Thursday, June 16, 2011

‘Anomaly Investing’ – Concept, Theory and Execution

Many investors assume the markets are efficient. However, in reality, inefficiencies are the rule rather than the oddity. Just imagine, there are inefficiencies in the equity markets even though armies of analysts, investors and other professionals are carefully scrutinizing the various securities on offer. However, there are countless opportunities that slip through the crack. You will find that the best performing counters are companies which ‘fall under the radar screen’.

Now apply the same to the property market, but take note that the available information for the real estate sector is sketchy and even valuations are estimates at best. I have gained 30% on a property 2 months after I bought it even though the original purchase went through a formal valuation. There are countless opportunities abound only you bother to do some in depth research.

What do I mean by ‘Anomaly Investing’? I look for impending economic trends that will benefit certain sectors but prices have not caught up with future demand. Many investors compete to buy real estate because everyone else is buying but the fact is that many are enamoured with current demand and more often than not over pay.

I do agree that executing such a strategy is tedious but I can assure you that it is extremely rewarding too. Just pulling off one deal can seal your financial future and secure you for life. My very first foray into property investing turned out to be an ‘over 1000%’ return on my initial investment. This is not a fluke as I have done this consistently. No doubt, now I buy maybe 1 asset a year at best but I do make it count. Be prepared to stick to your guns, and take a longer investment horizon and I can assure you that the rewards can be tremendous.

In fact, I have made far more on my property portfolio compared to the rest of the asset classes that I have invested in. It is not that they have not made money. My art, wine and corporate portfolios have all done well. But it is my property assets that really stand out.

I am writing this in the skies as I fly towards China from Bangkok. I will be going to a couple of cities for work. You have not heard from me for quite some time as I have been tied up (as usual). I am happy to report that tired as I may be, I am certainly happier than a couple of weeks ago.

I will be conducting my last ‘Business Accelerator Program’ this month end. Class is almost full with a couple of spaces left. This will be my last business class as I need to let my voice recover. Years of teaching have taken a toll and I intend to take a very good break. See you in class if you have signed on!

Your Friend,
Andy Ong