The recent news surrounding Swiber default case and Marco Polo potentially operating as a going concern have led many financial bloggers to pen their views on the matter. Many have condemned the act of investing in such companies or asset structure because they seemed “dangerous” or “unsustainable” and the bloggers have come out strong to make their point on the importance of having a sound investing knowledge.
I am going to provide a slightly different viewpoint here.
All of us here knows that investing can either be very easy or extremely difficult, depending on where you stand.
Folks who find them easy do so because they have not yet met with an event that will trigger and tweak their mind into thinking investing is difficult. On the other hand, folks who find it difficult usually do so because they’ve usually been there at the event, experience and gone through what is needed to survive.
Writing and condemning folks who invest in companies such as Swiber and Marco Polo is always easy after news have surfaced out. Similarly, when we look back at how past recessions have destroyed many lives and families, we look back and think it was silly. For those who did not participate, the magic mantra was always going to be “just hold and buy more, market will rebound back”. Never did anyone think that the psychology required to conquer past that difficult moment back then was entirely different than if we look back at it is today.
We may think folks who invest in companies such as Swiber, Ezion or Marco Polo are always dumb, greedy and uneducated. Contrary, we may think folks who invest in companies such as Capitamall Trust, Singtel and Cityneon (I purposely chose this for a reason) are always smart and have done their due diligence. For me, the only difference between the first and the second investors is that the first investor has got all the carrot sticks stuffed up their throats while the second investors are not seeing it that yet. Heck, if you are an investor who bought Singtel at the high of $4.50 and are making a paper loss now, I think that’s equally “uneducated” as investors who bought into Swiber bond or Marco Polo, whatever you want to call it.
Prospecting future events is what makes investing difficult.
We can compile many past historical data and come up with our very own magic formula or theory but the fact is that share prices are usually going to react for future events, not historical.
Folks who invest in O&G companies may be feeling the pain now, but that’s only after news have surfaced out that oil as a commodity is struggling. If circumstances happen such that oil was up instead of down, we may look the one that are “stupid” and “uneducated”.
The same goes for popular asset class such as investing in Reits. Until circumstances hit the fans, Reits investor may look like a genius knowing they are getting some 7-8% yield on an annual basis. This is not yet even accounting for potential capital gain which will push an investor’s return into double digit. But what happens when retail sales goes down, tourism hit by events such as Sars and industrial capacity gone through the roof?
Investing is easy or difficult? Depending on who you are asking at which point in time, I’d say.