Dennise Williams, Staff reporter
CHEN
"THE AVERAGE Jamaican investor who plays both markets (local and overseas) tends to do better on the local market," said Oliver Chen, vice-president of GK Funds, a GraceKennedy subsidiary. He was the guest lecturer at the Fitzritson & Associates' Portfolio Management programme and recently shared his investing insights with an audience of
aspiring investment managers.
While seeking a hedge from devaluation and a way to grow their hard currencies savings, many Jamaicans place their money overseas; and this can
be a profitable endeavour. However, Mr. Chen believes that caution is the watchword.
"All that glitters is not gold. Be very careful in choosing your investment adviser because your interest is not necessarily their focus. If you do need a broker, stick to a discount broker who does not peddle stocks.
RELY ON INDEPENDENT RESEARCH
Some time ago, I had a friend who placed her funds with a broker overseas. She explained that she was really a risk averse investor and wanted her portfolio to reflect that. Well after two years, her initial investment of US$200,000 was down to about a quarter of that. She showed me her account statement and I said that it was not right.
I advised her to take the matter to court. Eventually, the brokerage settled out of court with my friend, as it was discovered
that her broker had placed a large portion of her money on technology stocks."
Mr. Chen says the lesson from this is, "Rely on independent research and not from an adviser who could have a conflict of interest."
Now, this is not to say that Mr. Chen is against participating in the global market. He states, "With globalisation, we are now exposed to a vast universe of investment products. But some are very risky and difficult to understand. Many investors have been lured to look at various investment options and have been led astray. To compete in this global world we have to expand our knowledge of these new and changing products."
For investors who are not au fait with the intricacies of global investing, Mr. Chen advises, "A well managed mutual fund might be a better option than going it alone."
However, should investors seek to access other financial markets on their own, Mr. Chen offers this advice: "There is a major shift taking place away from traditional economies. There are real opportunities for investing in Brazil, Russia, India and China. These countries have recorded strong growth and this trend will be likely to continue.
And no matter where in the world you choose to put your money, Mr. Chen states that you should have a disciplined approach to investing. He then outlined the traits of a disciplined investor.
Have a plan that you are
willing to stick to.
Allow for some cash as reserves so you are not forced to sell at the wrong time.
Stick to a regular savings plan.
Have patience.
Understand your investment product.
Think independently and do not allow others to mislead you.
Have humility. Disciplined investors avoid a quick-rich mentality and instead, adopt a getting-rich-slowly-but-surely approach.
Develop a willingness to learn from mistakes made.
