH. There was no need for him to make money in conducting investment courses. What better person to learn from as a novice? He was highly qualified with a long and successful track record, willing to teach, happy to teach and yet not asking for teaching fees.

God bless all the generous, rich investors who have been willing to share their insights to newbies like Dr Leong.

In Dr Leong's own words,

For those of us who make money directly from the markets, we know how difficult it is for the novice investor to start investing. The least we can do is to show you the ropes free of charge. We will never want to take any part of your savings just to show you the ropes. This money is needed by you to start off your investment journey. Hence, my conscience will certainly not allow me to take such money. I rather share freely, or not at all.

This is not to say he was against trainers who charge for conducting trading/investment courses.

I still feel that one needs a different moral compass from mine if one charges thousands of dollars for a get rich quick scheme. Of course I am not against those who charge generally accepted rates for teaching. Put another way, an honest day's pay for an honest day's work.

I have blogged positively about investment courses that charge less than $100 for a day's work.

However, for courses that charge 4-digit figures, the student should consider free alternatives such as library books and online forums. I speak from personal experience that books and forums work just as well. I have never paid for any investment course or even attended a single free investment seminar. A budding novice should read all he can about all kinds of investment styles/methods while keeping an open mind, pay the necessary school fees to Mr Market and tweak his investment style to something that suits him personally as he progresses in the school of hard knocks. After experiencing at least 1 boom-bust cycle (5-8 years), there should be a long enough track record to assess if he is suited for this game. If he is not willing to put in the hard work which may not pay off anyway, passive index ETFs/funds are his best bets based on historical performance data. Even hiring expensive under-performing professional fund managers is better than investing on his own if he is someone who only loves the money but not the game.

While Dr Leong was generous and successful, I think some of his investment methods are not suitable for the majority. Dr Leong made a fortune from a concentrated portfolio and he once said "Put all your eggs in one basket and watch that basket carefully". It worked for him but this is dangerous for most. He had a unique background. He was a successful entrepreneur and his CEO position in Shareinvestor gave him access to the wisdom of other successful entrepreneurs. He was also highly intelligent given his medical background. His entrepreneur background gave him an edge in picking the right businesses to invest in. Concentration which worked for him will probably be harmful for most. I humbly admit I am not as good as him, so I did not follow him on this. I believe that most of us are better off with diversification and if you have no reason to think you should be better than most, stick with diversification.

Dr Leong's intial investment strategy which made him a fortune was similar to Benjamin Graham's net-net strategy. It is akin to buying companies selling at well below their liquidation value which is supported by solid, tangible assets such as properties, marketable securities and cash.

He later tweaked his strategy to invest in top entrepreneurs. He had bad experience investing in net-net companies run by entrepreneurs who did not treat minority shareholders fairly. He later changed his style to invest in top entrepreneurs like Elon Musk, not intelligent but conservative "care-taker" management executives. The Elon Musk type of entrepreneurs are less concerned with adding a few more zeros to their bank account and more interested in changing the world for the better with their products/services. "Care-taker" management, in my view, are more like "wealth managers" who invests in safe businesses, avoid rocking the boat, averse to taking big risks and not keen to see bad things happen under their watch. These people are usually very smart (surely smarter than me) but as a Singaporean, I hope to see more of our leading local companies led by trail-blazing "entrepreneurs" and not "care-taker" clever managers.

Again, I find Dr Leong's new strategy unsuitable for the majority of investors. This strategy suits his entrepreneurial background but it is very difficult to execute for the rest of us. His earlier net-net strategy was not only easier to execute but much less risky as well. What an investor need to execute the net-net strategy is the ability to read a balance sheet. This can be easily picked up by almost anyone willing to spare the time to learn basic accounting.

Even if a person has the good fortune to meet a helpful "mentor" like Dr Leong, he needs to have the humility to admit that what works for others may not work for him. Conversely, he also needs the "arrogance" to try and succeed at what most people failed if he thinks he has got what it takes. If a person thinks he can succeed with a concentrated portfolio and/or possess the sharp eye like Masayoshi Son to spot great entrepreneurs such as Jack Ma who had no business plan and revenue at that time, why shouldn't he give it a try?

Dr Leong was a devoted family man. I recalled that he remarked that the most stressful period of his life was when his son was hospitalized. Given that he was the founder of a successful start-up, I am sure he had very stressful periods in his life but his son's hospitalization topped it all. When I asked him how did he manage to find time for his family and yet have a successful career, he replied that he was lucky to have found a job with IBM that allowed him to work from home. He admitted there is no easy solution. I guess Dr Leong must have found a good wife who was a wonderful mother to his kids and also gave him the free time to focus on his business.

Although Dr Leong has passed away, the Shareinvestor business that he left behind is still making a difference to customers' lives. I have been a subscriber of Shareinvestor for > 10 years. His legacy has taken on a life of its own. I think the emotional satisfaction from being a successful entrepreneur is higher than a successful investor. Besides money rolling into the bank account, the entrepreneur gets additional satisfaction that his product/service is making a difference in his customers' lives, on top of the jobs created for his employees and sales for his suppliers.

Dr Michael Leong led a meaningful life. I am sure his family is very proud of him.

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