Coffee with FFN and Sean Seah

Sean is an ordinary person who chanced upon an extraordinary investing methodology, Value Investing that had helped him build his wealth and passive income. Prior to learning and applying Value Investing, he employed charts to study price movement but had loss money through the process. Sean’s philosophy now is to be a “Business Collector not a Speculator” and to  “Buy Business Performance not Guess Market Emotions”. Sean is the author of “Winning the Money Game” and “Gone Fishing with Buffett”.

FFN: When and how did you get interested in investing?

Sean Seah (SS): I was first exposed to the idea of investing when I was in Business School, but was warned that most people cannot beat the market. So after I graduated, I did not dare to invest until a colleague of mine, Suffian showed me that he had made money from the stock market. That really got me interested because it was one thing to read about successful investors but it is all together another experience to have someone you know personally show you that it is really possible to invest successfully. Subsequently, I learned to trade the stock market using a trading system which uses technical analysis by attending a course. Using that system, I lost a 5-figure sum within 3 months. Later, another friend, Jasper Bong, shared the idea of Value Investing and that really started my journey as an Intelligent Investor.

FFN: How do you choose which stocks to invest in? What are some of your strategies?

SS: I gather stock ideas from a few places. I always start by looking at industries I can understand, really simple ones such as businesses selling food, apparel, banks. These are things I personally use and contribute to their earnings. Another place I look at will be the portfolio of famous investors such as Warren Buffett, Charlie Munger, Walter Schloss. And one extremely valuable resource I have now will be Value Investing Academy Community. This community has given me the best ideas and through it I found some of the best Value Stocks ever.

My only strategy in choosing stocks to invest is Value Investing. I do use options to enhance the returns or use it to bargain for better deals, but whatever I do, it is based on the fact that I have analyzed the stocks as businesses and found those that are going to be profitable.

FFN: What are some of the stocks in your portfolio currently?

SS: As to date, I am only holding US Stocks such as BK, WFC and ESI.

FFN: I believe you have many US stocks as you follow an options strategy. However, USD is depreciating against SGD and this would actually translate into losses when converting back to SGD. Despite this, is it still viable to invest in US stocks? What’s your take on this?

SS: My take is very simple. US has a strong economic engine. When we think of the best schools, the best businesses, the best softwares, the best systems, these companies are still based in US. So in my opinion, in the long run, US businesses are sound. When do I convert USD back to SGD? The rule is the same as when I sell my stocks, I fall back to rule #1: Never Lose Money. So there are times my stocks go down in price, but I will not sell them at a lower price than I buy because based on calculations, they are worth much more than what they are priced. The good news is that now US is on a great sale, with its weakening currency and the low stock price, what would you do if you are a Value Investor?

FFN: What are the mistakes you have done pertaining to investing and what are the lessons learnt?

SS: With regard to investing, I have learnt to make my own decisions. There was once I invested heavily into a stock that had suffered bad news at $5 per share and a friend of mine told me that he heard from a guru that the stock is not going to survive. So I quickly sold it off at $3, making a loss of 40%. The stock subsequently went up to $50 within a year. Quoting Benjamin Graham, “”You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.””

FFN: What psychology do people need to succeed in investing?

SS: The key is to look at each investing opportunity from a business lens and then be disciplined so you can stick to it.

FFN: What lessons have you learnt over the years as an investor?

I am really still learning. I learnt many lessons, one of which is that Investing is not a “good to have” but a “must have” so that we can be good stewards of money.

Another lesson I learnt is that people who seek to get rich quick seldom get rich. Ironically, it is those who dropped the idea of getting rich quick who eventually becomes rich quickly.

FFN: What do you thing is the biggest misconception people have about money?

I can’t speak for “people”. But for myself, I once had the misconception that money is not important that wanting to get rich takes me away from God. Now I know that in order to be a good steward, I have to learn to manage whatever that is given to me and be faithful.

FFN: What is the one thing, in your opinion, do people need to succeed in investing?

SS: Action.

FFN: Congrats to you and your wife on your third baby! How are you going to impart your financial literacy to your young and lovable kids?

SS: I love this question. What I have been doing is to train my children to learn to allocate whatever amount of money given to them. They each have 3 coin banks for different purposes and each Sunday, they will receive their pocket-money and will divide into 3 portions for each coin banks. I wrote a post about it at http://crossroadmoneyskills.wordpress.com/2012/04/28/how-to-prepare-your-child-for-finances/

After my eldest son understands the value of allocating funds, I am adding another skill to him, which is to earn money by providing value. He loves art and we make cards to sell to relatives. Of course, lessons must be gradual and stacked. After he made the money, he will take the profits and apportion them into the 3 coin banks. I will be teaching him how to invest when he is ready.

FFN: What advice would you give for beginners who want to start investing?

SS: The ideal case is to find a friend who is already successful in investing. The alternative is to look for a community that has proven records and is willing to share their methods. Otherwise, read books about Warren Buffett and use whatever you learn about it. Oh yes, read my book, “Gone Fishing for Buffett”. It is written for a total beginner and let me be thick skin and say that it is a very useful book. =)

FFN: What are the habits one must follow to have a sound financial life?  

SS:

Step 1: Make it a habit to save a portion of your income

Step 2: Make it a habit to invest a portion of your savings

Step 3: Make it a habit to give

FFN: What does financial freedom mean to you?

SS: It means that I have enough to do God’s will and live a life pleasing to him.

FFN: Can you sum up your investing philosophy in 10 words or less?

SS: Buy profitable and honorable businesses at a profitable price

FFN: If you could summarise your whole life in one word, what would it be?

SS: Grace

FFN: A parting shot for the readers?

SS: Financial Success is by choice, not by chance.

Visit Sean’s Investment Blog at http://www.investment-in-stocks.com/. The titles of two of Sean’s books: “Winning the Money Game” which talks about Sean’s experiences and a step-by-step formula for achieving Financial Freedom and “Gone Fishing with Buffett” which is a story-based book that teaches Value Investing in a light-hearted manner for beginners.