GIC is my model fund management company

Phillip And wrote an article in his blog titled ‘Should GIC invest our CPF in a company after its share price quadrupled?’ He raised the question based on a number of reasons. I just quote this one,

‘GIC has paid for a business which was worth only a quarter of the price less than a year ago. Its purchase price of Rs 222 valued Nirlon at US$316 million when the market had earlier valued it at below US$80 million.’

I think any layman would also find this outrageously funny or even stupid. Why not buy it when it was Rs 50 but only after its price quadrupled to Rs 222. Isn’t this a perfect example of the market joke, buy high and sell low for losers?

I must disagree. People not in the industry of trading stocks always think it this way. But from my 20 years of experience, this is called play safe strategy. Do not buy a stock until one is sure that its price is up and confirmed up. In this case the price has quadrupled, which means it has confirmed going up and the uptrend is very strong.

Normally I would play safe and buy when the price is double. To me when the price is up 4 times is like playing safe 4 times safer. This is obviously a very conservative strategy. Look, when you are gambling with OPM, you cannot anyhow buy. You buy only when you are sure, very sure, double confirmed, triple confirmed and better still quadruple confirmed.

Fund managers adopting a ‘quadruple confirm strategy’ are very careful fund managers. I regretted that I did not follow this strategy. I always buy when the price has doubled. And you know what happened, I lost my pants. If I have known of this strategy, I would have made just as much money as GIC. Look at its past records, it is making profits practically every year, sometimes more sometimes less, but still profits. I did not follow this strategy, that is why I have been making losses all the time.

I am now watching and learning from this GIC strategy and learning a lot from it. Buy high, go higher! You see, when the price of a stock has gone up so high, it can only go higher. Now I am trying to start a fund to invest using this formula. This kind of strategy needs a lot of patience and homework. There are not many stocks that would have gone up 4 times in a year, or in 50 years. The chosen stock Nirlon is a rare gem. This kind of buys sure to make money one.

And better still if it is an Indian company. Indian companies are growth companies. There are 1.3b people there and growing. Soon India will have more people than China. Use the same logic, China’s population is 1.4b and many of its companies are growing and very profitable. The Chinese banks are the biggest in the world in capitalisation. Alibaba is one of the most successful IPO listing in New York. Indian companies would follow the path of these Chinese companies and would do better as they have more super talented banking and finance talents. They would out do Chinese companies in a matter of time. A caveat, unless all their top talents are in US or overseas, like in Singapore.

I ‘pai seh’ to tell Phillip Ang he did not know what he was saying. If GIC is a 3rd World SWF, you can bet something is not right. The analysts, the person who approved the buy and the board to concur, everyone must have a cut in this dubious acquisition. But GIC is a Singapore SWF managed by honourable people and with many layers of checks and controls. The decision must be make very carefully and it must be a good decision and the timing must be just right. The GIC is very professionally managed by the best talents money can buy. Period.

I like GIC, my favourite company, when investing strategy is concerned. Always make money one. Anyone wants to invest in my fun, oops I mean fund? I guarantee them sure make money using the same formula as GIC. Buy high and the price will go higher. And buy India, the most promising country for growth. The prices would not only quadruple, but could go up many more times.

My advice to Phillip Ang, don’t worry, be patient. Time will tell. Think long term. Remember CECA? If India is not such a good bet, the govt would not have signed CECA with India, a win win agreement. We laymen, outsiders, did not know how much thought processes, planning and homework have been put in before the decisions were made to invest in India and to sign CECA. You can blame them on anything but not on due diligence and expertise.