What, where and how to invest at such a time as this?

Yesterday a subsidiary of my company organized an Elementary Investing seminar where I was one of the speakers. Besides my Chairman who was an ex-banker, there were 3 other speakers, two are Head of Private Banking, one from a local bank and the other from a bank in Singapore. The other guest speaker is a MD of an asset management company. So I was the odd one out. I'm a lawyer by training. But since my Chairman knows I'm passionate about value investing and has achieved some decent results, he asked me to speak on value investing. Personally, I dread public presentation but can't say no when the boss told you to do it.

I guess the seminar was timely in wake of the financial turmoil in the world following the collapse of Lehman Bros. Financial giants would have fallen like a house of cards if not for the bailouts by the Fed and rescue from investor like Warren Buffet. During lunch with the 2 private bankers, I realized that the impact of the collapse of Lehman Bros. is huge. They told me and those attending the seminar that they have almost nothing to sell to their clients now. I guess everyone now is paralysed by fear.

My topic was Value Investing - The investing philosophy adopted by the richest man (for a while) in the world. The words in the brackets were added in last week because when I started preparing for the talk, Warren Buffet was the richest man in the world. Last week, the ranking was revised and he has dropped to 3rd place.

I told my audience that what I was about to present is nothing original. My approach was to let Warren Buffet speaks for himself. My presentation will be peppered with quotations from him. Some of those are real gems. Where appropriate I will give my comments and illustrations. But sometimes there will be nothing to be added to wisdom.

From the feedback, I guess I did not do too bad though I felt I've rushed through the whole presentation because of time constraint. Some things were left unsaid.

We had a panel discussion after everyone has spoken. The speakers were asked for their opinions on certain issues and there were some questions from the floor. One of the questions for discussion was 'What is your outlook and what trends do you see? E.g. market, currency, interest, commodity, prices, inflation etc.'

I was the last to respond and I said it was a wrong question to ask me as unlike the other speakers I'm no expert of the financial markets. Secondly as a value investor I really don't care about the outlook and trends because I follow what my sifu, Warren Buffet's approach. I quoted him

'If we find the company we like, the level of the market will not really impact our decisions. We decide company by company. We spend essentially no time thinking about macroeconomic factors. In other words, if somebody handed us a prediction by the most revered intellectual on the subject, with figures for unemployment or interest rate or whatever it may be for the next two years, we would not pay any attention to it. We simply focus on the business that we think we understand and where we like the price and management. If we see anything that relates to what's going to happen in Congress, we don't even read it. We just don't think it's helpful to have view on these matters.'

If you ask me where to put my money in these turbulent times? I would say stocks because they are one of the asset class of investments I understand well. Invest in things that you understand. Don't invest in products that you don't understand even if they are capital guaranteed. After all, the guarantee is only as good as the guarantor. After what we witnessed in the financial markets in the past weeks, can anyone really guarantee someone's capital?

I end with 2 quotes from Warren Buffet

1.Investment must be rational. If you can't understand it, don't do it.

2.Risk comes from not knowing what you are doing