Ep78: Eric Choe – Make an Investment Checklist and Check it Twice

Eric Choe started his investment industry career as a sell-side equity analyst in South Korea, where he worked with Samsung Securities, ABN AMRO, and Deutsche Bank. After earning his MBA at The University of Chicago Booth School of Business, he worked at Fidelity Investments where he ran the Fidelity Thailand Fund. Currently, Eric manages multi-asset portfolios for high-net-worth individuals at a private bank based in Singapore.

 

“We must have an investment checklist … every investor has different factors they look for when they make investments and watch their investments. And I think everyone has to have a different checklist for what they’re comfortable with … (which) can evolve over time.”

Eric Choe

 

One lesson learned

  1. One item on Eric’s own 10-point checklist: If a stock is trading at a price-to-earnings growth ratio (PEG ratio) of above one, don’t invest in it. (The PEG ratio is a stock’s price-to-earnings [P/E] ratio divided by the earnings-per-share [EPS] growth for a specified time period). If he’s invested in a stock in which the PEG ratio goes above 1.0, he sells it, and if it’s trading at about 1.0, he will not buy it.

 

Andrew’s takeaways

  1. Avoid investing in a company that is competing against the government. One exception would be when the government is truly failing in its strategy.
  2. Entry of the government into an industry isn’t the end of the world. But it can really affect the multiple of your target company, and lower the price that people are willing to pay for a stock as their assessment of future growth will have fallen. Companies can survive, adjust and thrive, but their valuation will slide a little.

 

You can also check out Andrew’s books 

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About the author, Andrew

Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company that provides institutional and high net worth investors with ready-to-invest stock portfolios that aim to beat the benchmark through superior stock selection.

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