Day 1: My inspiration for investing

The high school days at NSBHS

As my first post, I thought it'd be relevant to include a post regarding how my passion for reading the stock markets (particularly in Australia) had been established, and by extension, of investing.

This actually came about quite late in my life. During high school at North Sydney Boys (NSBHS), I studied English, Mathematics, Physics and Chemistry for my 2014 HSCs.

I had inklings of interest towards the business world but it was never prominent. I was actually more interested in health subjects, like dentistry or optometry at the time (following the steps of my optom sister...). If anything, I wanted a degree and career, that could marry my 2 favourite subjects, which were English and Mathematics (just so happens they were my best HSC subjects!). You could say a balance between qualitative and quantitative.

The beginning of UNSW

I ended up with the UMAT and HSC ATAR results for optometry, but after some thoughtful discussion with my sister, I ended up taking the second option of a dual degree in Commerce/Actuarial Studies at UNSW.

I thought that would have been my path towards an actuarial life. But I was wrong... Following one week of a lecture in MATH1151, I decided it was too rigorous for me (I was never that great at maths unfortunately...). Going back to my fundamental aspirations in high school, I enjoyed English and Mathematics, but I was more interested in a merge between the 2 areas. That led me to dropping my Actuarial Studies, and pursuing a degree in Commerce (majoring in Accounting and Finance).

If I could pinpoint only one UNSW tutor who had indirectly led me to this path of investing, it would be Anurag Kadian, my FINS2624 (Portfolio Management) tutor in 2016 S1. I think all my friends in his class, can attest to how deep his knowledge of finance was (including his ability to do mental math!). Apart from him helping me achieve an HD, it was his passion for teaching that led me to consider more about portfolio management, which as the story progresses, you will be able to see...

The job offer at Deloitte

Rewinding back a bit, I had applied post HSC in 2014/15 for a cadetship position at Deloitte, after doing a cursory browse of job opportunities available. Following numerous assessments, I received my job offer and began my career in the accounting/audit division of Deloitte Private, which was a job I began, whilst balancing my UNSW studies from July 2015 onwards. I figured an accounting life was for me, at that point in time.

My first equity research case competition

However, this all began to change in early 2016, when I did my first stock-pitch case competition as a keen second year at UNSW for Transurban (ASX: TCL) with a very encouraging team of peers. I stayed up all night designing a model to value TCL and spent more hours meeting up with my team to develop our argument for the BUY recommendation in powerpoint, and drafting a 1 pager proposal. I never felt so motivated and invigorated doing something like this before (although we didn't make finals, since we were just starting out...).

That's when my interest in the stock markets began to uproot itself. I began reading the news daily on the market happenings, from SMH to ABC to AFR to Livewire Markets (along with Finimize and Morning Brew), and I began to take a fond interest in how markets (eg indexes like the ASX, DOW, NASDAQ and S&P) behaved on the back of news updates.

My first mistake as a trader

However, when I first started my personal equity portfolio, I bought stocks with a 'trader' mindset. I lacked the discipline, patience, and energy in my ASX stocks I bought at the beginning. With that mindset, I was never comfortable with the stock market (I should have just put all my money in an ETF instead quite frankly)... I made a grave mistake. Thinking I was investing when I was actually trading.

The glimpse of the 'other side' in my fifth case competition

It was not about a year later in 2017, when I was onto my fifth case competition, that I had begun to entertain a thought that was completely different to 'trading'. It was an asset management case competition (notice how the title was not 'equity research') at UNSW. With a close friend, we had a greater arsenal of valuation tools and business acumen, and developed a pitch for a BUY on Crown Casino (ASX: CWN). Those hours spent on the discounted cash flow model, and the powerpoint slides, were painful, but ultimately so rewarding, when we came 1st in UNSW, and 3rd in the NSW State (I owe a great deal to my friend, Kevin Zhang, for being on that journey with me - and although we didn't win, I think he helped find my passion indirectly).

The revelation of investing, over speculating

I can't say I was struck by lightning one day, and discovered the school of investing. It happened almost by accident... I took the opportunity following the asset management case competition, to investigate that industry, by randomly reaching out to some of the judges, and researching what they did.

I was fortunate to speak with Tim Carleton, Portfolio Manager at Auscap Asset Management, and James Rodda, Sector Head of TMT at Antipodes Partners (who were both judges on that night I pitched CWN). Both were generous in their time, to explain what they did, and revealing the investor mindset for the first time to me, over a coffee. That inspired me to delve even deeper into the roots of what investing was all about. It was about giving up money now, to produce more money later.

There is no doubt I'm a late bloomer to investing... Through lots of reading (see my booklist), the likes of investors like Benjamin Graham, Warren Buffet, Peter Lynch, Joel Greenblatt, Phil Fisher, etc (the list goes on...) inspired me to begin pursuing a blog to begin updating the public about my own humble personal portfolio, and to capture the successes (and failures...) as a university student (and hopefully a full-time worker soon) navigating and investing in the stock markets. That whole idea of buying $1 with 50c, got me roped into this school of thought.

The mentor who helped refine my investing philosophy

Furthermore, I have to point out a man, in the funds management industry, whom I consider my mentor, to have had an extremely huge impact in inspiring me going forward as well, whom I met in late 2017, and helped me refine my own investing style. This was Albert Hung, Investment Chairman at Alleron Investment Management, whom I owe a great deal of thanks to. He taught me a lot about identifying 'investment triggers' that lead to long term growth profiles in superior quality companies trading at a discount. If not for Albert, I would not be where I am today. I owe it all to him, and God by his will, and for whatever reason, led me to Albert.

To this day, I endeavour to continue improving as an investor, learning what drives the companies, and refining my investment process. I hope you can join me on this journey as an investor, as I am only a beginner and still continuing to learn everyday!

Kind regards,

Michael Li