My guest today is Chong Ser Jing. Ser Jing is the portfolio manager and co-founder of Compounder Fund, a long-term focused global equities investment fund. He also shares his thoughts on investing on his website, The Good Investors, and was previously a writer and analyst for the Motley Fool Singapore. In this conversation we cover the nitty-gritty of starting a fund, fee structures, and writing about investing.
I hope you enjoy my conversation with Chong Ser Jing.
Show Notes:
[00:00:33] – [First question] – Introduction and Background
[00:08:24] – Starting a fund
[00:13:23] – Benefits of Ser Jing’s background
[00:14:51] – Managing others’ money
[00:19:43] – Fee Structure
[00:24:53] – Hardest part about starting a fund
[00:27:25] – Traps to avoid when starting a fund
[00:30:04] – Ser Jing’s writing process
[00:32:32] – His information diet
[00:35:30] – Investing abroad vs in Singapore
[00:36:58] – Undervalued skills or life experiences
[00:41:35] – What’s been influential in his worldview
[00:47:06] – Vision or plans for the future?
Connect with Ser Jing:
Listen to this episode on Apple Podcasts, Spotify, Stitcher, Castbox, Google Podcasts, or on your favourite podcast platform.
Transcript:
Kalani Scarrott (00:33): Ser Jing, thank you for having me. But I think, just to orientate listeners who might be new to you and maybe your writing and stuff, could you give a thumbnail sketch of your life and career up until today?
Chong Ser Jing (00:41): Sure. So I was born in 1987, so I’m currently 34. Born and raised in Singapore.
So when I was in university, I decided I wanted to enter the investment industry as a career. And it was just so happened that that was in 2012 when I was in final year of university. And I naively identified two organizations that I really wanted to work for. One would be Berkshire Hathaway, and the other would be The Motley Fool.
So maybe just to backtrack just a little bit more. So I got interested in investing when I was about 17 or 18 years old. I was in junior college in Singapore. So that was a preparatory course for students before they enter university. And I was doing economics as one of my subjects in junior college.
And I thought that the theories that were being taught were just weird and wrong. And I wanted to understand more about how people who actually work with money think about money. So I started searching for successful money managers. I did not even know fund management was a term back then.
So I came across Warren Buffet and his peers and his mentors, and started learning a bit more about them, and realized that, “Hey, what they say seems to make sense.” And I so I wanted to buy a book that was written by Buffet’s mentor, Benjamin Graham, called, The Intelligent Investor. So I think most people who are interested in investing would have heard about the book.
So back then, smartphones weren’t a thing yet. I was at a bookstore and I forgot the name of Buffet’s mentor and the name of the book. And I saw this book on the bookshelves that also have Warren Buffet’s stamp of approval on it. I bought that, went back home and realized, “Oh, no. Got the wrong book.”
That was actually Philip Fisher’s Common Stocks and Uncommon Profits. And then I did another background search on Philip Fisher and realized, “Oh, this guy is the real deal as well.” So I started reading the book and was like, “Wow, a lot of things that he said made sense,” especially about how the stock market works and all.
So that was my first introduction to the financial markets. And I was hooked. So that was when I was 17 or 18 years old, like I mentioned.
So over the years, I kind of continued being in touch with investing. I started reading a lot of different books about investing and so on. And when I was in university, I actually chose engineering as my degree. Because I’ve always also had an interest in the mathematics and the sciences, and I thought that it would be a lot easier to learn about investing on my own, as compared to learning about engineering and the sciences on my own.
So I took up engineering in university and started learning about investing on the side. But it was really halfway through my university life that I really decided that I wanted to take up investing as a career.
And for some reason, I’ve always wanted, like for whatever role I would be in in the future, for my career, I wanted to be in a role where I could positively impact the lives of people. And so I was very clear that even though I wanted to be in the investment industry, I did not want to just join the bank and sell products, or create lousy or crappy products.
And so that lead me eventually to naively select two organizations that I really wanted to work for. One would be Berkshire Hathaway and the other would be The Motley Fool.
And the reason for the The Motley Fool was because in 2010, I started becoming acquainted with them as a customer. So I was a subscriber to one of their newsletter services in the US. And as a customer, I could feel their sincerity in wanting to meet the mission that they had. Back then was to help the world invest better. Today I think is to make the world smarter, happier and richer, which is so, so fantastic.
So I really admired what The Motley Fool was doing. And so what happened then in 2012, was my final year in university, and in HQ in the The Motley Fool in the US, they started this thing called a blogging network, which was kind of like a platform for people outside of finance to write about investing. And if they liked what you were doing, they would publish the article under your name and they would also pay you for it.
And I thought that, as a student, it was a great deal. I could do something that I enjoy and I could get paid for it as well potentially. And so I started writing for them, and thankfully, they liked what I was doing. And so after a few months of that, they invited a bunch of the more interesting writers they found through the blogging network to HQ for a one day conference.
And I think when The Motley Fool set up the blogging network, they did not expect to attract anybody from outside of the US. But when I was there, I realized that there were people from a few other countries as well. So obviously I came from Singapore, and I think there was one other gentleman who came from Latin America. I can’t remember exactly which country it was now.
So a very interesting bunch of people they gathered there.
And when the people at HQ realized I was from Singapore, they were really excited because it just so happened that it was during that time where they were seriously contemplating bringing The Motley Fool brand to Singapore.
So after the conference, I came back to Singapore, and they got me in touch with the team that was bringing the company to Singapore. And so that was how they started.
So January 2013 was the day The Motley Fool Singapore launched, and I was on board from the very first day. So I was there all the way to October 2019, when the company closed down. And then in November 2019, I started thinking about building my own investment firm.
Because for a long time actually, one of the goals I really wanted to have as a career in Singapore was to introduce an investment fund to Singapore. And that investment fund would be a fund that focuses on long term business investing, so looking at stocks as business, and thinking long term, and also charging fair fees. So basically doing right by the investors.
And so when The Motley Fool Singapore closed down, I thought, “Now is probably a good time as any to launch a fund.” Like I won’t have the opportunity to do it under the banner of The Motley Fool, but maybe I can try something on my own.
And I thought also that it would be… Because for Compounder Fund, which is the investment fund that I set up, we also had bigger goals than just making profits. I thought that it would be a lot easier to accomplish those goals if I had nobody to answer to except for myself and any partner that I would bring on board.
And it just so happened that I’ve known my cofounder, Jeremy Chia, for many years. We’ve known each other since we were about 17 or 18 years old. And he became a colleague of mine in The Motley Fool some time in the middle of 2017.
So we left the company together when it closed down. And I talked to him and asked him if he was willing to set up Compounder Fund with me. And I shared the big, overarching goals that we want to achieve.
So Compounder Fund has four key missions. The first is to deliver a superior investment solution, one that focuses on long term investing in really good businesses. The other would be to have the fund be a vehicle for investor education. We intend to run it very transparently. So what it means is that we share all our holdings. We talk about investment theses very openly and very transparently so that people can learn from our experiences.
And the third thing with the pillar of the mission that we have at Compounder Fund is to charge fair fees and hopefully stir up conversation among the investment public in Singapore as to what are fairer fee structures. So we can talk a bit about the fee structure later if we want to.
And the last thing is that we want Compounder Fund to be a vehicle for us as well to be able to give back to society. Because if we launch Compounder Fund, it’s going to be a business, and if it’s a business, it will mean that, for Jeremy and I, we would have the opportunity to amass a certain amount of economic wealth if we are fortunate to make this project a success. And if we manage to do so, then we would have more resources to be able to give back.
So we’ve put all that together, and we came up with a mission tagline that says, “Compounder Fund’s mission is to grow your wealth and enrich society.” And so we launched Compounder Fund somewhere in the middle of 2020, and here we are today.
Kalani Scarrott (08:24): It’s a great story because I love it. Because it’s especially something that I could see myself doing, or wanting to do, is your whole story. And it’s applicable to a lot of people I think as well.
There’s so many good launching pads from that, but I think… We’ll come back to your writing later. But I’d love to hear, when Motley Fool Singapore was winding down and you were looking to start Compounder Fund, what did that actually look like? What was the process?
Because I’m guessing you guys had a bit of warning. So what was going on behind the scenes for you guys, setting that up? How did that go about?
Chong Ser Jing (08:50): Sure. So maybe just a bit of backdrop as far as to what I was doing at The Motley Fool Singapore.
In The Motley Fool Singapore, in the earlier years, I was in charge of writing investment-related articles covering the local stock market, which was the Singapore market. So and basically give my analysis and my thoughts about what’s happening.
And sometime in 2016, The Motley Fool Singapore launched its first investment newsletter. So we would recommend stocks from around the world, not just in Singapore. So by the time the product was closed, I think we had recommendations from the US, the UK, Malaysia, Hong Kong. I might have missed out on one or two countries. And of course, Singapore. So quite a nice mix of countries in the newsletter that we ran.
And so my primary responsibility, when we launched the newsletter, was to find the investment ideas, manage the investment ideas, and communicate the investment ideas to our members. So that also gave me a very fortunate… That experience, kind of gave me a… it allowed the public to know who I was and how I thought about investing.
Because, at The Motley Fool, we spent a lot of time writing and sharing our thoughts on investing, and how to go about building portfolios, and so on. So that experience helped me to grow, increase my knowledge, and at the same time also exposed me to the public. So there was a group of people who knew who I was, what I was doing.
And so I gained the experience, some of the experience necessary with regards to finding investment ideas, and finding good investment ideas.
And I guess the key difference between The Motley Fool and building a fund was that, with the Motley Fool, we had a lot of support from HQ. We had HR support, we had legal support, finances, and so on. But when it came to launching the fund, it was all of a sudden just Jeremy and myself, like two of us.
And we have a background that is, I will say, kind of different from a lot of professionals in the financial services industry. So we did not really know what it took to build a fund.
Like just to give an example of how much of a greenhorn we were, I think when you’re managing a fund, the investment fund you are managing, and the fund management company that are managing it are actually two separate legal entities. So at that point in time, when we first started thinking about that project, we had no idea that they were actually two separate legal entities. So we were that new to actually managing a fund.
But we were pretty thick-skinned. We went about knocking on many doors, trying to find as much information as possible about what it’s like to build a fund and what does it take. What are all the legal documentations necessary? What are service providers that are necessary? And so on. And so we spent many months piecing all of that together.
So it was a very interesting learning process as well because I think what I’ve also realized throughout that whole journey was there was no repository of knowledge about that. So that was what I think made it difficult. Like the internet is awesome and all, but if you Google, “How to set up a fund in Singapore,” there isn’t much information about that.
So it was a lot of just trying to get people to meet us and share ideas, and talk to them to see how some of these elder statesmen in the industry had done it before. How professionals have been in this space for a few years, how did they see it? And what are their daily lives like? And so on.
So we talked to so many people, get all the information, put them together, and realized, “Okay, so this is what we need.”
And it was also fun because it kind of exposed Jeremy and myself to the life of an entrepreneur. So managing a fund ultimately is a business, and because we are launching it ourselves, it’s an entrepreneurial journey. And so there are things like, “Okay, how should we think about hiring? How should we think about maintaining the culture?”
And what should we emphasize when we are trying to earn revenue from this business? Like shall we try to amass as much AUM as we can from the get go? Or should we be very careful about the types of clients that we want to take on, so that this project, even though it may grow slower as a result, that it would have, we think, a higher chance of a longer lifespan.
So all these decisions came into play as we were building the fund.
Kalani Scarrott (13:23): But yeah, you spoke about your background and the responsibility, also. But do you think there was any strength or weaknesses from your background that you gave that other people might not have, or any benefits you saw that you think that you could do, that other people couldn’t?
Chong Ser Jing (13:37): Right. So I think that a key benefit that I had was, like I mentioned, the public exposure. So people kind of know me for who I was.
I think one of the difficulties, especially for investment funds like ours, is that we are legally not allowed to market. We are not allowed to spend any form of marketing dollars. And so that makes business development difficult. But I was very fortunate that I had already that bit of public exposure where people knew who I was because of my background with The Motley Fool Singapore.
So that kind of became a bit of a launchpad in itself to where we had a potential group of investors that would be a lot easier for us to attract. As compared to a completely new group of people who have no idea who you are, you have no background in money management and so on, and how would you be able to run a fund?
So because of this experience that I had with The Motley Fool Singapore, and the fact that I had written more than 2,000 articles by the time the company closed down. There’s this whole body of work that people have seen me put out, and so they kind of had a decent idea of who I was as a person and as an investor.
So I think that was really, really beneficial.
Kalani Scarrott (14:51): So after going from writing at Motley Fool and doing the newsletter and stuff, to now managing outside money, can you talk a little bit about just what it felt like almost like on an emotional level, just having that risk of managing outside people’s money? Like you’re the responsible holder of… The guardian of it, I guess.
How did you find that?
Chong Ser Jing (15:06): Yes. So when we built Compounder Fund, we built it in a way where we could invest the way we would as though it was all our own money, meaning that we want to invest in a way for Compounder Fund. So we want to invest Compounder Fund in the exact same way that we would our own capital.
And so that meant being very honest with our investors in that we are unable to manage for any form of short term volatility. So that would mean that the fund could fall 50% if the market declines. And even if the market doesn’t decline, the type of stocks we were investing in could also fall 50% or more. And that, we have no control over that.
And that also means that we tell investors, “This is exactly how we are doing it.” Because focusing on businesses, focusing on good businesses, and letting their business returns drive the return of the portfolio, and this not paying attention to what’s going on in the macroeconomy or politics, and so on.
So what it means also is that we would lose a lot of potential investors. Because some investors who prefer… Perhaps they have a fund manager who’s very much on top of what’s going on in the macroeconomy and so on, and how it’s going to fine-tune the portfolio, and stuff like that. But that’s not what we do.
So we were very honest about what we could do and what we could not do from the very get go. And so I think that has, by being very honest, I think we try… In fact are also trying to attract the right type of investors for the fund. So we also want investors who are only keen to invest with money that they do not need for many years.
So that’s something so tell our investors that, “Hey, this project, it’s a long term investing thing. So if you need money within the next three to five years, or less, then it’s best that you do not invest.” It’s painful that we cannot take you on as an investor because that would be less business for us, but we think it’s the right thing to do.
Because if you invest short term money, it may not have a good outcome for you, and that’s the last thing we want for the investors that we have. And so I think we put in a lot of effort from the get-go to try to self select and also do some screening also in terms of having the right investors for the fund.
And after doing all this, it kind of gave us the mental confidence that we have. There is a very high chance that the group of investors we have are the right investors for the entire project that we were trying to build for. And so that gives us the mental freedom to really invest the way we would as with our own money.
So I think that really helps to minimize a lot of the emotional fluctuations that I think can happen. And I have to say, I’m also somewhat fortunate in the sense that I have not been… ok so before I started doing the fund, and even before I joined The Motley Fool, I was already investing for my parents and my family. So prior to setting up the fund, just before I set it up, I had my family’s portfolio was running for nine and a half years, nearly 10.
So I started in October 2010, so after the financial crisis. But even then, from October 2010 to June 2020, which is when I closed down my family’s portfolio, there was a lot of ups and downs in the financial markets. Every year there were big events happening, and so on. And stock prices have fallen, and so on.
But it was very rare for me to feel any form of panic or any form of major discomfort when stock prices are falling. So I think I’m quite fortunate in that regard. I do not know what that is the case, but it just so happens to be. And so, when managing my own family’s money, I knew that I was not very easily influenced. My emotions were not very easily stirred by what’s happening in the financial markets.
And then, with the fund, given that we had put in a lot of effort upfront to select the right group of investors, that gave us also the mental freedom to be able to operate the way that we wanted to in the long-term investing way that we want it. So I think when you put these two things together, there really isn’t a lot of emotional stress that I feel from day to day.
Kalani Scarrott (19:20): No, that’s cool to hear. And I love that it’s almost like a two-way street as well. Like investors are selecting you guys as a fund manager, and you guys are almost selecting your clients as well. So it gives you a better chance to succeed, in my mind, from the start.
Chong Ser Jing (19:31): Correct. We call it the importance of having a mutual understanding between our investors and us as the fund managers. Both parties need to understand what each other are trying to do.
Kalani Scarrott (19:43): Exactly. And I think it gets everyone onboard and aligned. You’ve mentioned at the start of this podcast, and one thing that interested me when writing about Compounder Fund, was the strategy behind your guys’ fees. So could you just explain a little bit about Compounder Fund’s approaches to fees and how you guys came to this decision? Because it is a bit different.
Chong Ser Jing (19:56): Sure. So we set up Compounder Fund with the main goal of… Our mission is to grow your wealth and enrich society. So the main starting point of Compounder Fund was to really be a project that could help enrich the financial health of people that we are fortunate to have come across, and we are fortunate enough to have them trust us.
And it’s basic math that for a given level of gross return, the lower your fees are, the higher the investor’s net return is. So it’s just basic one minus one equals zero. It’s basic math. And so we came up with the idea that, “Okay, how can we charge the lowest fee possible, and at the same time, not shortchange ourselves?”
Because if we want to be fair to everybody, everybody includes both Jeremy and myself. So how can we have a fee structure that is fair for both the investors as well as us? And so we came up with a fee structure that has both a management fee and performance fee component. So how then can we, incentivizing towards long term performance and being paid mostly for performance? And so we came up with the idea that, “Okay, we wanted…”
And we were very adamant that Compounder Fund needed to have a management fee. I think there are many schools of thought of what’s a fair fee structure to charge, and so on, and some people, they believe that you should only be paid by performance. We were adamant that we needed a management fee component. Because we were very aware that although we are very self aware of our limitations and our capabilities, we know for sure that there will be periods where we will have significant underperformance, which mean no performance fees. And in such a situation, we think if we do not have a management fee, we may not be in the right mental state to make the right long term investment decisions for our fund’s investors.
And so we decided that yes, we need to have a management fee, but this management fee needs to be as low as possible with the purpose of really being there to keep the lights on. It’s not going to be something that can earn us the big bucks. The bulk of the money where we have gotten from the fund would come from the performance fees.
So we came up with a structure where we have a management fee and a performance fee. And for the management fee, it would decline as our assets under management increases. So there’s a ladder. So at every $50 million mark, our management fee would decline. So at $200 million mark, that is when… So we start off with our management fee of 1%, near the $200 million mark. If we have the fortune to grow to that size, then our management fee would be, depending on the share class, either at 0%, or 0.2%. And that’s for the performance fee. Again, we want the same kind of incentive to us long term performance.
And so our idea was, “Okay, let’s have a hurdle rate that would be a respectable rate of return.” And so we came up with 6%. It’s not very scientific, and it’s 6% because that’s what Warren Buffet used for his investment partnerships, and Buffet is one of our investment heroes, so 6% it is. But this 6% is actually compounded. And so what happens is when an investor invests in the fund, when the investment is made, the investor can imagine that there will be a 6% compounded line that is drawn, and the value of our fund needs to be above that 6% line in order for us to earn any performance fee.
And our performance fee is, at the beginning, 10% of the excess returns over that hurdle. And each time the fund hits a new high in value, the new peak would then be the new base for a new 6% line. So this hurdle keeps increasing over time, and we think that this is what can incentivize or drive us to a sustainable long term performance. So that’s the whole, I think, our thought process.
And in terms of lowering the fees, the idea was that as we started learning more about the whole fund management business and so on, we realized that the cost involved with running the fund, it does not increase much over time. The growth in the expenses, it’s actually pretty gradual in slope. And so what this means is that as the fund’s assets under management increases, that’s a lot of operating leverage that can happen in the business itself.
But what this means also is that there is more opportunity for us to share the spoils with our investors. This goes back all the way to what I said earlier that the whole purpose of setting up the fund was it was for it to be a vehicle to help people grow their wealth. And the lower the fees that we can charge, the higher the fund’s investors net returns would be.
So we realized, “Okay, that’s actually a way for us to lower our fees as we go along.”
So both the management fee and the performance fee declines as our assets under management increases, according to that kind of ladder, structure.
Kalani Scarrott (24:53): Yeah. Because for me, it’s totally interesting. Because I’ve spent a little bit of time at a fund. And the same sort of thing. You realize, you got to have money to make money. And just, once you get past a certain point, then it’s so much easier.
In terms of starting a fund though, what’s been the hardest thing that you didn’t expect? Was it just all the business operations side of it? Or having to wear seven different hats, whether it be HR, accounting? Like how much did it differ from what you expected?
Chong Ser Jing (25:15): So, like I say, we spent a few months doing all the homework, so we kind of expected that there would be a lot of administrative and regulatory compliance work that needed to be done for the fund.
So we kind of went in and went, “Okay, this is what we would need to do, and it’s not going to be fun, but it’s necessary because we need to make sure that the fund is built in the most proper way possible to ensure investor’s safety, and also to make sure that we are doing everything in the most above manner as possible.”
And so we went into it knowing that there would be a lot of these administrative and compliance work that needed to be done, but when we started doing it, it was heavier than expected.
So I think that was one thing that caught us a little bit by surprise. But we went ahead and pressed on anyway, knowing that the project could be potentially very meaningful, and so we thought, “Let’s just continue and get it over the finish line, and we can launch.”
And interestingly, we kind of expected fundraising to be very difficult when we launched a fund. We know we were not naïve. We knew that it was going to be an uphill struggle, and we talked to quite a few people who threw out some numbers for us, and we realized that for every dollar that people promised to invest with you, you would be very fortunate and lucky if you end up with 10 cents or 30 cents. So it was like 10% or 30% success rate.
But what was very surprising for Jeremy and myself was that on the first day we launched, the initial amount that were promised to us, we had like an 80% success rate, and that was such a nice surprise for us. And we are so grateful that we had all these people who really believed in what we were trying to do, and who came through, and said, “I will be investing,” and they really did.
And that 80% success rate thing was the biggest surprise for us in a very positive way.
Kalani Scarrott (27:25): Yeah. Like for me even as well, I’ve heard from similar investors as well that they would be stoked if they get 15%, 20% from promises that they get from even friends and family and people they’ve known for years. So for 80%, that’s huge. But I think that speaks to probably the people you pick as well, I guess.
In terms of someone thinking about starting their own fund, is there anything that you’d recommend that they don’t do, or some easy traps to look out for, do you think?
Chong Ser Jing (27:45): So in terms of what they should not do, I think they really will need to question their intentions for doing this.
I think it’s really important that the intention isn’t just a lot of money. Because if so, then I think the… Especially in the initial stages is going to be very difficult, and it’s not going to be… And I think it’s going to be very difficult in terms of giving that project longevity. Burnout is going to happen.
And especially if you don’t have a passion for it, it may not be easy to handle the emotional fluctuations that could happen when markets are in a state of upheaval from time to time. As we all know, that will happen.
And so I think for anyone who wants to keep their sanity, I think it’s really important that if they are really interested in this, they should question their true intentions as to why they’re doing so. I mean of course, the money is of course is important. No one will ever deny the economics would have been unattractive. But I think personally there has to be even more important underlying reasons for it, for somebody who wants to do this.
I think an easy trap to fall under would be to start off in a very high cost structure. So from the get-go, you have a swanky office space, you have a lot of Bloomberg terminals. You have this massive research team, and so on. If you’re going to do that, chances are that if one or two… So typically people who build startups like this, from what I’ve heard, they tend to have one or two very strong backers. But the danger is that if they pull out, then all of a sudden you’re saddled with this very high-cost structure that is very difficult to unravel, and you’re in a dilemma.
Like, “Should I continue and have this huge albatross around my neck? Or should I just cancel this whole project and I may have this other small sum of money that people have said that they want to invest, but I can’t really go ahead with it now because that large backer has decided to pull out at the very last minute.”
And I’ve heard stories of such cases actually happening. It’s painful to hear. And so I think it’s important, cost as low as possible, even from day one.
Kalani Scarrott (30:04): To go back to your writing days, and you still write now at The Good Investor, what did your writing process look like when you were writing full time? And then how does that compare to what your writing process looks like now?
Chong Ser Jing (30:13): Right. So I think back then, at The Motel Fool Singapore, we also did a lot of… I think time was of the essence. That’s how I would describe it. Meaning that because even though we were in the business of selling investment advice, but how we gained the customer’s attention was also to write about very timely topics.
So for example, say a very prominent local company had some huge scandal or some huge business development, be it positive or negative one, then we would try to be one of the very first few organizations to be writing about it. And also giving an article spin on the topic.
And whereas I think for the fund right now, writing for the… So I write not just for The Good Investor, but even for Compounder Fund, we do a lot of writing. As I said earlier, it’s one of the key things we want to do for the fund is to be a source of investor education. So that involves a lot of writing, basically explaining how we invest, our investment thesis, and so on.
But the big difference is that time is not of the essence, meaning that we can spend as much time as we want writing about our investment thesis and explaining our thoughts as clearly as possible. There’s no time constraint.
And also, with The Motley Fool Singapore, we spent a lot of time also on investor education, so writing about the proper mindsets to have with regards to investing stock and so on. But that is something that we actually also do a lot in the fund, so that is something that is actually similar.
In terms of the actual process itself, I would say it’s similar. It’s really just reading, spending a lot of time reading to see what’s interesting, and absorbing as much information as we can. And then if there’s anything interesting that we read about, then we can comment on that in the form of an article or a longer form piece, and so on. And so those are the processes. It’s very similar.
One thing that I try to deliberately do, even today, is that when I read articles or books, or anything written by writers that I really admire and like, I read it consciously, trying to pick up how they construct sentences and how they communicate their thoughts, and try to learn as much as possible from the way that they built their article and their sentences.
Kalani Scarrott (32:32): Yeah. I think that leads perfectly in the next question, which is, what does your information diet look like? Is there anything you swear by? What’s your reading, listening look like?
Chong Ser Jing (32:41): So my information diet has changed quite a bit from my Motley Fool days to now. So over the years, there has been a gradual shift.
So in the early days, I spent a lot time looking at the Singapore market, mainly because that was part of what I was supposed to do for my job. And so it was a lot of reading through a lot of company filings. And because we, like I said, time is of the essence, so we spent a lot of time writing as well.
Whereas now, I spend more time reading than writing, and my information diet… As in, I still read a lot of company filings and so on, but now the geographical focus has changed quite a bit, mainly because our fund is global in nature, and I personally have an interest in stocks from not just in Singapore, but from all over the world.
So just having a lot more time and freedom to be able to read about companies outside of Singapore. So that’s one.
And over the years, I’ve discovered very interesting newsletters or communication platforms with very interesting information. So some newsletters.
There are a lot of really good Substacks nowadays. So I think a couple of ones Not Boring by Packy McCormick. There’s one… I think recently migrated from Substack is on macroeconomics and modern monetary theory. I think it’s run by this writer and columnist named Nathan Tankus. I cannot remember the name of his publication.
Then there are news sources like The Information which has really good news about technology companies in the Western world. There’s Tech in Asia, which focuses on technology news on Asian companies.
Then there is newsletters like Stratechery. I hope I’m pronouncing it correctly. Written by-
Kalani Scarrott (34:23): No, you’re all right. I think Stratchrey? [Kalani’s Note: I’m a gigantic idiot, I’ve been reading it wrong this entire time. And not only that, I doubled down on my stupidity in public. Lesson learned: shut up when I have no idea]. I don’t know. I just read it. I never talk about it.
Chong Ser Jing (34:29): It’s awesome. Written by Ben Thompson. There’s a couple of other Substacks that I forgot. And also people like investment legends like Howard Marks. He writes memos every now and then. So that’s something I always keep a lookout for.
And I would say, maybe in the past two years or so, I kind of discovered how useful Twitter can be. I think in Twitter, I think they call it fintwit, which is short for financial Twitter. There’s this little corner in Twitter where people who are passionate about investing, and people who are professionals in this space, they share their thoughts and so on in that platform.
And I’m a lurker. I’m not posting anything, but I’m there and I read what they share, and so on. And I find it to have been fascinating over the past two years.
So I think the main shift in my information diet over the past, say, seven years, is… One is the geographical focus. The other is the discovery of more interesting publications, and the existence of FinTwit.
Kalani Scarrott (35:30): Just to quickly touch on geographical focus, do you find any differences when… Because obviously you’re more acquainted with Singaporean based companies. Do you find any differences when investing abroad in technology that you might not use day to day or know about?
Chong Ser Jing (35:45): No, I don’t think there is a big difference. Of course, because the truth is that living in Singapore, we have not really seen the existence of say, cars made from Tesla. Whereas if you’re from the US, you would see it all the time.
But I think with the internet, the way it is today, it’s really not so difficult to be able to get information on products or services that you will not be able to see or touch firsthand in Singapore. So I don’t think it is that difficult.
And even then, if I were to invest in a Singapore company, it may be in a company that say built oil rigs or shipyards. And is that something that I, as a consumer or just a lay person, would be able to touch and feel and understand? I don’t think so as well. So I don’t think geographical constraints… Or rather, I don’t think geography is a big constraint when it comes to being able to understand a feel of what companies are trying to build and do.
I think one of the beautiful things about the internet is that it has given us the ability from people from all over across the world, it has given us the ability to really find out as much as we need to I think about the companies that we’re interested in.
Kalani Scarrott (36:58): Yeah, nah. That’s a perfect answer. Exactly what I was looking for. Because same for me, back to fintwit, and even the internet, for me, it’s just given me access that I wouldn’t get to otherwise.
To move into the final round of questions, in terms of undervalued life skills, what do you think university students giving light to? What do you think is an underrated skill or an experience that you think they should have?
Chong Ser Jing (37:15): Underrated. So that is a really good question, and when you sent the list of questions over, I saw that and it was really good. And it’s not something that I’ve spent a lot of time thinking about before you asked me this. So I managed to give a little bit of thought about that.
So I think one underrated… Maybe a few. My thoughts also are a little bit jumbled here. They’re not super clear, but I’ll try. There are a few that come to my mind. One would be, I think, the ability, or just being very comfortable being alone.
I mean we humans are social creatures. We crave company, crave companionship. Nothing wrong with that at all. But at the same time, it’s easy for us… I think easy for people, especially when you’re younger, when your hormones are a bit more active when you’re… You’ve just become a young adult and trying to explore the world.
And I think at that stage of our lives, people may perhaps tend to crave companionship a little bit more. Could potentially result in people having a higher chance of entering into all kinds of the wrong relationships, be it in terms of romantic ones or platonic ones, or business ones. All kinds of relationships.
And I think just that craving for companionship can make it easier for us to make a lot of poor decisions, I think, if you look back on it in hindsight. But I’m also not so sure that’s actually a bad thing, because people learn from mistakes. Because if I had not made those mistakes, perhaps we would not be who we are today.
I see a lot of problems that happen when people are not able to be comfortable being alone. And by comfortable being alone means really being able to love themselves as a human being. So I think that’s perhaps one thing that… like if I could go back in time, that’s something that I would tell myself.
And one other life skill I think would be to pick up meditation. So something that I picked up pretty late in my life. I’m not doing it on a super regular basis, but I kind of started maybe about three, four years ago. And I would say that I the has made a big difference in my life because it just helped me develop a sense of… I’m now a lot calmer in terms of my… Like just my day to day life, when bad things happen, I’m able to react in a better way. It doesn’t mean that I no longer feel angry or upset, or all these negative emotions, but it’s just like being calm. And I’m much better able to recognize that they are there and just let them fade away and deal with the problem or whatever the situation is in the proper manner.
And I credit a lot of that to meditation. And I think that if more people were able to pick up meditation when they are younger, then I think it would be a great benefit to them. Especially as young adults, you set foot in society, it’s unavoidable that you are going to meet a lot of obstacles and setbacks. And sometimes it’s painful. It’s always painful. But I think through meditation, if I go to handle their emotions in a better way, then I think it would be a net benefit to them.
And I hope I’m getting this correct, but I think I remember reading a quote from the Dalai Lama who once said that if we teach all eight or nine-year-olds meditation today, we can have world peace within two generations, or something. And I thought that was a very interesting quote from him.
So I don’t think there has been any one single collection of things that has shaped my worldview, but there are a few, I would say, very interesting books that have had a very deep impression on me.
Kalani Scarrott (41:17): No, I completely love that answer. And yeah, on thoughts on being alone, completely I get that. Because yeah, even for me, I love my friends, don’t get me wrong, but doing all these podcasting and FinTwit itself is a big step out. But I think once you’re comfortable with it, you can be yourself a bit more freely, I think.
In terms of books, classes, experiences, what’s been influential in shaping your worldview?
Chong Ser Jing (41:42): … In the 1800s, 1900s, and so on. And why is it not the people who are living in say, Australia or the Native Americans who ended up being the ones that moved out?
And according to the book, a lot of it was due to sheer luck because of the way the geography was built. Because in the Asian continent… So if Europe is actually connected as a landmass to Asia, it’s very long in terms of its longitude. So basically it’s very wide. Latitude, sorry. It’s very wide.
And what happens when it’s very wide, there are a lot of seasonal variations aren’t that drastic when you move from east to west as compared to north to south. When you move from north to south, if you have a continent that is very long in terms of its height… I hope listeners can get what I mean. There’s a wide variety of seasonal variations.
And what it means is that there is very little knowledge that can be passed on in agricultural societies if you’re living in the north versus people living in the south, because your climates are just so… Sorry, if you’re living in the equator versus living in the south, for example.
Kalani Scarrott (42:49): Yeah. Latitude.
Chong Ser Jing (42:50): There is just very little knowledge that can be passed on. And so there is very little useful knowledge transfer. Whereas if you are in the continent that is very long in terms of from the direction of east to west, there is a lot more knowledge that can be passed on because of seasonal variations,
And so it just so happened that that stroke of luck kick-started a process, a positive cycle, that enabled the countries in Europe to be able to become better, more advanced technology such that they will eventually be able to be the ones that went on to conquer the world.
And that left a deep impression on me because that I think spelled out how important raw luck is to somebody’s lives. And not just to individuals’ lives, but to a huge group of people. You’re talking about entire tribes and entire nations. And it’s all because of a stoke of luck as to where their ancestors eventually settled upon. So it’s also the role of luck. That’s one.
And the other book that left a big impression on me is Sapiens, by Yuval Noah Harari. So it’s a book that talks about history of mankind. And it’s a fascinating book because one of the central ideas is that humans, or rather homo sapiens, became the most dominant vertebrate species on planet earth because of its key ability to believe in things that are not grounded in physical reality.
So, as an example, our laws, our national boundaries, even in fact paper money, fiat money, these are all ideas that are not grounded in the rules of physics. Talking about rules of physics, like gravity is just a fixed figure. The speed of light is just a fixed figure. There are certain laws that cannot be transcended. They cannot be changed.
But none of these physical laws that make up our universe actually say that money has to be this way, or say that national boundaries have to be drawn that way, or says that commercial law has to be this way. But it’s built this way because enough people believe in it.
And humans, or homo sapiens’ ability to believe in what Harari calls this… I think he calls it the grand illusion, or something. It’s what enables us to be able to mobilize in a huge way.
It can mobilize a huge group of people together because they are able to collectively believe in the power of something that is not built upon a physical reality. And that’s something that’s unique to homo sapiens and not to any other animal species.
And I thought that is fascinating. That is something that has stayed with me ever since I have read the book. I have not had any practical ideas or thoughts that have emerged from that, but it is something that just keeps coming back to me, and it is just something that fascinates me.
Kalani Scarrott (45:33): Nah, I think that’s an incredible point.
Because for me, when you talk about human’s ability to believe, that’s been my biggest learning in the past year, is when you see it with all the Meme stocks and GameStop and stuff, if enough people believe something is worth it, I don’t want to be caught on the wrong side of that, even if I believe… If enough people believe in it, it is, I guess.
Chong Ser Jing (45:50): And I guess, now that you mention this, in the related way, have you ever wondered what is the actual process by which a stock’s price reflects its underlying intrinsic value?
I realize that this was a mystery even to Benjamin Graham. I believe it was in the 1950s or something where Graham was testifying in the US courts for some other issue. And one of the lawmakers asked him, “Hey, you’re in this job of identifying undervalued stocks, and according to you, stocks will eventually reflect the underlying intrinsic value. What is the actual physical process that leads to that realization, or at least the convergence of price and value?”
And Graham’s answer back then was, “I don’t know. It’s a mystery to me.” And I thought that was fascinating. I probably came across that five or six years ago.
And today, I have not come across the actual physical process. I’ve not learned about the actual physical process as to which price converges with value. I guess it’s that it’s somehow related to, with what you mentioned earlier, that as long as enough people believe in something, then it can happen. I’m not sure. But it’s something that fascinates me.
Kalani Scarrott (47:06): Yeah. That’s the thing. It definitely makes you think. And if Ben Graham can’t come up with an answer, then what hope do I have? My final question for ya. What plans or vision do you see yourself for the next five or 10 years? What are you most curious about?
Chong Ser Jing (47:17): So I think there are two parts of the question. One is my long term goals, or the long term vision I have for myself, and the other would be what I’m most curious about.
So I think, for the long term goal, I don’t really have visions. I’m more of a process person. So I know that I want to give Compounder Fund the highest chance possible of being a long term success. So it’s about finding the right processes to make sure that this project can be a long term success.
So it’s about putting in place the little, little things I need to do every day to give the project the highest chance that it can do well over the long time.
So what are these little things? So it’s being disciplined in terms of taking on the right investors. Being in disciplined in terms of maintaining a low-cost structure so that we can afford to select the right group of investors, and not have to just take any capital that comes into our way.
And just also being disciplined about the way we invest and making sure that we invest in only the things that we understand and that we know well, and invest in only… Basically invest in the way that we know well.
So these are examples. So the little things that I think we need to do, just showing up every day to make sure that the fund has the highest chance of becoming a long term success.
And what I’m most curious about… So there are a few things actually. I’m fascinated with how cryptocurrencies, or rather, I should say, blockchain technology, will eventually evolve. I’m kind of sensing a groundswell of excitement about Ethereum and how the value layer of what they call Web 3.0, which is like a permissionless, trustless new internet economy. And that is fascinating.
And I think if it eventually comes true, then I think somehow it’s peripherally related to the idea that I mentioned with the idea that I picked up from Sapiens, from Yuval Noah Harari. That’s one area that I’m really interested to see how that turns out.
Another area would be, I think, are genomics. I think we are perhaps in the cusp of a real genomic revolution. Prices of DNA analysis have fallen tremendously with the help of companies like [inaudible], which my fund owns shares in. Just full disclosure. And they have been a key player in terms of the cost of DNA analysis.
And I think, with COVID-19, it’s a tragedy. A lot of people have lost their lives. It’s painful. But one of the positive things that have happened from this global tragedy is that it has I think brought people’s attention to what is possible with genomics.
Because I’m not sure if you are aware, but when… And I think it was Moderna, when they designed their vaccine for COVID, they did not even have the actual virus in their labs at all. What happened was, after the research team from China decoded the genetic material from the virus, they blasted it all over the world. And Moderna had the data and they started designing their vaccine.
How amazing is that? Like they could design a vaccine that has worked so well once it has been administered. It’s found to have been working so well. And it was designed without even having to see or study the actual virus in their labs. And that I think is the power of genomics.
And I’m just fascinated also by the idea of what can happen… What are the positive implications? There’s also a lot of scary implications that can happen with human health and human development because of the genomics.
There was also a lot of developments with CRISPR editing, which is gene editing using the technology of CRISPR. And designer babies, they may become a thing in the future. And that seems like a scarier type of implication for me.
And a positive one will be perhaps one day all of us, when babies are born, they could have their DNA fully analyzed, and there could be a timetable for them to say, “When you are 15 years old, you should go for these checks because your genes say that you are perhaps more susceptible to these types of disease,” and so on. And I think that can have a lot of tremendous positive benefits for human health as well.
So genomics is one area where I’m super excited.
And then one other area would be, I think, space exploration with SpaceX and Blue Origin, and Jeff Bezos is going to put himself, I think one of the first few human tourist flights in a few weeks’ time. So this is another area that I’m really interested about.
Because I think I’ve read articles that says there are actually asteroids that hold tremendous amounts of precious natural resources like gold and gas and whatnot, and perhaps one day, if you have these asteroids or comets that orbits to earth in a regular fashion, and if we can, because of the work of SpaceX or Blue Origin, they have reusable rockets, then perhaps we can mine these things. And to me, that sounds like science fiction, but in a very interesting way.
Kalani Scarrott (52:15): I honestly love your excitement. It’s infectious. So I love that answer.
That’s a great way to wrap up. Thank you, Ser Jing, so much. It’s been a pleasure.
Chong Ser Jing (52:22): Thanks for having me, Kalani. I’ve had a really good time.
Kalani Scarrott (52:27): If you enjoyed this podcast episode, be sure to check the website, compoundingpodcast.com. On the website you’ll find every episode complete with transcripts, show notes and other related resources. Also be sure to sign up to my weekly newsletter, Curated by Kalani, where I share what I’ve been reading, learning, and watching for that week. Same as the podcast, it’s compress to impress and I aim for maximal return in the time invested. So sign up at kalanis.substack.com. You can also connect with me on Twitter @ScarrottKalani. Once again, links to all content mentioned will be in the description. But until next time, have a good one.