After overspending on shopping while studying in South Korea late last year, Nanyang Technological University (NTU) undergraduates Lim Yu Xin, 21, and Lim Jiing Wei, 22, turned to the stock market to make some money back.
"We felt guilty after spending too much on shopping, so we had a lot of motivation," said Jiing Wei with a laugh.
Said Yu Xin: "I would even look at the stock market on my phone while in the bathroom, and if I see a stock suddenly go up, I would shout out: 'Jiing Wei, look at this!'"
"Then we would spend the entire day monitoring the price and trying to trade at a good price."
Within four to five months, their investments in stocks like Global Logistic Properties (GLP) and CapitaLand have generated over S$8,000 in combined realised and unrealised profits as at March 31 - with the help of a bull market and accommodative government policies.
Other than their trading escapades, the two female undergraduates also hold their own in stock pitch competitions usually dominated by their male counterparts.
Both were part of the four-member NTU team making a contrarian sell call on supermarket operator Sheng Siong, which came in runners-up at the National University of Singapore-Singapore Exchange (NUS-SGX) stock-pitch competition in February.
For Yu Xin, it marked her fifth time participating in a stock-pitch competition; for Jiing Wei, it was her third.
Both had started investing in their second year of university.
Yu Xin's father stopped working 10 years ago, and together with her mother, a housewife, raised her and her two siblings with money earned from investing.
"Because of that, I was interested to find out more about this thing that could raise three troublesome kids," said Yu Xin, who is studying for a double degree in business and accountancy.
Jiing Wei was similarly drawn to investing because her parents do it to earn side income.
Both have Singapore stock portfolios worth around S$30,000 each.
What was the first stock you bought?
YX: GLP at close to S$1.70. It's a Singapore stock heavily invested in China, so its stock price dropped a lot when the China stock market crashed. But China as an economy is still quite stable and there's growth, so it provided a good point of entry. I bought 5,000 shares.
JW: Keppel Corp at the beginning of 2016. I spent more than S$6,000 on 1,000 shares. Keppel is quite a diversified business with a property segment, but I think the market viewed it as solely an oil and gas play. So when oil prices fell, the share price fell by more than 60 per cent from its high. I felt that it was oversold.
What stocks did you buy while in Korea?
JW: Our strategy was to use a bottom-up approach and invest in companies with good fundamentals and were trading at cheap valuations because they were momentarily oversold.
YX: To mitigate a concern I had about valuations being stretched, I looked for companies that I knew I would be comfortable with holding for the long term, with businesses that were more predictable and safe. Characteristics that I valued were: good capital allocation and structure, trustworthy management, and cheap valuations as compared to its peers or historical ratios.
JW: I bought CapitaLand in Decem-ber and sold it in March. I also bought more GLP in December; I had already bought some in Singapore.
YX: I bought CapitaLand too, which was trading at quite a cheap valuation. It was divesting some of its properties that didn't have good prospects, and going into higher growth areas like Vietnam. CapitaLand has a diversified asset base too. I also bought shares in City Developments in December, and Jumbo Group in October.
How has your exposure to competitions impacted you?
YX: Equities research is tiring and tedious, and it's not enough to see what sell-side analysts say. In stock-pitch competitions, you can consolidate the reports and do additional research to see if you agree. You also gain more confidence by presenting in front of a panel of industry professionals.
JW: For the NUS-SGX competition, we stayed over in school on a weekend to finish the report and ended up sleeping one to two hours on a sofa.
YX: We had a lot of fun too. Sell-side analysts tend to use sensational language, and one Jumbo-Sheng Siong report was titled "When Flying Elephants Trump Runny Eggs".
JW: So we started to think of our own sensational titles. We ended up writing, "Sheng Siong, Not For You" and "Investors might want to leave this stock on the shelf."
Read also: Tips for young investors
What's the most unexpected thing that you've learnt in your investing journey?
YX: I think I got into it wanting more money, but I learnt not to be so greedy. Letting your emotions rule your investing makes it risky.
JW: I used to only take into account the fundamentals, like revenue. But I learnt that the actions of the management need to be watched too. At the start of last year, a lot of management were buying their own stocks; these signals can actually move the stock market.
Is investing common for people your age?
YX: Not a lot of people our age invest, and I think more guys than girls are interested. The industry is male-dominated. When I went up on stage to get the prize for my first competition, the lady who passed it to me smiled and said, "You are the only girl here."
JW: That happens in a lot of competi-tions. For the NUS-SGX competition, there were only four girls participating and three were in our team. I think guys have a headstart because they get interested in investing while in the army, and they can use their army pay. But girls can catch up too if they want.
Read also: Investing is in his blood for NUS undergrad
What is your advice for newcomers?
JW: Talk to friends and family who are into investing. When you want to buy a stock, you will find reasons to reinforce your beliefs. People might have different opinions that will upset your thesis.
YX: You can open a paper money trading account first to practise. Look at sell-side reports to get a rough idea of what a company does and the key factors that you should look out for. For students, stock-pitch challenges are a good way to start because you can get feedback from professionals.
This article was first published on April 3, 2017.
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