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My Worst Investment Ever Podcast - Andrew Stotz 5th February 2021
James Leong – Learn How to Read Financial Reports to Pick Stocks
00:00:00 00:23:10

James Leong – Learn How to Read Financial Reports to Pick Stocks

James Leong is the founder of Visions One Consulting, a training consultancy that teaches finance to non-finance people. Using his unique Financial Storytelling approach, James can simplify a complex and dry topic to make learning joyful and fun. James has helped thousands of university students and non-financially trained people grasp finance and accounting easily, empowering them to make better decisions. The Singapore Business Review has featured James as one of ten influential professional speakers in Singapore. James is also a CSP (Certified Speaking Professional), a recognition earned by the top 12% of professional speakers worldwide.

 

“Go and seek your passion. I think that is what gives us joy and happiness in life, which is ultimately the most important thing.”

James Leong

 

Worst investment ever

James got into investing when he was a freshman. Having some knowledge in finance and accounting, he believed he understood numbers.

There was this particular young startup listed on the stock exchange. It was a newly IPO company with a lot of hype and tremendous growth prospects. Not a week could go by before an analyst said something great about this company. And, of course, the share price would keep going up. This attracted James’ attention, and he invested a substantial amount in the company.

Making huge returns before trouble starts

Everything leading up to the IPO was perfect. The growth curve, sales, revenue, everything was going up. IPO year was the best year. The shares made huge returns.

After the first year, things started getting rocky for the company. The numbers began dipping. Unfortunately, at the time, it was hard to find financial reports. Investors had to rely on what analysts were saying. While the numbers showed that the company was doing poorly, analysts kept saying that it would turn around. So James ignored the numbers and held onto his shares.

Unfortunately, the numbers never went back up, and after three years of making nothing, James finally sold his shares though he did not make much from them.

Lessons learned

Know your numbers and trust them

Know your numbers because numbers speak the truth. Get financial reports that go as back as 10 years and look at the numbers. These numbers will save you from making your worst investment ever. Do not let the story override the numbers, always pick up the story with numbers.

Know how much risk you can afford to take

Find out your psychological makeup, what can be absorbed, and how much volatility you can take within your portfolio. This will always help you manage your risks.

Andrew’s takeaways

Keep your market exposure

The best way to keep your market exposure for the long-term is to buy an ETF or an index fund.

Own 10 stocks, not more, not less

From his own research and what he has learned over the years, Andrew’s advice is if you are going to buy stocks in the stock market, own 10. Not more and not less than 10. If you buy less than 10, you will not be fully diversifying, and buy if you buy more than 10, you might as well buy an index fund. So if you want to be a stock picker, build a portfolio of 10 stocks.

Actionable advice

Take a course on how to read financial statements and reports so that you at least understand the basics.

No. 1 goal for the next 12 months

James’ number one goal for the next 12 months is to complete his book that will allow anyone with no financial background to learn and grasp finance and accounting easily.

Parting words

 

“Keep learning. Learning never stops.”

James Leong

 

[spp-transcript]

 

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